Tourism One Minute Report
A global market scan in one minute or less.
May 20, 2016

2016′s Q1: RUSSIA OUTBOUND IN SHARP DECLINE

Here is this month’s report on key outbound markets around the world…

In this report, the award for the strongest growth in outbound travel goes to the US, where outbound travel was 10% in the first 2 months of 2016. Russia had the weakest growth; outbound tourism from that country dipped an incredible 31.3% last year, due in large part to incremental restrictions by the Kremlin over the last few years to restrict outbound travel. Although registering a 4% drop in overall outbound travel (largely due to a 13% drop in travel to the US), Canadians continue their enthusiasm for overseas travel despite the weak loonie – up 8.5%. Like the Canadians, the Australians aren’t letting a weak dollar slow them down – the first quarter saw a respectable 4% jump in outbound travel.

Travellers out of the UK continue to range farther from home, having recovered from their post-recession travel blues – North America saw a sizable increase of visitation at 9% in 2016’s first quarter. India is emerging as one of the world’s top travel spenders – well-established diaspora in North America provide incentive for long-haul travel, meaning longer trips and more dollars spent; projections are for a rapid growth in this market for luxury travel. Despite slowing growth, Chinese travellers continue to be enthusiastic travellers. A recent report shows them as younger, more affluent, more sophisticated and keen on independent travel.

Here are the details…

NORTH AMERICA

Canada: 2.45 million Canadians travelled internationally in February, an overall decline of 4.1% on international travel, year on year. Travel to the United States was down 13.3% while international travel to other countries was up 8.5% compared to February 20151.

Unemployment declined by 25,000 to 7.1% in March from 7.3% in February.2. Consumer confidence grew for the third consecutive month in April, up 2.3 points from March to 94.5 in April3.

United States: In a May 11 release, the US government reported that outbound US travel for the first 2 months of the year was up by 10%. The strongest traffic flow was to South/Central America, Mexico and Canada. 2015/16, US travel is up 9% and by 11% to North America, so this represents sustained growth4.

Despite some uncertainty early this year, the US economy is showing signs of continued expansion with the creation of 215,000 jobs this past March. With more workers joining the labour force as well, unemployment edged up marginally from 4.9% to 5% February to March5.

Preliminary estimates of Consumer Confidence in the United States were projected to be 89.7 for April, but final calculations came in slightly lower at 89, down two points from 91 in March6.

EUROPE

Initial estimates of economic growth for the Eurozone have been readjusted in the first quarter. Estimates have edged down from 1.7% growth to 1.6% for 2016. Similarly, expected growth for 2017 was lowered from 1.9% to 1.8%. The rate of inflation remains around zero, with a humble rise of an anticipated 0.2% in the second half of the year. Increases in energy prices and a strengthening domestic demand have boosted inflation estimates to 1.7% in 20177.

United Kingdom: UK residents’ outbound travel was up 8% in the first quarter of 2016, with a 9% increase in spending. Y-Y growth was up 9% and spending by 11% to March 2015, so this too is sustained growth. Visits to North America were up by 9%. Business travel increased by 8%, holiday travel by 9% and VFR by 10%8.

Russia: Russian outbound travel decreased by 31.3% last year, the largest drop in 18 years9. This may be due in part to Russia’s increasing policy efforts to limit its citizens’ travel abroad and redirect a significant portion of the $54 billion cash flow back into the country to support its struggling economy. See “word of mouth” below for more information.

ASIA

India: Indian travellers are emerging as one of the world’s highest international spenders, spending approximately $4,500 – $6,000 US per 15-30 day trip to the United States, and $6,000 – $9,000 US per 10-12 day trip to the UK. Total expenditure on outbound travel in India amounted to approximately 11.26 billion USD in 2013 and that number is expected to 24.11 billion USD by 202410.

Indian luxury travel shows signs of rapid growth in the next decade, with a projected compound annual growth rate of 12.8%. This will focus on long-haul trips, largely due to the very well-established Indian diaspora throughout North America, Europe and the Middle East11.

China: A recent report by Phocuswright for TripAdvisor provides new insights into a new wave of Chinese travellers – young, free, independent, affluent and sophisticated. Nearly 9 out of 10 are 18-44, 77% have undergrad degree or higher, and 44% earn around $2300 US a month. They speak English and prefer to organize their own trips rather than go with the traditional escorted group trips. They have a short planning horizon for longer duration trips, three quarters of which happen between May and October (one quarter in the month of October alone). Shopping continues to be a strong motivator12.

China’s economy grew a mere 1.1% from the previous quarter in Q1 of 2016 – the slowest quarterly growth since the government began releasing figures in 2011. When annualized, the quarter-on-quarter figure yields 4.5% growth for the year. Speculation on the validity of statistics produced by China continues to swirl as the NBS has reported 6.7% growth in the first quarter of this year, a mere 0.2% less than the growth of Q1 in 201513.14.

Japan: The first three months of this year have all reflected a higher number of outbound travellers from Japan as compared to the first quarter of last year. 1.57 million Japanese embarked on international travel in March a 2.7% increase from March 201515.

Australia: 830,900 Australians travelled internationally in March compared to 795,900 in March of 2015, a leap of 4% year on year. The first quarter of 2016 has seen a 3.98% increase year on year with 2.444 million outbound trips in the first quarter of this year as compared to 2.34 million last year16.

Word of Mouth

“[Tourism is the] most easily understood and very precious freedom, all the more precious as several preceding generations of Russians were deprived of it for decades.” – words spoken by popular Russian journalist and political activist Oleg Kashin in response to the new bans the Russian Government has put on international travel.

In a twofold effort to limit the exposure of Russians to the outside world and retain a portion of the nearly $54 billion in Russian tourism cash flow back into the country, Russia continues to tighten the reigns on the international travel freedoms of citizens. Most recently, by banning all air travel to or from Egypt and Turkey.

Bans on travel began in 2010 by barring foreign travel for Federal Security Servants of Russia and then with a much larger portion of the population, debtors, which thwarted an estimated 1.4 million. This was followed by banning many civil servants from international travel, a grouping that accounts for nearly 4 million Russians17.

  1. “One or more nights trips by residents returning to Canada, by province of re-entry, current month”. Statistics Canada, April 19, 2016 []
  2. “Canada Unemployment Rate 1966-2016”. Trading Economics, April 8, 2016 []
  3. Ades, Julie. “Index of Consumer Confidence: April 2016”. The Conference Board of Canada, April 20, 2016 []
  4. TI News, ITA National Travel and Tourism Office, May 11, 2016 []
  5. Bartash, Jeffery. “US Adds 215,000 jobs in March”. Market Watch, April 1, 2016 []
  6. “The Conference Board Consumer Confidence Index Declined in April”. Conference Board, April 26, 2016 []
  7. Ellyatt, Holly. “EU Commission cuts Euro Zone GDP growth forecast”. CNBC, May 3, 2016 []
  8. UK Office for National Statistics, Statistical Bulletin, May 20, 2016 []

  9. Asia / Asia Pacific ((Eye for travel, quoting the Russian Industry Tourism Union, “No Gloom for Aeroflot”, March 15, 2016 []
  10. Elliott, Mark. “Indian Globetrotters among world’s biggest spenders”. Times of India, April 26, 2016 []
  11. Robert Sinclair-Barnes, Strategic Marketing Director Amadeus, “India will lead the way in luxury travel”, beyond brics blog, May 18, 2016 []
  12. WebInTravel, “Meet China’s New Wave of travellers – young, free, independent, affluent, sophisticated”, May 12, 2016 []
  13. Chang, Gordon. “China’s Economy is Past the Point of No Return”. The National Interest, May 10, 2016 []
  14. “China’s Q1 GDP Posts Slowest Growth on Record” Market Watch, April 17, 2016 []
  15. “2016 Foreign Visitors and Japanese Departures”. Japan National Tourism Organization, April 2016 []
  16. “Overseas Arrivals and Departures” Australian Bureau of Statistics, May 6, 2016 []
  17. Lemondzhava, Tatia. “In Russia, the Doors are Closing”. Foreign Policy. April 29, 2016 []

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.
For more information about our services or to discuss how we can assist your organization, government agency or business visit our website at www.mahonjones.com or contact us.

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