On the eve of the US election, there is an understandable amount of nervousness in the global travel industry as to the resulting impact on US outbound travel. While Hilary Clinton has laid out at detailed economic policy, Trump has yet to provide any evidence of an economic plan. Business travel for example, could be put on hold if Trump is elected, at least temporarily, as businesses wait for more detail around economic and foreign policies. Leisure outbound travel will no doubt witness a drop should the US dollar weaken – although that could re-energize travel to America from other countries like Australia, which has seen its dollar lose ground against the US greenback in recent years.
Here is this month’s report on key outbound markets around the world…
CANADA: Travel by Canadians to international destinations showed a sizeable drop of 5.4% between Jan-Aug 2016 compared to the same period last year, no doubt greatly affected by the lack of strength of the Canadian loonie and the lacklustre performance of the economy in the first part of the year. In August alone, travel abroad dropped 4.3%1.
Consumer confidence in Canada dropped 6.3 points in October to 96.7. This is the largest monthly decline since the price of oil first dropped below US$30 per barrel in January 20162.
USA: For the fourth consecutive year, outbound travel from the United States saw a notable increase, tallying 74 million in 2015 – a 9% increase from 2014. Travel to overseas countries increased 7% with 32.8 million trips taken, setting a new record. Mexico and Canada remained the top two destinations for Americans: travel to Mexico increased by 11% and to Canada by 8% in 20153.
With the addition of 161,000 jobs in the month of October, the United States saw a dip in the unemployment rate to 4.9% from 5% in September4. Consumer confidence dropped to 87.2 in October from 91.2 in September bringing the reading to the lowest it has been since September of 20155.
UK: The number of visits abroad by UK residents was 7% higher JAN-Aug 2016 compared to 2015; expenditure increased by 9% during this period. Visits to North America, Europe and other countries rose by 4%, 8% and 1% respectively6.
With the dust starting to settle on Brexit, the impact of the referendum on travel out of the UK to continental Europe remains to be seen. British citizens will not need visas to travel to Europe as originally feared, although entry may not be as smooth as in the pre-Brexit era. (Trend, Nick. What Leaving the EU Could Cost Travelers”. The Telegraph, October 6, 2016)).
In the wake of Brexit and the devaluation of the pound, tourism looks as though it could buck the trend. Inbound travel from China alone was anticipated to spike by 20-30% in July and August – conversely, the drop in the value of the pound has encouraged many would-be travellers to stay in the UK instead of embarking on travel to other European countries7.
FRANCE: Following a 0.1% fall in Q2, France saw a slight swing upwards with 0.2% growth in the third quarter. French government has set the target for growth at 1.5% in 2016 though at this point it has been recognized as an ambitious goal. Growth in the fourth quarter would have to reach at least 1.2% in order for that to be possible8.
GERMANY: Unemployment in Germany remained steady at 4.1% for both August and September, a drop compared to 4.5% over the same period last year9.
ITALY: Growth remained stagnant for the Eurozone’s third largest economy in Q2. Growth in Q3 is anticipated to be modest if at all. As of current, there are no signs that the final quarter of 2016 is anticipated to be any different. The Italian economy grew 0.7% in 2015 and the government has forecast growth of 0.8% in 201610.
GREECE: The Bank of Greece anticipates the Greek economy will begin to recover in the second half of 2016 and that the growth will continue into 2017 and 2018. The GDP is forecast to drop 0.3% by end of year, but that is expected to be followed by growth of 2.5% and 3% in 2017 and 2018 respectively11.
JAPAN: Outbound travel from Japan increased significantly to 1.81 million in August, a 10% leap from August 2015. September saw an increase of 1.3% in outbound travel to 1.55 million as compared to 1.52 million last year. In the months January to September, the only month that has not seen growth year on year is May. On average, the first three quarters of 2016 has seen monthly growth of 5% YOY12.
CHINA: As anticipated, China’s 2016 “Golden Week” saw an increase in outbound travel compared to last year. 9.96 million Chinese travellers took outbound flights during the weeklong holiday, an 11.6% increase from 2015. Hong Kong accommodated a mere 9,322 mainland visitors, a 55.7% drop from the number of visitors during the same week last year. Chinese travellers instead looked to destinations like Russia, the United States, Morocco, Tunisia and Tonga for the week13.
Outbound travel from mainland China is expected to set new records by the end of 2016. It is forecast that around 133 million Chinese will embark on international travel – an increase of 11.5% from 2015. Chinese spending overseas totalled $104.5 billion last year, a 16.6% increase on 2014. With the relaxing of visa requirements and increased outbound travel, that number is expected to increase once again in 201614.
WORD OF MOUTH
“Terror attacks and political unrest had no impact on the overall volume of worldwide outbound trips this year. The global travel industry remains on a growth path, and the number of outbound trips will probably increase by about 4 – 5 percent next year.” Attributed to Rolf Freitag, President of the tourism consultancy IPK International, at the 24th World Travel Monitor® Forum in Pisa, Italy15.
Worldwide outbound travel grew by 4% in the first nine months of 201616. China and Korea were among the key outbound travel drivers with 18% and 11% growth respectively. On the other hand travel out of Russia and Brazil dropped 20% and 15% respectively.
The outlook for 2017 remains equally as positive with outbound travel anticipated to grow between 4 and 5 percent. Travel from Asia is anticipated to see 6% growth, followed by with North, Central and South America (5%) and Europe (4%)17
Destinations impacted by attacks or political unrest, like France, Belgium and Turkey, witnessed feeble growth in tourism in inbound tourism during 2016, as it would appear that many tourists simply diverted to other destinations with a higher prospect of safety. In the first eight months of 2016 one million fewer visitors traveled to Paris and the surrounding region each month, resulting in a loss of tourism-related income of one billion euros per month. However, this too will likely be a temporary setback, as evidenced by Egypt’s impressive 38% jump in 2016, after years of lacklustre growth due to unrest18.
- Statistics Canada, International Travel: Advance Information, August 2016 [↩]
- Desormeaux, Marc. “Index of Consumer Confidence: October 2016”. Conference Board of Canada, October 31, 2016 [↩]
- “U.S. Travel to International Destinations Increased Nine Percent in 2015”. National Travel and Tourism Office, October 28, 2016 [↩]
- Swanson, Ana. “US Economy Added 161K jobs in October as Unemployment Rate Dipped to 4.9%”. The Washington Post, November 4, 2016 [↩]
- “United States Consumer Sentiment”. Trading Economics, October 28, 2016 [↩]
- UK Office for National Statistics, October 16, 2016 [↩]
- Chapman, Matthew. “Brexit and Tourism: ‘We have Devalued the Union Jack as a Tourism Brand”. The Guardian, August 3, 2016 [↩]
- “France Reports Growth in Third Quarter…but not Enough”. RFI English, October 28, 2016 [↩]
- “Germany Unemployment Rate”. Trading Economics, October 2016 [↩]
- Jones, Gavin. “No Sign Italy’s Economy to Accelerate in Fourth Quarter”. Reuters, November 4, 2016 [↩]
- “Greece All Estimates see Greek Economic Growth Approaching 3.0 pct in 2017”.Bank’s News, November 4, 2016 [↩]
- “2016 Foreign Visitors and Japanese Departures”. Japan National Tourism organization, November 2016 [↩]
- Ge, Celine. “Chinese Tourists Skipped Hong Kong, Taiwan and Headed Farther afield During Golden Week”. South China Morning Post, October 11, 2016 [↩]
- Li, Jane. “Record 133 million Chinese to travel out of Mainland this Year, with Hong Kong their Top Destination”. South China Morning Post, September 8, 2016 [↩]
- “International travel on the Rise World Wide”. Tornos News, November 5, 2016 [↩]
- UNWTO, Press Release, November 7, 2016 [↩]
- ibid. [↩]
- op. cit. [↩]
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.