Tourist markets and visitor expectations in flux

Tourist markets and visitor expectations in flux

by Pininvest Analysis

Global Tourism - an Asian Pivot on

  • 23 constituents
  • -17.0% 1y performance
  • 66.6% volatility
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In the advanced markets, much is made of the newly empowered middle class from developing countries, especially in China and India, willing to visit on long-haul travel, but the above average growth trends of visitors to these traditional – often European – destinations obscures changing priorities

Europe still accounts for 50% of tourist arrivals but the share of the continent was 60% 25 years ago; on average, tourism expanded globally at 4.2% a year and only at 3.6% for European destinations over the period, according to an September 2016 European Travel Commission report

sce Tourism Economics - European Travel Commission - Aug'17
sce Tourism Economics - European Travel Commission - Sept'16

Geopolitical forces and exchange rates may cause wide yearly variations as has been the case in Southern and Mediterranean Europe (growing at an exceptional 13% in 2017) but the global trends are unmistakable with arrivals in emerging markets projected over the long term – 2010 / 2030 – at twice the growth rate of advanced economies (+4.4% vs. 2.2% a year)

Europe maintains its dominant position for now (with 617m arrivals in 2017) but Asia Pacific has grown 5-fold since 1990 to reach 327 m arrivals (growing by + 6% in 2017); as ever larger numbers can afford short-haul and short-term visits across the region, Asia is gearing up to become the first – or close second – tourist destination globally

With travel becoming more affordable for a large base of more affluent visitors in Asia, demographics may well boost the trend even further… In China alone, the UN estimates the population of elderly will double to 20% in just 20 years to 2037 (in Germany it took 61 years…) and mind-boggling numbers – 100 million over 65 in 2005 and approx. 330 million in 2050

Although it is not unreasonable to assume that many Asian persons, getting older and also more affluent, will consider long-haul travel maybe once, short trips in the larger Asia Pacific region will probably continue to be favored many times over

In a sense, the 2 leading contenders in global tourism, Europe and Asia-Pacific, are like mirror images

  • Europe having built a strong lead with short-haul intra-region travel (85% of total) looks to expand its long distance visitor base
  • Asia, powering ahead on a seemingly inexhaustible demand of short-haul tourists, may anticipate demand for long distance travel but it remains a second-order priority today

Because these global trends can be ascertained fairly confidently, the medium-term strategies of the major industry players – hotel chains, cruise ship companies, packaged accommodation providers – can also be assessed in the context of this potential growth and related national and – in many cases – environmental constraints

Front running the growth trends in Asia, cruise ship companies are enjoying a clear advantage with the flexibility to access the most promising markets, without weighing on local hotel accommodations and in tune with projected demographics of aging populations

sce - Asia Cruise Trends 2017 Edition CLIA
sce - Asia Cruise Trends 2017 Edition CLIA

This is why this segment of the tourism industry is of special interest and the numbers speak of untapped, and still inexhaustible growth

The absolute volume of cruise travelers sourced from Asia quadrupled between 2012 and 2016 – to nearly 3.1 m – an annual growth rate of 41% - of which 2.1 m from China

As the main driver, China’s annual growth is 76% since 2012 – with Japan, Taiwan and India all within a 25% growth range – and as expected, almost all Asian cruises stay within the region in short sailings (94% in 2016)
2017 growth was projected at 4.3m passengers (+38% over 2016) as of the 2017 edition of Asian Cruises (by Cruise Lines International Association)

While none of these data will surprise, the growth acceleration is astounding, bringing the Asian market within striking distance of the Caribbean, today 3.5 times the Asia cruise market, within striking distance in less than 5 years