U.S. and Chinese travellers continue to dominate the world scene in terms of outbound travel, despite the recent tremors emanating from the slowing Chinese economy and the devaluation of the yuan. U.S. outbound travel was up 13.4% in 2015’s high travel season – July to September. Chinese travellers took 120 million trips in 2015 – up by 12% over 2014.
The United Kingdom is also a significant source of travel adventurers, as UK residents put the recession behind them and get comfortable with yet again venturing further from home. In 2015’s third quarter (July to September), UK residents’ outbound travel increased by 13.4%. North America was the greatest beneficiary – UK travel spending in North America increased by 26% in Q3.
Despite low oil prices at home and the associated devaluing of the Loonie, Canadians continue to be enthusiastic international travellers. Travel to the US continues to suffer, however – particularly same-day travel.
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CANADA: Outbound travel by Canadians to overseas countries rose 7.4% in October to 1.0 million trips. 3.5 million Canadians travelled to the U.S. in October, a 0.4% decrease compared to October 2014 – this decline is primarily the result of a 1.4% decrease in the number of overnight car trips to the U.S.1.
Canada’s economy is facing challenges due to pressures on the oil and resource sector. Unemployment edged up 0.1% in November to 7.1% from 7% in October – a noteworthy increase from 6.6% in November 20142. It held steady at 7.1% in January 20163.
The Index of Consumer Confidence fell 12.1 points in December to 91 (2014 = 100). The decline wiped out most of the gains recorded over the two previous months, leaving the index at its lowest level in two years.4.
UNITED STATES: Outbound travel to international destinations was up 7.8% Jan-Oct 2015, over the same period in 2014. The highest travel volumes were in July, followed by June and August. Most traveled-to destinations in July were Mexico, followed by Canada and Europe. The biggest jump in volumes so far in 2015 took place in September, which registered an impressive 14% increase over September last year5. The GBTA is predicting US outbound business travel to grow by 3.2% in 20166.
Unemployment in the United States remained at 5% in December – the lowest it has been in more than seven years7. U.S. Consumer Confidence jumped 3.9 points in December to 96.5, up from 92.6 in November8.
Optimistic outlooks suggest that the three million migrants expected to arrive throughout the European Union over the course of the next three years will have a positive impact on the economy.9. The impact from higher public spending and an increased labour force is anticipated to help edge up the GDP by about 0.25% by 2017. This is however, less than the rise in the underlying population which implies a small negative impact on per capita GDP throughout the period.
The outlook for employment is strengthening and is expected to make gradual improvements, increasing 0.3% more employed persons by 2017. The influx of migrants – excluding failed asylum applications – is expected to increase the EU’s population by 0.4%10.
UNITED KINGDOM: In the third quarter of 2015 (July to September), UK residents travel abroad increased by 13.4% over the same period of 2014. This is a far cry from 2009, in which visits abroad decreased by 16% and staycations increased by 17%. UK residents spent 14.4 billion pounds in Q3 alone – an 11.3% increase over Q3 2014. The spending increase was highest in North America (25.9%), reflecting an increase in visits to that continent11.
Britain’s economic recovery is showing signs of slowing as wage growth slowed in November 2015 to its lowest rate since February. However, November’s unemployment still registered at 5.1% – the lowest since 200612.
GERMANY:The German economy expanded about a quarter of a percent in the final three months of 2015, with record employment and expansionary monetary policy fueling domestic consumption at a time of weakening global trade. With wages rising and oil more than 37% cheaper than last year, domestic spending has become the driver of economic growth13.
FRANCE:After meagre 1.2% growth for the Eurozone in Q3, the terrorist attacks hit France at a sensitive time. Unemployment in the second quarter of 2015 stood at 10.4% and rose to 10.6% in the third quarter – the highest it has been since the fourth quarter of 199714. Accounting for 7% of the country’s GDP, tourism is one of the largest sectors of the French economy and is the number one tourist destination in the world, hosting around 83 million visitors annually. 2013 brought $45.3 billion in visitor spending to the country. In the wake of the recent terrorist attacks, estimates are suggesting the cost of diverted and cancelled travel to France could reach into the tens if not hundreds of billions of dollars15.
CHINA:On January 19, China released a statement indicating that Chinese travellers took around 120 million trips in 2015, a 12% increase from the year before, as the middle class spends more on tourism.
In the short term, it appears that China’s slowing growth and the devalued yuan are not having a significant effect upon Chinese travel. In September, China overtook New Zealand for the highest number of short-term visitors to Australia, leaving many hotels struggling to meet the spike in demand. The first four days of October’s Golden Week saw Chinese outbound travel grow 36.6% year on year, and over the course of the full seven days, more than 4 million Chinese tourists travelled internationally, spending a staggering $830 million in Japan alone and boosting the Japanese economy by 0.1%.
It is uncertain as to whether this trend will continue on a longer-term basis, given China’s changing economy. While a record-breaking number of Chinese tourists are travelling abroad each year, a mere 6% of the population actually hold passports. But, the Chinese appear to be driven to travel, seeing it not as a luxury but as a necessity: many are travelling to escape the country’s pollution or improve their quality of life. Families travel to broaden their children’s education and worldliness. The bottom line is that the Chinese outbound market still has tremendous potential for growth16.
JAPAN:In the 11 months leading up to December 2015, September marked the only month of increased outbound tourism from Japan when compared to the same timeframe last year. Both October and November saw a marginal decline in the number of Japanese travelling abroad. 1.41 million and 1.34 million Japanese embarked on international travel in October and November with -0.4% and -0.7% decreases year on year respectively17.18.
AUSTRALIA: Outbound Australian departures during November 2015 increased 0.5%, compared with October 201519.
With a falling Australian dollar trading at a mere $.71US, there are legitimate concerns about the impact this will have on outbound travel from Australia. To counter this, many air carriers are beginning to offer return flight options for as little as $900. With flights selling at this bare bone rate, top priority will be to ensure the planes are full20.
Unemployment in Australia dropped to 5.8% in November, a slight increase over a year ago but a slight decrease over October21.
WORD OF MOUTH
“Here is a message to the world, to all the tourists who canceled their trips: ‘Come to Paris! The city is safe, spend your money, live, go to cinemas, to theaters.’ That’s our message and it’s the answer to this terrorist attack“
Quote from Prime Minister Manuel Valls – in response to the terrorist attacks in Paris which claimed over 130 lives last month22. Despite this optimism though, concern about lost revenue continues to grow. Within the first two weeks following the attacks, the French government had reported losses of £1.4billion in tourism revenue and that number continues to grow23.
- Travel Between Canada and Other Countries, October 2015”. Statistics Canada, December 17, 2015 [↩]
- “Labour Force Survey – November 2014”. Statistics Canada, December 5, 2014 [↩]
- “Canada Unemployment Rate”. Trading Economics, January 8, 2016 [↩]
- “Index of Consumer Confidence: December 2015”. The Conference Board of Canada, January 7, 2016 [↩]
- “US Citizen Travel to International Regions, 2015”. Office of Travel & Tourism Industries, December 29, 2015 [↩]
- “U.S. Business Travel: An Island of Stability”, GBTA blog, January 12, 2016 [↩]
- “Economic News Release”. US Bureau of Labor Statistics, January 8, 2016 [↩]
- “Consumer Confidence Index”. The Conference Board, accessed January 21, 2016 [↩]
- Kanter, James. “European Union Predicts Economic Gains From Influx of Migrants”. New York Times, November 5, 2015 [↩]
- Calamur, Krishnadev. “The Economic Impact of the European Refugee Crisis”. The Atlantic, November 5, 2015 [↩]
- UK Office for National Statistics, accessed January 21, 2016 [↩]
- Phillip Inman, “UK unemployment falls but wage growth weakens”. The Guardian, January 20, 2016 [↩]
- Jana Randow, “German Economy Defied 2015 Global Slowdown as Growth Accelerated”, Bloomberg Business, January 14, 2016 [↩]
- “France Unemployment Rate”. Trading Economics, December 3, 2015 [↩]
- Newton-Small, Jay. “The Cost of the Paris Attacks”. Time, November 23, 2015 [↩]
- Gu, Charlie, “What Slowdown? Why Chinese Outbound Tourism will Continue to Grow”. Travel Daily News, November 17, 2015 [↩]
- “2014 Foreign Visitors & Japanese Departures”. Japan National Tourism Organization, November 2015 [↩]
- “2015 Foreign Visitors & Japanese Departures”. Japan National Tourism Organization, December 2015 [↩]
- “Overseas Arrivals and Departures, Australia, October 2015”. Australian Bureau of Statistics, December 4, 2015 [↩]
- King, Mike. “Want to Fly to the US for $904 Return? Now You Can”. The Motley Fool, November 24, 2015 [↩]
- “Labour Force Australia, November 2015”. Australian Bureau of Statistics, January 12, 2015 [↩]
- Fouquet, Helene. “Paris Safe for Tourists Two Weeks After Attacks, PM Says”. The Vancouver Sun, December 1, 2015 [↩]
- Wyke, Tom. “Terror Attacks in Paris Means Visitor Numbers Across Europe Tumble and France has Already Lost £1.4billion in Tourism Revenue”. Mail Online, November 29, 2015 [↩]
Mahon Jones & Associates is a tourism consulting firm, based in Canada, with special focus on cultural tourism and attracting the cultural tourist. The information above has been compiled via desk research of the internet for clients and key contacts, primarily located in Canada. It is intended to provide contacts with a quick snapshot of currently available market information.
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