The Future of the Global Tourism Industry

Despite the political and economic turmoil of the past decade, the global tourism industry has continued to grow as the number of international tourists continues to rise at a steady pace and as industry revenues have nearly tripled over the past 15 years.  Of course, there have been some dramatic changes to the global tourism industry in recent years, with some clear winners and with some obvious losers.  For example, the expanding global middle and upper classes, coupled with the rise of emerging markets, particularly those in Asia, has created a vast new market for travel destinations.  On the other hand, political unrest and terrorism has severely damaged the tourism industries of what had been some of the world’s fastest-growing tourist destinations.  Looking ahead, demand in this industry is forecast to continue to rise and, as we have seen in many cases, the tourism industry can help struggling economies to grow at a faster rate, or at least avoid a complete meltdown.  Of course, competition in this industry will remain high and more changes are sure to come in the years ahead, but high rates of growth are all but assured.

Undoubtedly, the past few years have seen some of the greatest changes in the nature of the global tourism industry as external factors have changed the shape of the industry.  No factor has had a greater impact on this industry than the rise of emerging markets as not just travel destinations, but as sources of tourists.  This has resulted in increased competition within the industry as the number of potential tourist destinations has soared.  In addition, this has led to more and more travelers coming from emerging markets, especially China.  In fact, Asia is now the leading source of international tourists and Asia’s lead over all other regions in this category will continue to expand in the coming years.  In contrast, other key markets have struggled.  For example, the tourism industry in the Middle East and North Africa has been severely damaged by that region’s political unrest in recent years.  Meanwhile, Latin America and Russia, major sources of tourists, have been squeezed by their respective economic troubles.  Finally, the dramatic shift in exchange rates in recent years has had a major destabilizing effect on many sources of tourism and as well as on many of the world’s leading travel destinations. 

Despite the recent turmoil, the global tourism industry is forecast to continue to grow at a much faster rate than the global economy as a whole in the coming years, providing a source of growth for those countries that are able to attract today’s increasingly diverse market of tourists.  Without a doubt, Asia will remain the center of growth for this industry for the foreseeable future.  China is already the world’s largest source of international tourists and is home to the world’s second-largest tourism market.  With India and Southeast Asia also providing major growth opportunities, both in terms of tourists and destinations, Asia’s tourism industry will play an increasingly important role in this sector.  Outside of Asia, traditionally strong tourism industries in North America and Europe will continue to record healthy growth, with the former benefitting from increasing demand from Asia and the Americas, and with the latter benefitting from the downturn of rival tourist destinations to the east and the south, which is keeping more European tourists in their home region.  In fact, those markets that can provide for safe and secure travel destinations will continue to benefit at a time of increasing political unrest and uncertainty.

The next few years will be vital in determining the direction of the global tourism industry.  As we have seen in southern Europe, the tourism industry can play an important role in helping struggling economies to find a source of needed growth and job-creation.  On the other hand, those tourist destinations that continue to suffer economic- and security-related losses will see a key driver of their economies turn into major drags on economic growth.  Meanwhile, China will continue to emerge as the leading source of international tourists, while other emerging markets will also continue to play a greater role in providing tourists for travel destinations.  Overall, the level of competition will continue to increase as more and more countries become major providers of tourists and as more and more destinations compete for these tourists.  As growth in this industry continues, so too will its diversification, to the benefit of some and to the detriment of others.