Freer travel equals jobs, prosperity
As the changes in visa policies between China and the US shows, policymakers can help turn on tourism’s economicbenefits by making it easier to travel, Alfred Romann reports.
slower economic expansion around the word, travel and tourism are that much more important.
“The cycle of growth will trump the economic downturn over the next few years,” said Ng. “China may face some economic (difficulties) but we believe tourism will continue to grow.”
Outbound tourism from China has expanded almost exponentially over the past couple of decades on the back of rising incomes.
Ng pointed out that when annual incomes hit the $20,000 mark, people start traveling. At $35,000, people start traveling internationally. The number of people hitting these markers is growing by tens of millions every year in China.
Still, much potential for growth remains in this particular market. Thus, as China grows, so does the global travel and tourism industry.
“The number of outbound tourists is huge but it will only get bigger,” said Ng. “Although the growth of Chinese outbound tourism has been strong, the penetration is still weak, only 7 percent.”
In more developed markets, travel and tourism is a more popular activity. In the US, the penetration rate of the sector is around 20 percent. In South Korea or Japan, it is closer to 30 percent.
Greater penetration into China would translate into much larger numbers of travelers and, in turn, double-digit growth for the travel and tourism industry — a scale big enough to power the growth of the global industry.
This is a reality that has not escaped the notice of industry stakeholders, who not only expect big things from Chinese tourists but from the global industry as a whole.
For many, the travel and tourism industry has the potential to propel global economic growth.
Moving toward the year 2030, there is a clear trend in favor of more travel and tourism and, at the same time, greater spending.
Chinese tourists have emerged as a major force. While travelers from other countries in the region are also spending, Chinese tourists are the biggest spenders by far, with almost 117 million international trips and spending of $165 billion last year.
While consumers with more disposable income are eager to travel, it is up to policymakers to make it easy for them to do that.
“We need to shape policies and procedures for this growth to materialize,” said John Kester, director of the tourism market trends program at the UNWTO.
“Whether as a destination you are able to receive those visitors or whether they will go to your neighbor depends on your policies,” he added.
“We are now entering the next phase of tourism … we are now getting a more experienced and demanding customer.”
Better infrastructure and well-executed plans to facilitate travel are both key. Visafree access, in particular, is an example of the type of policy that can oil the engine of travel and tourism.
South Korea’s Busan is a prime example of a city that has benefited from wellimplemented visa-free policies.
The city credits the implementation of a 72-hour visafree policy with driving its growth and allowing the city to recreate itself.
It is also the type of policy that country groupings elsewhere look for to drive their own tourism industries and associated sectors. The creation of a single zone in the European market helped spur tourism there.
Countries in Latin America are also working to facilitate travel within countries in the region and for foreign travelers, the Chinese in particular.
The huge levels of expenditure that travelers from China represent has not gone unnoticed among the furthest destinations either, such as Mexico, Colombia, Peru and Chile, which make up the Pacific Alliance.
“Visa facilitation is very important and our president is working on this already,” said Sandra Howard Taylor, vice-minister of commerce, industry and tourism in Colombia.
Well-designed policies can both attract consumption and drive investment. A case in point is China’s Belt and Road Initiative, said Liu Yang, chairman of Atlantis Investment Management, a veteran fund manager.
Proposed by President Xi Jinping in 2013, the development strategy seeks to connect countries in Asia, Europe and Africa that straddle the ancient land and maritime Silk Road.
China’s plan could power investment in infrastructure and, in turn, facilitate the growth of travel and tourism.
Liu believes service industries, in particular the ones related to travel and tourism, will drive economic growth in China.
“This sector should contribute 20 to 30 percent of GDP growth in the near future, including Internet, healthcare, and hospitality services,” she said.
In the past three years Chinese salaries have increased 12 percent and that is a big driver of growth in travel and tourism.
The challenge going forward may not be to drive the growth of travel and tourism but rather to grab more market share, suggested Peter Meier, CEO of the Kuoni Group, a Swiss provider of services to the travel industry and governments with its focus on Asia.
Tourist arrivals to Asia Pacific rose 23 percent in 2014 to around 260 million.
Half of them went to Northeast Asia. The region already receives more than 30 percent of international tourist receipts.
“When it comes to travel, we really don’t have to worry about demand,” said Meier. “It is more a question of how we grab this demand.”
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Luo Wangshu and Su Zhou contributed to this story.
A growing number of Chinese tourists visit foreign countries, and among their favorites is the United States.