Global trends in tourism Breaking the billion barrier Vanitha Srinivasan Threats of terrorism, pandemic outbreaks, natural calamities

s and, finally, pesky security checksnotwithstanding, the international tourism industry is booming. Tourism has become a key economicdriver globally, and is one of the main sources of income for many developing countries today.International tourism receipts totalled $682 billion in 2005 while arrivals, at 842 million in 2006,registered a five-fold growth over the last three decades. The United Nations World TourismOrganisation (UNWTO) estimates that international tourist arrivals will touch the one-billion mark by2010 and the centre of activity will be the Asia-Pacific region.The World Tourism Conference in Kuala Lumpur early this month acquired significance given the recentresurgence in the global tourism industry following several shocks starting from 9/11, continuingthrough the Bali bombings in 2002, the SARS epidemic, the avian flu and the Asian tsunami. Theconference discussed several important issues that the global tourism industry is faced and thechanges happening worldwide. The impact of technology and the changing demographics on tourismwere among the interesting trends discussed. COMING OF AGE The tourism industry has matured significantly in recent years and is displaying a new willingness toshare information and co-operate. The result: A different type of growth, one that is more moderate,more solid and more responsible. More moderate because it is not likely to produce the spectacular double-digit growth rates of 2000and 2004. The industry can, however, look forward to about 4 per cent growth in 2007. More solid because enterprises, consumers and institutions are able to anticipate shocks and respondeffectively to crises. The market shows increased resilience and travellers are better informed; forinstance, they now include security concerns as just another consideration while selecting theirdestination. "Following each crisis, the ability to respond has improved and the return to normalcyhappens more rapidly," as Mr Geoffrey

Lipman, Assistant Secretary-General of the UNWTO, pointedout, while delivering the keynote address at the conference. More responsible because greater attention is now being paid to the congestion that tourismgenerates and its ill-effects as also its relationship to climate change. According to the World Economic

Forum Competitiveness survey, small countries are often better at planning tourism development thanthe big ones. There cannot, of course, be a better example for this than the city-island state of Singapore which was a pioneer in developing its tourism industry in its part of the world.For the smaller countries tourism accounts for 20-30 per cent of GDP. "For those economies, tourism isnot the icing, it is the cake," said Mr Christopher Rodrigues, Chairman, Visit Britain.The `greying' population of several developed countries is proving to be a plus for global tourism. Therising average age means a growing market of people with more discretionary income and time totravel. Rapid economic growth has also created more affluent populations willing to splurge on travel."Tourists over 55 years of age travel farther away from home, include two or more destinations in atrip, engage in

more activities, travel with one or another household member and spend more per tripthan tourists, on an average," observed Mr Lipman. This is unlike the average tourist in the workingage who may be weighed down by his back-pack as well as work pressure and other compulsions totake no more than a short holiday. Retired tourists have no such compulsions even as they spendliberally from their retirement savings to see the world in a `now or never' spirit.What may ultimately determine a travel decision is the desire to learn, discover new experiences andadd meaning to people's lives. Cross-border family travel is becoming frequent and these trends areapparent in the growth of niche products developed by destinations, hotels and resorts.This demographic shift is breeding as a corollary a new set known as `Short Holiday Break' travellersamong younger folks in double-income families. The concept of a shorter main holiday plus a series of breaks is not only born out of necessity but the norm. CLIMATE CHANGE Tourism is intimately linked to two issues of global concern: Climate change and poverty. And,sustainability is at the start of this equation. Aviation is blamed for contributing about 2 per cent of greenhouse gases but it is unfair to demonise the sector. One must weigh the benefits against theodds and take a balanced view. The point is that while there are alternatives for other modes of transport, there are none for aviation."We cannot plan for an invention that cannot be invented. Nevertheless, we cannot be complacent.Countries must reduce emissions on account of air travel to zero by 2050. We should do something totackle this problem, before it destroys us," said Mr Lipman, speaking to this writer at the sidelines of the conference.Towards this end, airlines have achieved a 70 per cent improvement in fuel efficiency over the last fourdecades. Moreover, billions of dollars being invested in new aircraft will drive a further 25 per centimprovement in global efficiency by 2020. "Every minute that we can shorten a single flight saves 62litres of fuel and 160 kg of carbon emissions. New flight paths are being tested and efforts are on toshorten distances and hence flying time," pointed out Mr Peter De Jong, President and CEO, Pacific-Asia Travel Association.Sir Richard Branson, CEO of Virgin Atlantic, does not believe that curtailment of travel will benecessary to address global warming. He thinks we have the technology, ingenuity and resources toproduce technical solutions. However he does warn that we

need to address the sustainability issues,both those created by travel and those generated at both destinations themselves, "before others do itfor us". JOB CREATION Tourism has become an important instrument to fight poverty by employment generation. In 2005, itcontributed $205 billion in foreign-currency income to the developing and emerging countries and hascreated many jobs.The industry created about 140 million jobs in the Asia-Pacific region in 2006. In this context, theUNWTO has established the ST-EP (Sustainable TourismEliminating Poverty) Foundation to encouragesustainable tourism aimed at eliminating poverty in the developing countries. Forty-six ST-EP projectsare currently underway in Africa, Asia and Latin America. LOW-COST CARRIER REVOLUTION While the overall trends in the tourism industry are in favour of continued growth, this is likely tointensify competition and consolidation in the sector. The emergence of low-cost carriers (LCCs) is making significant inroads into the scheduled carriers' business and is transforming many sub-sectorsof the tourism industry."Our strategy is to lower fares because we want more people to fly. We want to reach out to everydestination, explore new routes and work with new people. Our focus is on South-East Asia,particularly India and China," said Mr Tony Fernandes, CEO, Air Asia, while speaking on the role of LCCs in transforming international travel.LCCs have nevertheless opened up avenues for those lesser known regions that otherwise would notbe visited by tourists.What is wanting is provision for accommodation, secondary airports, other tourist facilities andservices catering to this segment. INFLUENCE OF THE NET The penetration and popularity of the Internet worldwide are shifting power from the industry to thetraveller.The travel industry is becoming market-driven as consumer price expectations and the Internetexpand travel planning and booking capabilities.This trend towards direct booking, already squeezing the travel agents, is now growing, with the helpof the Internet. Budget airlines are helping to fuel this trend. For instance, 85 per cent of Ryanair'sseats are sold on the Web.Other industry suppliers are following

fast; Iberia and Hyatt, for example, have developed their ownWeb sites that offer lower Internet-only rates. We have only seen the proverbial tip of the icebergwhen it comes to the Net and the way it is transforming the tourism industry. OPTIMISM IN THE AIR The optimism in the minds of the who's who of the global travel trade at the Kuala Lumpur conferencewas unmistakable.Having weathered successive crises over the last decade successfully the confidence exuded by theparticipants was understandable. The focus on the twin issues of climate change and poverty and thequestion of how should the tourism industry respond to it was well-timed.There is a lot to be done in developing tourism potential in such exotic parts of the world as Africa,Latin America and, of course, Asian countries such as India. Even as the global tourism industry racestowards the 1 billion arrivals mark, these are the regions that will take it forward to the next level
urrent tourism trends in India

In 2006, Indias share had been 0.8% of the world market travel and tourism market . This share has risen from 0.6% in 2001, registering a 13% CAGR as against 8% CAGR for the world during the same period. Further, the WTO has forecast the Travel & Tourism Industry in India to grow by 8% per annum, in real terms, between 2008 and 2016. Foreign exchange earnings from tourism alone could show annualized growth of 14% during the same period. Despite the burgeoning share of the Asian market, Indias total share in world tourist arrivals, however, remains a modest 0.8%, even though international arrivals to India have seen somewhat of a dramatic turnaround since 2002, when a temporary declining trend was reversed aggressively. This turnaround was the result of several factors such as Government of Indias Incredible India campaign, high visibility afforded to India by its economic success, the tourism industrys constant search for new destinations, and to some extent improvement in infrastructure in specific areas (such as better air connectivity of smaller and remote destinations). The total foreign tourist arrivals in India in 2005 was around 3.92 million, registering a CAGR of 18.1% over 2002-2005 vis--vis world tourist arrivals which registered a growth of barely 4.76% on a larger base (See Exhibit below).

Exhibit 12 3: International Tourist Arrivals by Region (millions)

Source: World Tourism Organization Whether measured by the yardstick of its vast tourism resources, or its emerging economic importance, Indias low share of tourism receipts and arrivals could be termed below potential. Exhibit: Competitiveness Ranking of Nations on Factors affecting Tourism Business Human, cultural Regulatory Overall Environment & and natural Framework resources Infrastructure Country Rank Rank Rank Rank Switzerland 1 2 2 2 USA 5 33 1 12 Hong Kong SAR 6 4 14 14 Australia 13 16 10 26 Greece 24 20 32 15 Malaysia 31 27 27 57 Italy 33 42 30 32 Mauritius 39 35 46 39 Brazil 59 67 48 67 Argentina 64 85 58 45 India 65 62 55 81 China 71 78 61 93 Source: World Economic Forum, World T&T Competitiveness Report, 2007, Geneva The Competitiveness Report notes that India has key strengths, linked mainly to cultural endowments. For instance India ranks 7th in terms of number of World Heritage sites. The country also benefits from excellent price competitiveness, and ranks 6th overall in this category.

Low ticket taxes and airport charges as well as low prices (mostly for manufactured goods and not so much for the service industry in the premium range) in the economy as a whole contribute to Indias price competitiveness. It is imperative to point out that India has the advantage of a strong domestic tourism base which was in excess of 200 million tourists in 2006. This base is likely to grow on the back of a rapidly rising middle class with increased incomes and awareness levels and is not greatly affected by the Competitiveness ranking which is primarily a comparison with other countries. Hence despite low rankings on the Competitiveness scale, it emerges that India can leverage its higher rankings in certain categories to exploit its tourism potential over the next decade with appropriate planning and sensitivity towards the environment. Also, certain states such as Gujarat have a natural advantage due to their historical, cultural and natural endowments which could be appropriately targeted for better tourism flows.