Why the world depends on our need to travel

Often overlooked in the world of finance, the travel industry contributes a tremendous amount to the global economy. From elitist beginnings, it is now one of the world’s most transformative forces

 
Why the world depends on our need to travel
Crowds of tourists on the Great Wall of China 
Author: Callum Glennen
April 25, 2017

China’s economy is preparing for the future. No longer able to count on growth in the manufacturing and export industries, the government is fostering a number of more self-sustaining sectors that are better able to maintain growth in the long term. Such efforts are necessary should the country wish to continue its remarkable economic development beyond the next few years.

In December, China’s National Development and Reform Commission (NDRC) announced that tourism would be one of its areas of focus for the next four years. The country is aiming to invest RMB 2trn ($290bn) into tourism projects by 2020, an ambitious figure designed to renew the country’s infrastructure and public services.

In a joint release with the China National Tourism Administration, the NDRC said that, by 2020, the Chinese Government aims for the total sum of tourism services purchased in the country to reach RMB 7trn ($1trn). That figure would contribute more than 10 percent of the country’s annual economic growth and employ around 50 million people; more than 10 percent of the country’s total workforce.

Economic mountains
When pressed to list the biggest and most important industries in the global economy, most people would say some of the more visible and tangible mainstays on the world’s stock market indexes: energy, finance, pharmaceuticals and so on. In terms of the industries that may have the most transformative impact on a country, the majority of people would list the same. The tourism industry is often overlooked, with few taking notice of its ability to not only to transform an economy, but to change the entire identity of a location. Throughout history, tourism has been a force of wealth, status and power that is capable of producing more than just economic growth.

The contribution that the tourism industry makes to the global economy is difficult to exaggerate. In an interview with World Finance, President and CEO of the World Travel and Tourism Council (WTTC) David Scowsill said that in 2015, the travel and tourism industry contributed $7.2trn to the global economy, a little less than 10 percent of the world’s total GDP. In total, the tourism industry is expected to support 11 percent of all jobs by 2026 (see Fig 1).

The industry’s rate of growth is only accelerating as well. Scowsill explained: “We expect travel and tourism to have grown over three percent in 2016, which will be the seventh consecutive year we are growing ahead of global GDP. Generally speaking, our sector grows about one percent ahead of the global economy.”

According to WTTC data, travel and tourism’s overall GDP contribution grew by approximately 29 percent in US dollar real terms between 2006 and 2016, increasing from $5.8trn to $7.4trn. Its direct contribution, through industries such as hotels, airlines and leisure activities, reached $2.23trn in 2016 – a figure that is expected to reach $3.47trn by 2026 (see Fig 2).

Scowsill said the last decade has seen a significant shift in the global tourism industry, as international travel has fallen within reach of more people: “This means that more people with higher disposable incomes have been able to travel over the last 10 years; the Chinese market in particular has witnessed significant growth.”

Besides efforts to make the country a more attractive tourism destination, China has also been the source of tourism development beyond its borders, thanks to an increasingly wealthy population. In the coming years, as long as China’s economy continues to grow, numbers are only going to increase. Writing in the Nikkei Asian Review, Morningstar analysts Dan Wasiolek and Chelsey Tam stated only nine percent of China’s population are frequent international tourists (see Fig 3). When that number is compared to the 38.3 percent of South Koreans and 51.1 percent of Taiwanese who regularly travel internationally, one can see that China still has a lot of room to grow.

Together with rising incomes, the falling cost of travel and its increased ease have contributed to the growth in global tourism. Scowsill said: “The increase in connectivity and travel facilitation have helped boost the mobility of people, specifically the rise of low-cost carriers has made flying more economical.” With a hotel on the other side of the world bookable in just a few clicks, an international trip can be a spur of the moment decision, with travel agents now far less of a necessity. “Another factor is the increase in visa-free travel”, Scowsill added. “Over the last 10 years, the percentage of the global population requiring a traditional paper visa has decreased from 75 percent to 58 percent.”

Grand Tour
What has been particularly remarkable about the global tourism industry is the consistency of its growth, not just over the past decade, but the past 70 years. Tourism has always carried a high social currency, and financial barriers are often the only things stopping people travelling more. Though now a long way from its elitist beginnings, the status associated with international travel has ensured it remains an industry whose growth may slow, but will never truly stop.

Eric G E Zuelow is an associate professor of European History at the University of New England and author of the book A History of Modern Tourism. Speaking to World Finance, he said that, while it is a debated subject, tourism as a concept is generally accepted to have started in the late 17th or early 18th century with what was know as the ‘Grand Tour’.

“The initial impetus was that, in the wake of the Renaissance, diplomacy was becoming more complicated in Europe, and it was necessary to, instead of simply sending a diplomat to another court to negotiate a treaty, have people on the ground at all times”, Zuelow explained. During this time, Queen Elizabeth I began funding England’s best and brightest to travel, meet people, gather intelligence and ultimately embed themselves in another culture.

“As that happened, other elite families and members of the gilded elite wanted their sons to have a similar experience, and so more and more people started going [abroad]”, Zuelow said. “And by the middle of the 18th century, it was a kind of finishing school for the elite.”

With tourism and travel originally being exclusively the domain of only the wealthiest, new technology has always played a role in gradually lowering the financial barriers that stop people from travelling. Zuelow explained: “The Grand Tour more or less came to an end with the Napoleonic Wars. In the immediate aftermath of that, or even against the backdrop of the Napoleonic Wars, steam ships, and then railways, were developed.”

This point marks the beginning of tourism falling within reach of working-class people, with day trips emerging as a popular and affordable pastime. For middle-class people, an overnight or even slightly longer trip was an option.

Zuelow said for many, the act of travelling was just as exciting as the destination: “The technology itself was exciting, so it wasn’t even just about the place that you went to, but it was about the experience of getting on one of these vehicles. And that was particularly true of the train because they went faster than people were used to going, and they were big, and noisy, just exciting in and of themselves.”

With travel and tourism becoming cheaper, businesses that directly targeted the growing number of people keen to experience other places began to emerge, including the first travel agency. Founded by Thomas Cook and his son John Mason Cook in 1841, Thomas Cook & Son became the first of what would soon be a worldwide phenomenon. A deeply religious man, Cook saw tourism as a path to social reform and higher education for the masses. His company made a particularly significant impact arranging travel for many living in the English Midlands to visit London for the Great Exhibition of 1851.

Planes, trains and automobiles
Today, tourism tends to be described as an industry, albeit one that is difficult to categorise due to how large, expansive and varied its members are. Tourism began to expand at an almost overwhelming rate following the Second World War. Technological developments also accelerated, with improvements to automobiles allowing people to easily travel greater distances on their own.

In the 1960s and 1970s, air travel became more affordable and inspired a new, less affluent class of international traveller. Scowsill pointed out the price of a flight today is a fraction of what it once was: “Furthermore, people increasingly value new experiences rather than investing in other goods or repeatedly going to the same local holiday destination. These factors have all contributed towards making the industry far more competitive and diverse.”

While technology has made tourism easier, faster and cheaper, what hasn’t changed is the sense that travel creates better people. Just as aristocrats sent their children out to learn and become more ‘well rounded’ individuals, the notion of becoming more ‘worldly’ is the overwhelming motivation behind many people’s desire to travel.

Zuelow said tourism’s development is also tied to the rise of nationalism in the 19th century. At the height of the British Empire, the infrastructure that allowed larger numbers of people to travel ultimately helped them form a deeper opinion of themselves by experiencing other cultures.

The tremendous growth of tourism on a global scale suggests there is little that could stop the industry from continuing to flourish

“What that meant was that people were travelling and they were seeing themselves, and what scholars and academics would call the ‘other’, and they were able to define themselves relative to that other”, Zuelow explained. “I think that one of the things that’s really significant is that tourism plays a central role in the shaping of who we think we are. We imagine ourselves to be relative to other people, which strikes me as a pretty huge thing.”

Tourism has now fragmented into a number of different branches. After the rise of urban tourism (which is popular for cultural learning) and rural tourism (often seen as beneficial for health), specific tourism products began to emerge. By this stage, tourism had become a product rather than just an activity or intellectual pursuit.

“Disneyland, for example – the first big theme park – opened in the middle of the 1950s, and others followed suit after that”, Zuelow said. “Heritage tourism started to take hold in the 1970s, and different forms of outdoor tourism grew in popularity. Things that had been developing for a long time really took hold.”

Reshaping cities
Tourism is also capable of initiating a tremendous amount of change in a single place. Since the days of the Grand Tour, cities have been an important destination for tourists, but it has only been more recently that destinations have branched out and offered a diverse range of activities, often permanently reshaping cities. Zuelow said London is a prime example: “London has a wealth of historical sights, a lot of heritage, so there’s the experience of going to see history. It also has rather less intellectual things that you can take part in, like Madame Tussauds. By the 1980s you’ve added the London Dungeon and other kinds of things like that, that don’t tend to be much more than entertainment. And a whole lot more besides; art museums, history museums, anthropology museums, technology museums, all these kinds of different things that people can do.”

However, the transformational aspect of tourism can have an impact beyond cities. Zuelow gave as an example Ireland’s TidyTowns Competition in the 1950s: “The idea being to take essentially poor Irish towns and brighten them up with paint and flowers, so Irish townscapes came to look like the brightly coloured towns that we all recognise from postcards. That was directly a result of tourism. That competition was implemented by the Irish Tourist Board in order to create something for a tourist to see.”

Some towns go in the other direction, and renew efforts to preserve history in order to maintain appeal; cities like Athens and Rome, for example.

Tourist crowds surround a pair of snow monkeys in northern Japan

Deteriorating destinations
The tremendous and continued growth of tourism on a global scale suggests there is little that can stop the industry from continuing to flourish. While individual destinations’ tourist appeal may suffer if they deteriorate into conflict (as has happened in Egypt in the wake of the country’s revolution) it would take a truly disastrous international event or economic catastrophe to impede overall tourism numbers.

However, Scowsill said something that could impede the tourism industry is deteriorating global security: “It is extremely important that the public and private sector work together on a coordinated approach across borders. We are living in a time where countries are beginning to look more inwards than outwards out of fear of the unknown. WTTC believes that people have the right of freedom to travel and it is therefore of extreme importance that governments do not shut down their borders, but look at other ways of enhancing security through intelligence sharing and the implementation of electronic visas.”

Another threat is the gradual deterioration of destinations, either through sheer volumes of visitors or global warming. While occasionally stories of ungrateful or out of control tourists emerge in the media – such as people trampling wildlife, or even knocking over priceless statues while posing for selfies – more consistent damage is emerging.

The gradual deterioration of destinations, either through sheer volumes of visitors or global warming, is a real
threat to tourism

In May 2016, authorities in Thailand announced the island of Koh Tachai would be closed to tourists until further notice due to the damage visitors were causing to the natural habitat. “We have to close it to allow the rehabilitation of the environment both on the island and in the sea without being disturbed by tourism activities, before the damage is beyond repair”, said Tunya Netithammakul, Director General of the Department of National Parks, Wildlife and Plants Conservation, in an interview with the Bangkok Post.

However, the negative impact of tourism is not just limited to its effect on nature: from an economic perspective, Venice is another example of there being too much of a good thing.

A beautiful and enduringly popular destination, the Venetian tourism industry has cannibalised local industries to the extent where the city would simply cease to function without visitors’ money. As residents depart the city, the local culture, industry and the city itself are eroding.

For many of these popular destinations – in particular, poorer countries that see increasing visitor numbers as an opportunity to tap into an international inflow of cash – the long-term impact of tourism is often overlooked. However, the longer-term, negative impact of tourism is increasingly being looked at, with some destinations even considering limiting visitor numbers to sacrifice short-term gains for long-term sustainability.

$290bn

China’s planned investment into tourism projects by 2020

50m

people will be employed by china’s tourism industry if these plans are successful

$7.2trn

Travel and tourism’s contribution to the global economy in 2015

1 in 11

jobs are related to tourism

29%

Growth in the industry’s contribution to global GDP between 2006 and 2016

“As travel and tourism continues to grow, it is of [utmost] importance that we safeguard the world’s assets, ensuring we balance growth while preserving the environment, local communities and cultural heritage”, said Scowsill. “Sustainable policies and operations should be at the forefront of government bodies and companies that operate within our sector.”

Needing to get away
With the substantial investment being made into it, the tourism industry is continuing to evolve, placing travel in reach of even more people. Scowsill said: “We will continue to see an increase of the circular economy, changing the way people travel, not just for leisure but also for business. Boundaries are being pushed with new technologies, such as virtual reality. Also we see the role of social media impacting the way people experience travel, as many unique experiences are being shared.

“Additionally, we see the parameters of sustainability widening to include accessibility, consumer awareness and more technological innovation. Especially when it comes to accessibility, there is a lot that can and needs to be done within our sector. There is a huge economic and social opportunity to cater for those with accessibility needs, including wheelchair users, the hearing and vision impaired, and also the ageing population.”

Ultimately, the need humans have to travel will be enough to last for many years to come. Zuelow said the social wealth that comes with being well-travelled makes it an incredible force in people’s lives: “It makes it kind of one of the ultimate consumer goods, and I think that the tourism industry plays on that to a certain extent… Closely tied up in that is the idea that we all use this phrase, ‘I need a vacation’ – well, not really. But of course we feel like we do, because we’ve learned to feel that it will make us healthier to be away from work and to engage in leisure.”

With this ultimate consumer good capable of both economically and socially transforming destinations, China’s efforts to support its future make complete sense. While other industries may boom and bust, tourism is one that has endured over the centuries – and can be counted on to continue to do so in a way that most others cannot.