The Authority on World Travel & Tourism

Economic Impact of Travel & Tourism 2013 Annual Update: Summary

Travel & Tourisms direct contribution to world GDP and employment in 2012 was US$ 2.1 trillion (2012 prices) and 101 million jobs. Taking account of its combined direct, indirect and induced impacts, Travel & Tourisms total economic contribution in 2012 was US$ 6.6 trillion in GDP (2012 prices); 260 million in jobs; US$ 760 billion in investment (2012 prices); and US$ 1.2 trillion in exports (2012 prices). This total contribution represents 9% of total economy GDP in 2012, 1 in 11 jobs, 5% of total economy investment and 5% of world exports.

Global Performance and Outlook: 2012 and 2013

Despite on-going challenging economic conditions, global Travel & Tourism direct contribution to GDP grew by a robust 3.2% in 2012. This was faster than growth of the world economy as whole (2.3%), and also faster than growth of a number of broad industries including manufacturing, financial & business services and retail. Total Travel & Tourism employment, including those working in the industrys supply chain and supported by the spending of their employees, increased by 4.0 million jobs in 2012. While Travel & Tourism GDP growth slowed throughout 2012 and was weaker than forecast one year ago, visitor exports exceeded expectations, rising 4.7% year on year. In percentage growth terms, Asia, Latin America and Sub-Saharan Africa were amongst the fastest growing destination markets in 2012. Though in absolute change terms, visitor exports growth to North America and Europe exceeded expectations in 2012 and explain most of the growth in global visitor exports. In terms of outbound spending, Asia and Latin America were the fastest growing origin markets in 2012, but in absolute change terms, it was again Europe and North America, along with North East Asia, that accounted for the overall above expectations growth. In contrast, growth in both domestic Travel & Tourism spending (2.8%) and Travel & Tourism investment (2.4%) in 2012 was weaker than expected a year ago. Looking ahead to 2013, the slowdown in Travel & Tourism international demand growth observed in the second half of 2012 is forecast to continue. But offsetting this is an improving macroeconomic environment, where the imminent prospect of a eurozone break-up has reduced, and risks are shifting to the upside. A quick return to robust growth, especially in the eurozone, will remain elusive in the short-term, however. Global Travel & Tourism contribution to direct GDP in 2013 is forecast to grow by 3.1%, compared to 3.2% in 2012. Travel & Tourism is again forecast to outpace growth of the total global economy (2.4%) in 2013. Visitor exports growth is forecast to slow from 4.7% in 2012 to 3.1%, with domestic Travel & Tourism spending forecast to grow by 3.2%, a marginally better outturn than 2012. Total Travel & Tourism employment is projected to expand by 4.4 million jobs in 2013.

Economic Impact of Travel & Tourism 2013 Annual Update: Summary

Understanding the relative strength of international Travel & Tourism demand in 2012
Global consumer spending growth was weaker in 2012 compared to the outlook one year ago - a result of persistent high unemployment and downward pressure on household disposable incomes. Despite this, visitor exports performed strongly and above expectation while domestic spending growth was below expectation. In normal economic cycles, consumer spending, visitor exports and domestic Travel & Tourism spending would move closely in line. More recently, however, visitor exports have been more volatile than both consumer and domestic Travel & Tourism spending and international travel has become more of a luxury discretionary spending category. There are however various reasons to explain the relative strong performance of international Travel & Tourism in 2012 versus domestic Travel & Tourism spending: While 2012 was the third successive year of strong growth in visitor exports, part of this growth may still reflect a rebound from the global recession in 2008/2009. Global visitor exports fell by over 6% in 2009, compared to a smaller fall in domestic Travel & Tourism spending. The domestic share of total Travel & Tourism demand has been on a downward trend since the late 1990s. While this trend temporarily reversed in 2009 at the depth of the global recession, it has subsequently returned and is likely to have continued at least into early 2012. Behaviourally, the appetite for travel beyond national borders, from leisure and business visitors, has remained undimmed. Although the evidence is not fully available, the implied data for some countries suggests that short domestic trips are being sacrificed to retain international trips. International destinations are increasingly offering discounts to attract visitors, who in turn are taking shorter trips and spending less per trip to make international travel affordable within constrained budgets. Many of the people most affected by the sluggish recovery of the world economy are typically low income travellers who are more likely to take trips domestically as opposed to travelling abroad. Last, as a more general point, it is important to remember that while global economic growth slowed, the world economy, and world trade, still grew in 2012, even in countries like Germany in the weakest performing region of Europe. With visitor exports more volatile on the upside and downside, the positive growth of the world economy will have contributed to this more volatile upside growth in international Travel & Tourism.

Regional Performance and Outlook: 2012 and 2013

2012 was another year of mixed Travel & Tourism performance across the globe. At a regional level, South East Asia (7.3%) was the fastest growing in terms of Travel & Tourisms contribution to total GDP - half of the 4.0 million growth in total Travel & Tourism employment was in Asia alone. Europe was the slowest growing region, but still registered marginally positive growth of 0.4%. Europes performance would have been even weaker were it not for its above expectation visitor exports growth of 3.5%. Among the 20 largest Travel & Tourism economies, South Korea, China, South Africa and Indonesia performed best in 2012. The six slowest growing of the major Travel & Tourism economies in 2012 were all European. Travel & Tourism bounced back in Japan as expected in 2012, following the tsunami/earthquake in 2011, with visitor exports growth of 32%. Outside of the 20 largest Travel & Tourism economies, Qatar, Azerbaijan and Kyrgyzstan were the fastest growing in terms of Travel & Tourisms total contribution to GDP growth. Travel & Tourism total contribution to GDP in Syria, beset by the on-going conflict and damage to Travel & Tourism infrastructure, is forecast to have shrunk by almost half in 2012.

Economic Impact of Travel & Tourism 2013 Annual Update: Summary

In 2013, industry growth in Europe is again forecast to lag the rest of the world, with only modestly stronger growth of 0.8% in its contribution to total GDP. This compares to a much more robust growth forecast of 2.4% for North America. Asia will continue to be the strongest growing Travel & Tourism region in 2013, followed by Latin America and Sub-Saharan Africa. Indonesia, China, India and Brazil are forecast to be the strongest growing of the largest Travel & Tourism economies in 2013, with growth in Japan and South Korea set to slow following strong performance in 2012.

Ten-Year Outlook and New World Order: 2013-2023

Travel & Tourisms direct contribution to world GDP is set to grow by 4.4% on average per year over the next ten years, and outpace growth in the wider economy and other industries, notably retail and public services. By 2023, Travel & Tourisms total economic contribution is forecast to rise to US$ 10.5 trillion in GDP (2012 prices), almost 340 million in jobs, over US$ 1.3 trillion in investment (2012 prices) and almost US$ 2.0 trillion in exports (2012 prices). The growing importance of Travel & Tourism in the global economy will mean that by 2023, Travel & Tourisms total contribution will account for 10.0% of GDP and 1 in 10 jobs. Total Travel & Tourism employment is forecast to increase by over 70 million jobs over the next decade, with two-thirds of the additional jobs in Asia. Asia will continue to lead growth of the global Travel & Tourism industry over the next decade, with annual average growth of over 6%. Asias growth will be driven by increasing wealth among its middle classes. This will impact on the wider global industry via increased destination competition but also create opportunities to grow outbound spending. Destinations within and outside Asia will need to be prepared to invest in infrastructure suitable for these new sources of demand to achieve the clear growth potential that exists. Africa, Latin America and the Middle East will also outperform world industry growth over the next ten years, with growth of 5.1%, 4.7% and 4.8% respectively. More mature markets in North America and the Caribbean are forecast to see annual average growth rates of 3.4% and 3.3% respectively in Travel & Tourism total contribution to GDP. Industry growth in Europe is forecast to pick up in 2014, but overall long-term growth of Travel & Tourisms total contribution to GDP is forecast at 2.7% in Europe and 2.6% in Oceania, the weakest two regions. As a result of these long-term regional outlooks, there will be a shift in the world order of Travel & Tourism over the next decade. By 2023, China will lead the world in the total contribution that Travel & Tourism makes to GDP, overtaking the current leader, USA (2012 prices). This will be fuelled by the scale of its domestic and investment Travel & Tourism spending. China is also set to become the largest outbound Travel & Tourism market in 2023 in spending terms*. However as a destination, both in terms of visitor exports and its share of global foreign arrivals, China will still be a long way behind the US in 2023. Excluding arrivals from Macau, Taiwan and Hong Kong would actually push China well down the global league table for foreign arrivals in 2023, behind mature markets such as France, Spain and Italy.

* Including outbound spend to Hong Kong, Macau and Taiwan

Economic Impact of Travel & Tourism 2013 Annual Update: Summary

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27022013 - ECONOMIC IMPACT OF TRAVEL & TOURISM 2013 ANNUAL UPDATE: SUMMARY 2013 World Travel & Tourism Council