The stellar growth in Chinese expenditure on outbound travel and the strength of the US dollar for Americans seeking FX-related travel destinations are key findings in the latest Economic Impact Report by the World Travel & Tourism Council (WTTC).
Chinese expenditure on outbound travel has grown by a stellar 53% in 2015, contributing to the overall growth in global international spending on travel and tourism, finds the WTTC report. Long-haul destinations Europe and Oceania saw the most favourable impact of Chinese travellers’ total expenditure, which reached $215bn (€189bn) in 2015.
‘Chinese outbound tourism is growing like crazy,’ David Scowsill, president and chief executive officer of the WTTC, told the Financial Times. Scowsill noted Europe has noticeably benefited from the strong numbers of Chinese visitors: ‘Major destinations like the UK and Germany, alongside emerging destinations like Iceland, are profiting from strong Chinese outbound trends.’
However severe declines were seen Macau, Hong Kong and Taiwan, due to ‘local factors’, according the report. Japan was the exception in the region, where a ‘mini-boom’ in tourism visitor exports, notably the Chinese, contributed to a 49% year-on-year increase.
Travel to outperform GDP
Globally, in 2015 the travel and tourism sector contributed $7.2 trillion (€6.3 trillion) to world GDP, representing 9.8% of global GDP, while the sector as a whole grew by 3.7%, the sixth year of positive growth. WTTC forecasts the sector’s contribution to GDP will grow by 3.3% in 2016. The growth trajectory is on track to continue throughout the next decade, growing by an expected 4% on average each year.
FX rates key for countries pegged to US$
FX rates are a key influencer for travel trends in 2016, especially for currencies relative to the US dollar. WTTC notes the strength of the US dollar is keeping destination countries that are pegged to it relatively more expensive; as well as the US, these include Hong Kong, Saudi Arabia, Qatar and the UAE, although the international purchasing power of their residents is enhanced. Key destination markets for US travellers, in particular Europe, will continue to see bigger gains as Americans seek ‘more affordable travel options’ in 2016.
Longer term, the travel and tourism sector is forecast to grow by an average of 4% of GDP contribution per year over the next decade, continuing to outperform the global economy through to 2026. ‘The divergence in growth between economy-wide GDP and direct travel and tourism GDP is expected to widen relative to the last few years to 14%, as the components of travel and tourism GDP continue to grow more quickly than their macro economy counterparts,’ says the WTTC.
South Asia will be the fastest growing sub-region for total travel and tourism GDP long-term growth through to 2026 with 7.1% growth. India is the country to watch here, as it starts to overtake China, with 7.5% and 7% growth respectively predicted over the forecast period. The next tier of sub-regions with growth of between 4-6% includes Southeast Asia (5.8%), Northeast Asia (5.6%) and North Africa (4.2%). Regions falling below the global average of 4% growth per year include Latin America (3.7%), the Caribbean (3.4%) and Europe (2.8%).
With 7% growth annually over the next decade, China will outstrip global growth of 4% and overtake the US by 2026.
China, the US, Germany and the UK will remain the top four markets for outbound travel and tourism spending to 2026. Meanwhile the industry is watching India, Indonesia and Singapore, which will make noticeable moves up the global league table for outbound spending.
Global Blue takeouts:
• Chinese expenditure on outbound travel has grown by a stellar 53% in 2015.
• Chinese travellers contributed to a ‘mini-boom’ in Japan, where tourism visitor exports were up 49% year-on-year.
• FX rates are a key influencer for travel trends in 2016, especially for currencies relative to the US dollar, where overseas trips are less expensive than travelling at home.