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Travel and Tourism Industry Trends

Travel and tourism industry trendsTravel and tourism industry trends can be summed up in one statement – the travel and tourism industry is characterized by rapid and radical transformations that are not expected to end any time soon.  These transformations have been driven by travelers (who are themselves changing) and facilitated by technology (which is also transforming at a fast pace).  

Travel and Tourism is Largest Industry in the World

Tourism has been one of the most remarkable economic and social phenomena of the last century. The travel and tourism industry is now the world’s largest industry.  Travel and tourism contributes US $7.17 trillion to the global economy, according to the World Travel and Tourism Council.  All indications suggest that it will keep this position in the decades to come.

The tourism industry has been marked by rapid and almost continuous expansion. Every year, more and more people travel and the trend is set to continue. From a mere 25 million travellers in 1950 to 1.2 billion in 2015 tourism is growing apace. The compounded average annual growth rate (CAGR) between 1950 and 2015 was 6.1%, representing one of the fastest and consistently growing industries. However, this rate of growth slowed in recent years to a compounded average annual growth rate of 4.7% between 2010 and 2015, indicating a maturing industry. However, the new emerging markets, particularly China, have been giving the industry a boost. China now represents the largest source market, in terms of volume, with over 120 million outbound travellers, outcompeting the likes of the USA, Germany and the UK.

International tourist arrivals grew by 4.4% in 2015 over 2014 to reach an all-time high of 1.2 billion, according to the World Tourism Organisation. Some 50 million more tourists (overnight visitors) travelled to international destinations around the world in 2015 compared to 2014. The year 2015 marks the 6th consecutive year of above-average growth, with international arrivals increasing by 4% or more every year since the global recession crisis which ended in 2010.

Global Tourism Arrivals 1950-2015

Global travel and tourism industry growth

Source: United Nations World Tourism Organisation, 2016

 

A Resilient Industry

The travel and tourism industry is resilient. Over the period 1970 – 2008 there were only two recorded declines in international tourism – a 0.4% decrease that occurred in 1982 and a 0.92% decrease in 2001 as a consequence of the September 11th terrorist attacks in the US. The year 1982 was influenced by an adverse economic climate and travel restrictions in Central and Eastern Europe that arose as a result of the declaration of the state of siege in Poland.

In the 1990s there were two major armed conflicts – the Gulf War in 1991 and the Kosovo conflict in 1999. These triggered a significant slowdown in the growth of tourism. However, there was not a fall off in total arrivals. In each case, the subsequent years showed remarkable recovery – an 8.3% increase in arrivals in 1992 and a 7.4% increase in 2000.

Of course, there were significant fall outs in the travel and tourism industry because of the global recession of 2008-2009.  However, in less than two years (by 2010), the travel and tourism industry recovered from the global recession moving from a slumped position of 880 million arrivals in 2009 (compared to 919 in 2008) to an improved position of 939 million arrivals in 2010. The additional 59 million arrivals over 2009 represented an increase of 6.7%.

According to the UNWTO, tourism arrivals is expected to reach 1.8 billion by 2030 pointing to stable, long-term compounded average annual growth rate of 2.8% between 2015 and 2030.

Implications of Global Tourism Trends

Travel and tourism industry trends - allmarketanalytics.comThe growth of the travel and tourism industry from 25 million in 1950 to a forecasted 1.8 billion in 2030 represents an average growth rate of 5.5% over the 1950-2030 period. The industry is growing rapidly and is being transformed radically. On the demand side, the transformation process has been driven by the consumer who is in control of how this transformation is taking place, according to the Paradigm Shift in Travel and Tourism, Tourism Intelligence International. Consumers today are more knowledgeable, sophisticated, demanding and experienced. And they are in the driver’s seat. Supply side transformation determinants are lead by the significant advancements in information technology (IT). In additions there are a number of framed conditions to consider, these include natural and man-induced disasters, pursuits of more sustainable forms of tourism, climate change, war, terrorism, global economic recession, volatile oil prices and growing competition. This rapid and radical transformation has given way to a new paradigm.

If suppliers are not able to keep up with the travel and tourism industry trends they will get left by the way side. 

In this new paradigm the consumers (travelers) are in control.  They are more knowledgeable, connected, sophisticated, experienced and demanding.  They have information, choices and purchasing power literally at their finger tips.  And technology is facilitating the rise to power of the consumers.  With the dawn of technological advancements such as the Internet and credit cards, customers are no longer price takers.  They are prices setters as well as trend setters.  But while technology is empowering the consumers, it is also giving suppliers greater ability to surgically deliver exceptional and targeted service to their clients.  If suppliers are not able to keep up with the travel and tourism industry trends they will get left by the way side.

6 thoughts on “Travel and Tourism Industry Trends

  1. It really is an amazing growth rate when you consider all the turmoil in the world. It obviously has not deterred people form travelling as you would think watching the daily news reports. That is refreshing to hear because it’s important for us all to keep on living and travelling. It really is a resilient industry. Thanks for this.

    1. What I’ve found Peter is that people simply change their travel patterns. After 9/11 for example, Arabs felt uncomfortable travelling to the West, particularly to the US. The Arabs felt more comfortable traveling closer to home and to destinations they feel comfortable being themselves. That was the dawn of destinations such as Dubai. So travel is here to stay. How it will morph in the future is anybody’s guess.

  2. Hi Kevon,
    This is interesting, and heartening. I’m glad to see that there exists a rich appetite to explore other parts of the world and it’s my hope that we’re only seeing the tip of the iceberg in that regard. It seems to me it can only help us as a society to be exposed to other places, people and cultures.
    Now, I hadn’t though about it from the supplier perspective. Interesting. The consumer paradigm is true of many (most?) industries anymore, in my view, and many companies are not seeing this, or are choosing not to accept it. They do so at their own peril! On the flip side … opportunity is everywhere for those who seek it.
    I enjoyed your article. Keep up the great work.
    Best wishes,
    Kevin

    1. You are totally right Kevin, this is just the tip of the iceberg. Consider that only around 20% of Americans own a passport so that’s a traveling population of approximately 62-70 million persons. That means that 240 or more million Americans are yet to leave the confines of the United States. This means that this a potential market that could grow in the future. Added to that is the Chinese market. Chinese are travelling more than ever before and at 1.3 billion travel from China will not stop growing anytime soon.

  3. This is a very thorough article backed with a lot of stats. I agree with what you said. This also led me to think about AirBnb. They just got a new financing. In total, they’ve got around 1 billion dollar financing over the years.

    Together with the prosper of the travel industry, I am pretty confident about their future. What do you think of AirBnb and its relationship with the travel and tourism industry?

    1. Thanks for your comment Jerry. Airbnb has completely revolutionised and ‘disrupted’ the travel and tourism industry. Imagine, Airbnb is the largest accommodation provider in the world and they do not own or manage a single hotel. Now that’s turning the entire industry on its head. One of the critical concerns though is quality standards. However, I believe that with time and with sites such as TripAdvosor, peer-to-peer and customer-to-business reviews will help uproot the weeds.

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