IBISWorld Report Sees Tourism Rebound for U.S. Over Next Five Years
By James Shillinglaw
June 17, 2012 9:32 PM
According to a new U.S. travel industry market research report published by Los Angeles-based IBISWorld, which claims to offer a comprehensive database of unique information and analysis on every U.S. industry, the recession left the travel industry struggling, but revenue will rebound in the next five years due to positive changes. Tourism will particularly benefit from the economy improving, unemployment rates declining and people spending more money, the report found.
The number of inbound visits to the United States will go up significantly, especially from East Asia and South America. For these reasons, industry research firm IBISWorld has added a report on the tourism industry to its growing industry report collection.
After a disappointing 2009, when revenue declined 4.1 percent as travel demand plummeted in response to a drop in consumers' disposable income, the tourism industry began its recovery in 2010 and 2011. Over the five years to 2012, IBISWorld estimates that the tourism industry's revenue will grow at an annualized rate of 0.8 percent. From 2011 to 2012, says IBISWorld industry analyst Nima Samadi said revenue is expected to grow 4 percent to $1.4 trillion.”
The state of the economy and other travel-related trends drive growth and contraction for tourism, the report found. In 2010 and 2011, domestic travel increased 1.9 percent and 2.4 percent, respectively. In addition, international arrivals increased 8.7 percent in 2010 and 5.7 percent in 2011. As the effects of the recession continue to subside, demand for the tourism industry is expected to continue to grow due to increased travel demand and higher travel rates.
The picture was dramatically different during the recession. In 2009, the decline of the domestic economy and the heightened unemployment rate forced people to become more selective with their spending. Unemployment topped 10 percent in 2009, leading consumer spending to decline 1.9 percent in the year. “As people cut down on spending across the board, they became less likely to spend money on nonessential travel,” said Samadi.
Falling business revenue and profit also led to far fewer business trips. Domestic travel declined 5.1 percent during 2009, pushing industry demand and revenue down. Inbound travel rates also plummeted, with 5.2 percent fewer people visiting the United States than in 2008.
Over the five-year period to 2017, industry revenue is forecast to increase at a moderate pace. An influx of international visitors from South America and East Asia is anticipated due to rising household incomes in those regions and their emerging middle class's propensity to travel internationally. According to IBISWorld, the most significant change will be the continued shift away from brick and mortar tourism providers toward online tourism operators.
Between 2012 and 2017, the number of industry firms is expected to grow little, which will be largely due to the number of brick and mortar firms exiting the industry, partly offsetting the growth in new industry entrants. The tourism industry includes a number of firms across various other industries that facilitate travel and related activities, including major players United Continental Holdings Inc., Marriott International Inc. and American Express Company.