UAE. The number of people travelling abroad continues to increase around the world despite a challenging economic environment, according to the second annual Global Destination Cities Index released by MasterCard Worldwide.
Dubai features prominently on the Index, coming in eighth in terms of number of inbound international visitors and outranking cities such as New York, Amsterdam, Kuala Lumpur, Shanghai and Beijing. Abu Dhabi emerges as the world’s fourth fastest growing destination city by visitor numbers, outstripping cities such as Istanbul, Singapore and Toronto and is set to grow three and a half times faster than New York.
The Index looks at the global economy from the perspective of connectivity between global cities, especially in terms of international air travel and cross-border spend, and aims to deepen understanding of the dynamic flow of global commerce.
Dr Yuwa Hedrick-Wong, Global Economic Advisor for MasterCard Worldwide and author of the report comments: ‘‘In spite of a sluggish global economic climate, this year’s Index suggests that the overall travel and tourism picture is quite positive. We continue to see hotspots of strong growth around the globe, with major global destination cities attracting international visitor arrivals and expenditure and acting as important engines of growth.”
Another interesting trend that we observe is a rise in cashless payments with many international travelers opting to do electronic transactions rather than using cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel.”
Raghu Malhotra, Division President, Middle East and North Africa, MasterCard Worldwide said: “We are delighted to see that Dubai and Abu Dhabi have once again emerged as vital destination centers regionally and globally. The ease of doing business in the UAE as well as the country’s exciting offering of hotels, entertainment, shopping and sightseeing are some of the factors that are driving this influx of visitors. This is especially positive news for local businesses as it highlights strong opportunities for growth.”
With 8.8 million international visitors expected in 2012, Dubai is the eighth most highly ranked destination city in the world, moving one spot higher compared to 2011 and marking a growth of 15.3%. In terms of the volume of international visitor spend, Dubai ranks 18th in the world with a projected US$ 8.8 billion visitor spend in 2012, an 18.5% growth over 2011.
London, Paris, Munich, Frankfurt and Kuwait are set to be the top origin cities for Dubai in terms of number of inbound passenger arrivals. London is the number one origin city for Dubai, with 803,000 visitors expected in 2012. Visitors from London are also the highest spenders in Dubai with US$1,495 spent per visit, compared to an average of just below US$900 by visitors from the other four top origin cities. However, the growth rates of visitors from Munich, Frankfurt and Paris are remarkably high at 29.5%, 22.1% and 20.2% respectively.
Abu Dhabi shines through as the world’s fourth fastest growing destination city by visitor numbers with a 17.9% spike expected in 2012, outstripping New York by more than three and a half times, and outperforming cities such as Istanbul, Singapore and Toronto. The UAE capital is also expected to draw an international visitor spend of US$2.6 billion in 2012, representing an increase of 20.7% compared to 2011.
Overall, the total visitor numbers for the world’s top 20 destination cities in 2012 is estimated to be 184.9 million, representing an increase of 5.7%; cross border spend by these visitors is expected to be US$241 billion, up by 10.6% from last year.
London was crowned as the world’s top destination city for the second year in a row, with 16.9 million inbound passengers expected in 2012. Paris came in second (16.0 million), followed by Bangkok (12.2 million), Singapore (11.8 million) and Istanbul (11.6 million) in the top five ranking.
London also stood first in terms of cross-border expenditure with a whopping US$21.1 billion anticipated in 2012. New York came in second (US$19.4 billion), followed by Bangkok (US$19.3 billion), Paris (US$17.8 billion) and Singapore (US$12.7 billion) in the top five ranking.
The MasterCard Index of Global Destination Cities ranks 132 cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012. This Index and the accompanying reports are not based on MasterCard volumes or transactional data.
Highlights from Key Regions:
• According to the report, the regional outlook for the Middle East and Africa is bright, with visitor numbers for the top ten cities set to grow by 7.2%, total international spending predicted to rise by 10.4% and average spend per visit set to grow by 3%. Visitors will spend the most in Dubai which is also a fast growing city within the top ten for this region. Abu Dhabi will be the fastest growing in terms of spend, according to the report, up 20.7% this year. Looking at the full list of cities, Durban will be the fastest growing for the region in terms of visitor numbers and is predicted to be the second fastest growing city in our report.
• The outlook for European travel and expenditure is rosy for 2012. The top ten cities show a projected combined overall increase in visitor numbers of 2.8% and a rise of 8.1% in terms of projected total international spend. The average international spend per visit will rise for these European cities to $1,172, up 5.1% on last year.
• The Asia/Pacific regional story stands out as the real success story of the report, with total visitor numbers for the top ten cities predicted to grow by 9.5% and total international spending set to increase by a solid 15.3%. Average international spending per visit for these cities is set to increase to $1, 350, up 5.4% on the previous year. Bangkok claims the top slot in terms of visitor spend in the report and Tokyo, in sixth place, shows the fastest predicted spend growth, at 24.2%. Hot on its heels is Taipei, with a healthy predicted visitor spend growth of 20.5%.
• The growth figures for Latin America show real signs of positivity, with projected visitor numbers up by 7.3% for the top ten destination cities in the region and total international predictions for spend growth at 7.9%. Though there is set to be a lower average international spend per visit of $982, this is up by 0.6% on last year. Buenos Aires takes the number one slot in spend terms, whilst Quito and Bogota will be the fastest growing, says the report. Meanwhile, Recife will be the fastest growing regional city within our report in terms of visitor numbers, with impressive anticipated growth of 37.6%.
• The predicted growth in North America also looks healthy. Looking at the top ten cities, visitor numbers are set to swell by 4.1% and international spending to grow by 5.8%. Average spend per visit will also go up by 1.6% to an impressive $2,442, claims the report. New York will be the city where visitors will spend the most, up 6.8% on last year.
There will also be increasing numbers of visitors flocking to the Big Apple, with visitor numbers set to grow by 5.2%. Dallas and Boston, though not in the top ten, will also show fast growth in terms of visitor spend, both predicted to go up by 13.6% on last year, as well as healthy increases in projected visitor numbers. Toronto, the fastest growing city in North America’s top ten, will also grow fast in terms of international visitor spend, with a projected increase of 10.2% on last year.
For the full report go to: www.masterintelligence.com
The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities. Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.
On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.
On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included). An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.
A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.
This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).
Please note, the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.
About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor, MasterCard Worldwide
Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009. Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001.
As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing. In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.
Yuwa is also currently the HSBC Visiting Professor of International Business at the University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.
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