Tourism One Minute Report
A global market scan in one minute or less.
September 14, 2016

TRAVEL SPENDING STILL ON THE RISE FOR 2016

Despite some key economies weakening, overall, global travel spending is still on the rise – albeit at a slower pace. Travel spending is projected to grow 3.1% in 2016. This is down from a forecast of 3.3% in March but still well above global economic growth which is anticipated to be 2.3% for the year.

The current economic backdrop, political uncertainty and a series of terrorist attacks are all factors impacting the demand for international travel, though those detoured by instability in some areas may just be rerouting their travels to other countries. South Asians are anticipated to lead global spending growth in 2016 at 5.9%, North America and Europe are expected to increase their spending by 3.1% and 2.2% respectively1.

Continue reading for a quick summary on current outbound travel around the globe…

NORTH AMERICA

CANADA: Outbound travel from Canada was down 5.9% in the first six months of this year as compared to the first half of 2015. 16.6 million Canadians embarked on international travel January to June of 2015 with numbers dropping to 15.62 in the same timeframe this year. Most notable was the 4.1% drop in outbound travel from Ontario and the 7.7% decline from BC, equating to 10.44 fewer outbound travellers collectively2.

Despite cheap oil, a low loonie and a strengthening US economy, Canada’s economy is taking a bruising as evidenced by its GDP’s steepest dive since 2009 during the summer of 2016.  And, the effect is finally showing up in consumer confidence levels  – after positive growth near the beginning, the Canadian Consumer Confidence Index decreased twice in the last 3 months, and dropped 3.1 points from July to August reaching 101.53. Largely due to the economy, Canada shed 31,200 jobs in July – the since November of 2015. As a result, the unemployment rate edged up to 6.9% in July4.

UNITED STATES: The first four months of 2016 saw a 9.8% increase in outbound travel over 2015 with 22.87 million Americans embarking to international destinations5.
Unemployment remained unchanged from June to July at 4.9% (7.8 million Americans)6. However, there could be clouds on the horizon – consumer sentiment in the US dropped to its lowest reading since April to 89.8 for the month of August, stumping expectations for it to be as high as 90.4. Long term inflation projections dropped to the lowest level ever recorded7.

EUROPE

UK: Visits abroad and spending by UK residents was up 8% and 12% respectively in the 12 months prior to June 2016.  Leisure continues to dominate the reason for travel (7%), followed closely by business trips (5%), and visits to friends and relatives (10%).  Visits to all areas of the world rose: North America by 9%, Europe by 9% and other countries by 2%8.

Brexit is proving to be less of a drag on the UK economy than originally feared, possibly due to the Bank of England’s actions to vastly reduce interest rates and re-enlist measures to provoke growth and avoid a recession. Preliminary data reflected 0.6% growth in Q2, up from 0.4% from the first quarter and early estimates for the first half of 2016 show that the UK is on track for 1.6% growth in 2016 and 0.7% in 20179.

GERMANY: Despite recent signs of slowing (some of the effects of BREXIT), Germany’s economy overall  is growing and enjoys a low unemployment rate – 4.2% in July.  It advanced 0.4% in Q2 of 2016, a slight decrease from its growth of 0.7% in the first quarter10.

FRANCE: The terrorist attacks on France in late 2015, the more recent attack on Nice and recent threats of impending terrorist attacks have had a dramatic impact on inbound travel to the country and visitation to the capital city. Paris and its top attractions have seen a loss of around 750 million euros ($850USD) in revenues this year. Visitation at the Grand Palais and the Palace of Versailles have declined 43.9% and 20% respectively. Summer hotel revenues in Paris are down 15% with higher-end hotels reporting declines of between 30 and 40%11.

Unemployment in France decreased to 9.9% in Q2 as compared to 10.2% in the first quarter12, but edged back up to 10.3% in July13.

ASIA PACIFIC

CHINA: Despite the China’s slowing economy, outbound travel continues to be robust. For example, travel to Australia reached a new record high January to May 2016 of 1.4 million visitors, and daily spending registered around $474 USD per day((“Australia to score as China Tourists Spend More”. The Sydney Morning Herald, July 19, 2016)). 731,400 Chinese travelled to Japan in July – setting a new monthly record. The number of single female travellers in their 20′s and 30′s is on the rise; comprising 40% of all Chinese travellers in Q2 this year14. Recent surveys show that millennials, the Chinese demographic with the greatest potential for growth, are prepared to spend almost a quarter of their annual income on travel.

JAPAN: 1.43 million Japanese embarked on international travel in July, up 8.3% from 1.3 million in the same month last year. 19.34 million Japanese travelled between January and July of this year and each month, with the exception of May, has shown noteworthy year-over- year increases in the number of outbound travellers15. The Japanese unemployment rate is one of the lowest for OECD countries, sitting at 3% in July 201616.

AUSTRALIA: Australians took 843,200 international trips in the month of June this year, a 7.3% increase from the 782,000 international trips taken in June of 201517.18.
The Australian unemployment rate sat at 5.7% in July 201619.

WORD OF MOUTH

…I believe the case for an increase in the federal funds rate has strengthened in recent months…Janet Yellen, Chair of the Board of Governors of the Federal Reserve regarding an increase in the benchmark of US interest rates.

The global economy felt the impact of the sudden increase last December so the Fed has held back on raising rates in the months since though many within the bank believe another hike is warranted. While being very careful to avoid a clear timeline for an increase, Yellen has hinted that “in light of the continued solid performance of the labour market and [the] outlook for economic activity and inflation” a gradual increase may be on the horizon.

  1. Mayerowitz, Scott. “Global Travel Spending Still Growing but at a Slower Pace”. Toronto Sun, August 22, 2015 []
  2. “One or more Nights’ Trips by Residents Returning to Canada, by Province of Re-entry, Year to Date”. Statistics Canada, August 18, 2016 []
  3. Desormeaux, Marc, “Index of Consumer Confidence”. The Conference Board of Canada, August 26, 2016 []
  4. “Canada Unemployment Rate”. Trading Economics, August 5, 2016 []
  5. “U.S. Citizen Travel to International Regions” National Travel and Tourism Office. August 23, 2016 []
  6. “United States Unemployment Rate”. Trading Economics, August 5, 2016 []
  7. “United States Consumer Sentiment”. Trading Economics, August 30, 2016 []
  8. UK Office for National Statistics, Statistical Bulletin, August 19, 2016 []
  9. Isfeld, Gordon. “Brexit Likely less of a Drag on UK Economy than Many Feared”. Financial Post, August 23, 2016 []
  10. “Germany GPD Growth Rate”. Trading Economics, August 12, 2016 []
  11. Vidalon, Dominique. “Paris Tourism Chiefs Demand Rescue Plan as Attacks Scare off Visitors”, August 23, 2016 []
  12. “France Unemployment Rate”. Trading Economics, August 18, 2016 []
  13. OECD Stat, Short-term Labour Market Statistics, extracted September 14, 2016 []
  14. Baird, Cory, Ujikane, Keiko. “Chinese Tourists in Japan Choose Cosmetics over Electronics”. Bloomberg, August 21, 2016 []
  15. “Foreign Visitors & Japanese Departures 2016”. Japan National Tourism Organization, August, 2016 []
  16. OECD Stat, Short-term Labour Market Statistics, extracted September 14, 2016 []
  17. “Overseas Arrivals and Departures, Australia, June 2015”. Australian Bureau of Statistics, August 7, 2015 []
  18. “Overseas Arrivals and Departures, Australia, June 2016”. Australian Bureau of Statistics, August 4, 2016 []
  19. OECD Stat, Short-term Labour Market Statistics, extracted September 14, 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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