"Red Flag" - US To Bermuda Air Travel Drops In 1H19 

While searching for evidence the American economy is deteriorating, more or less, observing consumer trends, it appears that some are starting to pull back on travel.

A new report from the Bermuda Tourism Authority (BTA), first reported by The Royal Gazette, shows US air visitor arrivals slipped 5% YoY in 1H19, with the sharpest declines from millennials and arrivals from New York airports.

If you've ever been to Bermuda and or any country in the Caribbean, most economies are entirely based on tourism from the US, Canada, and Europe. So monitoring the tourism industry in these countries serves as alternative data on the health of consumers from developed economies.

BTA said while air travel from the US fell at an alarming rate, spending among tourist rose 7% more per person in 1H19.

Kevin Dallas, the chief executive of BTA, said: "In the hospitality business, visitor spending is a metric most closely tied to profitability."

"We're very pleased to see economic growth in the first half of the year. However, we remain concerned airlift challenges will continue to negatively affect air arrivals in 2019."

"We raised this red flag at the start of the year, and since then, our team has closed the deal on big-brand event partnerships, including the US Open and the PGA Tour's inaugural Bermuda Championship. These are purposeful steps that can help us offset the constraints on airlift."

BTA figures show the number of air visitor arrivals declined from 66,604 to 64,175 in 2Q19, with the most significant loss in the millennial age bracket [25 to 24].

In the first six months of the year, total air visitor arrivals declined from 92,920 to 88,263, a 5% drop YoY.

The decline rippled through the tourism industry on the British island territory in the North Atlantic Ocean, sending the hotel occupancy rate down 4.4% in 1H19.

Air visitors who vacationed in Bermuda between April and June, spent a total of 2.4% more, $98.5 million compared with $96.2 million in the same period last year, an increase of $2.3 million.

For the 1H19, air visitors spent a total of $132 million.

Dallas explained: "After twelve consecutive quarters of leisure air arrival growth dating back to January 2016, the sharp increases Bermuda experienced over the past three years are leveling off."

The deterioration in air visitors was also blamed on a drop in the number of seats available by airliners from New York to Bermuda in 1H19.

A BTA spokeswoman said: "At the BTA's Outlook Forum back in February, officials warned that while 2018 leisure air arrival numbers had reached a 16-year high and third consecutive year of growth, business and visiting friends and relatives travel had declined sharply — down more than 30% since 2007.

However, baby boomers traveling by cruise ship was up 15% YoY in 1H19, up from 201,179 to 231,495 — 30,316 people. The increase was able to push total visits in 1H19 to 319,758, which was 25,659 people more than the same period last year.

While millennial travelers from New York airports scaled back their travels to Bermuda, baby boomers, on the other hand, are living the high life on cruise ships that eventually dock in the small island country.

We will continue to monitor tourism trends in Bermuda and countries in the Caribbean to see, if that in fact, American consumers are pulling back on their travels, which would only occur on the onset of a recession.