Las Vegas could experience slight turbulence in international tourism

A Virgin Atlantic passenger jet takes off from McCarran International Airport Tuesday, August 2, 2016.

Jose Diaz flew to Las Vegas from Mexico City recently for a family trip. With golf clubs in tow at McCarran International Airport, he seemed excited to get going and start his getaway — but he also knew he’d be watching his wallet.

The U.S. dollar is much stronger than it was a few years ago, crimping foreigners’ spending power. If their money went further, Diaz said, the family would play an extra round of golf or stay longer.

“You have to have a budget,” his brother Adrian Diaz said.

Jim Pope, a Las Vegas construction contractor, recently flew home from a trip to Canada. U.S. money goes a longer way up north, though his girlfriend, who lives in Edmonton, plans to visit him next month and won’t get the same perks.

She was trying to figure out how she could “afford to do what she likes to do” here, Pope said, “because their dollar is so weak compared to our dollar right now.”

Trevor and Julie Wright, of England, recently flew here for a week-long vacation. They booked the trip, their first to the United States, just a few days before — “We’re really rubbish at planning,” Julie said — and weren’t worried about their dampened purchasing power.

“We’ve come for a blowout, and that’s it,” Trevor said.

Americans comprise the bulk of Las Vegas’ 42 million annual visitors, but international tourists are much more lucrative per person, as they stay longer and spend more money. But lately, this segment of the economy has faced some big headwinds.

Hainan Airlines

Vice president of Hainan Airlines Hou Wei joins with the Las Vegas Convention and Visitors Authority to announce from Drai's Pool at the Cromwell that Hainan Airlines will be making their first nonstop service to Las Vegas on Thursday, August 4, 2016. Launch slideshow »

The U.S. dollar’s rise — fueled by a relatively better economy at home than abroad, reports say — has slashed spending power here for people from around the globe. Affected countries include Las Vegas’ three biggest sources of foreign tourism: Canada, whose economy has been hurt by a steep drop in oil prices as well as western wildfires; Mexico, whose economy has “stumbled” with stalled exports and a slowed service industry, according to Bloomberg News; and the United Kingdom, where the Brexit vote in June to leave the European Union rocked global stock markets and caused the British pound to tumble.

Foreign currencies have plunged against the U.S. dollar from peak values reached over the past five years. As of Aug. 12, according to currency converter

• A Canadian dollar was worth 77 cents, down 25 percent from 2012

• A British pound was worth $1.30, down 24 percent from 2014

• A euro was worth $1.11, down 23 percent from 2011

• A Mexican peso was worth 5 cents, down 38 percent from 2013

The busiest international carrier here, Canada’s WestJet Airlines, flew about 481,500 people in and out of McCarran this year through June, down 11 percent from the same period last year. Aeromexico was down almost 6 percent year-over-year to 135,300 passengers, and Panama’s Copa Airlines, whose flights here typically carry loads of Brazilians, was down 34 percent to 45,200.

Several foreign carriers are growing here. British Airways’ midyear passenger tally in Las Vegas was up 19 percent from same-period 2015, to roughly 164,700. Germany’s Condor Airlines was up 18 percent to 40,800 passengers, and Air Canada climbed 8 percent to 387,600.

But overall, foreign carriers’ midyear passenger totals at McCarran were essentially flat, up 0.2 percent to 1.7 million, while U.S. airlines’ passenger counts rose 6.3 percent to 21.1 million, airport data show.

International tourism “remains strong” in Las Vegas, “but we’ve certainly seen some effect” from the currency swings, said Cathy Tull, senior vice president of marketing at the Las Vegas Convention and Visitors Authority.

According to the most recent LVCVA data, foreign tourism here grew every year between at least 2005 and 2014, growth rates ranging from 1.5 percent to 13.7 percent. In 2014, there were 6.2 million international visitors.

Industry insiders and analysts say they don’t expect international visitor totals to decrease. But, they said, many tourists might watch their spending because of the stronger greenback.

“It’s not going to stop them from coming,” Union Gaming analyst John DeCree said. “Maybe they’ll just make some different decisions while they’re here.”

Overall, foreign tourists’ spending in the United States slowed “considerably” over the past year and a half, though other industries have been hit harder by the rising dollar, said David Huether, senior vice president of research at the U.S. Travel Association, an industry group.

U.S. manufacturing exports fell 7.5 percent this year through May compared with the same period last year, and agriculture exports fell 13.8 percent. International visitors’ travel-related spending in the United States, however, climbed 2.4 percent in that time, according to association estimates of federal data.

“We haven’t been as adversely impacted,” Huether said.

Currency swings have an “inverse relationship” with tourism, said Chris Jones, chief marketing officer at McCarran: Domestic tourism to Las Vegas climbs when the dollar is stronger, and international tourism gets a boost when the dollar slides.

“There’s always going to be a trade-off,” he said.

There has been “some softening” from Canada and South America, but Europe is “still really strong,” LVCVA’s Tull said. Moreover, China’s Hainan Airlines plans to launch service between Las Vegas and Beijing in December, the first nonstop flights ever between McCarran and mainland China.

The airport has spent a fortune luring international airlines and travelers. McCarran’s $2.4 billion Terminal 3, used by foreign carriers, opened in 2012, and airport officials last year unveiled plans to double McCarran’s international gates to 14.

International visitors stay an average of 5.3 days in Las Vegas and spend $1,515 per trip; domestic travelers stay an average of 4.2 days and spend $1,100. Foreigners spend an average of $282 per trip on shopping, compared with $93 by U.S. visitors, and $63 on sightseeing, compared with $6, LVCVA data show.

“It’s a good profile for us,” Tull said.

Canada is the biggest source of international tourism in Las Vegas — 1.9 million people visited from the country in 2014, comprising 31 percent of foreign travelers that year, according to the LVCVA. But industry pros say tourism from the country is slumping.

WestJet, based in the oil-heavy province of Alberta, is running 63 flights a week to Las Vegas, down from 78 per week a year ago, Jones said.

According to a recent report by government agency Statistics Canada, the country’s gross domestic product shrank in May by 0.6 percent, the largest one-month decline since 2009.

“If you’re (from) a market that is largely oil-centric, it makes sense that you’ll be hurting a little bit more right now,” Jones said.

WestJet spokeswoman Lauren Stewart said the currency swings and Canada’s economic woes have “definitely impacted” the airline, with less travel to the United States.

Canadians “love Las Vegas,” she said: It is WestJet’s biggest U.S. market, as Canadians flock here for sunshine, entertainment and gambling. And while Canadians still take vacations here and elsewhere, they are finding ways to trim costs.

Travelers are going to all-inclusive resorts, staying in Canada, taking shorter trips or ditching a hotel and staying in other people’s homes through Airbnb and cooking their own meals — “just watching their dollars a little more closely,” Stewart said.

T.J. Atkinson, of Manitoba, visited Las Vegas recently for the first time with his wife and another couple. Many Canadians spend winters in the United States, he said, but “a lot of them are looking to sell their properties” because “it’s not as viable anymore.”

He said it was “a bit of a kick in the pants” to see the Canadian dollar slide after he booked his tickets for the trip here. But he was “hyped” to visit and “see all the sights” in America’s casino capital.

Standing in baggage claim at McCarran, Atkinson said he had “heard so many good things” about Las Vegas and wouldn’t let the exchange rate crimp his spending.

“Sometimes,” he said, “you’ve just got to pay a little more for that enjoyment.”