The Following Winds
Over the past decade, the international tourism industry had reason to be bullish about its future forecasting average annual growth rates of 4.0% per annum (UNWTO). The familar graph produced by the UNWTO perhaps encouraged a false sense of security causing leaders to believe that the era of "boom and bust" was past.
Mass tourism, as a phenomenon, started after the Second World War and, fuelled by a number of positive factors - see list below - nearly quadrupled in size in thirty years and is forecast to double again by 2020.
- Current Low levels of Market Penetration
- Economic Growth in Source Countries
- Relatively low energy costs for much of the period
- Globalisation, connectivity and economic interdependence
- Development of the Knowledge Economy
- The Rise of the Middle Class in developing countries with large populations (BRIC)
- Demographic changes in Western Economies
- Changing Consumer Values
- Declining Cost of Travel relative to Disposable Incomes
- Increasing Number and variety of Distribution Channels
- Rise of new destinations and increases in tourism investment.
Then came the financial crisis and, seemingly overnight, these growth drivers seem to have evaporated. So the big questions of the day are:
- how strong or weak are these growth drivers over the longer run?
- will they resume their potency once the economy picks up?
- have these drivers been changed in kind by the recession such that the business models underpinning current tourism will need to change?
The WTTC is clearly of the opinion that the drivers will assume their full force, once the financial crisis passes. In a press release issued at the ITB on March 12th, the WTTC forecast that tourism will continue to grow at an average annual rate of 4% for the next decade citing economic growth in emerging economies as the primary cause . Business will be tough in the short run, however, with overall tourism GDP contracting by 3.9% in 2009 and showing little improvement in 2010.