Inbound’s Outlook and Arrivals Predictions from Top International Source Countries in 2016
Overall, the outlook for the inbound travel market is, in two cautious words, not unsettling. While there are some country markets with real challenges, none face situations which are so formidable—with the possible exception of Venezuela—that they should discourage U.S. travel suppliers from doing business in them. The narrative for the world’s travel economy is similar to that of the global economy which, a recent Reuters item descried thus: “The world economy may be set for another year like 2015, with modest growth in developed economies offsetting persistent weakness elsewhere but generating very little inflation and keeping interest rates low.”
Following the table below are brief sketches presenting the outlook for individual country markets. This paper concludes with NTTO’s outlook for global regions.
Top 15 Overseas Source Markets for Inbound Tourism
Plus Canada and Mexico
Arrivals (000s), 2014-2016
| Country/Market & Rank | 2014 Arrivals | 2015 Arrivals* | 2016 Arrivals* |
|---|---|---|---|
| 1. UK | 4,149 | 4,440 | 4,617 |
| 2. Japan | 3,620 | 3,548 | 3,512 |
| 3. Brazil | 2,264 | 2,355 | 2,284 |
| 4. China | 2,190 | 2,562 | 2,972 |
| 5. Germany | 2,056 | 2,118 | 2,161 |
| 6. France | 1,658 | 1,642 | 1,675 |
| 7. South Korea | 1,460 | 1,664 | 1,748 |
| 8. Australia | 1,304 | 1,369 | 1,410 |
| 9. Italy | 964 | 954 | 973 |
| 10. India | 962 | 1,087 | 1,163 |
| 11. Colombia | 881 | 890 | 908 |
| 12. Spain | 708 | 743 | 758 |
| 13. Argentina | 685 | 616 | 585 |
| 14. Netherlands | 642 | 655 | 668 |
| 15. Venezuela | 616 | 505 | 480 |
| Canada | 23,003 | 21,163 | 20,951 |
| Mexico | 17,070 | 17,923 | 18,461 |
| Total Overseas | 34,938 | 36,248 | 37,868 |
| Total International | 75,011 | 75,334 | 77,280 |
| * - Forecast | |||
| Source: U.S. Department of Commerce, International Trade Administration, National Travel and Tourism Office |
ANALYSIS AND ARRIVAL PREDICTIONS FOR 2016
UNITED KINGDOM
Still expected to be the largest overseas source market to the United States through most of the current decade, the UK’s anticipated steady increase in visitor volume in 2016 and through the succeeding four years is the expected result of a conflation of positive factors: the UK economy has grown, modestly but with certainty, ever since the shadow of the 2008-09 economic recession lifted; the currency exchange rate between the pound sterling has not fluctuated vs. the dollar as much as have other currencies; the number of acquisitions and mergers within the tour operator community has abated, giving U.S. suppliers a better understanding of who it is they will be working with; there has been a substantial increase in the number of new, more experiential-in-nature travel agencies by big-name brands that have opened in the past two years; the non-stop promotions of Brand USA, which have been unanimously credited among the trade with stimulating renewed interest in the U.S. as a destination among British travelers, will continue; new and interested product in the U.S.—such as a new Wizarding World of Harry Potter at Universal Studios Hollywood—is certain to appeal to Brits; and the Air Passenger Duty (APD), the tax levy which has added roughly $100 per person to the price of a flight to the United States, has been eliminated for passengers under 16 years of age, effective March 1, 2016. What weakness there is in the ongoing UK recovery (its annual arrivals have yet to reach the high of 4.7 million registered in 2000) is that the purchasing power for middle class Brits has remained about the same as it has been for a decade.
INBOUND PREDICTS: ↑4.5%
JAPAN
For U.S. travel suppliers, DMOs and Brand USA, the challenge in marketing to Japanese travelers is akin to the conundrum in the answer the Red Queen gave to a question from Alice in Lewis Carroll’s Through the Looking-Glass: “Now, here, you see, it takes all the running you can do, to keep in the same place.” No one seems capable of figuring out how to reinvigorate a market that once sent 5.37 million visitors to the United States in 1997 and is projected by NTTO to send just 3.5 million visitors not quite 20 years later in 2016. Economic challenges of the past two years have not helped matters, but it would not have made that much difference in arrivals numbers even if there were a fully healthy economy. A major reason for the decline is the aging over the past several decades of the Japanese population, due in large part to a low birth rate, resulting in a shrinking travel-ready population. Combine this with the fact that the USA is a “familiar” destination … and the marketing scenario requires suppliers, DMOs and Brand USA to do all the running they can do just to stay in place, Japan will see another decrease.
INBOUND PREDICTS: ↓1.5%
BRAZIL
After a decade of overheated promotion and consumption that saw the number of arrivals in the U.S. from Brazil register nothing but double-digit percentage increases each year—from 485 thousand visitors in 2005 to 2,264,000 in 2014—the latest 2015 data suggest that the rate of increase this year is hovering close to zero percent. A “perfect storm” of economic factors took place during the past year, during which the country sunk into its worst economic recession in a half-century and the value of the Brazilian real dropped by nearly 40 percent vs. the U.S. dollar. Some tour operators who sold their products in reales but paid their U.S. suppliers in dollars were unprepared for the economic crunch and one of the largest, Nascimento, went bankrupt last summer. Still, as numerous sources have told the Inbound Report—even though 2016 should see a single-digit percentage decline in visitor arrivals to the USA—well over 2 million visitors are still expected to descend upon their acknowledged “dream destination” as Brazilian operators and U.S. receptive tour operators have found that shorter stays, an increase in MICE traffic and a lower per capita spend on shopping and attractions (particularly in the Orlando area) will be the new normal. And, according to a spokesman for United Airlines, his is not the only carrier that is planning to cut routes to Brazil in 2016. INBOUND PREDICTS: ↓6.1%
CHINA
Despite—or maybe because of—the over-the-top prognostications for increased arrivals, the number-one overseas source market-to-be by the beginning of the 2020s, China, presents a sticky challenge for U.S. travel suppliers, DMOs and receptive tour operators even as it adds another two-and-a-half million visitors a year to its total Visit USA traffic in the next five years. Unlike other inbound source markets that took decades to mature, the system in China is supported, to a substantial degree, by government pronouncements and bi-lateral agreements. In 2015, the US and Chinese governments’ extension of visas from one year to ten years has created huge interest for MICE products to US and, earlier this year, Chinese President Xi designated 2016 “The Year of Chinese America Tourism,” which will also be a positive factors.
On the receiving end, another challenge has emerged—the inadequate supply of trained and certified Mandarin-speaking tour guides and personnel in the United States. The good news in all of this is that, even if the challenges of a doubling of the market are not adequately addressed, more parts of the USA stand to benefit over the next five years from a traveling population that is already shifting away from group tours to FIT mode as more and more are opting for self-drive products and exploring non-gateway, second-tier destinations via America’s highways and byways. INBOUND PREDICTS: ↑8.1%
GERMANY
A strong and resilient inbound source market for more than a half-century, this country seems likely not to expand or recede very much in the number of visitors it sends to the USA for some time to come. Hit hard by a dramatic decline in the value of the euro in the fourth quarter of 2014, just as brochure prices were established for the coming travel year, the largest tour operator in Europe, Hannover-based TUI and its competitors found themselves cutting package prices, promoting “late sells” with lower online rates and, to offset a flat long-haul market (not to mention the drop-off in traffic to northern Africa and the Middle East), focusing on product to other European destinations. For 2016, it seems inconceivable that the euro could fall further vs. the dollar (it looks as if it bottomed out at about $1.06 this past October), but payment for most wholesale product purchased for the year has already been made, so a further decline in arrivals to the U.S. is not likely. The NTTO estimate of no change from 2015-16 seems fair. In the long-term, however, another problem looms. This past year, the birth rate in Germany became the lowest among all major nations, leaving economists to wonder who is going to replace (and help care for) the retiring population in coming years—not to mention the population segments that travel overseas. INBOUND PREDICTS: ↓1.1%
FRANCE
Here, the outlook for visitor arrivals to the U.S. could be worse, were it not for the creativity and resilience of French operators and their U.S.-based receptive operator counterparts. So, the NTTO forecast for essentially no change in the number of French visitors in 2016 vs. 2015 seems conservative to us. Operators had been doing well enough in France in the first couple of years following the 2008-09 economic recession, but the nation suffered from the impact of the debt crisis that primarily affected Greece and, as it turned out, the major European nations that bordered the Mediterranean—Greece, Italy, France and Spain. There was a credit crunch that had an impact on 2012 traffic from all four nations. Reacting to the effects of the situation, operators moved aggressively to include more MICE travel, a segment that is more immune to fluctuations in the economy because it seeks mostly luxury product and warrants pricier visitor experiences. Reflecting this shift, the number of MICE buyers at IPW increased by 100 this past year, and will increase even more in 2016. (There is also a strong loyalty to the U.S. among French travelers, a feeling that was underscored by demonstrations and expressions of sympathy in the U.S. in the wake of the Nov. 13 terrorist attacks in Paris that killed 368 others.) One can confidently forecast single-digit increases in visitor arrivals from France through the end of the current decade. INBOUND PREDICTS: ↑5.3%
SOUTH KOREA
It is probable that this nation’s visitor numbers, based on its population of 52.7 million, are disproportionately larger (to the overall population) than those of most nations. It is likely, too, that visitor counts will continue to grow steadily, probably passing the two million visitors-a-year mark in five years or so. There are few potential disruptive bumps on the road to this figure, but there are many factors in its favor: first, the nation has been a Visa Waiver Program nation since 2008; second, as a connecting point between Asia and the U.S. West Coast, its international airport at Incheon, South Korea gives the nation and its residents an almost unlimited lift capacity to the USA; third, it has a strong bond with southern California, where Ahn Changho (1878-1938), the leader of the Korean independence movement, lived for 25 years; fourth, it is the number three source of international students attending school in the United States; fifth, because the U.S. is its number one trade partner, its currency is closely tied to the fortunes of the U.S. dollar and avoids fluctuations in its relationship to the dollar; and sixth, a substantial portion of its traveling population is English-speaking. While South Korean travelers tend to favor West Coast destinations, the VFF market, which includes visits to students at universities throughout the U.S., has exposed them to second- and third-tier destinations, which are growing in popularity. INBOUND PREDICTS: ↑5%
AUSTRALIA
Hey mate! Your currency, the Australian dollar, has taken a beating against the U.S. dollar, dropping some 23 percent since IPW in Chicago in April 2014 until this month—going from 93 cents to 72 cents in value. Such numbers would be daunting to international tour operators in any other source market, but in the case of Australia, the USA stubbornly remains its favorite long-haul destination of choice. Rather than forego their holiday in the United States, Aussies will search for shorter itineraries, less expensive packages and accommodations, and reduce the number of add-on options. NTTO has projected a small change (+ 3 percent) in the number of arrivals from Australia in 2016, which would be a good sign of the market’s resilience. One way of telling us if the market is on course will come when the Australian Bureau of Statistics (ABS) releases its monthly figure on departures for overseas destinations for this month. January is a popular month for travel among Australians—the strongest for the first quarter, to be sure—and in 2015, just less than 100,000 Aussies came to the USA. If departures/arrivals for the month are close to this figure, the inbound tourism industry in the United States will likely have the year that NTTO is forecasting. INBOUND PREDICTS: 0%
ITALY
We could probably cut and paste here parts of the outlooks for France and Spain. As is the case in France and Spain, the outbound industry in Italy has to deal with a weak euro/strong dollar; an economy that is still working to stop its knees from wobbling and a political situation that re-defines the meaning of stability on a daily basis. But, like those in France and Spain, Italy’s tour operators have found some comfort in the additional business provided by the MICE market and, along with the reality that, for Italian travelers, the USA constitutes a luxury tourism product, those planning on visiting the United States in 2016 are not the kind of traveler who is going to stay home because of fluctuations (one way or the other) in the value of the euro vs. the dollar. It is safe to project that outlook for 2016 is “Molto bene!” and, possibly, a million visitors from Italy will experience the USA during the year. INBOUND PREDICTS: ↑4%
INDIA
As we see it, no Top 15 overseas market has a better, steadier outlook than does India. For about a decade, the major obstacle to increasing its number of visitors to the USA was poor lift capacity. Because of its location, the world’s second-largest nation is a long distance in either direction (east or west) from the USA. New Delhi, for instance, is 7,311 miles from New York and 8,008 miles from Los Angeles. But that obstacle has been overcome as three Middle East-based carriers—Emirates, Etihad and Qatar Airways—have ramped up the number of flights from southwest Asia to their hubs on southern/southwestern part of the Persian Gulf and their connections to the west and the USA.
The built-in factor that makes India an easier country than most for Visit USA marketing efforts is that it is the second largest English-speaking nation in the world—second only to the United States, with 125 million English-speaking residents. And most of its traveling population speaks English. A sizable portion of its visitors are students: almost 133,000 attended U.S. schools in the 2014-15 school year. Only China sends more students to the U.S. These students help fuel a large VFF segment, as do large Indian-Americans near some U.S. population centers in U.S. Northeast.
Also, Brand USA has stepped up its marketing activity in the country. Its 2015 road show—the third yearly undertaking—has visited major as well as secondary population hubs. And as U.S. travel suppliers, hoteliers and DMOs improve their capacity to accommodate the unique travel preferences and characteristics of Indian travelers—vegetarian meals are a must, and multi-generational travel groups of six or more from one family are common—they will ensure a smooth transition from selling to, and servicing, a growth market to selling to and servicing a key mature market. INBOUND PREDICTS: ↑7.3%
COLOMBIA
Following a half-century of internal warfare between Colombia’s military and guerrilla forces led primarily by FARC (Fuerzas Armadas Revolucionarias de Colombia, or Revolutionary Armed Forces of Colombia), there came the announcement earlier this year of a settlement ending the conflict. The agreement seems to have stuck and, as a result, the only real major obstacle to Colombia’s continued growth as the second-ranking source market in South America is no longer there. The nation’s economy is on a steady growth curve, it has a substantial “able-to-travel” population in the right demographic (25-to-54 years old) and it is close enough to the continental United States that our country is almost a short-haul destination. Indeed, Cartagena, a major point of departure for Colombians, is only 1,100 miles from Miami.
The country has an abundance of air service as major Colombian airlines, major U.S. carriers and regional carriers combined provide service from five cities in Colombia. Its residents, one Colombian tour operator told us several months ago, are comfortable in the U.S. because there are so many Spanish-speaking people in the United States .And based on anecdotal accounts from operators at the 2015 IPW in Orlando and La Cita de Las Americas show last September in Boca Raton, Florida, business for 2016 should be strong enough that it just might exceed NTTO’s already healthy forecast. INBOUND PREDICTS: ↑5.1%
SPAIN
The outlook for the Number 12 overseas source market is similar to that for Italy and France. The country was the second most-affected nation during the economic woes and debt crisis that beset some European nations—especially Greece—two years ago. (Budget and austerity measures imposed by the government were unpopular with most Spaniards and likely contributed to the electoral loss on Dec. 20 of the country’s ruling political party.) But receptive tour operators in the U.S., as well as operators in Spain found additional business in the MICE market to help compensate for the decrease in leisure tourism caused by the nation’s shaky economy. With the same proviso regarding the euro that is part of the outlook for every European source market—the currency is slowly rebounding from its low-water mark of $1.06—visitation from Spain to the USA should realize modest increases next year and through the end of the current decade. INBOUND PREDICTS: ↑3.3%
ARGENTINA
Chaos—economic and political—reigned throughout most of 2015 in Argentina and the nation’s outbound tourism industry was one of its victims. The nation’s population was preoccupied much of the year with a bitterly fought presidential election. Mauricio Macri, the mayor of Buenos Aires, became president following a run-off election in which he received just 51 percent of the vote. The atmosphere was so hostile that his predecessor, Christina Fernández de Kirchner, refused to attend Macri’s Dec. 10 inauguration. The nearly year-long election process kept many Argentines from traveling abroad. In addition, the Argentine peso has been so weak vs. the U.S. dollar, that a parallel currency, the “blue dollar,” became a de facto medium of exchange. Argentine tour operators have been enormously resourceful in dealing with weak peso, the blue dollar and rampant inflation, selling all-inclusive package product over time and avoiding surtaxes on goods purchased abroad by including as many products as possible in a package price. The early take on Macri seems reassuring. He has already lifted capital controls—imposed by his predecessor’s administration in an effort prevent “capital flight” out of Argentina—that will allow businesses unlimited access to foreign currencies. But enough damage has been done. Visitor traffic to the USA will, once the totals are final, show a decrease. And because much long-haul travel has already been purchased, the decline will continue through 2016. INBOUND PREDICTS: ↓6.3%
THE NETHERLANDS
The popular quip—“If it ain’t Dutch, it ain’t much!”—just might have some merit as a proposition, as this small (est. population in 2015: 16.9 million) country has proved itself to be a durable and substantial overseas source market. The Dutch economy is largely dependent on international trade and, as such, most of the country’s residents are multilingual. For example, more than 90 percent of the Dutch population can converse in English and are quite comfortable with American English—possibly because of the popularity of U.S. movies and television programs, which are broadcast with subtitles and are not voiced-over. While the effects of the weak euro have been real, Dutch operators have been able to absorb the impact by diversifying its product line. As well, for most Dutch travelers, travel to the USA is a luxury experience; its affordability is not something that is contingent on the currency exchange rate. While the NTTO forecast of an increase of 26, 000 Dutch visitors to the U.S. from 2014 through 2016 would be an asterisk for most of the larger source markets, it represents a solid 4 percent increase for the Netherlands. The market should continue through the rest of the increasing its traffic by modest, single-digit percentages. INBOUND PREDICTS: ↑.5%
VENEZUELA
“Hopeless” is how we characterized the outlook for the Venezuelan market last year and, in retrospect, that assessment might have been a tad optimistic. For most of 2015, the nation’s economy seemed to be stumbling downward toward the ninth circle of Dante’s Inferno. Earlier this month, Alejandro Werner, director of the Western Hemisphere Department of the International Monetary Fund, told the Spanish international news agency EFE that Venezuela will end 2015 with an inflation of around 160 percent, the highest in the world, and that its economy would contract by 10 percent by the close of the year. While some economic observers take solace with the news that combined opposition parties won more than two-thirds of the seats in the nation’s Dec. 6 parliamentary elections and reduced the ruling party of President Nicolas Maduro to a weak minority, it will be many months before action can be taken to begin to reverse the course of the nation’s economy. For the inbound tourism industry, currency controls have meant that U.S. carriers have had to take payment for flights in Venezuelan bolivares and wait for the government to convert them into dollars. Some airlines have waited two years for payments. The situation has found that Venezuelans who have been able to do so have used third parties in the U.S. to establish credit card accounts in the USA so that they can transact business—and make cash withdrawals at ATMs—in dollars. With good reason, many receptive operators are foregoing the opportunity to do business in Venezuela for the foreseeable future and airlines are cutting back service. INBOUND PREDICTS: ↓8.3%
CANADA
All of the bad news in the outlook for the USA’s largest international inbound source market, Canada, is reflected in a few numbers: 16 percent, which is how much the Canadian dollar (also referred to as the “loonie”) has fallen in value vs. the U.S. dollar since last December; 23 percent, which is how much the loonie has fallen in value against the U.S. dollar since December 2013; and 1 percent, which is what NTTO is projecting as the percentage decline in visitor traffic from Canada next year. That miniscule one percent adds up to 212,000 visitors in the case of Canada. The weakened loonie has had a particular impact on New York State and New England, whose tourism suppliers and merchants of all kinds of goods have depended on overnight and weekend excursions by Canadians, about 90 percent of whom live with 100 kilometers of the U.S. border. “Snowbirds” and others who travel further into the USA comprise a more well-heeled market segment, and often pay for their travel arrangements in Canadian dollars (leaving tour operators to absorb the difference or raise prices). If they do pay in U.S. dollars, they can generally afford to pay higher prices. INBOUND PREDICTS ↑0.2%
MEXICO
There are a several sound reasons for expecting the market from Mexico to continue to grow for the rest of the decade. First, while the Mexican peso has taken a hit because of the strong U.S. dollar (it has fallen 15 percent against the U.S. dollar since last December), it has fared better than other currencies and has had less of an impact on travel purchases than the exchange rate has had in other countries. One reason is that many Mexicans, especially those in the major cities close to the U.S. border, already use the dollar in their business transactions and price their goods and services (including travel) accordingly. Also, the size of the “travel-able” Mexican middle class has increased considerably since 2000, expanding the potential market for U.S. visitors. Then, too, air service from Mexico to the U.S. interior has gone from not-quite-adequate to the point at which the budget carrier Volaris—it began operations less than a decade ago—now flies to nearly 20 U.S. destinations from points in Mexico. Volaris reaches cities such as Portland, Fresno and Reno, as well as Chicago, Houston and New York. Some of Volaris’ fares aren’t that much more than the cost of a bus ticket. Finally, providing support for the market is the size of the Spanish-speaking Mexican-Americans population. A Pew Research Center report in 2013 that analyzed U.S. Census Bureau data reported that 33.7 million Hispanics of Mexican origin resided in the U.S. in 2012—11.4 million immigrants born in Mexico and 22.3 million born in the U.S. who self-identified as Hispanics of Mexican origin. Not only does this number comprise a base for a huge VFF destination; it also ensures that Mexican visitors will be able to interact in Spanish just about any place in the United States. INBOUND PREDICTS: ↑3.3%
Brazil: CVC to Dump All Trade Shows in 2016– Except for its Own
The news came out last week that analysts from Brazil’s Central Bank said that they expect Brazil’s economy to contract by 2.99 percent this year, with the outlook worsening slightly from the previous week’s 2.95 percent estimate. In other words, the nation’s worst economic recession in more than a half-century, which is known simply as a crise, continues. The Central Bank’s news coincided with the announcement by CVC, the nation’s largest travel company, that it would forego having a booth at all trade shows in Brazil this year. “We have much affection for these fairs, but we decided to invest in exclusive events CVC this year in regional meetings where travel agents will meet our customers to talk about sales, destination, seasons …” Valter Patriani, the company’s vice president, told Panrotas, the country’s top travel trade publication and website.
The company’s decision is a marked departure from the conventional way of doing business in Brazil where—even though it is a nation of more than 200 million people—the tourism community, especially the tour operators that comprise the membership of BRAZTOA (Brazilian Tour Operators Association, whose members sell about 90 percent of all travel in Brazil), is a tightly knit one and whose participation in trade shows is de rigueur.
But the collegiality factor might be less important than it was in 2015, when a number of the nation’s operators, including a leading tour operator, Nascimento Turismo, went bankrupt as they were unable to absorb the spread between the value of the dollar and the Brazilian real in their margins.
As Patriani seemed to suggest, the allocation of the company’s resources to sales efforts and events will engage CVC sales agents and travel agents year-round. The company will also pay closer attention to domestic product and be more focused on what international product it sells. He cited Orlando and Las Vegas as examples of product that it will sell throughout the year.
Meanwhile, it is possible that the worst might be over, insofar as the decline of the real vs. the U.S. dollar is concerned. It has stabilized at the same level since it bottomed out four months ago in mid-September. For a view of the real-dollar relationship during the past year, visit:
http://www.xe.com/currencycharts/?from=BRL&to=USD&view=1Y
Five Charts That Show How 70 Countries Rank in their Proficiency of English
Though the Netherlands, Sweden and Denmark rank 68th, 90th and 112th, respectively, in population among the nations of the world, the same three countries rank a much higher (14th, 16th and 24th) among overseas source markets for inbound tourism to the United States. The three countries collectively have a population of 21.5 million, yet sent one-and-half million visitors to the USA in 2014, according to data from the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO).
Perhaps the reason for the strength of the three small European nations has something to do with another ranking: Sweden, the Netherlands and Denmark are number one, two and three in a ranking of English-speaking proficiency of the major nations of the world in which English is not the principal language of its residents—this according to figures from EF (Education First), a Swedish organization founded in 1965 by providing immersion training in English) that operates in more than 100 nations worldwide, and has a travel division. Its English Proficiency Index has become the authoritative index for measuring the English speaking level of all nations. The data for its current edition was calculated using results from 910,000 test takers who completed two different EF English tests in 2014.
Overall Ranking of Countries by English Skills
| Country & Rank | Country & Rank |
|---|---|
| 1. Sweden | 36. Chile |
| 2. Netherlands | 37. France |
| 3. Denmark | 38. Ecuador |
| 4. Norway | 39. Russia |
| 5. Finland | 40. Mexico |
| 6. Slovenia | 41. Brazil |
| 7. Estonia | 42. U.A.E. |
| 8. Luxembourg | 43. Costa Rica |
| 9. Poland | 44. Uruguay |
| 10. Austria | 45. Pakistan |
| 11. Germany | 46. Guatemala |
| 12. Singapore | 47. China |
| 13. Portugal | 48. Panama |
| 14. Malaysia | 49. Sri Lanka |
| 15. Argentina | 50. Turkey |
| 16. Romania | 51. Yemen |
| 17. Belgium | 52. Morocco |
| 18. Czech Republic | 53. Jordan |
| 19. Switzerland | 54. Kazakhstan |
| 20. India | 55. Egypt |
| 21. Hungary | 56. Iran |
| 22. Latvia | 57. Colombia |
| 23. Spain | 58. Oman |
| 24. Dominican Republic | 59. Venezuela |
| 25. Slovakia | 60. Azerbaijan |
| 26. Lithuania | 61. El Salvador |
| 27. South Korea | 62. Thailand |
| 28. Italy | 63. Qatar |
| 29. Vietnam | 64. Mongolia |
| 30. Japan | 65. Kuwait |
| 31. Taiwan | 66. Iraq |
| 32. Indonesia | 67. Algeria |
| 33. Hong Kong | 68. Saudi Arabia |
| 34. Ukraine | 69. Cambodia |
| 35. Peru | 70. Libya |
Perhaps these results—which had Brazil, the world’s fifth most populous country with more than 205 million people, but with an EPI ranking of 41st out of 70 nations, had something to do with the announcement last May by the country’s largest tour operator, CVC, that it would start selling travel packages in which customers can choose to study in one of EF’s 44 schools in 16 countries. This announcement followed a Bloomberg news article in which CVC’s founder and chairman, billionaire Guilherme Paulus Jesus, said that his company wanted to increase the numbers of student age adults who are English-speaking, explaining that “Brazilians will sacrifice everything to send their children to learn English abroad … It’s an investment.”
Following are EF’s regional breakdowns of nations, along with the English Proficiency Index for their populations.
Ranking of Countries by English Skills—Europe
| Nation | Index Rating | Category |
|---|---|---|
| Sweden | 70.94 | Very High Proficiency |
| Netherlands | 70.58 | Very High Proficiency |
| Denmark | 70.05 | Very High Proficiency |
| Norway | 67.83 | Very High Proficiency |
| Finland | 65.32 | Very High Proficiency |
| Slovenia | 64.97 | Very High Proficiency |
| Estonia | 63.73 | Very High Proficiency |
| Luxembourg | 63.45 | Very High Proficiency |
| Poland | 62.95 | Very High Proficiency |
| Austria | 61.97 | High Proficiency |
| German | 61.83 | High Proficiency |
| Portugal | 60.61 | High Proficiency |
| Romania | 59.69 | High Proficiency |
| Belgium | 59.13 | High Proficiency |
| Czech Republic | 59.01 | High Proficiency |
| Switzerland | 58.43 | High Proficiency |
| Hungary | 57.9 | High Proficiency |
| Latvia | 57.16 | Moderate Proficiency |
| Spain | 56.8 | Moderate Proficiency |
| Slovakia | 56.34 | Moderate Proficiency |
| Lithuania | 55.08 | Moderate Proficiency |
| Italy | 54.02 | Moderate Proficiency |
| Ukraine | 52.61 | Moderate Proficiency |
| France | 51.84 | Low Proficiency |
| Russia | 51.59 | Low Proficiency |
| Turkey | 47.62 | Very Low Proficiency |
| Azerbaijan | 46.12 | Very Low Proficiency |
Ranking of Countries by English Skills—Asia
| Nation | Index Rating | Category |
|---|---|---|
| Singapore | 61.08 | High Proficiency |
| Malaysia | 60.3 | High Proficiency |
| India | 58.21 | High Proficiency |
| South Korea | 54.52 | Moderate Proficiency |
| Vietnam | 53.81 | Moderate Proficiency |
| Japan | 53.57 | Moderate Proficiency |
| Taiwan | 53.18 | Moderate Proficiency |
| Indonesia | 52.91 | Moderate Proficiency |
| Hong Kong | 52.7 | Moderate Proficiency |
| Pakistan | 49.96 | Low Proficiency |
| China | 49.41 | Low Proficiency |
| Sri Linka | 47.89 | Very Low Proficiency |
| Kazakhstan | 47.04 | Very Low Proficiency |
| Thailand | 45.35 | Very Low Proficiency |
| Mongolia | 43.64 | Very Low Proficiency |
| Cambodia | 39.15 | Very Low Proficiency |
Ranking of Countries by English Skills—Latin America
| Nation | Index Rating | Category |
|---|---|---|
| Argentina | 60.26 | High Proficiency |
| Dominican Republic | 56.71 | Moderate Proficiency |
| Peru | 52.46 | Low Proficiency |
| Chile | 51.88 | Low Proficiency |
| Ecuador | 51.67 | Low Proficiency |
| Mexico | 51.34 | Low Proficiency |
| Brazil | 51.05 | Low Proficiency |
| Costa Rica | 50.53 | Low Proficiency |
| Uruguay | 50.25 | Low Proficiency |
| Guatemala | 49.67 | Low Proficiency |
| Panama | 48.77 | Low Proficiency |
| Colombia | 46.54 | Very Low Proficiency |
| Venezuela | 46.14 | Very Low Proficiency |
| El Salvador | 45.52 | Very Low Proficiency |
| Mongolia | 43.64 | Very Low Proficiency |
| Cambodia | 39.15 | Very Low Proficiency |
Ranking of Countries by English Skills—Middle East and North Africa
| Nation | Index Rating | Category |
|---|---|---|
| Nation | Index Rating | Category |
| U.A.E. | 50.87 | Low Proficiency |
| Yemen | 47.6 | Very Low Proficiency |
| Morocco | 47.4 | Very Low Proficiency |
| Jordan | 47.33 | Very Low Proficiency |
| Egypt | 46.73 | Very Low Proficiency |
| Iran | 46.59 | Very Low Proficiency |
| Oman | 46.34 | Very Low Proficiency |
| Qatar | 43.72 | Very Low Proficiency |
| Kuwait | 42.65 | Very Low Proficiency |
| Iraq | 40.69 | Very Low Proficiency |
| Algeria | 40.34 | Very Low Proficiency |
| Saudi Arabia | 39.93 | Very Low Proficiency |
| Libya | 37.86 | Very Low Proficiency |
For more information, visit: www.ef.edu
The 17 Top Trends for the U.S. Inbound Tourism Industry 2016
Here, based on our coverage of the inbound tourism industry for the past year and beyond, as well as our ongoing review of a wealth of information resources and our own industry sources, the Inbound Report presents what we believe are the top trends for the industry for the coming year. There are other items that we could add to the list, to be sure, but in the interest of brevity and broadest relevance, here they are.
- The currency exchange rate should remain stable; so should business in Europe. From a high of just under $1.40 in April of last year, the euro plummeted in value against the dollar by 25 percent to about $1.06 in early November, oscillating up and down until this month, when it crept back up to $1.10. U.S.-based receptive operators who had to sell product in euros but pay their suppliers in dollars have taken a beating in 2015. While no one is saying so publicly, street-corner logic, which hopes that it has no place to go but up, just might be right.
Regardless of the Federal Reserve Board’s decision this month to increase interest rates (pushing them up for institutional borrowers usually makes the dollar more expensive vs. other currencies), the noted international economist, Anatole Kaletsky, wrote last month, “Fortunately, the market consensus concerning the dollar’s inevitable rise as U.S. interest rates increase is almost certainly wrong.” He cited a number of reasons for his position, suggesting that—because a Fed interest rate hike has been speculated on for most of 2015—most currency traders have already taken their gains. Also, institutional traders seem to be aware that any further increase in the value of the dollar would be disruptive to the global economy.
In essence, the marketplace simply cannot handle a much stronger dollar; traders know that. And, as far as the tour and travel industry is concerned, travel bookings for next year were set at the euro’s low. The inbound travel market might not get that much stronger, all of the above suggests, but it should not get any worse.
For a real-time view of what the fluctuations in the dollar-euro currency exchange over the past year look like, visit: http://www.xe.com/currencycharts/?from=EUR&to=USD&view=1Y
- Receptive tour operators are diversifying in several new ways:
—By opening new source countries as they struggle to survive by trolling for new clients in third- and fourth-tier markets such a Peru and Ecuador. And Teamamerica increased sales in 2015 by attending 25 international trade events.
—By establishing outbound divisions in order to neutralize the effect of the exchange rate and maximize staff utilization. American Tours International (ATI) has now established a new outbound division that will be fed by their Triple A partners.
—For the FIT “Bed Bank” receptive operators such as Tourico, Hotelbeds and GTA are expanding into offering to attractions and activity providers that cannot do so themselves.
—By bundling hotels with attractions product and shopping vouchers for travelers from markets where travelers pay a surcharge on credit card purchases made while they are abroad.
- The Chinese Market is evolving into Self-Drive Group Tours. Spurred on by favorable rental car rates and the desire to capture some of the explosive FIT market, Chinese receptive operators offer self-drive tour programs for FITs and groups of as many as 20. For the latter, the RTOs operate in a caravan system in which the tour guide with driver of the lead car and everyone else are connected by walkie-talkies.
- Demand for U.S. National Parks will grow, aided by promotions surrounding the 100th anniversary of the National Park system in 2016, which will be boosted by the release in key international parks of Brand USA’s giant screen film promotion featuring national parks (This film will be followed up by another film in 2017) as operators seek low-cost stops in their itineraries. At most national parks, it costs nothing but a vehicle fee to enter and to use their facilities. (In addition, Fodor’s has ranked U.S. national parks Number One on its list of Top 25 Destinations for 2016.) However, capacity at hotels and accommodations in our near the most popular parks during the peak summer months has frustrated operators.
- Look for expanded diversity in USA destination offerings (Think “Beyond the Gateways”) to international operators as receptives try to appeal to repeaters and differentiate themselves. While visitors to the United States want to see what they’ve seen promoted or talked about through media channels and in the movies—New York City, Los Angeles, Miami, Orlando and Las Vegas—they are OK with staying in Upstate New York, the San Fernando Valley, Fort Lauderdale, Cocoa Beach and Laughlin, Nevada and visiting destinations outside U.S. Gateways.
An emerging destination for travelers from India, for instance, is Harrisburg, Pennsylvania. Right next to the Hersheypark theme park and entertainment complex, the area is also home to many Indian Americans and has a Bochasanwasi Shri Akshar Purushottam Swaminarayan Sanstha (BAPS) center, as well as the nearby Indian American Religious Institute temple and center.
- Partially Independent Travel (PIT) is a hybrid genre of product that continues to grow as Baby Boomers, the fastest growing segment of the escorted tour market, are loathe to being overly programmed while, at the same time, tour operators seek a means to reduce overall tour costs to offset the exchange rate.
- “Testosterone Tourism” is a growing category for incentive groups. For these visitors, “manly” activities that are prohibited in their home countries—such as shooting automatic assault rifles—are now routinely included in incentive ideas to everyone from Brazilians to Chinese. Not to mention the driving of exotic race cars on enclosed tracks or the construction site in the desert around Las Vegas that allows participants to pretend they’re on construction site operating heavy equipment and bulldozers. The women’s equivalents to these include spa treatments, shopping and preparing a meal with a famous American chef.
- Dining will be a major tourism product. Open any issue of Conde Nast Traveler or Travel and Leisure and you’ll see that 50-60 percent of the photography is food-related—either images of restaurants or actual meals in an inviting setting. To accommodate demand, tour operators will need to offer concierge services by curating dining experiences, assisting in reservations and even providing transportation.
- MICE visitor numbers will grow as suppliers and receptives look to compensate for a decline in leisure visitors. After a fall-off in visitors from Spain, France, Brazil and several other source markets in 2014, specialty receptive tour operators in the U.S. managed to make up for the loss by providing product for MICE groups, whose spending levels are much higher than leisure travelers. Receptives are finding such groups enjoy sporting events, music concerts and special events at entertainment venues. One indication of the growing strength of this market segment is the presence of an additional 100 MICE buyers at the 2015 IPW in Orlando, with even more buyers expected for the 2016 IPW in New Orleans.
- Air traffic from Asia and Southwest Asia (especially India) to the USA will grow as Gulf carriers increase lift capacity and connecting flights from three major international carriers situated in a triangle that puts them within in commuting distance of one another (Distances: Dubai to Doha 236 miles; Doha to Abu Dhabi 187 miles; Abu Dhabi to Dubai 81 miles.) in what is becoming the world’s major connecting point for East-West air service.
Gulf Carrier Air Traffic to/from USA
October 2015: Year-to-Date
Carrier Passengers (millions) Change, year-on-year Emirates 2.521 +33.4% (to/from Dubai) Qatar 1.051 +34.6% (to/from Doha)* Etihad 0.971 +43.4% (to/from Abu Dhabi) * Some limited service from Milan Source: U.S. Department of Commerce, National Travel and Tourism Office
- With fuel costs actually decreasing, airfares should remain stable into 2017; this should help keep package prices stable for next year-and-a-half.
- China Market Needs more Regulation. By 2021, the National Travel and Tourism Office (NTTO) has estimated, China will be sending 7.3 million visitors to the United States. This will place considerable demand on suppliers and put additional stress on the infrastructure for inbound tourism in the USA, which is already straining to handle the 2.5 million visitors who have visited the U.S. in 2015. The industry will have to be vigilant to monitor itself so that unregulated, non-certified tours, tour buses and tour services—they are already active and operating in parts of the country—do not cheapen the American experience for visitors. The industry will also have to intensify efforts to provide enough adequately trained, Mandarin-speaking personnel to accommodate Chinese travelers.
- It will be a sellers market for hotels through 2017. Hotel occupancy rates, as predicted by PKF consulting, are expected to remain high through 2017, and it will continue to be a seller’s market, which is not good for business in major cities, where ADRs increased 4 to 5 percent this year and are expected to do the same in 2016.
- Digital literacy is becoming a must. Understanding the rudiments of digital marketing will be more important than relationships to international marketing and sales professionals. New technologies are now available that will automate bookings for small attractions and tour operators for international distribution. Small attractions and activities are much more creative and targeted than established attractions. A host of newly released apps—such as pictyear, eatwith and feastly, detour, periscope and others will be discovered by operators who will use them to enhance their tour products.● Mercedes’ Sprinter Van May be the Motor Coach of the Future … There may always be 50-passenger buses to take groups from activity to activity, but 36- and 27-passenger vehicles are now de rigueur, and watch for more Mercedes “sprinter vans,” which are larger than familiar airport shuttle vans, holding 18 people. They are the new motor coach of choice for those working with Baby Boomers.
- Millennials will represent a challenge … International operators and their U.S. receptive counterparts will have to deal with Millennials, who now outnumber Baby Boomers. (In the USA, for instance, there are 76 million Baby Boomers, but 87 million Millennials.) While this new reality might provide a challenge for operators, it also presents an opportunity for the growing popularity of inter-generational travel.
- And finally (for now, at least) free Wi-Fi will be the most appealing amenity offered by everyone from hotels to motor coaches, as international visitors don’t want to use their expensive data plans while abroad and, at the same time, hand-held devices and smartphones rely on Wi-Fi availability.
What the Weak Australian Dollar is doing to Long-Haul Travel
Short-Term Resident Departures from Australia:
—Trend estimates: Short-term resident departures during November 2015 (799,800 movements) increased 0.5 percent, compared with October 2015 (795,600 movements). This followed monthly increases of 0.6 percent in both September 2015 and October 2015. The current trend estimate for departures is 4.9 percent higher than in November 2014.
—Seasonally adjusted estimates: During November 2015, short-term resident departures (784,600 movements) decreased 2.8 percent compared with October 2015 (807,600 movements). This followed a monthly decrease of 0.8 percent in September 2015 and a monthly increase of 3.8 percent% in October 2015.
—Original estimates: There were 703,000 short-term resident departures from Australia in November 2015.
Resident departures, Short-term (000s)
Source: Australian Bureau of Statistics
For an up-to-date chart showing the past year’s fluctuation in the value of the Australian dollars versus the U.S. dollar, visit this link: http://www.xe.com/currencycharts/?from=AUD&to=USD&view=1Y
Is it Apples to Apples? Why Are NTTO’s First Half 2015 Arrivals So Strong?
Absent up-do-date figures and after months of suggesting, on the basis of our own sources and anecdotal accounts, that some key overseas sources markets—Brazil, Germany and Australia, in particular—would show that Visit USA numbers would be flat to negative versus 2014, the latest (through June 2015) figures from the U.S. Department of Commerce’s National Travel and Tourism Office (NTTO) showed unexpectedly robust year-to-date increases that challenge the agency’s own earlier full-year forecast for 2015 (See table in first article, “Inbound Report’s Outlook and Analysis for 2016 …”).
What happened? To use NTTO’s own language, “Technical problems are affecting I-94 Program data gathered by DHS/CBP and used by the U.S. Department of Commerce (DOC)/National Travel and Tourism Office (NTTO) to calculate arrivals to the United States in 2015.” As NTTO makes changes in its methodology, it seems that any update or change would increase arrivals figures and projections if only because NTTO has a reputation for being conservative in its forecasts. At least, such an explanation seems plausible when reviewing the numbers below vs. the table in the first article.
First Half 2015 Arrivals
From Top 15 Overseas Markets
Plus Canada and Mexico
| Country/Market | First Half Arrivals, 2015 | Change vs. 1st Half 2014 |
|---|---|---|
| 1. UK | 2,100,826 | 13.80% |
| 2. JAPAN | 1,729,352 | 2.20% |
| 3. CHINA (EXCL HK) | 1,155,590 | 18.20% |
| 4. BRAZIL | 1,108,954 | 5.30% |
| 5. GERMANY | 1,024,557 | 13.50% |
| 6. SOUTH KOREA | 814,596 | 19.50% |
| 7. FRANCE | 796,800 | 4.30% |
| 8. AUSTRALIA | 657,800 | 10.60% |
| 9. INDIA | 585,448 | 18.70% |
| 10. ITALY | 430,403 | 5.60% |
| 11. COLOMBIA | 396,462 | 1.60% |
| 12. ARGENTINA | 357,452 | -1.00% |
| 13. SPAIN | 325,761 | 7.50% |
| 14. NETHERLANDS | 320,236 | 12.80% |
| 15. SWEDEN | 295,320 | 8.00% |
| CANADA | 10,311,336 | -6.10% |
| MEXICO | 8,412,012 | 8.30% |
| TOTAL OVERSEAS | 17,304,54 | 8.70% |
| TOTAL INTERNATIONAL | 36,027,862 | 3.90% |
| Source: U.S. Department of Commerce, ITA, National Travel and Tourism Office from the Summary of International Travel to the U.S. (I-94) report. |
NEW SESSION ADDED TO RTO SUMMIT –DIGITAL DAY
—How do you determine whom you “friend” through social media?
—What type of posts would you find most useful on posts from suppliers?
—Does knowing more about their personal lives make you feel somehow closer to them?
—Which of the following of their posts would you find most useful?
-Marketing intelligence
-What’s new with their companies that can benefit you
-Special deals available only to their social media contacts
Invited (i=invited but not confirmed) Panelists include: Patrick Swen, Lassen Tours (i); Ike Ogura, TransOrbit USA (i); Aniseh Dalju, (formerly of Destination America), Roselle Masse, TeamAmerica
Please note: The RTO Summit West is now completely sold out for the full conference including the one-on-one appointments, but we were able to free up 10 spaces available for Digital Day, February 17th. For more information, visit: http://www.rtosummit.com/rto-summit-west/
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Dyrana Guimarães, who moved on to AIT last summer after the collapse of Nascimento Turismo, where she had directed sales operations at the company’s Rio de Janeiro office for seven years, has left the former to become a partner of Peter Adour and Diana Prudencio in Portfolio Travel Solutions, another Rio-based operator specializing in international travel, including a variety of North American product.
Amanda Darrington has been appointed to the newly created position of sales director at Funway Holidays. She joins the company from Kuoni (UK), where she served for seven years, most recently as head of trade sales. A veteran of more than 25 years in the tour and travel industry, Darrington’s CV also includes tenures with Thomas Cook and Thomson.
Roberto Matsuzaka has been named senior manager of the strategic partnerships area of the new Brazilian operation of HRS, the hotel booking platform. He will focus on working TMCs, GDSs and OBTs. Matsuzaka has more than 15 years of experience with companies such as International Utell/Pegasus, HotelDo.com (Bestday), Accor Hotels and American Express.
Sonja Karl has taken over in Germany as head of long-haul holidays and the luxury program, Thomas Cook Selection, including long-haul flight contracting, yield and product management. Karl, who was previously senior product manager for Asia, the Middle East and the Indian Ocean, takes over from Sascha Büsseler, who has switched to the new short-haul product and yield management team where he and ex-Sun Express manager Andreas Thams are responsible for coordinating flight procurement, yield and product
Heike Pabst, the long-time head of FTI’s North America program and the FTI Gold luxury holidays program, has left the company at her own wish. The responsibility for the North America program was transferred at the start of 2015 to a new Swiss-based unit but she remained head of FTI Gold until year’s end.
Alan MacLean, a 25-year veteran of the tour and travel industry and managing director of Cosmos Tours since July 2010, is leaving the company, which was folded into the Monarch Holidays brand last year. He will depart at the end of January to “pursue other interests,” a company statement said. “The decision to step down is with mutual consent and the company thanks Alan for his leadership, dedication and hard work during his seven years with the business,” the company said.
