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EMERGING OUTBOUND MARKETS LOOKING AHEAD IN UNCERTAIN TIMES OCTOBER 2011
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EMERGING OUTBOUND MARKETS

LOOKING AHEAD IN UNCERTAIN TIMES

OCTOBER 2011

ECONOMIC UPDATE

TOURISM PERFORMANCE

CATEGORY DEVELOPMENTS

© Euromonitor International

3

-5-4-3-2-10123456789

10

% y

-o-y

gro

wth

Emerging vs Advanced Economies % Real GDP Growth 2000-2015

Emerging Advanced World

Economic polarisation at workECONOMIC UPDATE

Source: Euromonitor International, IMF

Global recovery in slowdown, double dip fears Balance of power shifts to emerging markets

© Euromonitor International

4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

%

“Misery Index” in Key Advanced Economies 2005-2016

Japan USA United Kingdom Eurozone

Misery index shows stagnation in advanced economiesECONOMIC UPDATE

Source: Euromonitor International from IMF, Eurostat, ILO, national statistics

Note: “Misery Index” is the sum of inflation and unemployment rate

Misery index increased in 2011, to improve from 2012 High unemployment and prices in advanced economies squeeze income

© Euromonitor International

5

Emerging population

6.2bn

2015

Emerging population

6.2bn

2015

853m middle

class households

2015

853m middle

class households

2015

China to be world’s largest

economy 2017

China to be world’s largest

economy 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% o

f p

op

ula

tio

n

Urban Population 2005-2015

2005 2010 2015

Demographic growth boosts emerging middle classECONOMIC UPDATE

Source: Euromonitor International

© Euromonitor International

6

Income tipping point for outbound travelECONOMIC UPDATE

Morocco

Philippines

Note: size of bubble reflects outbound departures in volume 2015Middle class defined by average gross income of over US$5,000

-4

-2

0

2

4

6

8

10

12

14

16

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

Ou

tgo

ing

to

uri

sm e

xp

en

dit

ure

%

CA

GR

20

10-1

5

Number of middle class households growth % CAGR 2010-15

Rising Middle Class as Growth Catalyst for Outbound Travel

China

India

Indonesia

Uzbekistan

Ukraine

Vietnam

Egypt Pakistan

Philippines

Russia

Brazil

Thailand

ECONOMIC UPDATE

TOURISM PERFORMANCE

CATEGORY DEVELOPMENTS

© Euromonitor International

8

Emerging markets growing importance for outbound tourismTOURISM PERFORMANCE

-

200

400

600

800

1,000

1,200

1,400

-

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015

US

$ a

ve

rag

e sp

en

d

Mil

lio

n t

rip

s

Developed vs Emerging Outbound Tourism Demand 2010-2015

developed departures emerging departures

developed average spend emerging average spend

Departures from emerging markets 325m 2011, to reach 43% share by 2015 But differential in average spend remains

© Euromonitor International

9

China, Russia and India lead new sources of demand

-

5,000

10,000

15,000

20,000

25,000

30,000

‘00

0 t

rip

s a

bso

lute

in

cre

ase

20

10-1

5

Outbound Departures Forecast Absolute Increase 2010-2015

Millionaires departure club TOURISM PERFORMANCE

Source: Euromonitor InternationalNote: based on forecast increment of 1 million departures

© Euromonitor International

10

Brazil 6m

departures

High average outbound spend

US$3,000

Open Skies liberates traffic

with Europe and America

Russia 54m

departures

Online travel to take off with

Expedia entry

India 22m

departures

Greater choice of packages at

affordable prices

China 62m

departures

US$77bn

Outbound spending

Asia destinations popular - Thailand,

Malaysia

BRICs long term outbound appealTOURISM PERFORMANCE

Note: forecast departures for 2015

© Euromonitor International

11

5.4m departures, up 2%, outgoing expenditure US$22bn up 38%

Airline mergers LAN / TAM, Gol / Webjet

Travel retail innovation eg CVC “World to Brazilians”

Growing importance of social networking

18,064.1

8,096.1

13,103.5

956.21,912.3

3,089.11,576.9

Brazilian Outbound Tourism Expenditure 2015

Accommodation

Entertainment

Excursions

Food

Shopping

Travel Within Country

Other

Brazil outbound in focusTOURISM PERFORMANCE

Source: Euromonitor International

© Euromonitor International

12

Destination Asia: arrivals 2011TOURISM PERFORMANCE1

> 25 million arrivals > 20 million arrivals> 15 million arrivals> 10 million arrivals> 5 million arrivals< 5 million arrivals

Asia Top 12 Growth

2010 13%2011 4%2012 6%

Japan Arrivals Growth

2010 25%2011 -30%2012 10%

Source: Euromonitor International

© Euromonitor International

13

Intra-regional travel remains mainstay of Asian demandTOURISM PERFORMANCE

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Ge

rma

ny

Au

stra

lia

US

Ru

ssia

Bra

zil

Sa

ud

i A

rab

ia

Ka

zak

hst

an

Ch

ina

So

uth

Ko

rea

Ta

iwa

n

Sin

ga

po

re

InternationalAdvanced

Emerging Markets Asia Advanced

'00

0 t

rip

s

Outbound Tourism Flows from Key Markets to Asia 2010-2015

2010

2015

Note: based on departures to top 12 Asian destinations, China excludes departures to Hong Kong

ECONOMIC UPDATE

TOURISM PERFORMANCE

CATEGORY DEVELOPMENTS

© Euromonitor International

15

Asia to account for 33% of world air passenger traffic by 2030 (Airbus)

LCCs high growth and new launches - Air Asia Philippines/Japan

Long haul low cost - Air Asia X, Jetstar joined by SIA’s Scoot

Asia at core of emerging demand, driven by air transportationCATEGORY DEVELOPMENTS

0 2 4 6 8

China

India

Indonesia

Malaysia

U$S billion

Low Cost Carriers Sales US$ billion in Key Asian Countries 2010/2015

2015

2010

Source: Euromonitor International

© Euromonitor International

16

Dubai International aim for world’s busiest airport, 99m passengers by 2020

Emirates leads Middle East to China, 34% of 1.3m

Middle East – Far East premium passenger growth 11% (IATA)

Middle East air boom will play a pivotal role CATEGORY DEVELOPMENTS

0

10

20

30

40

50

60

Egypt 2010 Egypt 2015 KSA 2010 KSA 2015 UAE 2010 UAE 2015

Pa

sse

ng

ers

, m

illi

on

Airline Capacity and Passengers Carried by Middle East Countries 2010/2015

PassengerscarriedExtra capacity

Source: Euromonitor International

© Euromonitor International

17

30%

4%

12%6%12%

36%

34%

4%

12%6%

12%

32% 38%

4%12%

6%

11%

29%

Hotel Outlets by Region % Share2005/2010/2015

Asia Pacific Australasia

Eastern Europe Latin America

Middle East and Africa North America

Western Europe

Emerging markets lead hotel pipeline developmentCATEGORY DEVELOPMENTS

1,290 hotels, 310,000 rooms in the pipeline (STR)

Accor opened 50+ hotels in Asia 2011

IHG 150+ properties in China, 150 more

Note: outer circle represents 2015

Asia

© Euromonitor International

18

0

2

4

6

8

10

12

14

Latin America Asia Pacific Eastern Europe Middle East Africa

% v

alu

e C

AG

R 2

010

-15

Emerging Regions Online Sales by Category% CAGR Growth 2010-2015

Air

Hotel

Travel Retail

Online and mobile drive travel salesCATEGORY DEVELOPMENTS

Emerging markets 4.3bn mobile subscribers vs developed 1.2bn Boom in online travel retail, China and India 16% and 18% CAGR 2010-2015

Source: Euromonitor International

© Euromonitor International

19

OPPORTUNITIES

THREATS

Engine for growth

Smaller share of global consumption growth than of GDP growth

853m middle class households by 2015

Driver of new outbound demand

400m emerging market departures by 2015

Increased connectivity and new LCCs

Greater segmentation and choice

Faltering global economy

Risk of oversupply

Impact on Hotels

Europe and US risk tipping world back into recession

Reduced bailout capabilities, including China

Stagnation of key international source markets

Excess supply is a threat to profitability

EMERGING OUTBOUND MARKETS

© Euromonitor International

20

For further details, please contact:

Caroline Bremner

Head of Travel and Tourism Research

Euromonitor International

www.euromonitor.com

[email protected]

+44 (0) 20 7251 8024

Thank youEUROMONITOR INTERNATIONAL


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