EMERGING ECONOMIES ARE TRANSFORMING THE TRAVEL INDUSTRY

WHEN you arrive at Dubai International Airport, the bus journey from your aeroplane to the terminal building takes almost 15 minutes. This is not because Dubai is inefficient-far from it-but because for a small country it has a huge airport, which is in the throes of expansion. The airport will still be too small to cope with the swelling inflow of travelers, so Dubai’s rulers are building another one, at Jebel Ali, a port town 35km (20 miles) away, which is due to come into full operation in 2017. Designed to handle 120m passengers a year, it is expected to be the world’s busiest airport.
Booming emerging economies are the great hope of the world’s travel and tourism industry. Dubai is the most shimmering example. It has only a tiny percentage of the United Arab Emirates’ oil reserves, and so is straining to turn itself into a regional hub for finance, travel and high-class tourism. Three palm-shaped island-resorts are being built: the Palm Jumeirab, the Palm Jebel-Ali and the Palm Deira. The Burji al-Arab, curved like a sail and on another artificial island, is the world’s only seven-star hotel with its own helipad, naturally. Dubai also boasts the Middle East’s first indoor ski-slope.
About 30% of Dubai’s GDP depends on travel and tourism, but Sheikh Mohamed bin Rashid Al Maktoum, Dubai’s ruler, wants the industry to grow much more. He is the driving force behind the construction of Dubailand, a tourism and entertainment complex divided into seven theme worlds that are Dubai’s answer to Disneyland. By 2015, Dubailand is aiming to attract 15m tourists, roughly 40,000 visitors daily.
No wonder, then, that last month the top brass of the World Travel & Tourism Council (WTTC), the industry’s main lobby group, held their annual meeting amid Dubai’s glitz. They might have found lots of reasons to be gloomy – a weak dollar sky-high oil and food prices, looming recession in America and a credit crunch on both sides of the Atlantic. Yet the tourism barons were fairly chipper. They hope that Americans will still travel, albeit more parsimoniously. And they think that travelers to and from emerging economies will make some of the flagging Wanderlust of the developed work.
Ready for take-off
The rise of emerging economies marks the third revolution the travel industry has undergone in the past 50 years. The first came in the 1960s, in the shape of cheap air travel and package tours. Rising incomes to travel more, to farther-flung parts of the globe, and to take advantage of “all-in” offers that may have included sightseeing trips, scuba diving or camel rides. The second was the advent of the internet, which has allowed millions to book flights, hotels, hire cars and package tours without going near a high-street travel agent.
Now fast-growing emerging economies – not just Dubai but also the BRICS (Brazil, Russia, India and China) and others, such as South Korea and Vietnam – are changing the world of travel once again, either as destinations or as sources of newly of newly affluent travelers. Often, citizens of these countries are visiting similar, emerging lands. Last year, for example, Russians made a total of 34.4m trips abroad, up from 29.1m in 2006. Turkey was their most popular destination, followed by China and Egypt. The Chinese head the table of visitors to Vietnam.
The WTTC claims that travel and tourism is the world’s biggest industry in terms of its contribution to global GDP and employment. The lobby group forecasts that global travel and tourism will account for $5.9 trillion of economic activity in 2008, or about 10% of global GDP, employing 238m people. It expects employment to rise to 296m in the next decade.
In fact, assessing the scale of the industry is not straightforward. When all travel and tourism is lumped together, so that everything from airlines to cafés counts, it is no surprise that the WTTC’s total is so large. As a rule, restaurants do not record whether they are serving tourists, business travelers or locals out for a meal.
The United Nations World Tourism Organisation (UNWTO) has resorted to monitoring international tourist arrivals only. It therefore knows where tourists are going to, but has a much less accurate idea of where they have come from. Travel and tourism data from developing countries, in particular, are unreliable. And many of the industry’s jobs, such as tour guides or souvenir salesmen, go unrecorded. Officially, the tourism business in Sicily is sizeable, but it would be bigger still if untaxed and undeclared jobs were counted.
Never mind the difficulties of definition and measurement the industry, from any angle, is huge and growing. It accounts for a large part of many countries’ foreign exchange earnings. For many developing countries, it offers an important route out of poverty. And further expansion and democratization of tourism, centred on emerging economies, is under way. Having once worked in tourism, an increasing number of citizens of those countries are beginning to become tourists themselves.
According to the UNWTO, international tourist arrivals grew by 6% last year to 900m. The total has gone up by almost 100m in two years. Last year, the Middle East welcomed 13% more international tourists, or 46m in all. Arrivals in Asia and the Pacific were up by 10%, to 185m – with much of the extra travel coming from elsewhere in the region. Africa saw an increase of 8%, to 44m. This year, the UNWTO predicts, growth of international tourism will be fastest in Asia and the Pacific.
Forecasts for growth are even less reliable than in other industries, partly because tourism is vulnerable to shocks such as natural disasters or terrorist attacks. José Antonio Tazon, boss of Amadeus, a travel technology company, points out that global firms are less exposed than local ones. They can make up for lost business in a region affected by catastrophe with business in other parts of the world.
(Courtesy: The Economist – 17th May, 2008)