Asia Pacific Tourism Revenues set to soar to us 4.6 Trillion by 2010
SINGAPORE, March 19, 2008 - The Pacific Asia Travel Association (PATA) is forecasting robust growth for travel and tourism in the Asia Pacific region, with tourism revenues to top US$4.6 trillion and visitor arrivals to reach close to 500 million by the end of 2010.
These remarkable figures headline PATA's newly-published Asia Pacific Tourism Forecasts 2008-2010, officially launched in Singapore today in partnership with the Singapore Tourism Board.
Despite regional stock market volatility and uncertainty over local impacts of a possible US recession, the PATA Forecasts predict robust average annual growth rates of between 7 and 8%.
PATA Director, Strategic Intelligence Centre, John Koldowski, explains that as much as two-thirds of all international arrivals into Asia Pacific are generated from within the region.
“Due to the global nature of business, Asian markets will inevitably be impacted by a slowdown in the US economy triggered by the credit crunch. However, the medium-term outlook for most Asian economies is very strong with growth rates well above world averages," he says.
Mr Koldowski notes that localised issues and conflicts, including political and civil disruption in some markets, could pose a greater threat to tourism growth.
The 40 Asia Pacific destinations covered by the Forecasts account for close to 98% of all international arrivals measured and tracked across the Asia Pacific region in a given year making them a compelling measure of total activity across the wider Asia Pacific region as defined by PATA.
Highlights of the Forecasts include:
1. Strong outbound growth - in volume - from China (PRC), Korea, Singapore and the US;
2. Strong outbound growth - in percentage terms - from Gulf markets (including Bahrain and Oman) and Greater Mekong region markets (including Myanmar, Lao PDR and Vietnam);
3. Fiji and Nepal are showing extremely positive trends after periods of political uncertainty;
4. Asia to dominate growth: by 2010 Asia will receive the same number of international visitors as the whole Asia Pacific region did in 2006.
Produced by PATA's Strategic Intelligence Centre (SIC), the annual forecasts have become the bedrock for future planning by thousands of travel and tourism operators, national tourism organisations and airlines.
“These Forecasts are the bedrock of the information that PATA provides members and partners in the travel and tourism industry. They are indispensable for anyone from the tiniest spa in Bhutan to a global airline or national tourism organization," said Mr John Koldowski, Director of the SIC.
“The forecasts have proven highly accurate, with the 2007 forecasts falling within 3% of the actual at the time of publishing the new edition," he added.
Created using the very latest forecasting models by respected academics and industry experts - Professor Lindsay Turner of Victoria University and Professor Stephen Witt from the Hong Kong Polytechnic University — the PATA Forecasts are geared for use by everyone in travel and tourism. The intelligence contained is structured to be of daily, practical and demonstrable value to everyone whose business is travel and tourism.
Singapore Tourism Board's Mr. Soo Siew Keong, Director of International Relations, said PATA's Forecasts were very much in line with the country's stated Tourism 2015 goals of S$30 billion in tourism receipts and 17 million visitor arrivals.
“With numerous new attractions and exciting events coming on stream in Singapore over the next years, we remain on track to achieve our tourism objectives. In this regard, PATA's Forecasts are useful as they offer valuable insights by which we can plan and strategize for future growth", said Mr. Soo.
The Pacific Asia Travel Association (PATA) is a membership association acting as a catalyst for the responsible development of the Asia Pacific travel and tourism industry. In partnership with PATA's private- and public-sector members, it enhances the sustainable growth, value and quality of travel and tourism to, from and within the region.
PATA provides leadership to the collective efforts of nearly 100 government, state and city tourism bodies, more than 55 international airlines and cruise lines, and hundreds of travel industry companies. In addition, thousands of travel professionals belong to more than 30 PATA chapters worldwide.
PATA's Strategic Intelligence Centre (SIC) offers unrivalled data and insights, including Asia Pacific inbound and outbound statistics, analyses and forecasts, as well as in-depth reports on strategic tourism markets.
For more information, please visit www.PATA.org.
ABOUT SINGAPORE TOURISM BOARD
The Singapore Tourism Board (STB) is an economic development agency for one of Singapore's key service sectors - tourism. The mission of the Board is to develop and champion tourism, so as to build the sector into a key driver of economic growth for Singapore. The STB aims to differentiate and market Singapore as a must-visit destination offering enriching experiences through the “Uniquely Singapore" brand.
For more information, please visit www.stb.com.sg.
Please see page 4, 'Detailed Backgrounder,' for in-depth findings.
Knowledge is power
Created using the very latest forecasting models by respected academics and industry experts - Professor Lindsay Turner of Victoria University and Professor Stephen Witt from Hong Kong Polytechnic University — the PATA Forecasts are geared for use by planners and decision-makers at all levels of travel and tourism.
“Knowledge is power," says Mr Koldowski. “These Forecasts are the bedrock of the information that PATA provides members and partners in the travel and tourism industry. They deliver value across the spectrum: from the manager of an exclusive spa in Bhutan to planners of global airlines and national tourism offices."
Importantly, PATA Forecasts have proven to be remarkably accurate. “In 2007, for instance, our forecasts were within 3.3% of the actual recorded travel flows. And this high level of accuracy has been a consistent feature of our work over many years."
Mr Koldowski further explains that the past five years' Forecasts had been particularly valuable in anticipating the turning points of a particular destination's fortunes, both up and down.
“This is particularly effective when recovering from a negative growth cycle triggered by some external force(s) but impacting significantly on travel demand; the predicted turning point can be brought forward in time by specific targeted activities to hasten the recovery process," he says.
Commenting on the latest Forecasts, PATA President and CEO Mr Peter de Jong says they have become a “mainstay of PATA's service, not only to our members, but to the greater travel and tourism sector."
“For hundreds of thought-leaders, entrepreneurs and travel operators across Asia Pacific and beyond, the PATA Asia Pacific Tourism Forecasts have become the touchstone for future planning.
“Knowing where the growth will be, understanding why and translating that knowledge into real business action through the deployment of resources gives the holder of these Forecasts a unique advantage," Mr de Jong adds.
In the pursuit of accuracy the authors have taken into account a number of key factors that influence the forecast data, including: air liberalisation, aircraft deliveries, political events and trends, headline events such as the 2008 Olympics and new accommodation coming on stream.
“For example, the Olympics in China this year and the 2010 World Expo in Shanghai will have a profound influence on arrivals during the forecast period. In addition to the actual surges around the events, the overall international profile of the Chinese destinations will contribute to strong volume growth in the years to come," says Mr Koldowski.
He pointed to the growing influence of air liberalisation, across the region.
“With increasing liberalisation, the introduction of new air freedoms and bilateral agreements, aviation will be in a much better position to do its job, which is getting people to places. Aircraft deliveries and the introduction of new models such as the high-capacity Airbus A380 and the super-efficient Boeing 787 Dreamliner will also help the industry keep pace with demand," he says.
Hotel and resort development across the region is also moving forward rapidly. According to a Lodging Econometrics report last year there are more than 1,200 hotels in the construction pipeline in Asia Pacific alone and these, collectively, will add almost 367,000 rooms to the existing stock when they come on line.
“The huge new casino projects in Macau SAR, the development of the Integrated Resorts in Singapore and widespread hotel construction throughout China and India are just some of the influencers contributing to future travel and tourism growth," Mr Koldowski comments.
Weathering the storm
Mr Koldowski cautions that it is not all good news across the region. Perhaps the most pressing concern is the unfolding financial crisis in the US and how that may affect the region. While America might not necessarily fall into a full-blown recession, any downturn will ripple through many interconnected economies, including that of regional powerhouse China.
The weak US dollar is not helping either, making both exports and our tourism products relatively more expensive.
“But perhaps the bigger concerns relate to other factors such as political and social unrest which can have a dramatic impact on tourism flows and we have a number of those situations simmering across the region at the moment," he says.
“While many of these issues are beyond the control of travel and tourism leaders, we have proven to be a remarkably resilient industry and tourism can play an important role in the healing process and helping destinations recover from crises."
He cites the recovery across Asia Pacific following the SARS outbreak and the revitalisation of the areas affected by the December 2004 Tsunami as examples of how unforeseen events have forced the industry to react and recover quickly through unified efforts.
“Obviously you cannot predict every intervention event, but what you can do is learn from them and even turn them to your destination's advantage. By accepting that the size and diversity of travel and tourism means there are enormous unknown influencers, the use of accurate forecasting ensures you are maximising the information available to you that will help, literally, weather the storm," Mr Koldowski explains.
Strong inbound growth
The PATA Forecasts show that by the end of 2010 international visitor arrivals to the Asia Pacific region will have virtually doubled from the 245 million received in 2000.
“Travel and tourism demand over this will have expanded by more than 80% and be worth in excess of US$4.6 trillion. It will provide about 94.6 million jobs, making it by far the largest employer and a key contributor to the GDP of the destination countries," says Mr Koldowski.
Looking across the Asia Pacific region, Professor Turner says China and the United States are running well ahead of the curve. Malaysia remains a major hotspot for arrivals and continues to soar while the Pacific Islands are generally expected to do well through to 2010 with solid growth.
“Countries with recurring political problems such as Fiji and Nepal are climbing back, with the exception of Sri Lanka, which has dropped back severely as a result of increasing internal conflict. Even a country with the difficulties of Pakistan is growing arrivals well," he adds.
“The main disappointments are Australia, where growth is continuing to be slow, and New Zealand, which has come off an earlier outstanding performance. Both of these countries have depended heavily on Japanese outbound that is now in general decline after decades of growth and are struggling to find the right marketing and product mix to suit the new, more independent Asian traveller.
“The Maldives was slow to recover from the tsunami but is doing so now. Indonesia remains sluggish and continues to be hampered by poor press in many source markets."
He says growth to Thailand has tapered, “possibly due to political uncertainty and capital investment concerns, although this would need to be further explored".
“The Chinese destinations are booming and, while much of this is domestic in nature, there is also huge demand from international visitors, particularly with interest building for the 2008 Olympic Games. There may be small drop in growth after 2008 but not a decline in arrival numbers."
Professor Witt cautions that it has been some time since the region, and indeed the world, has felt the impact of a major shock on arrivals growth.
“Apart from record high oil prices and localised conflicts, there has been no major shock affecting tourism since the December 2004 tsunami. History has taught us that it is unwise to discount the likelihood of external shocks which can have catastrophic impacts on growth. After SARS and the tsunami, the upside is that Asia Pacific may well be better prepared to deal with them," says Professor Witt.
Asia to dominate arrivals
By 2010, the Forecasts show that Asia will increase in dominance from a 64% grab of all international arrivals to the region to just over 75% by the end of the decade.
“In fact by 2010, Asia will receive around the same number of international arrivals - in its own right - as did the whole of the Asia Pacific region in 2006," adds Mr Koldowski.
Northeast Asia dominates the growth within Asia but this is heavily influenced by the neighbouring cross-border flows between each of China, Hong Kong SAR and Macau SAR. As can be seen in the China Cross-border Flows table, this traffic generated more than 126 million arrivals in 2007 and is expected to rise to close on 173 million over the next three years.
While cross-border travellers have different needs and spending patterns compared to other international tourists, they are still represent a significant sector of our industry, posing both opportunities and challenges for our industry.
Key outbound markets
The PATA Forecasts show that by the end of 2010 international visitor arrivals to the Asia Pacific region will have virtually doubled from the 245 million received in 2000. This increase will be fuelled by growth from mega outbound markets such as China and Korea, as well as emerging destinations in the Gulf and Mekong regions.
Bahrain tops the source markets which will deliver the biggest percentage growth rate to Asia Pacific over the next three years, with an expected annual average growth rate of almost 29%.
Other Gulf destinations, such as Oman and Syria, will also record big percentage gains. “It is hardly surprising that a number of Gulf airlines are just itching to take delivery of newly ordered aircraft and increase air capacity into Asia!" comments Mr Koldowski.
Not far behind are Myanmar and Lao PDR, with arrivals from these two markets into Asia Pacific destinations expected to average 28.8% and 26.1% respectively over the period to 2010.
“Even though these high growth rates may be off relatively small bases, it still means that arrivals from these two markets alone are set to more than double from their current levels by 2010," says Mr Koldowski.
“Care needs to be interpreting these numbers, however, as such travel may be driven by need - such as seeking employment and/or near-border trading - and will thus be largely non-discretionary in nature," he adds.
>From a volume point of view, Hong Kong SAR, China and Korea top the table.
As noted previously, Hong Kong and China's large numbers are swelled by the high level of cross-border traffic between the Special Administrative Region and the mainland. However, even after cross-border travel has been discounted, China and Hong Kong are still among the region's leading suppliers of travellers.
South Korea is also a dominant outbound market. “Their numbers will jump from a base of 11.8 million visits to Asia Pacific destinations in 2006 to more than 20 million in 2010. This is a highly mobile and increasingly wealthy population," he explains.
The forecasts throw up some surprises. Despite a relatively flat total outbound market from Japan, the number of Japanese arrivals at Asia Pacific destinations is expected to increase by almost three million in 2010. “Are we looking at an increase in multi-destination travel on each overseas trip? This will be a fascinating trend to track."
One of the most exciting elements of the PATA Forecasts is the concept of destination pairing, which throws up some unexpected trends.
Origin-destination pairs to watch out for over the coming years include:
1. India, the Philippines and China (PRC) to Papua New Guinea
2. South Koreans to the Maldives and Nepal
3. Singapore, Malaysia&the Philippines to Bhutan
“As examples, all of these origin-destination pairs are expected to generate growth in excess of 30% a year to 2010. While many of these pairs have a relatively low volume, the high growth rates over the next three years suggest they are worth tracking," says Mr Koldowski.
Managing the growth
Such strong growth is mostly good news for destination marketers and operators across all sectors of the industry. It drives additional revenues, foreign exchange earnings and jobs. However, it also places a strain on infrastructure development, especially in emerging destinations. Already there are signs that the industry is struggling to recruit and train sufficient levels of skilled human resources to cope with the surging demand.
As Mr de Jong notes, the ultimate challenge for travel and tourism is manage the projected growth in a sustainable fashion. “We need to protect and preserve the region's diverse environmental and cultural heritage as well as reap the economic benefits from tourism growth," he says. “To this end, PATA will continue to focus on critical issues, such as countering the impacts of climate change, and work with industry and government alike to develop sustainable business models."
This backgrounder is an edited extract from the March-April 2008 issue of PATA Compass magazine.
The PATA Asia Pacific Tourism Forecasts 2008-2010 can be purchased for US$750 (PATA members) or US$1,500 (non-members). For more information: href="mailto:publications@PATA.org">publications@PATA.org.
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