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Visitors Wishing to Enter the United States Facing Tougher Restrictions; Number of Overseas Arrivals Still Only 71%
of the Previous Peak in January 2001

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PricewaterhouseCoopers Expects National Security Regulations to Remain Deterrents to Inbound Travel Contributing to Arrivals Lagging
Pre-September 11 Share of 13 Percent of Total Demand

NEW YORK, July 29, 2004 - PricewaterhouseCoopers predicts overseas arrivals to the U.S. will increase by 3.1 percent from 2Q 2004 to 4Q 2004, reaching a level of 1.59 million arrivals in December 2004, as compared to recent troughs of 1.48 million and 1.49 million overseas arrivals in August 2002 and September 2003 respectively.

A number of factors including the value of the dollar, and the extended period of time without acts of terrorism on U.S. soil, among others have drawn travelers back into the country.  However, visitors wishing to enter the United States now face tougher restrictions at the borders.

Congress has passed acts affecting visitation and immigration into the United States.  Visitors wishing to enter the country now face longer waits for visas, greater scrutiny at ports of entry, and/or higher visa application fees - all contributing to concerns about convenience of travel into the U.S.

"Laws passed and policies implemented to secure the nation due to the events of 9/11 have had unintended effects on international travel into the U.S.," says Bjorn Hanson, Ph.D., global industry leader, PricewaterhouseCoopers Hospitality & Leisure practice.  "Although recovery has started, as of March 2004, the number of overseas arrivals was still only 71 percent of the previous peak in overseas arrivals and only 90 percent of previous peak arrivals from Canada and Mexico in January 2001."  Currently, residents of Canada and Mexico, with the exception of government officials, do not need a visa to enter the U.S.

The following is a summary of restrictions imposed on in-bound travelers to the U.S.:

  • The USA PATRIOT Act, enacted in October 2001 established provisions to grant border surveillance privileges to the FBI and CIA, expand deportation and detention powers, and strengthen anti-money laundering laws.  Consequences for non-U.S. nationals visiting the country include warrantless surveillance of email, written correspondences, health records, and other business documents.  According to Travel Business Roundtable, the act also moved the deadline for mandatory machine readable passports (MRPs) from 2007 to 2003; however, the Secretary of State may extend this deadline if it is determined that a visa waiver country is taking steps towards complying with the technology requirements.
  • In November 2001, the government drafted a profile of the Islamic suicide attackers that were involved in the September 11 events.  This profile tightened surveillance of Arab travelers between 16 and 45 of age at U.S. borders, affecting the entry process of approximately 900,000 visitors from the Middle East in each of the past two years.
  • In May 2002, the Enhanced Border Security and Visa Entry Reform Act was established to provide for electronic tracking of visitor with visas entering the U.S.  This act mandates aliens entering the country to provide detailed background information regarding family, address, and employment status. 
  • The Enhanced Border Security and Visa Entry Reform Act also requires individuals from the 27 countries participating in the visa waiver program to provide machine readable passports containing biometric identifiers by October 26, 2004, a deadline that the U.S. itself could not meet until late 2005.  If this deadline is not met, visitors from visa waiver countries will undergo interviews along with non-visa waiver visitors as part of the entry process.  As a result, 2005 visa applications are expected to be double 2003 levels.  According to Travel Business Roundtable, visitors from visa waiver countries represented about 68 percent of all overseas visitors to the U.S. in 2002 and 49 percent in 2003.
  • In December 2002, the Justice Department mandated that all male, Islamic visitors currently in the U.S. over age 16 appear before the INS for questioning, fingerprinting and photographing.  As a result, arrivals from the Middle East declined 7.3 percent from 2002 to 2003.
  • In January 2004 the US-VISIT program began at 115 airports and 14 seaports by requiring visa-holding visitors to the U.S. to submit digital photographs and fingerprints.  These biometric readings are then compared electronically to international watch lists, according to Travel Business Roundtable.  By December 31, 2004, the VISIT program will be in place at the 50 busiest land border ports.  The exit component of the VISIT program is currently in place at one airport and one seaport as part of a test phase.  This component serves to help determine when a visitor has outstayed his or her approved time in the U.S.
  • On June 14, 2004, legislation delaying biometric identification requirements until 2005 passed on the floor of the House of Representatives.
"These restrictions have affected decisions of international visitors wishing to enter the U.S.," says Hanson.  "The weak dollar and strengthened foreign economies have offset some of the deterrent effect of these regulations, and overseas arrivals have begun to rebound.  These economic factors will help arrest further decline in the share of overseas travelers of total lodging demand in 2004.  After falling from 13 percent of total lodging demand in 2000, overseas travelers' lodging demand will stabilize at nine percent in 2004."

 
Contact:
PricewaterhouseCoopers
Linda Baiamonte
linda.baiamonte@us.pwc.com
Also See: Travel Business Roundtable and World Travel & Tourism Council Used International Reach to Ensure Postponement Machine Readable Passports / September 2003
Department of Treasury to Regulate Travel Industry Money Handling / Status of Hotel Managers Unclear / April 2003


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