Despite improvements since 2009, consumer confidence remains below 2007 levels. Uncertainty prevails, with the Eurozone crisis, the US fiscal cliff and China’s rising inflation – all contributing to a dip in confidence towards the end of 2012. Against this backdrop, tourism had a record year in 2012, with increased global mobility driving international arrivals of over 1 billon, coupled with expenditure of US$ 1.2 trillion. This highlights the resilience of the sector and reinforces its importance as a key contributor to GDP.
Downturns in consumer confidence have historically resulted in sharp falls in tourism arrivals, as evidenced by the 4% decline witnessed in 2009. However, this recovered within a year, rising by 6% in 2010. More recently, the industry has demonstrated continued strength with accelerating emerging economies and demographic shifts enabling the sector to rebound quickly despite the continued challenges in the global economic backdrop. Key markets in Asia, where consumer confidence is higher, have witnessed more significant tourism growth (7%) than that seen in the US (4%) and Europe (3%).
The future indicates further optimism with a 3-4% increase in tourism arrivals forecast for 2013. Demand from Europe is expected to remain strong, but the most significant growth is expected from China and India and new emerging markets, such as Vietnam and Thailand, continuing the shift towards Asia.
The importance of government work promoting the attractiveness of destinations must not be overlooked in mature and emerging economies alike. I see this as likely to remain a key trend in the future, particularly in relation to visa and aviation policy.
Forty-three destinations have eased their visa policies over the last two years. The UN World Tourism Organization suggests that improved visa processes could generate an additional US$ 206 billion in global tourism receipts by 2015. This highlights the significance of such initiatives in enabling the sector to achieve the 3-4% growth as suggested. A forecasted 5% increase in global commercial air traffic is expected to reach or surpass airport capacity over the next 20 years, reinforcing the importance of continued investment in infrastructure. This is particularly apparent in regions such as China, Asia, India and Latin America where forecast growth is higher.
The future of the tourism sector is positive. Despite a subdued consumer backdrop, travel is something that consumers appear they are not willing to forego so easily. A more buoyant market, together with continued commitment by governments to promote destinations and implement measures to reduce international boundaries, should further assist in the development of the sector in the future.
Author: Simon Oaten is Director of Travel, Hospitality & Leisure at Deloitte, with over 12 years’ experience advising and supporting international hospitality and leisure businesses.
Image: Tourists visit the Great Wall of China outside of Beijing REUTERS/Stringer (China)