Tourism Slump Potentially Indicating a Real Estate Collapse in the United States?
The United States is currently experiencing an 8.2% decline in international tourism, according to the World Travel & Tourism Council (WTTC). This decline, a significant factor in the housing bubble showing signs of weakness, is causing concern among economists and real estate professionals.
When the US dollar is strong, it can make international travel to the US more expensive for tourists. Additionally, harsh new immigration policies and a growing Mexican economy have contributed to a decrease in Mexican tourism to the US. These factors have led to a substantial loss of tourism spending, estimated at $12.5 billion in 2025 alone.
Tourism accounts for a significant portion of economic activity in many US cities, contributing roughly 2.5% to the national GDP. In places like Las Vegas, it contributes even more, with tourism accounting for about a quarter of the city's economy. The downturn in tourism is causing substantial losses in the hospitality, retail, and entertainment sectors, reducing incomes and consumer spending capacity, limiting population inflows, and housing demand.
In tourism-dependent areas like Las Vegas, the effect is direct and pronounced. Visitor numbers have fallen by about 11-17% in 2025 compared to previous years, with international visitors dropping even more sharply. Hotel occupancy rates have decreased about 15%, and major visitor markets like Canada and Mexico are sending fewer tourists. This slump reduces job opportunities in hospitality and related industries, making it harder for workers to afford housing and dissuading new residents or investors from purchasing or renting property. Consequently, residential vacancies rise, and home prices face downward pressure.
The US government secured $585 billion in tax revenue last year alone from tourism activities. However, the decline in tourism is a serious "wake-up call for the U.S. government," according to Julia Simpson, the WTTC President & CEO. She explained that the government needs to do what needs to be done to reverse the troubling trend of a decline in international tourism.
To help mitigate the impact of the declining tourism on the housing market, advanced AI systems can integrate a massive amount of data to provide a comprehensive overview and market forecast, helping homeowners determine if it's time to repurpose the property or sell it. Additionally, CoStar, a leading provider of online real estate marketplaces, information, and analytics, has expanded its technology capabilities by acquiring Matterport, a pioneer in creating immersive 3D digital twins of real-world spaces. These virtual tour solutions boost property marketing and streamline sales processes, strengthening CoStar's position across commercial and residential markets.
However, the decline in tourism is not the only factor affecting the housing market. High interest rates, declining employment, and market uncertainty also play roles in the current situation. To stimulate the housing economy, artificial intelligence could help by providing AI-powered market analysis and pricing systems to help homeowners better understand the market and make informed decisions.
The decline in international tourism is projected to result in a loss of jobs and businesses, leading to job losses and declining housing prices in certain regions. To counteract this, travel technologies such as AI itinerary systems and protocols designed to help hosts target specific niche travel sectors have the potential to help drive tourism. Additionally, blockchain technology provides benefits for the real estate market, such as fractional ownership, where a property is split into more affordable tokens and sold, reducing the financial barrier for new investors to enter the market.
In summary, the tourism decline undermines demand and economic stability in regions reliant on travel spending, diminishing housing market resilience and raising the risk of a crash in those markets. To combat this, advanced AI systems, virtual tour solutions, and innovative travel technologies could help stimulate the housing economy and drive tourism. The US government must also take action to reverse the decline in international tourism to protect the housing market and the broader economy.
References:
- World Travel & Tourism Council (WTTC)
- Las Vegas Review-Journal
- CNBC
- NBC News
- U.S. Travel Association
- As the US government faces a potential housing market crisis due to the decline in international tourism, AI systems can help homeowners repurpose or sell their properties by providing comprehensive market forecasts.
- Innovative travel technologies like AI itinerary systems and blockchain-based fractional ownership could attract new investors and tourists, supporting the housing market in tourism-dependent regions.
