First off Laowai (老外) is not a good term. I have heard many Chinesesay that lao (老) is respectful, and sometimes it does, laopengyou (老朋友) or when used before the family name. But sometimes it's not respectful like in laotou (老头) forexample. So Lao is not always good or bad, laowai is the same. Some people use it in a way that sounds respectful, but I've had many times in China where people have used it in a very negative way as well. This is the main reason I would suggest we shouldn't use the word Laowai anymore.
Another good reason is that it is a word that tries to divide the whole world into China VS The World which doesn't help with making people feel welcome and will make some people upset as in English the word "Foreigner" is not a good word to call people.
Waiguoren (外国人) is a much better term to use usually as it's more of the proper formal term and I don't know anyone who dislikes it. Though it's actually much much better to not use either term. Calling people by their name or describing them by clothes, height, weight etc, is usually considered a much better way than just saying foreigner.