The global travel and tourism industry was reported to have $7.6 trillion in 2016 and it includes markets in transportation (mostly airlines), entertainment, accommodation, and online travel businesses. This industry has a CAGR of 11.1% for the forecasting period of 2016–2022. By far, France and the United States reap the highest economic benefits as they are considered the most popular tourism destinations worldwide. With the rise of the middle class population and the growth of social networks, travel markets have gone up significantly over the past few years and it doesn’t seem to be slowing down anytime soon.
Key Facts
- The top five countries for the tourism market come from the USA, China, Japan, Germany, and the UK. They account for 47% of the global Travel & Tourism GDP.
- Travel & Tourism sector grew by 3.9% and outpaced the global economy.
- In the U.S. direct spending on leisure travel totaled $761.7 billion in 2018.
- In terms of employment status, travel is ranked among the Top 10 Industries in 49 states.
- The U.S. travel industry generates $2.5 trillion in economic output, supports 15.7 million American jobs and generates a $69 billion trade surplus for the United States.
- Trade generated a $69 billion international trade surplus for the U.S. economy in 2018.
- International tourists grew by 6% in merely 6 months in 2018.
- 40% of solo traveling is done by Baby Boomers.
- 50% of travelers from the USA, UK, Canada, and Australia claimed that social media contents influenced their decision to travel.
- Spending for experiences in general have risen over spending on tangible goods.
GDP & Employment Contribution
In a research done by the World Travel & Tourism Council (WTTC) in 2018, the tourism market in 185 countries and 25 regions accounted for nearly 10.4% of the global GDP and took hold of 319 million jobs, representing a whopping 10% of the total employment rate. With such impressive growth in job creation across the globe, the sector reached an $8.8 trillion valuation. Travel and Tourism industry placed ahead of Healthcare, Information Technology, and Financial Services, recognizing as the second-fastest growing sector in the world in 2018. The number one fastest growing industry was Manufacturing, which rated 4% higher than Travel and Tourism.
Travel & Tourism market is expected to grow 0.7% faster than the global economy, resulting in a 3.6% expansion. Most of its growth is driven by a continued rise of middle-class households and attraction of high international visitors. Research finds that by 2029, nearly 67 million new travelers will surface in China, followed by 14 million in India, and 9 million in the USA. In countries where Travel & Tourism plays a significant part in growing the economy, Greece, Portugal, and the UAE all had exceptional performances in generating new jobs.
Industry Trends
With the advent of new technologies, the tourism industry has adopted several trends to match the needs of today’s growing consumers. Below are the top five trends to watch for:
- Artificial Intelligence — AI machine learning technology is widely used for marketing purposes in the tourism sector. Especially in the arena of online booking, AI has increasingly added value by personalizing customer experiences and providing hotels and tours based on their preferences. AI is also used by businesses to help manage their customer support system. Chatbots have demonstrated topnotch ability to draw conclusions based on customers’ feedback and behavior.
- Virtual Reality & Augmented Reality — VR & AR have gained significant traction in the tourism industry as they allow travelers to digitally get into any virtual surroundings of their choice. VR & AR offer several high-end entertainment technologies for travelers to engage in stimulating and extreme activities. Tourists who are too weak for physical tours and people with disabilities can make good use of these technologies.
- Recognition Technology — A significant trend in the travel industry is utilizing the latest recognition technology to provide authentication and security services. This includes fingerprint, facial recognition, retina scanning, voice activation, and signature recognition. In the U.S. alone, roughly 65 million facial recognition cameras have been implemented. Through these technologies, many travelers can increase their safety and enjoy more conveniences overall.
- Robot Guides — In major international airports, robot guides are used to help travelers locate nearby stores, subway stations, and hotels. They also help with cleaning the floors, detecting hidden weapons, and even greet new visitors during check-in and check-out procedures. Robots have undoubtedly transformed the travel industry and they will continue to make a huge impact for years to come.
New Investments
With the market for Tourism & Travel expected to reach $1.7 trillion in 2019, investment opportunities will continue to rise. Travel stocks can be separated by four components: hotels, airlines, online travel agencies, and cruise ships. Hotel stocks have surged over the past year due to an increase in room rates. Ironically, this reveals that demands for hotel accommodations have gone up. With airlines, more than 80% of the U.S. market is made by American, Delta, United, and Southwest. Airline stocks currently have fairly cheap P.E ratios with low double digits. But there will be some challenges later on in terms of competing with oil prices. As for online bookings, the internet has definitely changed the way people make travel itineraries. Travel agencies such as Expedia and TripAdvisor have witnessed immense growth by adapting to market segments. Lastly, in terms of cruise ships, the market has been quite volatile for the past few months. But so far the past year has been riding with strong economy and investors interested in this should definitely consider both macro and micro economic factors.
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