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Tourism industry could take an $18 billion hit from travel ban, researcher says

Key Points
  • The travel ban and strict security could cost the tourism industry $18 billion over the next few years, says Reza Marashi, National Iranian American Council research director.
  • Patrick Surry, chief data scientist at Hopper, argues that not enough security measures are in place, causing a hit to the industry because flyers fear for their safety.
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The revised travel ban could cause a hit to the tourism industry upwards of $18 billion over the next few years, Reza Marashi, National Iranian American Council research director, said in an interview on CNBC's "Squawk on the Street."

Marashi said the U.S. government must balance its national security concerns with the economic and humanitarian costs of the travel ban. After 9/11, the tourism industry took a $600 billion hit, and after the travel ban the industry will take another hit, he said.

The revised travel ban went into effect Thursday night and covers Iran, Libya, Somalia, Sudan, Syria and Yemen. However, people with "close" family ties can enter the country: A parent, child, spouse, fiance(e), son-in-law, daughter-in-law or sibling.

While Marashi argued that too many security measures keep flyers away, Patrick Surry, chief data scientist at Hopper, argued that flyers are kept away by too few security measures, because they are concerned about terrorism.

"We have already seen a pretty significant shift in terms of where Americans are looking to fly, a shift away from national destinations and more towards domestic ones," said Surry in an interview with "Squawk on the Street."

"I think [this shift] is driven by these kinds of concerns about security risks, bad publicity that you're hearing from places all around the world with these kinds of terrorism incidents and so forth," he said.

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Surry also added that a wider laptop ban could cause travelers to consider vacationing elsewhere or attend international business meetings via Skype rather than in person.

To avoid the costs associated with the ban, Marashi had three pieces of advice for the government: better explain the reasoning behind the ban and why certain countries are included while others are not, explain why previous administrations never took these drastic steps, and minimize the economic hits to the U.S. and other countries.

"We have to ... challenge the administration to explain why a handful of countries, Saudi Arabia and UAE, are not on the list," said Marashi. "It's a haphazard application of a particular rule and until the details are flushed out, it might be a bridge too far to take the steps when a variety of other measures have been in place since 9/11."

Airline stocks have yet to take a hit from the travel ban. Southwest Airlines is trading at $62.44 a share, the highest it has traded at to date. American Airlines is trading at $50.74, up from its $40 readings in April. And Delta Air Lines is trading at $54.13, up from $45 in April.

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