Finding Gold in the Tourism Slump: Contrarian Plays in a Shrinking U.S. Travel Market

The U.S. international tourism sector is in turmoil. Inbound arrivals are projected to decline by 9.4% in 2025, with Canada's leisure bookings plummeting 40% and European arrivals dropping 17%. Meanwhile, outbound travel booms, fueled by luxury and eco-friendly trends. For contrarian investors, this crisis is a goldmine: sectors and regions deemed “undervalued” today could rebound fiercely as travel preferences shift and geopolitical tensions ease. Here's where to position now.

The Decline: Where the Pain Is

The U.S. tourism landscape is uneven. Inbound tourism from Canada—once the top source of visitors—has collapsed due to strained diplomatic relations and tariffs, while European arrivals have stalled. The economic hit is stark: a projected $22 billion revenue loss in 2025. Meanwhile, business travel, though rebounding, still lags pre-pandemic levels, with domestic trips down 60% in 2020.

But here's the contrarian angle: these declines mask opportunities.

1. Medical Tourism: A Hidden Growth Engine

While U.S. inbound medical tourism from Asia and Europe is sluggish, South America is thriving. Countries like Panama, Colombia, and Brazil now attract U.S. patients seeking treatments at 40–70% of domestic costs. The U.S. medical tourism market itself is projected to reach $8.74 billion in 2023, but investors should look south of the border.

Investment Play:
- Target: Invest in South American hospitals or clinics catering to U.S. patients.
- Why Now? U.S. healthcare costs remain prohibitive, and political tensions may ease, boosting cross-border travel.

2. Luxury Travel: The Rich Aren't Slowing Down

Outbound tourism's $224 billion projection for 2025 is fueled by luxury spending—$16,000 per person for elite trips. Aspen, Colorado, tops the list as the costliest destination at $779/day, while budget-conscious Gen Z seeks affordable, eco-friendly stays.

Investment Play:
- Buy Undervalued Luxury Stocks: Companies like Hilton (HLT) or Marriott (MAR) in prime U.S. cities (NYC, Miami) may be oversold due to inbound tourism slumps but could rebound as business travel recovers.
- Go Green: Back eco-lodges or sustainable travel tech firms—Gen Z's preferences are here to stay.

3. Regional Rebound: The Canada Border States

Canada's 40% drop in leisure bookings to the U.S. has hit border states like Michigan and Vermont hard. But if U.S.-Canada relations thaw, these regions could snap back. Their real estate and hospitality assets are now cheap.

Investment Play:
- Buy Cheap Real Estate: Resorts or hotels near Canadian borders at discounted prices.
- Back Canadian-American Joint Ventures: Companies facilitating cross-border leisure or medical travel.

4. Sports Tourism: Millennials Are the New Market

Despite overall declines, sports tourism is booming. In 2024, 190 million domestic sports trips were taken, with millennials and Gen Z driving demand for unique experiences like music festivals and outdoor adventures.

Investment Play:
- Back Event Venues: Stadiums or arenas in cities like Los Angeles or Las Vegas, which host major events and attract domestic and international crowds.
- Invest in Sports Tourism Platforms: Apps or services connecting travelers to niche sports experiences (e.g., Outdoor Adventures Inc.).

The Bottom Line: Act Now Before the Crowd

The U.S. tourism sector is a mosaic of pain and potential. While inbound arrivals from Canada and Europe falter, South American medical hubs, luxury travel, and sports tourism are growth engines. Investors who buy now—when fear dominates—could profit as travel trends rebound and geopolitical clouds lift.

The time to act is now. The next tourism boom won't wait.

Invest with conviction where others see only decline.