Expect Solid Year of Growth for Travel in 2019: New Skift Research

All things considered, 2018 has turned out to be a very healthy year of growth for travel in both advanced economies and emerging and developing markets.

As people begin to start thinking about 2019, our latest Skift Research report, Skift Global Travel Economy Outlook 2019, provides a look-back on 2018 as well as details our 2019 economic expectations for the U.S. and globally. We provide our global travel outlook which offers forecasts for growth in tourism, international arrivals, and business travel as well as our expectations for key sectors within travel including hotels, airlines, online travel agencies, and cruise.

In the excerpt below, we offer our expectations for 2019 global economic growth as well as our forecast for international arrivals.

Overall, we expect 2019 to be another strong year of economic growth, with a few different puts and takes, which should translate well for travel. Given that we are 10 years into this economic expansion, it’s possible some may begin to ask, “Have we reached the top?” In our view, recessions are not caused by the age of the economic cycle alone and so as long as key indicators remain positive and a negative shock to the global economic system doesn’t occur, we should be in for another solid year of growth.

Last week we launched the latest report in our Skift Research service, Skift Global Travel Economy Outlook 2019.

Below is an excerpt from our Skift Research Report. Get the full report here to stay ahead of the trends.

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Year-in-Review 2018: “Room for Optimism” Gave Way to a Year of Solid Growth

Overall, and in line with our optimistic views last year, 2018 has turned out to be a relatively strong year. Global GDP growth for 2018 is expected to be in line with 2017 at around 3.7 percent. Economic growth in advanced economies has been better than expected, and growth in emerging markets and developing economies continues to be very strong.

Global GDP growth is expected to be in line with 2017 this year

Source: IMF, World Economic Outlook, October 2018

Year in Review 2018: Global Travel Markets

When it comes to travel, 2018 was another solid year, with international arrivals expected to reach an all-time high at a strong growth rate. Year to date (through September 2018), 2018 internationals are at around 1.1 billion, up 5 percent versus the first nine months of 2017. Asia and the Pacific had the strongest growth with a 7 percent increase, whereas the Americas were the weakest at a 3 percent increase.

Given the first nine months of the year generally account for three-quarters of total international arrivals for the year, we assume 2018 international arrivals will come in around 1.4 billion.

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Global Economic Outlook 2019

When it comes to 2019, expectations are calling for essentially stable growth, in line with 2017 and 2018, at around 3.7 percent. Growth prospects for emerging-market and developing economies are generally solid, with strength in India and energy export countries like those in the Middle East. Nevertheless, this is offset by weaker expectations for the U.S., China, Japan, the Euro area, and the U.K., primarily on announced trade measures and weaker economic activity.

Although expectations are for decelerating growth in 2019 for advanced economies, ongoing strength in emerging-market and developing economies offsets this, resulting in overall global growth, which is essentially in line with expectations for 2018.

We expect global economic growth to be essentially in line with 2018.

Source: IMF, World Economic Outlook, October 2018

Global Travel Outlook 2019

We expect solid economic growth in 2019 should bode well for travel. We forecast international arrivals to reach a new all-time high and for travel and tourism to continue to contribute positively to the global GDP. While the GBTA (Global Business Travel Association) is forecasting a deceleration in growth in business travel activity spend, public hotel brand companies are expecting “steady-as-she-goes” growth in 2019, and cruise lines are noting strong 2019 bookings on occupancy and rate. Airlines should benefit from passenger volume growth and increased ancillary sales, though low-cost competition and oil prices are, as ever, wild cards. The secular shift to e-commerce worldwide should remain a tailwind to online booking sites. The leading global online travel agencies are likely to further pursue full-service platform strategies as the law of large numbers dictates that room night growth rates slow.

Previously, the UNWTO set international arrival targets for 2020 and 2030 in their Tourism Towards 2030 report that estimated arrivals at 1.36 billion and 1.8 billion, respectively. Because we expect 2018 to come in at 1.4 billion, the UNWTO’s forecast of 1.4 billion for 2020 appears too low. As a result, we have adjusted our forecasts using reasonable growth rates in the 5 percent range to estimate 2019 international arrivals will be somewhere around 1.5 billion, and then 2020 will be at 1.6 billion. We have maintained the UNWTO’s forecast of 1.8 billion for 2030E.

Exhibit 27: We forecast international arrivals to reach 1.5 billion in 2019

Source: UNWTO, Skift Research estimates

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