Four key findings emerge from the results of the 2017 edition of the Travel & Tourism Competitiveness Report. First, T&T competitiveness is improving, especially in developing countries and particularly in the Asia-Pacific region. As the industry continues to grow, an increasing share of international visitors are coming from and travel to emerging and developing nations. Second, in an increasingly protectionist context—one that is hindering global trade—the T&T industry continues building bridges rather than walls between people, as made apparent by increasing numbers of people travelling across borders and global trends toward adopting less restrictive visa policies. Third, in light of the Fourth Industrial Revolution, connectivity has increasingly become a must-have for countries as they develop their digital strategy. Finally, despite the growing awareness of the importance of the natural environment to tourism growth, the T&T sector faces enormous difficulties in developing sustainably, as natural degradation proceeds on a number of fronts. These findings are covered in greater detail in the Eight Trends Driving Industry Transformation section.
The Rise of the South
The number of people on the move today is unprecedented, with international arrivals increasing from just 25 million in the 1950s to 1.2 billion in 2016. While, historically, the majority of travel was North to North, this reality is changing. Outbound travel from Africa, the Middle East and Asia-Pacific is expected to grow exponentially in the coming decade.
In fact, since the global financial crisis, tourist expenditures from developing nations have grown faster than that of expenditures from advanced economies- a trend on track to continue in the coming years (see Figure 2). Developing and emerging markets are not only becoming larger source markets, but they are also improving their T&T competitiveness in order to position themselves as more attractive destinations for developing the T&T sector.
The 2017 edition of the Travel & Tourism Competitiveness Report finds that several developing and emerging economies have significantly improved their performance scores from 2015, when the previous edition was published. Indeed, 12 of the top 15 most-improved countries are developing and emerging markets, with at least one country from each of the five geographical macro-regions represented in the Report.
These results echo World Travel and Tourism Council (WTTC) research, which forecasts that between 2016 and 2026, the 10 fastest growing destinations for leisure-travel spending will be India, followed by Angola, Uganda, Brunei, Thailand, China, Myanmar, Oman, Mozambique and Vietnam. 5
These shifts suggest that developing and emerging countries are catching up, providing better conditions to develop their T&T competitiveness and, therefore, becoming better prepared to attract and welcome the millions of new tourists who will travel for the first time in the coming decade.
This growth in demand is here to stay. South-South tourism is on the rise, and will increasingly do so as these countries improve their competitiveness and develop their T&T sectors.
Build Bridges, Not Walls
While nativist and protectionist rhetoric are on the front page of the news, the T&T industry, unlike global trade, remains, to date, relatively unharmed. Data reveals that while there has been a slump in merchandise imports, the number of people travelling only keeps rising (see Figure 4).
More and more, governments around the world are realizing that, for the most part, barriers to travel are not making people and countries safer, but are hindering economic growth, job creation and tolerance between countries. With a growing “wanderlust”, there is a unique opportunity for many countries to benefit from the T&T industry while, at the same time, ensuring the security of borders and citizens.
This trend is sustained by diverging underlying policies in trade and tourism. In 2016, destinations worldwide required 58% of the world’s population to obtain a visa prior to departure. 6 This is a significant improvement from 2008, when 77% of the world’s population was made to apply for a traditional visa. In general, the great majority (approximately 85%) of countries have reduced, at least partially, the burden of obtaining a tourism visa in the past two years. This contrasts with the minimal progress made on trade policy. Only about half of the countries assessed by the Travel & Tourism Competitive Index (TTCI) improved their non-tariff trade barriers (see Figure 5a). Further, the total number of trade protectionist measures has actually increased since 2015 (see Figure 5b).
To continue supporting the expected growth in international travel in the coming decades, there is a related need to continue improving policy frameworks and innovate the way people move across international borders. While enabling more people to discover the world, it is imperative to balance the safety of national borders and citizens with enabling the movement of people, especially non-immigrants.
The World Economic Forum’s 2017 Digital Borders Report presents a vision for the future of travel, where eligibility to travel is based on the individual rather than on the legacy system of the traveller’s country of origin. In this digital age, technological solutions can and should be created and implemented to move the global system from one of physical to digital borders. In effect, “digital” needs to be integrated across the travel journey—from digital identification and authentication through biometrics to a frictionless airport transfer courtesy of digitally enabled security devices and the creation of a digital interface and individual profiles to increase accuracy, efficiency and security.
Embracing the Fourth Industrial Revolution
As the Fourth Industrial Revolution expands, digital is increasingly becoming a basic requirement to be competitive across the T&T industry. Countries not integrating technology and enhancing their connectivity will be left behind. In recent years all countries have significantly increased their telecommunication infrastructure. Today, having a mobile phone signal is nearly ubiquitous, and the usage of mobile phones and internet services has boomed.
With 4.9 billion unique mobile (cell) phone users worldwide and an estimated 2.7 billion people on social media 7, digital services available via mobile platforms and social media are offering many more services and changing the way they are provided. While the internet already transformed the sector two decades ago, today a second revolution is taking place, with the rapid increase of services provided through mobile devices. In less than two years, the share of online booking has exploded, from 9% to almost 33% (see Figure 6).
As mobile technology becomes mainstream, the T&T sector has had to adapt. Indeed, mobile devices have enabled the customization of services well beyond what was previously possible as a result of an improvement in the capacity to understand individual preferences and behaviours. They have also enabled the traveller to have real-time access to information and constant access to services.
ICT readiness correlates directly to the amount of value that tourism can generate (see Figure 7). However, the meaning of being “ICT ready” continues to evolve rapidly, causing many organizations, companies and countries alike to spend time rethinking their “service delivery” to integrate constant connectivity into the experience.
At the same time, the growing number of connected citizens around the world provides a unique opportunity to benefit from the inclusive nature of the T&T industry. In effect, the internet has become a great mechanism to enable locals and travellers to connect directly without relying on intermediaries, hence business models have to change accordingly (as further discussed here).
Environmental Standards is a Win-Win
Despite growing global awareness of the importance of sustainability, and the fact that real progress has been made on some fronts, many aspects of the natural environment continue to degrade, causing a serious and quantifiable impact on the tourism sector. Though countries are increasingly committed to respecting international environmental standards, environmental performance benchmarking assessments 8 show that deforestation, overfishing, and air and water pollution continue to reduce the global natural capital.
Data reveals that the environmental strength of a country is directly related to tourism revenue (see Figure 8). Although this relationship is complex, and there is no evidence of direct causality, the more pristine the natural environment of a country, the more tourists are inclined to travel there, and the more they are willing to pay to access well-preserved areas. Consequently, as the natural capital depletes, destinations lose revenue.
Although tourism is often negatively impacted by the pollution caused by other human activity, it is important to recognize that processes, mechanisms and activities associated with tourism also damage the environment. Globally, there is little sign of improving T&T development standards (see Figure 9). In particular, the footprint of the sector has been reduced in the majority of countries of Northern and Western Europe while it has increased in most developing nations, especially in Asia.
Given the close relationship between natural resources and a very large segment of the tourism industry, then, a lack of progress on fostering sustainability, both from a general and sectoral point of view, will reduce tourism development opportunities.