TRAVEL 2016 KEY INSIGHTS

INTERNATIONAL OUTLOOK

OCTOBER 2016

SHOCKS, SPILLS AND THRILLS

BREXIT: BOOM OR BUST?

DISRUPTION BREEDS GROWTH

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Flight

- Refugees and migrants seeking safety and fleeing war

zones and poverty

- Puts stress on existing infrastructure

- Avoidance of destinations affected by terrorism

Financial stress

- Global economic stagnation

- Economic uncertainty and job losses leading to

consumers’ falling out of the middle classes

Fright

- Pandemics cause major consumer alarm, eg Zika

- Social unrest and protests

- Growing inequality

- Radicalisation

Political fracture

- Potential collapse of political unions and trading blocs, eg

EU and Brexit

- Democracy in question, eg in the US with Trump polarising opinion and challenging the

status quo

Travel flies in the face of fear SHOCKS, SPILLS AND THRILLS

Quadrant of Fear Factors

US$2.5 trnTRAVEL PRODUCT SALES

+45%ONLINE TRAVEL PENETRATION 2020

4% CAGRGLOBAL OUTBOUND TRIPS 2015-2020

CAGR = Compound annual growth rate

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0

100

200

300

400

500

600

2001 2006 2010 2015 2020

Mill

ion

Tri

ps

World Arrivals by Region in Trips 2001-2020

Asia Pacific

Australasia

Eastern Europe

Latin America

Middle East andAfricaNorth America

Western Europe

Tourism demand yet to peakSHOCKS, SPILLS AND THRILLS

Global demand has grown consistently over the past 20 years, shows very little signs of slowing

By 2020, it is expected that 1.5 billion international trips will be taken

While Western Europe remains the most popular region, Asia’s ascent is at the expense of Europe

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Destinations on a geopolitical rollercoasterSHOCKS, SPILLS AND THRILLS

Visible substitution effect where shifting capacity to more stable countries

Sharp declines in Egypt, Tunisia and Turkey as consumers opt for safer shores of Spain, Portugal & Croatia

Source: Euromonitor International from UNWTO

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Asia Pacific punches well above its weight in terms of travel indicators compared to its share of global GDP

Asia Pacific is not enjoying as much success inbound as it is on a domestic and outbound scale

Asians in the next development phase of tourism, away from intra-regional to international travel

Decline in Asia’s value share of world inbound receipts over 2015-2020, from 46% to 37%, will in part be due to greater price pressure, due to online sales

Players like Ctrip are driving this charge

Scales tilt in Asia’s favour, with positive widespread effectsSHOCKS, SPILLS AND THRILLS

0% 10% 20% 30% 40% 50% 60%

Hotels

Airlines

GDP

Online Travel Sales

Intermediaries

Outbound Expenditure

Inbound Receipts

Domestic Expenditure

Population

% share

Asia’s Share of World Travel and Tourism 2015/2020

2015

2020

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By 2018, Chinese outbound departures expected to reach the 100 million mark

By 2030, 200 million outbound Chinese travellers

Large steady supply from China will gravitate to Asia

Japan and South Korea have enjoyed the strongest demand from China, aided by visa programmes

Chinese hard landing scenario would knock 250,000 trips off China to US , but still growing strong at 26% CAGR 2016/2020

CAGR = Compound annual growth rate

China outbound is a great opportunity but not a panacea SHOCKS, SPILLS AND THRILLS

China to US 2020: 3.5mn 30% CAGR

-

5

10

15

20

25

30

Ho

ng

Ko

ng,

Ch

ina

Thai

lan

d

Mac

au

Jap

an

Sou

th K

ore

a

Taiw

an US

Vie

tnam

Sin

gap

ore

Mal

aysi

a

Fran

ce

Mya

nm

ar

Ge

rman

y

Ind

on

esia

Au

stra

lia

Ru

ssia

De

par

ture

s (m

illio

n)

China Outbound Departures

2000/2010/2020

2000 2010 2020

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The Chinese government has so far avoided an economic hard landing

Economic fundamentals proving better than expected, with real GDP growth forecast at 6.4% in 2016

China takes the leading share of outbound Asian expenditure, with 41% in 2015, compared to much lower shares for advanced economies like Japan (4%) and South Korea (8%) & India (6%)

Work still needs to be done in India to encourage outbound travel as to become the world’s most populous nation by 2025

Important to look at other emerging markets with rising disposable incomes - India, Indonesia, Mexico, Malaysia, Turkey and Poland

Looking to China and beyond for long-term growthSHOCKS, SPILLS AND THRILLS

-

100

200

300

400

500

600

2015 2020

US$

bill

ion

Asia Outbound Expenditure2015/2020

Other Asia China Hong Kong

India Indonesia Japan

Singapore South Korea Taiwan

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Looking into India’s futureSHOCKS, SPILLS AND THRILLS

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WinnersDepartures '000 2020

Ranking 2020

Ranking position change 2015/2020

India 26,379 15 6

Indonesia 13,280 27 6

Singapore 27,094 13 4

Turkey 11,065 33 4

Malaysia 23,083 19 3

Thailand 14,003 26 3

China 116,484 2 2

South Korea 29,868 11 2

US 119,471 1 1

LosersDepartures '000 2020

Ranking 2020

Ranking position change 2015/2020

UK 95,749 4 -1

Russia 30,878 10 -1

Australia 20,908 20 -1

Belgium 26,814 14 -2

Germany 113,317 3 -3

Switzerland 24,971 17 -3

Japan 24,380 18 -3

Ukraine 18,079 22 -4

Brazil 9,135 39 -8

Continued diversification to safeguard tourism demandSHOCKS, SPILLS AND THRILLS

Asia Pacific will be key to tourism strategies; India, Indonesia, Singapore, Malaysia and China will see big jumps in their importance to global tourism as a % share of departures

Conflict and economic strife will see Russia, Ukraine and Brazil continue to lose momentum

UK to US will continue to grow at 3% per year but challenges ahead post-Brexit

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