Ken Research announced its latest publication on, “Travel and Tourism Industry Business Outlook and Procurement Report H1 2016”, offer insights on the business outlook and key procurement behaviors and strategies within the Global Travel and Tourism Industry. The publication includes an insightful analysis ofkey business priorities, emerging and developed markets, mergers and acquisitions activity globally and regionally, leading business concerns likely to impact the industry, changes in capital expenditure, procurement budget expectations, supplier price expectations and e-procurement outlook. Intuitively the industry can be categorised into those that are emerging like in China, India & Russia and those that are developed like in US and UK.
Over the last five years, global travel and tourism industry has shown significant and steady growth rates.In fact, the travel industry has consistently outperformed the wider global economy. This trend coupled with the sustained demand in the travel and tourism industry has underlined its importance as key driver of economic growth all over the world through job creation and contribution to GDP. According to WTTC report, for the sixth consecutive year, the contribution of global travel and tourism industry has grown, amounting to a total of 9.8% of world GDP (US$7.2 trillion) and supporting 284 million people in employment. Despite adverse macroeconomic conditions and various challenges, the industry is expected to show strong growth rates in 2016, again outperforming the global economic growth.
Mapping the Key issues in the Global Travel & Tourism Industry
As shown in the above figure, the global travel and tourism industry, through its strong economic performance contributes to global GDP and employment in different forms (direct, indirect &induced). However, the industry faces various challenges such as uncertainty due to geopolitical unrest, a potential US interest rate rise, oil price volatility and the Eurozone crisis etc., increasing cost, rising competition within the market& terrorism above all has been the most serious issue in countries like Egypt, Indonesia, France, Kenya to name a few. Despite these challenges, the industry has found its way to achieve growth through exploiting potential opportunities in emerging & developed market, using technology to reduce their internal operation cost, expanding current markets through mergers & acquisitions and above all, the govt. is in full support to this industry for long term job creation and economic growth.
Hence, the global travel & tourism industry is all set to exhibit strong growth rates outperforming the global economy once again in 2016 as well as over the next years with a forecasted annual growth rate of 4%. Growth in 2016 will be brought about by improving household finances, on account of lowest oil prices in more than a decade. All the major components are expected to grow at faster rate than in 2015. Investment is expected to grow by 4.7% in 2016, and domestic and international Travel& Tourism spending are expected to grow by 3.3% and 3.0% respectively. Also, in the H1 2016, improving operational efficiency and expansion in current market is expected to be the key priority.Mergers and acquisitions are expected to increase with emerging markets such as China, India, and Russia offering prominent growth opportunities. UK is also expected to provide significant growth opportunities during the next six months. Due to increasing use of technology, procurement activities will increase on IT services and consequently, procurement expenditure for the industry is projected to increase by an average of 5.9% over the next six months. Also, supplier prices are expected to increase with expectation of global procurement budget to remain within the USD 250,000 range during H1 2016.
*Tourist Arrivals in Millions (On the Vertical Axis)
Figure: Projected international tourist arrivals worldwide from 1995-2030
Key Macroeconomic Trends Driving Growth in Global Travel & Tourism IndustryGlobal Travel and Tourism industry is one of the world’s largest Industry with significant contribution to the world economy through job creation and increasing world GDP.While countries, such as France & other countries in UK and the United States, have always been popular tourism destinations; emerging markets in China, India & Russia are also in operation to reap the economic benefits of the industry. With significant growth opportunities in emerging as well as developed market, strong growth prospects are in line for the travel and tourism industry in H1 2016 and in coming years as well.
Figure: Global Travel & Tourism Industry Overview
As can be seen from the table, the global tourism industry has performed well over the years. The reasons behind this strong economic performance can be attributed to various macroeconomic trends and factors.
Some macroeconomic factors driving growth in global travel and tourism industry include:
- As global per capita income increases, international tourist exursions have increased.
- With decreasing unemployment rates in different regions of the world, purchasing power has increased leading toincreased demand for recreational travels.
- Improvement in consumer sentiment with the trend of going on a complete sign-off from work during holidays as well as exploring lesser known destinations.
- With increased globalization and connectivity among different parts of the world through cheap flight rates, there is increase in international family and business travels.
- Industry supporting govt. policies such as progressive policies on visa access, taxation, human resources planning, and sustainability.
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Related Reports:
https://www.kenresearch.com/media-and-entertainment/tourism/global-travel-tourism/28855-94.html
https://www.kenresearch.com/media-and-entertainment/tourism/global-travel-tourism/28506-94.html
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