Manual on Module V – Trends and Issues in the Tourism and Hospitality Industry
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A tightening of the economic situation will often result in reducing tourism spending (Source: Facts and figures, UNWTO). In Table 4.2, the number of long-haul travel fell by 10% indicating that tourists are not financially able to afford taking long-haul travels. However, the number of short-haul travels increase by 5%, data would suggest that tourists are continued to increase their short haul travels at the expense of decreased in income. How tourists can afford to travel with a decreased in income?
This could be explained by the popularity of low cost carriers, LCC, among tourists, and LCC have positive implications to the travel pattern of tourists during and after the economic hard time. LCC offer passengers with less expensive air fares which help tourists sharply reduce their travel budgets. Graph 4.3 shows a steady growth rate of tourists in choosing low cost carriers (LCC) when it is compared with the full-serviced carriers (FSC) as their mode of air travel during economic hard time. When consumers gone through the recession period, they are looking for more value in their spending, seek cost saving alternatives and find more economical ways to travel. Therefore, the demand for LCC continues to be strong after the recession. Graph 4.4 shows a steady of passenger-traffic growth in the LCC’s market but a decrease in the FSC’s market. Today, LCC primarily focused on short-haul routes but they are likely to develop longer haul services in the near future (Deloitte:2015). It is likely that the hospitality industry going to change rapidly to meet the heavy demand of both short-haul and long-haul services passengers for accommodation. The section on “Accommodation Sector” will look at the implications of LCC for hospitality because a lot of low-cost carriers are bringing more tourists. Graph 4.3: Low cost carriers an alternative during economic hard time 
Source: The Statistics Portal – Respective airlines Source: International Low-Cost Airline Market Research by Airline Profiler available at http://www.airlineprofiler.eu/2014/07/international-low-cost-airline-market-research/ 7 6 5 4 3 2 1 Departure per year in millions FSC LCC Graph 4.4: Popularity of low cost carriers 
4.1.3 Competitions among tourism receiving countries Generally speaking, GDP is used as an indicator for measuring the economic performance of a country or a region. In Table 4.3, it shows that China, India, Brazil and Russia have a relatively higher GDP growth rate than most of the advanced economies such as the United States, Germany and Japan.
In view of the GDP data, it could say that consumers from China, India, Brazil and Russia are more willing to spend their time and money on travel. According to UNWTO World Tourism Barometer issued on April, 2014, the emerging economies of China, Russia and Brazil have been the fastest growing outbound markets (tourist generating markets) in recent years. In 2013, these three source markets (tourist generating markets) accounted for some US$ 40 billion of the total US$ 81 billion increase in international tourism expenditure. According to the data in Table 4.4, China overtook the United States and Germany in the ranking by international expenditures in 2013 as the world’s top tourism spenders. It could explain that the huge growth of GDP in China has fuelled the expansion of the middle classes and increasing the amount of disposable income they have available for international travel. Other than China, Russian Federation and Brazil also experienced double digit growth of spending for their citizens on travelling abroad. In addition to UNWTO data, research data from ITB World Travel Trends Report, also indicating the strong growth of international travel by people in emerging economies around the world. They were the dominant element of travel trends in 2013. (Source: ITB WTTR 2013/2014).
Therefore, it would be acceptable for the top tourist receiving countries listed in Table 4.5 to use the GDP data as well as the tourism expenditure data to predict the future development trend of tourist generating countries. In other words, the data could help to predict who are the tourists?
In order for the tourist receiving countries to sustain their tourist arrivals and tourism receipts growth rate, it is essential for them to identify their competitors. In other words, to find out where do tourists go for their holidays? From the data below, it reveals there are fierce competitions among the tourism receiving countries for tourists. According to the UNWTO’s data on international tourist arrivals and international tourism receipts in 2013, Europe accounts for 42% of world international tourism receipts and 52% of the world international arrivals. Asia and the Pacific are the world’s number 2 in ranking in terms of world international tourism receipts (31%) and world international tourist arrivals (23%). Although Europe is still the most attractive destinations for international tourists, Asia and the Pacific are catching up with Europe in becoming the world’s top tourist destinations. Based on the data in Table 4.6, Asia and the Pacific recorded the highest relative growth, it indicated that more and more tourists are interested in spending their holidays in Asia and the Pacific.
4.2 Accommodation Sector 4.2.1 Disposable income Hospitality industry is heavily affected by economic uncertainty as consumers rely on disposable income to meet their travel needs. Historically, there’s an economic parallel between RevPAR (Revenue Per Available Room) and GDP (HotelNewsNow, August 2014). According to Deloitte’s report on Hospitality 2015, demand for hotels overall has fallen four times faster than GDP during the recession in 2009, the most dramatic fall seen over the past century (refer to Graph 4.5). The data in Graph 4.6 confirms that there is an economic parallel between hotel demand growth rate and GDP growth rate. In this case, the GDP growth rate goes up in 2010 and the demand for hotel room increases. Graph 4.5: Annual Percentage Change in U.S. Hotel Room Demand Growth vs. U.S. GDP Growth (%) Real GDP 
6% 4% 2% 0% (2%) (4%) (6%) (8%) (10%) Percentage Change from Previous Year Hotel Room Demand 1988 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09E 10E Source: Smith Travel Research and U.S. Department of Commerce (1988 - 2008), JLLH and International Monetary Fund (2009E - 2010E) Directory: attachment attachment -> A unified Modeling Approach to Climate System Prediction James Hurrell* 1, Gerald A. Meehl 1, David Bader 2 attachment -> Voluntary and mandatory surrenders 2013 Download 0.72 Mb. Share with your friends:
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