Economic Impact of Trump's Travel Ban

Though the legal ramifications of the travel ban implemented by the Trump administration remain to be seen, especially given the increasing likelihood of it being argued before the Supreme Court, it has already wreaked lasting havoc on the American tourism industry.

A bit of research by Hopper, a flight price analysis company I’ve personally used before shows searches for incoming international flights to the United States dropped by 17 percent in the days following the administration’s executive order, compared to the 1.85 percent average downturn typically experienced this time of year. Of the 122 nations Hopper tracks, 94 of them experienced diminishing searches, with Russia being the notable exception; they saw an 88 percent increase in the number of searches for flights from Russia to the United States.

According to the Global Business Travel Association (GBTA), business travel transactions in the United States saw a 2.2 percent decrease in the week following the travel ban, with over $185 million in business travel bookings lost due to uncertainty among travelers and the dysfunctional way the administration handled the introduction of the ban. The GBTA also estimates for every 1 percent impact, positive or negative, on business travel annually, the American economy gains or loses 71,000 jobs, $5 billion in Gross Domestic Product (GDP), $1.2 billion in taxes, and $3 billion in wages.

While most hotel chains saw little change in their stock prices following the announcement of the ban, airlines based out of the United States were not as lucky. American Airlines (AAL) opened the day before the ban at $49.59 and bottomed out a few days later at $44.01, an 11 percent decrease overall. United (UAL) and Delta (DAL) also saw a 6.5 percent and 7.1 percent decrease, respectively. Even Southwest, which wasn’t as impacted due to its service areas, saw a small dip but an impressive rebound, currently sitting 5.5 percent above where it was immediately prior to the ban. Only Delta has fully recovered since then, sitting .5 percent above the price per share on the day the ban was enacted, due in large part to a massive purchase of Delta and Southwest stock by Berkshire Hathaway, Warren Buffett’s firm.

Given the current debate over whether or not a Trump bubble exists on Wall Street, it's difficult to predict the future of these companies. One thing's for sure - international tourism to the United States has been grounded for the forseeabble future.