Historically travel has been considered a luxury good but the lowering of travel barriers and falling costs has put travel within reach of millions. These factors combined with the growth of disposable income, the rise of the middle class in many emerging markets and changing attitudes of people towards travel, have enabled the industry to flourish leading many a pundit to say it’s time to wave goodbye to yesterday’s tourists.
In previous decades North America and Europe have dominated the travel markets but this may not be the case for much longer. By 2030 most of the growth in international travel will come from Africa, Asia and the Middle East, which will enable further growth and job opportunities in these regions. While markets in Europe and the Americas will continue to grow the rate will be incomparable to other regions.
The global middle class is expected to grow by another three billion people between 2011 and 2031, the majority of which will come from emerging markets with China and India leading the way. This newfound buying power will give the middle class greater access to travel. While travel is already booming in China it is estimated that currently only 5% of Chinese nationals have passports. Similar trends are apparent in other emerging markets. The learning here is that when people have more money they spend more money on travel.
Westerners are Changing Too
Across the globe but especially in developed regions millennials as well as older baby boomers are looking for experiences that are distinct. They don’t want the same old travel routine as previous generations.
Studies show that millennials are more tech-savvy and connected than any previous generation and are changing the way travel is consumed. In effect millennials might take low-cost flights and go all out on activities and restaurants. Travelers today often consider experiences to be the prime motivator when booking. So whether it be an authentic local experience, a foodie excursion, an adventure or even and the opportunity to make a difference at the destination, millenials care about how their trip will play out on social media.
In the next five to 10 years this group will also become the industry’s core customer base. Millennials’ spending on business flights is expected to account for 50% of global travel by 2020 and to maintain that share for the subsequent 15 years.
While millennials are on the rise, baby boomers are the most traveled generation to date and have more disposable income to be able to travel. Creating a strong value proposition for this group will be key to attracting them in the next decade.
In every region populations are ageing with senior citizens representing the fastest growing demographic globally. By 2025 seniors will account for 11% of the world’s population. This shift is more pronounced in developed countries where 22% of all citizens will be seniors versus 9% in emerging markets. And these people will travel and spend money.
Visa estimates that travel spending will reach an average of $5,305 a year per traveler by 2025 (this doesn’t include airline tickets). This new “traveler class” will spend a growing portion of its household income on cross-border travel and they will most likely be older and hail from emerging markets.
All this means that tomorrow’s tourists will be very different from yesterday’s tourists and so in the future the entire global travel industry will be changed.