Big cities will welcome young and digitally savvy leisure travellers from emerging economies, even as they become hotspots for a growing number of meetings, incentives, conventions and exhibitions (Mice). The tourism outlook for this year has several surprises, including leisure travel outpacing business travel and cities overtaking country holidays.
City vs country
Cities such as Dubai and Abu Dhabi are well placed to absorb the growing tourist interest in urban destinations, predicts ITB World Travel Trends Report (WTTR) 2013-14. Compared to countryside trips that declined by 10 per cent, the volume of city trips has increased by 47 per cent since 2009. Tours have grown by 27 per cent thanks to more long-haul trips, while foreign holidays grew by 25 per cent. Sun and beach holidays, which comprise the largest segment, grew by a meagre 12 per cent.
According to the MasterCard Global Destination Cities Index, Dubai was ranked the seventh most popular city globally in terms of inbound international visitors last year, outranking cities such as Hong Kong, Barcelona, Milan and Rome. Dubai shows the strongest growth in arrival numbers among the top ten global markets, with 9.89 million overnight visitors expected this year.
Of the Middle East and Africa’s top ten, Abu Dhabi (ranked seventh) shows the strongest growth rate, with an anticipated 16.1 per cent increase in arrivals.
Eyad al Kourdi, UAE Country Manager, MasterCard, tells GN Focus, “The Index highlights that if these rates are maintained in the coming years, Abu Dhabi will overtake Lagos in 2016 and match Johannesburg by 2017. The UAE’s capital also ranked sixth among the global top 20 with regard to growth rates of international visitor arrivals between 2009 and 2013.”
Rise of the millennials
Travel intelligence company, Skift calls it the “Apple-ification of the world”, predicting that the increased sophistication in user design gives travellers much more control over their entire experience.
Research company Deloitte’s 2014 outlook on travel, hospitality and leisure places importance on digital innovations and social media, as more companies from these respective industries seek to engage with customers directly.
Adam Weissenberg, Vice-Chairman, and Leader of the US Travel, Hospitality and Leisure sector, Deloitte, says, “In addition to their core Gen X customers, companies should consider focusing on millennial customers (typically aged between 18 and 34) as they present a significant growth potential. Millennials’ spending will likely to only increase as they step into their prime earning and spending years in the next decade. A few hotels are launching new brands while others are revamping their existing facilities with the latest technology features to appeal to young, tech-savvy customers.”
Leisure now trending
The World Tourism Organisation (UNWTO) estimates that youth travel generated $182 billion (about Dh668.49 billion) in international tourism receipts in 2012, and represented more than 20 per cent of the more than one billion international arrivals.The average cost of a trip by a young person amounted to $910. The UNWTO predicts the number of international trips by young people might increase from 200 million trips a year at present to 300 million by 2020.
According to the WTTR, “One interesting trend is that a lot more young people now describe themselves as tourists — nearly 30 per cent in 2012 compared to about 15 per cent in 2002. In contrast, the number of backpackers has fallen to about 15 per cent from more than 30 per cent a decade ago.”
While regional destinations are well placed to receive a growing number of leisure travellers, more can be done. Andrew Robinson, Resident Partner, Transportation and Leisure, KPMG Lower Gulf Limited, says, “On the leisure side we are blessed with amazing sea, sun and sand, and we have built shopping malls, sporting venues, golf courses, water parks and more. However, tourists need more of these, so it is great to see the theme park projects in Dubai Land taking shape and new parks signing up companies such as Six Flags to bring their attractions here. Continuous investment in such facilities is required to sustain a growing tourism market in the future.”
Brics and beyond
Yes, China has the most travellers and the ones that spend the most. WTTR cited IPK’s Asian Travel Monitor figures, which highlighted that the number of outbound trips soared by 26 per cent, the number of overnight stays by 12 per cent and spending by 15 per cent over the first eight months of last year. Despite the fact that spending per trip (€1,765 (Dh8,986.2)) and per night (€294) has declined, the dramatic growth still positions China as the world’s number one for total spending on outbound travel, number two for the volume of trips and number four for the quantity of overnight stays.
The number of foreign holidays has surged by 30 per cent last year. Business trips only increased by 6 per cent. The WTTR report says that the traditional Big Three — Germany, the US and the UK — are now being challenged strongly in the rankings. Russia, too, is growing fast, with a 12 per cent increase in trips this year, and is now number five in terms of overnight stays. Brazil (+6 per cent) is also rising steadily up the travel league. However, it’s not a good idea to rely only on Brazil, Russia, India and China (Bric) customers.
Weissenberg says, “Although disposable income continues to be on the rise in the Bric countries, growth in these regions is sluggish. Hoteliers should now focus on under utilised markets such as Burma, Cambodia and Vietnam, as well as other high-potential countries such as Turkey, the UAE and South Korea.”
Mice in focus
While business travel has been affected by cuts in corporate travel, the Mice sector continues to do well. According to WTTR, “The Mice segment accounts for 54 per cent of the business travel market. Within this segment, incentives (+61 per cent), conventions (+44 per cent) and conferences (+27 per cent) have all grown strongly since 2009 on a cumulative basis, while traditional company trips have declined by 10 per cent.”
This is great news for Dubai, which is readying itself for Expo 2020. Robinson says, “Mice visitors are predicted to grow as the capacity to host such events increases. The news of Dubai World Trade Centre restarting its exhibition expansion is also a boost.”