2011 and beyond: What it may hold for global tourism

“The global crisis is over, at least for tourism” was the message that came out strong at the 18th Travel Monitor Forum held in Pisa, Italy in November this year, organised to unfold research carried out by the international consultancy outfit IPK.

The President and founder of this event, Rolf Freitag said:

“The international travel industry is back and now even more dynamic, and this year (2010) has underlined its role as one of the mainstays of the global economy.”

Record figures

The report and its updated findings with more emphasis on the year ahead will be presented at the next big event on the tourism calendar: the ITB, Berlin in March 2011. Among the report’s key findings were hopeful indicators for global tourism of a takeoff, based on the recovery in 2010 from the impact of the recession.

It presented new record figures for international trips and travel booms in emerging markets of India, China, Middle East, Brazil and the already-established market of Russia. Spending by international tourists is only expected to recover slowly, in comparison with the growth in the volume of travel. It is also noted that that the traditional generating markets of Europe and North America will only present sluggish growth.

In 2009, according to the IPK analysis, the total number of outbound trips fell 4%, the number of outbound room nights declined 7% and the sector’s outbound turnover dropped 9% as prices and rates tumbled.

Revenue per hotel room, for example, slumped by 26% in Asia and by 19% in Europe and North America. This was with international tourism declining with a 4.2% fall to 880 million arrivals worldwide and a 5.7% drop in spending to $ 852 billion (€ 611 billion), as the World Tourism Organisation (UNWTO) statistics showed.

Good prospects

Looking ahead to 2011, the report said that expectations for “good prospects for the world economy next year and beyond will be a major driver of growth for tourism. While the world economy is expected to have grown at 4.8% in the current year, it will be followed by growth rates of 4.2% in 2011 and 4.7% in 2012.” According to Germany’s respected IFO Institute, “The world economy is on the brink of a consolidated upswing.”

“This growth is being driven by Asia (mostly China and India) and Latin America and these Emerging regions will contribute about two thirds of world economic growth this year, while in contrast, the US GDP will grow 2.7% but slow to 1.9% in 2011” also stated the Q3, 2010 IFO forecasts.

Highs and lows

“Western Europe is improving but there are big differences from country to country,” it was noted. Germany is “a front-runner” with 3.7% GDP growth this year and a further 2.2% next year.

“I hope Germany can be a small locomotive alongside China as the big locomotive,” Dr. Gernot Nerb, IFO’s Director of Industry Research has commented. The German outbound travel market should profit “over-proportionately” from higher private consumption levels in 2011, thanks to the sustained upturn, lower unemployment and less job insecurity, he predicted. “In contrast, the UK and France might see only very low growth in 2010 and 2011,” Nerb predicted.

International tourism is now expected to increase in the 3-5% range next year, according to both IPK’s World Travel Monitor and UNWTO forecasts. IPK’s Global Travel Confidence Indicator lies at 103 points for 2011, indicating 3% to 5% growth in world outbound travel. The main drivers will be the improving world economy and low fares from budget airlines.

According to the report, safety and environmental concerns are not expected to impact significantly on this scenario and it must be noted that the impact of severe winters, closed airports and cancelled flights at the peak winter holiday season, have not yet been factored into this analysis.  Similarly, the UNWTO forecasts growth of 4-5% in international arrivals for 2011, which would put the sector back at the long-term growth rate of 4% recorded between 2000 and 2009. Air passenger volumes, according to Boeing, are likely to rise about 5% in 2011.

The European outbound market could consider 2010 as “a year of stabilisation” the report said. Short-haul travel to European destinations has been stagnating while long-haul travel was growing well at 5%. This is reflected in a 2% drop in car-based travel but a 2% rise in air travel. Water-based travel is continuing to boom with a 10% rise for cruise and other ships.

Shorter trips

At the same time, Europeans are taking shorter trips with the average length of stay declining 7% to 8 nights, with a 10% rise in the number of short trips (one to three nights). In parallel, Europeans are spending less on their holidays with spending per trip dropping 4% to € 874. Total travel spending by Europeans will thus be lower in 2010 than in 2009.

The European Travel Monitor also reported wide variations in terms of major outbound markets The British market is trailing badly with a 6% decline and Germany is stagnating with 0% growth. France, Spain and Italy have low growth of 2- 4% but the Nordic markets are stronger with 5-8% growth. Destination winners with growth of over 8% from Europe include Germany, Netherlands, Egypt and China but countries with stagnant or lower European visitor numbers include the UK, Spain, Greece and the USA, reflecting this year’s uncertain market.

According to the report, “Late bookings soared this year, with a 25% increase in bookings made less than one week before departure. The number of Europeans booking travel on the internet rose 17% and is now approaching the 50% level.”

The European Travel Monitor Trend Survey 1-8/2010 is done based on 100,000 representative interviews, covering 12 major markets that represent 65% of European outbound travel.

Most dynamic region

“Asia was the most dynamic region for world tourism in 2010,” according to the Asian Travel Monitor, which covers eight major outbound markets in the region. “The region’s own outbound travel is increasing at double-digit rates and will even end the year well ahead of the (pre recession) 2008 levels. The region’s destinations are also smiling with good growth rates this year, and the overall outlook for 2011 is very optimistic. With a new all-time high for outbound travel in 2010, Asia Pacific is demonstrating this year, that it is one of the engines driving world tourism forwards. At present Asia only accounts for 18% of world outbound tourism, compared to 59% for Europe but is already ahead of the Americas (17%),” it added.

The booming outbound Asian markets this year are China, South Korea and Malaysia, which are all increasing at more than 20%, while outbound travel from Taiwan, Japan, Singapore and India are also growing at double-digit rates. Japan is the largest Asian source market with 17.5 million trips in 2009, followed by China with 13.1 million trips (excluding Chinese travel to Hong Kong and Macao), South Korea and Taiwan. Asians stay mostly within the region, in choice of destinations.

Around 76% of Asian trips are to countries within the region, while only 13% are to Europe and 10% to the Americas. China is the most popular destination for Asians, well ahead of Thailand, Malaysia, South Korea and Japan.

Asia will increase its market share as a destination this year, with a 17% growth rate, but the Americas (+20%) are also proving popular for Asians this year. European inbound from Asia is growing at a more modest 8% and should reach 10.4 million trips by Asians this year with two thirds of them being for holidays.

China has grown to match Japan as the main Asian source market for Europe, at 3.1 million trips, well ahead World Travel Trends Report 2010/2011 of India (0.9m) and S. Korea (0.8m).

Incredible growth

“Asia has bounced back faster than our expectations,” declared Adam Sacks, Managing Director of Tourism Economics. “There are incredible growth rates that are far exceeding the losses of 2009.”

IntraAsian travel is the driving force, up 16% in the first half-year, which was even an 8% rise on 2008. Long-haul travel to the region is recovering only modestly, however. Asia Pacific is currently expected to close the year with a 9-11% rise in international arrivals, the UNWTO predicts.

The report states that all sub-regions within Asia Pacific are recovering strongly this year and according to UNWTO figures, North East Asia welcomed 16% more international tourists over the first eight months of this year, which was 9% more than in 2008. Japan, Taiwan and Hong Kong are leading the way with growth of more than 20% but mainland China has a relatively modest 5% rise, according to PATA statistics.

South-East Asia is growing 13.1% with Vietnam up by a dramatic 36%, followed by Singapore, with a very healthy +22%, UNWTO figures show. The sub-region’s 13% growth over the first eight months also corresponds to 7% growth in the same period in 2008.

South Asia was up 14.3%, with Sri Lanka (+44%) and the Maldives (+20%) impressively making up for past losses. The sub-region saw a 14% rise over the first eight months of this year which amounted to a 7% increase on 2008 volumes, UNWTO said.

All about China

Travel to and from China had been a major topic at the Pisa meeting. The country will play a decisive role in the world tourism industry in future, according to Professor Haiyan Song, Chair Professor of Tourism at the Hong Kong Polytechnic University.  “China’s emergence as the new superpower will define the global economy as well as world tourism over the next 20 years,” he reportedly told Pisa participants. By 2030, the country would become the world’s largest economy, roughly the size of the USA and Europe combined, he predicted.

From a destination perspective, China is forecast to grow from 130 million international arrivals in 2009 to nearly 188 million in 2015. This would give the country a 50% share of the inbound market to Asia Pacific. “China will become the largest tourist destination in the world after 2015,” Professor Song declared.

As a source market, the number of Chinese taking foreign trips could grow to 79 million by 2015, possibly outstripping Germany as the top outbound travel market worldwide. At present about 91% of Chinese tourists visit destinations in Asia Pacific. However, they will start to travel further in the future, he had predicted.

Dancing the samba

It was revealed that on the other side of the world, a less-noticed boom is also taking place. “Brazilians, boosted by years of good economic growth and a strong currency, are also starting to travel much more, both within their own country and abroad” it was reported.

The number of outbound trips by Brazilians has soared to 26% this year, with further strong growth expected in 2011 as well. For language reasons many first time Brazilians prefer to travel in groups and also have high levels of spending, especially for shopping.

New long-haul flights, such as by Emirates, and the merger of TAM and LAN into South America’s leading airline LATAM, would support this growth in the future, predicted Jeanine Pires, former Embratur President and now head of the Government’s Olympics 2016 organisation.

Focus on Lohas

We in Sri Lanka can look at these trends with a dual focus. First, will be to identify the potential we have to attract the right type of traveller/tourists we desire and the other, to design our products and services to meet the demands of that potential, which may now somewhat defer from the conventional type of tourism we catered to in the past. Here, the Pisa meeting and the IPK report provided valuable input on the profile of the new tourist we perhaps need to look at, given the unique value pull Sri Lanka could have as a destination. ‘Lohas’ is an acronym for a new social phenomenon that has emerged over the last decade or so and that is increasingly recognised as a major consumer movement.

Officially standing for “lifestyles of health and sustainability,” the catchy abbreviation has also come to refer to the people themselves. According to the US website Lohas.com, the term refers broadly to consumers interested in goods and services “focused on health, the environment, social justice, personal justice and sustainable living”.

Essentially, these are people who live and consume in an informed, aware and ethical manner, especially with regard to their own health and fitness, and to social and environmental issues. They are also interested in spirituality and new technologies.

Not greenies

According to the report, the term thus covers diverse sub-groups who have these attitudes in common (and therefore cannot simply be abbreviated to “green consumers”). “Lohas are a lifestyle phenomenon discussed as the new premium target group in tourism,” explained Katja Neller, Senior Consultant with German research company and direct marketing full service provider in data and analytics, Schober Group.

“They think global, are very mobile and open-minded. They are looking for a type of tourism that is ecologically sustainable and meets their standards of ethics and social justice.” But they are also critical consumers, especially of ‘green-washing’ marketing strategies.

Estimates of the number of Lohas in Western countries vary widely, with surveys reporting figures of anything from 5% to 30% of the adult population. In the USA, where the term is longest established, the number of LOHAS consumers is estimated at 19% of the adult population, or 41 million people. The US market for Lohas goods and services is put at $209 billion (Source: The Natural Marketing Institute, 2008), including a large ‘eco-tourism’ market estimated at $42 billion.)

Year 2011 and beyond points to growth in global tourism, but of a different kind to what we are accustomed to in the past. There are many lessons to learn from the data and information the IPK Travel Monitor report and the Pisa meeting had generated.  We need to look at them as indicators and place them in context amidst the rest of the challenges we face for tourism such as potential regional conflicts, terrorism, global warming, pandemics, the widening gap between haves and have-nots and access to resource ownership.

 (Renton de Alwis is a former Chairman of Sri Lanka Tourism serving two terms during 2000-2002 and again from 2007-2008. He served as Head of the Asia Division of the Pacific Asia Travel Association(PATA) based in Singapore from 1990-96 and as CEO of the National Association of Travel Agents Singapore from 1997-99. He also served as a Chief Technical Advisor and consultant with the ADB, UNDP, UNWTO, ESCAP, UNICEF and the ILO. Now in retirement, Renton lives away from Colombo in the Deep South of Sri Lanka and is involved in writing and social activism. He can be contacted at [email protected].)