The Impact of Rapidly Expanding Growth on the Tourism Infrastructure Prepared by: “No Holds Barred” Think Tank October 2008 Change is no stranger to travel professionals. With daily upgrades in technology opening new doors for the consumer, and particularly since the face of travel was forever changed on September 11, 2001, NTA members and travel professionals across the world have been making changes to their business model, their staffing structures, their buying and selling habits and more to keep up with rapid market shifts. A new shift is on the horizon that may cause perhaps the biggest impact on how the business of travel is conducted. That change — a massive increase in the number of tourists vying for travel products. Some might say this is a good problem to have, and to a degree they would be correct. Having more customers doesn’t sound like an issue. However, businesses must be prepared to receive and properly serve this expanding tourist base. This white paper will take a look at exactly where this expanding tourist base will be coming from and how the growth will change the infrastructure of travel as well as the way NTA members do business. After reviewing the demographics shifts in the world and the impact that will have, the paper then turns to the overall effects of these changes on the travel industry and attempt to formulate answers to several key questions. How will this change the way travel companies do business? How will it change where and how people travel? What will be the travel icons of the future … will they be the same as today? How will it change the traveling consumer and the demands they place on their travel providers? Whether a business is focused on strictly North American travel or travel worldwide, these shifts can have an impact. This white paper is designed to get NTA members thinking about the future they face and making preparations today that will position their businesses for success tomorrow. The Changing Demographic The United Nations World Tourism Organization estimates that international tourist visits are expected to double soon, from roughly 800 million in 2008 to 1.6 billion by 2020. 1 But, from where will the travelers be coming? Two places immediately come to mind — China and India. These two nations, combined, account for one-third of the world’s population. And, with economies and a workforce that is in growth mode, these two countries are primed for the largest impact on tourism.
Harvard Business Review, “The Tourism Time Bomb,” June, 2008.
China and India Let’s start with China. In the last 20 years, China has moved 250 million people from farms and villages into the cities, with plans to move another 300 million in the next 20 years.2 For over two decades, China’s economy has sustained a growth rate of 9.5 percent a year. Given their young population, it is estimated that the economic growth rate will continue at 7 to 8 percent for decades. 3 India’s growth is rapid as well. It has grown by 6 percent a year and, within three decades, India is predicted to surpass Germany as the world’s third biggest economy.4 Both India and China are hungry for raw materials, including millions of barrels of oil, and both countries are experiencing a surge of wealth among their populations, creating a new middle-class in their countries and new consumers for travel products and services. Already, China and India graduate a combined half million engineers and scientists each year. That is compared to the 60,000 that graduate each year in the U.S. The McKinsey Global Institute projects that the total number of young researchers in both nations will rise by 35 percent to 1.6 million by the end of 2008 and the U.S. supply will drop by 11 percent to 760,000. While many companies have transferred their services to India for lower cost labor, what many don’t realize is that India is building the next generation of workers. This has created a new consumer...