Shifting Sands: How the U.S. Tourism Crisis Opens New Investment Horizons

The U.S. tourism sector is in freefall. A $12 billion revenue loss and a 10% decline in non-citizen arrivals—driven by trade wars, border tensions, and eroding global perceptions—are not mere blips but harbingers of a structural shift. Investors who recognize this must pivot swiftly: capital reallocated to emerging destinations like Canada and Mexico, and U.S. industries insulated from international dependency, now offer the highest returns.

The Crisis in Context

The U.S. tourism decline is a multi-faceted collapse. Trade tariffs have sparked global retaliation, while harsh border policies—such as detentions and device searches—have fueled fear. Travel advisories from Canada, Germany, and France, coupled with LGBTQ+ rights concerns, have further deterred visitors. The data is stark: Canadian land arrivals fell by 32% in March 2025, while European arrivals dropped 12%. Even smaller U.S. towns like Anacortes, Washington, report measurable declines, with restaurants like Adrift Restaurant seeing a 4% sales drop due to fewer Canadian tourists.

The economic toll is vast. Goldman Sachs warns of a worst-case $90 billion GDP hit by 2025, while NYU’s Jukka Laitamaki projects up to $120 billion in tourism losses if advisories spread further. These figures underscore a systemic loss of trust in the U.S. as a welcoming destination—a perception that will not easily recover.

Capitalizing on Emerging Markets: Canada and Mexico

The decline in U.S. tourism is creating opportunities elsewhere. Canada and Mexico, long overshadowed by their northern neighbor, now stand to benefit from redirected travel demand.

• Canada: With Prime Minister Justin Trudeau urging citizens to “support homegrown tourism,” Canadian destinations like Vancouver and Niagara Falls are experiencing a surge. Searches for U.S. travel from Canada fell 50% in early 2025, while Canadian tourism stocks like Crescent Hotels & Resorts are outperforming the S&P 500. .
• Mexico: Mexican tourism bookings rose 35% in early 2025, as travelers seek alternatives to the U.S. The Mexico Tourism Board (MEXB) ETF has gained 18% year-to-date, outpacing broader markets.

U.S. Industries to Bet On: Domestic Focus and Resilience

Within the U.S., investors must seek firms less exposed to international tourism. Three sectors stand out:

1. Domestic Travel and Hospitality:
   Companies catering to U.S. travelers—such as regional airlines, national parks, and road-trip infrastructure—will thrive as Americans shift spending inward. Expedia’s domestic bookings, for example, rose 8% in Q1 2025, while Camping World Holdings (CAMP) benefits from rising outdoor recreation demand.

2. Healthcare and Wellness:
   U.S. healthcare facilities are seeing increased traffic as foreign patients—formerly drawn to medical tourism—now prefer destinations like Mexico or Canada. Universal Health Services (UHS) and Tenet Healthcare (THC) are well-positioned to capitalize on this trend.

3. Tech and E-commerce:
   Sectors insulated from travel trends, like cloud computing and e-commerce platforms, offer stable growth. Amazon (AMZN) and Salesforce (CRM), which serve a broad customer base, remain defensive plays amid macroeconomic uncertainty.

Data-Driven Decisions: The Numbers Speak

• Geographic Winners: Canadian cities like Toronto and Mexico’s Cancún now attract 30% more investment inquiries for hospitality projects.
• Profitability Shifts: U.S. tourism-dependent firms—such as Las Vegas hotels and cruise lines—saw profit margins drop from 41% (2024) to 32% (2025), while domestic-focused rivals like Lodging Hospitality Trust (LHT) maintain margins above 40%.
• Currency Effects: The strong U.S. dollar further deters foreign travelers, creating a tailwind for Canadian and Mexican assets.

Conclusion: Act Now—or Risk Falling Behind

The U.S. tourism decline is not a temporary dip but a seismic shift. Investors who cling to traditional tourism stocks—such as Marriott (MAR) or Carnival Cruise (CCL)—risk prolonged underperformance. Instead, capital should flow to Canada’s CXW ETF, Mexico’s MEXB, and U.S. domestic champions like Expedia (EXPE) and Camping World (CAMP).

The structural shift is clear: the era of U.S. tourism dominance is over. Those who pivot to emerging destinations and domestically rooted industries will reap the rewards. The clock is ticking—act decisively, or watch opportunities vanish into the shifting sands of this new landscape.