REAL ESTATE NEWS

So far, the economy has been holding steady despite fears of what might happen as a result of Washington igniting a global trade war, alongside other implemented policies.

As a result, the hotel sector could take a hard hit. A report from Bloomberg Intelligence forecasts that nearly $20 billion in national retail spending could be at risk due to a slowdown in foreign tourism.

But in the meantime, hospitality looks strong. Since the pandemic, hotel prices are up almost 10 percent, per Bloomberg.

Yariv Ben-Ari, partner in Herrick's Real Estate Department, said he has been seeing resilience from New York, which is a key market he focuses on.

"I think people are seeing New York in particular as a very exciting and opportunistic place," he said.

"I'm seeing a lot more people looking back here to the place they would like to travel to, visit, see and potentially capture that American dream. You have three major airports. They're all within half an hour of getting to the city. It is one of the easiest places to get to if you want to come here."

TARIFFS MIGHT NOT BE THE BIGGEST CONCERN

That's how things are shaping up currently. But assuming elevated tariffs continue, it's fair to expect at least slower GDP growth, coupled with an uptick in inflation, as many experts have predicted this year. You would think that a weaker economy would impact spending across the board — but Ben-Ari actually sees this playing in the favor of international travelers. A big reason? The value of the dollar is down by over 10 percent in 2025 and is off to its worst start in more than 50 years.

"If the dollar is weakening, then travel to the US, and the cost of spending money in the US is reduced for international travel, so people are more inclined to come here and spend their money here, because they're getting more of a bang for their buck," he explained. So he's not as concerned with tariffs in that regard.

However, there are a couple of other caveats. For one, don't lose sight of the impact of domestic traveling. The tariffs will likely come into play there and make things more expensive for Americans when vacationing in the country, according to Ben-Ari.

But Ben-Ari's biggest concern is the Trump administration's crackdown on immigration and the border. That has a two-fold impact.

THE CONCERN OF LIMITING INTERNATIONAL TRAVELING

The first one is limiting international travelers. Recently, the Trump administration announced a full travel ban on 12 countries, with another seven getting partial restrictions.

"The tightening up of the borders and the rules about immigration and so forth have created some challenge [for] people who want to come here for either business or tourism, because they can't obtain visas generally, or in a timely manner," Ben-Ari said.

DEPORTATIONS COULD CAUSE STAFF SHORTAGES

Then there's also deportations, which the Trump administration has been ramping up on, and the impact that could have on labor. According to Ben-Ari, hotels rely heavily on cleaning services — roles commonly filled by undocumented immigrants. Plus, other key components of hospitality, including travel arrangement and food and beverage services, could face challenges, he added.

Ben-Ari thinks that New York City will see a lesser impact from potential staff shortages because a large concentration of its hotels are unionized. However, some outside The Big Apple could struggle.

"Certainly for hotels outside of New York City and other businesses that are in rural areas, that may be a bigger concern for a longer period, until the system figures out how to get them the labor they need," Ben-Ari explained.

So we'll have to see what the near term holds. But as of now, Ben-Ari generally describes the transactional side of hospitality as "lucrative."

Overall, Ben-Ari expects to see "a bigger influx" of international travelers. We'll just have to see how much the immigration crackdown weighs on it and how domestic spending will impact tourism going forward.

Source: GlobeSt/ALM