By: Edwin Fuller
Founder and President of Laguna Strategic Advisors
The day has long past when travel and tourism could simply be relegated to a series of images of folks living the “high life” on fat expense accounts, romantic couples celebrating their first weeks of marital bliss on honeymoons in exotic places, iconic picture postcards depicting some of the world’s “must see” attractions or of families reconnecting during long-planned reunions, whether far from home or near.
Today’s travel and tourism industry has grown into a global economic powerhouse whose combined direct and indirect impact on the world economy, according to the World Travel & Tourism Council (WTTC), in 2012 was US$1.2 trillion; 260 million jobs; US$70 billion in investment and US$1.2 trillion in exports. All this represented 9% of the world economy last year; one in 11 jobs globally; 5% of its economic investment and 5% of its exports. Along the way, in 2012, international tourism surpassed 1 billion visitors globally for the first time in history and China became the world’s largest spender in international tourism by spending US$102 billion, surpassing Germany and the US.
While year-end figures for 2013 are not yet available, the industry is projected to remain strong this year despite ongoing challenging economic conditions. Better still, travel and tourism’s contribution to the world’s GDP over the next 10 years is set to grow by 4.4% on average each year and to outpace the growth of the wider economy and other industries such as retail and public services.
But numbers alone don’t tell the whole story and they are not the only reason we should pay a lot of attention to this industry. A number of factors are fueling not only the industry’s phenomenal expansion but also its impact as a growing cultural and economic force for good around the world. In the process, these forces are transforming the industry’s dynamics as we once knew them.
First, a dramatic shift is underway in the “world order” of travel and tourism fueled by the emergence of a strong global middle class, especially in countries like China, Russia, India and Brazil whose collective pent-up demand to see the world beyond their national borders and to experience other cultures is boundless. Over the next 15-17 years, Goldman Sachs predicts another 2 billion people will join the middle class in China alone—and these folks won’t be content to stay put if the recent past is any indication of the future.
Second, just last month, the 13th annual Dubai Air Show posted more than US$200 billion in aircraft orders that Bloomberg News noted is more than the total GDP of New Zealand. Boeing BA -0.02% and Airbus, the two biggest jet manufacturers, accounted for about $179 billion in combined sales but, as USA Today noted, smaller orders placed with Canadian manufacturer Bombardier pushed the show’s collective sales past the $200 billion mark.
The show’s success prompted UAE Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al-Maktoum to tweet “Emirates Airline signed deals worth $99 billion, whereas Etihad’s deals reached $25 billion and flydubai’s deals reached $11 billion. Our national airlines are leading a new phase in the global airline industry. We aim to be the economic centre that links the world together,” underscoring the high aspirations of a nation that just a little more than two decades ago was not yet among the global community’s economic “players.”
A third transformative factor is the blurring of business and leisure travel along with the emergence of niche tourism—wellness, real estate investment, culinary for example.
Take Bleisure. Chances are you won’t find this word in your favorite dictionary but it’s a travel trend in which about two thirds of business travelers say they’re participating. It’s the tacking on of personal holidays to a business trip and as Orbitz published last year noting that 72% of 600 business travelers surveyed said they take extended business trips with a leisure component. And 43% said they had a significant other with them.
Meanwhile, an SRI study recently released by the Global Wellness Tourism Congress indicated wellness tourism now accounts for nearly 15%. or about $439 billion, of all domestic and international tourism expenditures and is anticipated to grow by nearly 10% over the next three years, opening up yet another channel for tourism expansion.
And here in Southern California, every day we read accounts of major commercial and personal real estate deals being made in Orange County by visitors from China. They’re buying office buildings and other investment properties, vacation and retirement homes for themselves and sons and daughters currently enrolled in one of our local colleges or universities.
I’ve been privileged to spend more than 40 years of my professional life in the travel and tourism industry and have experienced and helped lay the foundations for the growth and cultural and economic impact the industry is experiencing today. Over coming months, I’ll be sharing my thoughts about some of these dynamic changes and their implications for all of us.
I look forward to visiting with you.
Originally posted on Forbes