Emerging Markets Changing Face of Inbound Travel

The face of the visitor to the U.S. is changing, increasingly favoring emerging markets such as China and Brazil over more established markets such as Canada and Western Europe, according to a tourism official from the U.S. Dept. of Commerce.

The shift in inbound travel was repeatedly emphasized by Julie Heizer, deputy director of industry relations for the Office of Travel & Tourism Industries (OTTI), during a talk last week before the Greater New York chapter of the Hospitality Sales & Marketing Association International.

An industry veteran who started with the predecessor of what is now the U.S. Travel Association, Heizer said that OTTI “now serves as the national tourism office.”  It is represented in 100 domestic offices as well as in 140 commercial offices in 80 countries.

Growth among BRIC countries
In particular, Heizer pointed to the astonishing growth in travel to the U.S. from China and Brazil. The other “BRIC” countries, Russia and India, are also growing, but Russia has a smaller population and “India is not growing at the rate we had once expected it to,” she said.

Not only are the numbers of travelers from BRIC countries growing, but they are spending more than those from traditional markets, she added.

“The average Chinese traveler will spend $6,000 on a trip to the U.S., as opposed to about $4,000 from mature market travelers and much less from neighboring Mexico and Canada,” she said.

“I just spoke to the manager of a shopping plaza in California where a bus full of Chinese tourists bought out the entire Louis Vuitton store and then asked if there was anything in the back. That kind of spending will level off as people come back for a second and third time.”

Another phenomenon of the newer inbound travelers, some of whom are now repeat travelers to the U.S., is that “they will come into a market and stay put, where in the past they would jump to two or three other destinations because they are still in the discovery mood,” she added.

By contrast, travelers from Australia still prefer to visit multiple cities, she noted. “We love Australians – they stay longer and spend more. Even during the recession they were the only market from which we saw growth.”

Largest service sector export
Travel and tourism represent the largest service sector export – a total  of $153 billion in spending, she said. “It also represents a $43 billion trade surplus, which helps keep our national debt down.”

After the post-recession dip in 2009, international arrivals have achieved record numbers the last few years, Heizer said.  In fact, visitor arrivals and spending were up a full 10% in 2012, according to preliminary numbers.

While noting that the top origin markets continue to be Canada, Mexico, U.K., Japan and Germany, Heizer said shifts will be occurring over the next few years as the U.K. and Japan “struggle” because of their weak economies and other reasons.

By contrast, China saw a 36% increase in arrivals in 2011 with projections of a further 300% increase between 2011 and 2017.China ranked 22nd in visitor arrivals in 2000 – and seventh in 2011.  By 2017, China will be the fourth largest source of travelers to North America and Brazil will be sixth.

UNWTO forecast
In discussing the UN World Tourism Organization’s forecast for 2030, Heizer said the outlook is for continued growth but at a more moderate pace.

Still, “even with moderate growth there will be 43 million new travelers a year and we want to get our share of those,” she said. “And Brand USA (the marketing arm of the federal Corporation for Travel Promotion) will aim to get our share of those new travelers.”

The growth in travel to North America, according to UNWTO, will be 1.7% a year through 2030. One issue with that growth, said Heizer, is limited air capacity from certain destinations, including Germany.

Better communication at govt. level
Noting that President Obama is “really supportive of tourism,” Heizer said that, as a result, there is now better communication between governmental agencies with tourism connections.

In the past, agencies like the Department of Transportation and the Army Corps of Engineers, which has jurisdiction over many recreational lakes, did not think of themselves as being involved with tourism, she said.

Heizer said that her office was a “nexus for Brand USA because the Department of Commerce appoints the members of the Corporation for Travel Promotion.”

Partner with Brand USA
Travel agents and especially tour operators who handle inbound travel should aim to partner with Brand USA to build packages and participate in other ways, Heizer told Travel Market Report.

There are many cooperative opportunities for private travel companies to work with Brand USA, she said.