What does the global future of travel look like?

The global economic landscape has always had an influential role over the travel industry, and today is no different.

Chief economist for Southeast Asia Justin Wood had a few insights up his sleeve at the Travelport conference in Seoul, and trends that are likely to shape the future of travel.

Wood took dry economic analysis and stats, and turned them into useful info for the travel sector. Here are the top tips to look out for.

Economic Outlook

In terms of the global economy, things look to be improving at a modest pace, with Asia Pacific tipped to outperform all the rest for the next 12 to 18 months.

Commodity prices are shaky, which will leave the Americans saving around $200 million on petrol and fuel costs over the coming year, a trend that will boost the demand for travel.

The Euro is pinned to remain weak, along with the Yen, while printing money in Europe and Japan means the economies will enjoy greater stimulation.

China’s growth has also been predicted to slow in the near future, and despite being in a slightly better position than previous years, Greece continues to be at risk.

Geo- Political Risk areas

The key global areas that remain at risk, and subsequently will drop in travel demand, include:

Russia-Ukraine
South China Sea
Middle East

Wood suggested these destinations would experience a lag in visitors, while they pulled themselves back up to tip top travelling standards.

Global Themes

Overall, Wood said it’s a good year to be making the trek to Europe, with the continent set to grow modestly by around 1.5%.

The Central Bank in Europe has decided to start printing money, and as a result the Euro is weakening, further encouraging travellers to jetset off on a European getaway.

The US economy is roaring along, with more jobs being create, and an economy that is now 8% bigger than before the GFC.

Japan

A lot is happening in Japan, from printing money to government spending on infrastructure, plus a range of structural reforms.

A rise of consumption tax means that people have stopped spending as much money, and where once Japan was an expensive place to travel to, Wood says it’s now looking much more affordable.

Pack your bags, it’s a good time to check out Japan.

Where is the growth in the emerging markets?

Emerging markets are important to track in the travel industry, and Wood suggested to keep an eye on Asia and Africa, both markets that are coming into their own.

In 30 years China has had 10% growth year-on-year, but this is now set to drop to 6-5%, however the nation can still expect exceptional growth.

Chinese workforce is aging and shrinking
Investments in fixed assets are now saturated, the key engine of growth in China.

China will still add $890 billion dollars every year to the global economy, the equivalent GDP of Australia every year over the coming years, with Wood suggesting the country will become much more than just a strong, emerging market.

India is growing faster than China, but don’t be fooled, because its speed is no match China’s size.

Australia’s sharp drop in currency and our somewhat shaky dollar means that more travellers are looking to visit down under, while Aussies are predicted to travel to other cheaper markets outside of our home territory.

Overall, Wood says a trend will emerge where Australian consumers will slowly come home, and start to spend again as the weaker currency and fall in interest rates boosts the economy back up.

The overall economic outlook is looking good for the future of travel, and it’s something Wood says we as an industry can look forward to.

Nancy Hromin is attending the Travelport Conference in Seoul on behalf of Travel Weekly and can be contacted at nancy@travelweekly.com.au.

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