GLOBAL PULSE: Uneven Markets + What Would Dolly Do?

Greetings, Travel South Partners,

In June, I wrote that uncertainty had become radical, demand was mixed, and the World Cup would tell us something. The mega-event may be behind us, but the barriers I identified still remain: politics at home and abroad, trade policy, safety perceptions, and affordability. What has changed is that we now have the final 2025 numbers and a 2026 revised forecast to measure them against. That is what this edition is about.

When it comes to international markets, everything is uneven. I live in Atlanta, and whenever I talk to a restaurant owner, a hotelier, or anyone else in this business, I ask the same question. How is business?

At a recent event at Atlas, the team was upbeat. Summer was busy, they said. During the World Cup, they had ministers and presidents of countries at their tables. That is exciting news.

The recent national data reads differently. NTTO data show overseas arrivals to the U.S. fell 5.8% during the January-August period. The World Cup did not offset broader overseas softening. Spending is holding up better than visitor counts.

Let’s start with the Canadian market.

Canada sends more visitors to the United States than any other country. The drive market took the hit. The nine steepest Canadian declines in 2025 were all in northern border states, led by Washington, with nearly 31% fewer Canadian visits. Vermont, North Dakota, and Maine were all at a 28% decline. The U.S. as a whole lost about 22%; Travel South, 21%. 

What 2025 actually cost us.

Tourism Economics finalized 2025 data a few weeks ago, so we can now put a number on the year. International visitors spent $7.9 billion across Travel South states, down 6.0% from 2024. In dollars, that is roughly half a billion.

Canada is the primary driver of the 2025 story, accounting for about two-thirds of that loss. Canadian spending fell 23.1%, about $331 million. Overseas spending fell 2.6%, about $180 million. Mexico, a small market for the region, grew 4.7%.

The overseas picture was mixed. Japan grew 18.4%. Italy grew 10.6%. South Korea grew 9.8%. Brazil, the Netherlands, the U.K., and Spain all grew around 6%. China grew 3.4%.

The losses were concentrated. India, our fifth-largest market, fell 9.4%. Germany, our fourth-largest, fell 6.9%. France fell 9.1%. Australia fell 18.6%.

Behind the numbers, there is a bigger picture.

Economists worldwide expect some steadiness right now. The World Economic Forum’s economists survey shows 56% expect the global economy to hold steady or improve. I also anticipate an improved outlook for early 2027.

Ipsos backs up the steadier mood. Its Global Consumer Confidence Index held at 48.4 in September, the first month without a drop since February, when the war in Iran began. Eight of our key markets sit below Ipsos’ global index: Japan, France, Germany, Belgium, Italy, South Korea, Spain and Canada. For most of them, the 2026 forecast follows the mood: flat, slowing, or down. Spain is the exception, and Canada is rebounding.

Four things matter for our business.

First, interest rates. In September, the European, U.S., and Japanese central banks raised rates, citing energy prices, geopolitics, and inflation. Central banks will likely go their separate ways from here. That matters for us. Rate moves shift currencies, and exchange rates are one of the biggest factors in affordability. Since the Fed’s hike, the dollar has strengthened, making U.S. trips more expensive for many international travelers.

Second, purchasing power is weakening as inflation rises across the globe. The same erosion shows up in other major economies, including the U.S. And it is not expected to ease soon. Downbeat consumers have a reason to be careful about their spending.

Third, the cushion is gone. 69% of chief economists say government spending has carried the world through the shocks since 2020. Only about a quarter expect it to be there for the next one. Businesses and households are likely to absorb the next shock.

Fourth, small businesses make up a large share of the global travel industry and depend on credit. When interest rates rise and credit tightens, doing business costs more. These businesses are under pressure.

What we expect in 2026

The spending forecast looks positive: $8.2 billion, up 3.6%. Overseas up 2.6%. Canada up 8.4%.

That growth recovery is projected to be a little over half of what we lost. Overseas spending gets back to its 2024 level this year. Canada does not. Even with a rebound this year, Canadian spending in 2026 is 17% below 2024 levels.

Four major markets are projected upwards: Canada, China, Brazil, and the U.K. account for more than 80% of the forecast growth. Canada leads at $1.2 billion, still our largest market by far. The U.K., the largest overseas market, is forecast to reach $854 million, up 4.2%, after growing through 2025. China is projected as the fastest-growing large market at $592 million, up 13.6%. Brazil is projected at $409 million, up 9.4%, with growth in both years. Behind them, Australia rebounds 8.5% to $277 million after an 18.6% drop in 2025, and Mexico climbs 18.2% to $97 million.

Spain rounds out the growth list at 5.7%. Japan’s growth slows from 18.4% to 3.2%. South Korea is forecast down 10.7% after growing 9.8% last year.

India is flat, which is not surprising. It is the market where the $250 visa integrity fee tested worst in Future Partners’ spring survey. There are also visa waiting times, 7.5 months in New Delhi.

Then there is the other Europe. Germany, third-largest overseas market at $507 million, is soft, down 1.1%. Austria is down 15.4%, and Switzerland is down 12.1%. France is down 4.1%. The Netherlands is down 3.8%, Belgium 7.2%, Denmark 10.9%, and Norway 3.5%.

The markets are uneven based on the latest projections. The Americas are up. Asia is split. Europe is running at two speeds.

The traveler appetite for the South is there.

Future Partners’ latest survey includes a data point showing the lure of travel is still there. Among all international travelers surveyed, 38% say they are likely to visit the U.S. in the next two years. The good news is that among travelers who find the region appealing, 61.5% report this. Only 7.2% of them say they are unlikely to come or will not come, compared with 23% of travelers overall.

The biggest barrier is the perception of politics. Almost half of Canadians stated they are uncomfortable with U.S. national politics. This figure is 34% for Germans, according to Future Partners.

What would Dolly do?

A few weeks ago, our team spoke with the Tennessee tourism commissioner. Wendi on our team asked a question that has stuck with me. What would Dolly do when things are down?

I think she would do what she has always done: show up for her fans and get to work. The national headline is uneven, and so are the markets. The South is in better shape than the headline.

Dolly put it simply. “If you want the rainbow, you gotta put up with the rain.”

We have had our share of rain. Let’s go get the rainbow.

With Gratitude, 

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