More households around the world will be packing their luggage and heading to overseas destinations for annual holidays in the next decade. According to a new Visa report, some 109 million Asia-Pacific households are expected to go on an international trip once a year by 2025, up 65 percent from 2015.
Over the same period, Visa’s report, “Mapping the Future of Global Travel and Tourism in Asia Pacific”, which forecasts travel and tourism trends in the next 10 years (2015 to 2025), found average annual spending by households during a trip is likely to rise 8 percent to US$5,230.
The Report also identified key drivers expected to impact global travel, including a growing middle class, greater internet connectivity, improved transportation infrastructure across many countries and an aging global population with more time for leisure travel.
“Travelling internationally will become more common and attainable in the future thanks to changing demographics, combined with technology advances that make travelling abroad easier and less expensive,” said Wayne Best, Chief Economist, Visa Inc. “What will emerge is an expanding “travelling class” that will spend a growing portion of their household income on cross-border travel. Tomorrow’s travelling class will likely be older and hail from emerging markets – looking very different from today’s typical international traveller.”
In Asia Pacific, households in mainland China (US$255 billion), Hong Kong (US$47.4 billion) and Singapore (US$44.9 billion) are likely to be the top markets with the largest outbound travel spend by 2025. However, emerging markets Indonesia (211 percent), Vietnam (132 percent) and India (101 percent) are likely to be experience the sharpest increases in spending.
Highlights of the global report include:
The Rise of a new Global Travelling Class: Growing income levels around the world is creating a new “travelling class”. The study uncovered that worldwide, households that make at least US$20,000 per year account for more than 90 percent of spending on international travel today. By 2025, it is estimated that nearly half of all global households (945 million) will be within this income range, spurring greater international travel and spending, particularly by households from emerging markets.
Global Aging: By 2025, travellers aged 65 and above will more than double their international travel to an estimated 180 million trips, accounting for one-in-eight international trips globally. The study estimates that older travellers will be able to afford longer trips that provide greater comfort at higher prices. Trends such as “medical tourism” whereby aging populations undertake international travel for medical purposes will also take hold in the future.
Increasing Connectivity: The combined forces of globalisation and technology are expanding access. Construction of more than 340 new airports is expected over the next decade, creating new routes and destinations that will make international travel easier and more convenient. At the same time, awareness of travel options is spreading with the rapid uptake in internet access and the number of mobile devices around the world. Digital connectivity is not only fostering greater spontaneity in travel, but also spurring a broader array of personalised travel and tourism options as well.
Visa estimates the number of households travelling internationally by comparing Visa-branded cardholders in a given country who have made at least one face-to-face transaction abroad versus the population of all active cardholders in the source country. The figures were adjusted to be representative of the source country’s population regardless of payment methods used by households. The propensities were then used as an input in the forecasts developed by Oxford Economics for the study.
Oxford Economics used survey data on the age and income of the international travelers from a sample of 10 countries to calculate international travel frequencies and share of travel by age bracket and income class. The results were extrapolated to a broader set of countries based on their classification as developed or emerging markets and key variables such as GDP per capita and total international arrivals per capita. The estimated travel shares were then compared with each country’s household income distribution and age distribution to develop a historical relationship from which to project international travel shares and volumes by income class and age bracket from 2005 to 2025.