Destination Asia-Pacific – The 21st Century’s Tourism Hub

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Travel sector looks upbeat for Asia-Pacific region?

According to a study conducted in 2013, the year was good for international tourism and strongest for destinations in the Asia Pacific region – Asia saw six per cent growth. Moreover, the number of international tourists increased by 14 million to reach 248 million. South-East Asia (as a sub-region of the Asia-Pacific) registered a 10 per cent increase. China emerged with a record number of international tourist arrivals in 2013, at 55.69 million.Asia’s tourism industry employs 65 million people and supports one in 12 jobs – exceeding industries such as financial services.

Needless to say, this growth also led to the generation of 1 million new jobs and accounted for USD2 trillion in contributions to GDP, equivalent to roughly nine per cent of the region’s gross domestic product (GDP). This signifies that at present, this sector employs approximately 65 million people and supports one in 12 jobs – exceeding industries such as financial services.

What tourism brings to the table

With more inbound tourists exploring different cities in the Asia-Pacific region as holiday destinations, the benefits abound.

Economic growth

The contribution of the travel and tourism sector to this region’s GDP is expected to grow by 5.4 per cent per annum by 2024. More employment opportunities will also emerge in sectors like hospitality, airlines, transportation services and restaurants, to name a few. By 2014, travel and tourism will account for 79 million jobs.

Social benefits

As the tourism industry matures, social media platforms are making headway. Most of these online platforms, including online forums and travel blogs, are being increasingly used by companies to disseminate information to larger audience. Needless to say, social media is leading to greater awareness of travel among Asians. This has been one of the factors driving the upsurge in budget air travel within Southeast Asia.

Eco-friendliness

Sustainable tourism is emerging as one of the key growth drivers for this sector. Members of the Asia Pacific Economic Cooperation (APEC) group are making joint efforts in the direction of a sustainable future in tourism. APEC’s Tourism Working Group is an initiative to help promote growth in travel and tourism in the region.

Where are the opportunities?

As the Asia-Pacific region becomes an increasingly popular holiday destination, it is gradually emerging as a leader on the global tourism stage.

How will this evolution take place?

Emergence of new traveler segments

A clear shift is underway in the preferences of travelers wherein a customized approach would best cater to their travelling demands. This has given rise to an array of categories for travelers under the female business traveler, small business traveler, visiting friends and family traveler as well as the senior traveler, not to mention the lesbian and gay or LGBT traveler. This growing consciousness of segmented demand will create opportunities for service providers to produce more targeted offerings.

Technological advancement in the region

Online transactions and mobile devices are emerging as key mediums for travel bookings. In countries such as Thailand and Indonesia, the standard fixed internet phase has evolved to mobile device-centric internet usage. Thus, it has become crucial for agents and travel service providers to support mobile solutions or become obsolete.

Moreover, social media is now emerging as a powerful medium of information and decision influencing. 61% of Indonesians mention that they use social media during travel as a means of seeking advice from friends and contacts.

Cruise control

Consumers aged 18-30 are showing strong interest in cruise holidays.

Many travellers have expressed a keen interest in cruise holidays – with the strongest interest cited by the 18-30 age group. This represents a market opportunity for travel agents. But infrastructure is holding back the cruise industry. Many terminals in the region lack the capacity to accommodate larger vessels.

Growth of budget airlines

The global middle-class is expanding rapidly and is expected to reach, 2.1 billion by 2030. Most of the increase is coming from Indonesia, India and China. According to research in 2013, 47% of leisure travelers have taken at least one international flight with a budget airline in the past 12 months.

Challenges ahead

The Asia-Pacific’s travel industry seems to present many business opportunities. Can growth be sustained?

Easing travel access within Asia-Pacific countries

As Asian governments focus on economic integration through trade and investment liberalization, travel between nations will pick up. A strong indicator of liberalization is the increase in bilateral free trade agreements (FTA). With just 53 in 2000, there are now 250 FTAs in various stages of development as of September 2012. Further liberalization is on the cards. Asian governments are bringing down trade barriers via the AEC, RCEP and TPP multi-lateral agreements. One barriers that trade agreements could help address is reducing visa restrictions. This is a huge impediment to the industry, particularly in terms of capturing demand from China and India, as Chinese and Indian travelers tend to require visas for most destinations in this region.

Lack of infrastructure

Improvement in infrastructure is required, especially for the cruise industry. Although home port cruise terminals are being established, the region lacks terminals which can accommodate large and more modern vessels. Moreover, to cater to the potential of outbound tourism from China and India, enhanced airline capacity, improved airport infrastructure and less stringent visa policies need to be addressed.

Enhancing customer experience

Embracing technology to reach out to a target segment and improve the online customer experience has become a crucial competitive success factor. Service providers need to understand that web presence is absolutely critical because travelers often use the internet to make travel bookings. They also read recommendations on social media (often on mobile devices) before choosing a holiday destination. Service providers face pressure to enhance their ratings on social media platforms and online forums as travelers increasingly seek validation from online communities rather than advice from traditional sources.

Human capital crunch

Although there has been a boom in the travel sector, investments in human capital seem to lag behind those in infrastructure such as hotels and airports. According to a report in 2014, an expected shortage of eight million jobs is foreseen in the next 15-20 years.

Upcoming trends in travel

Catering to various types of travelers is big on the agenda of travel service providers as a one-stop approach is no longer practical. Some of the upcoming trends include:

Focus on millennials

The growing impact of millennials is undeniable in this region. Most of them fall in the age-group of 18 – 30 years and are much more ethnically diverse compared to other generations. They are young and have the enthusiasm to explore the world. Some of the key characteristics of the millennials are a preference for urban over resort destinations, likelihood to travel in pursuit of favourite hobbies and roaming with friends from the same age group in an organized fashion.

Senior citizens

Contrary to popular belief, senior citizens are no less keen on travelling. They are not just enthusiastic but very demanding as well. Customer service is a crucial component of their travelling experience.

Taste for luxury

As the number of millionaires continue to grow, so do the number of affluent U.S. households – with an increase from 10.5 million in 2012 to 20.5 million by 2020. This has fuelled the rise of luxury holidays. This particular sector will be dominated by the U.S., Japan and Europe, but significant demand will come from China, India and the Middle-East in future.

On the other hand, luxury travellers are active in writing hotel reviews, representing 52 per cent of all hotel reviews globally between 2012 and 2014 – adding another target segment of interest.

Moving forward

The Asia Pacific region’s travel industry is growing at a fast pace, carrying economic, social and environmental benefits in its wake. Ample opportunities have emerged for investors with the rise of new travel segments, technological advancements and the as yet under-served cruise industry picking up, alongside the phenomenal growth of budget airlines, which have opened up Asian travel destinations to budget travelers.

At the same time, challenges remain. Infrastructure is under-developed and too many travel service providers are not differentiating their offerings enough by segment. Millennials, seniors and luxury travellers, for example, have very different needs and wants when travelling. And most industry players have not yet fully capitalized on the incredible rise in mobile internet usage in the region.

Going forward, the tourism industry in Asia is likely to move into a maturation stage, when more differentiated and segmented offerings start to appear, both online and off-line. We can expect different sections of major tourist cities to increasingly focus on different tourist segments. We can also expect that national tourism promotion boards will increasingly try to position their countries to cater to a wide range of inbound as well as domestic tourist segments.

And one final word: travel clubs and travel agents should not be written off yet. The personal touch cannot be completely replaced by a website.

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