Travel and tourism to ride out ‘cyclical downturn’ – WTTC

The global travel and tourism industry is expected to generate almost $8 trillion this year, rising to around $15 trillion over the next 10 years.

The prediction comes in the latest Tourism Satellite Accounting research issued by the World Travel & Tourism Council and Accenture.

There will be a “moderate impact” on the industry as a result of the global economic downturn, with the annual growth rate seeing a slowdown in 2008 to 3%, in comparison to 3.9% in 2007.

Looking beyond what WTTC described as the “present cyclical downturn”, long-term forecasts point to a “mature but steady phase of growth” between 2009 and 2018, averaging a growth rate of 4.4% a year.

This will support 297 million jobs and 10.5% of global GDP by 2018, according to the forecast.

Africa, Asia Pacific and the Middle East are experiencing higher growth rates than the world average, at 5.9%, 5.7% and 5.2% respectively, while the mature markets, most notably the Americas and Europe, are falling below the world average with a growth at 2.1% and 2.3 % respectively.

The overall impact of the slowdown for mature markets is expected to be offset by the strength of the emerging markets.

John Walker, chairman of Oxford Economics, said: “In particular, China, India and other emerging markets are still growing rapidly, which will increase both business and leisure travel, while many countries in the Middle East are undertaking massive tourism-related investment programmes.”

Even in countries where economic growth slows, there is likely to be a switch from international to domestic travel rather than a contraction in demand for travel and tourism, according to the WTTC.

President Jean-Claude Baumgarten said: “Challenges come from the US slowdown and the weak dollar, higher fuel costs and concerns about climate change.

“However, the continued strong expansion in emerging countries – both as tourism destinations and as an increasing source of international visitors – means that the industry’s prospects remain bright into the medium term.”

Among the 176 countries covered in the TSA research, the US continues to maintain pole position as the largest travel and tourism economy with its total demand accounting for more than $1,747 billion this year.

With a growth rate at 1.1% in 2008 the credit crunch is leading to a “marked slowdown” in US economic growth and is likely to restrict the business travel of those working in financial markets.

China will jump from fourth to second position above Japan and Germany this year and is forecast to increase its travel and tourism demand four-fold by 2018, accounting for $2,465 billion, with an annual growth rate of 8.9%. Among the fastest growers in 2008, Macau leads with growth rate at 22%.

Alex Christou, senior executive of Accenture’s Transportation & Travel Services, said: “High performance companies will differentiate themselves by being highly focused on their individual customers. The winners will be companies that take a balanced view, driving customer intimacy and product innovation while driving non-value added costs out of their operations.”

by Phil Davies