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Savills: real estate impacts of changing global tourism attitudes

Hong Kong’s proximity and appeal to mainland Chinese visitors is what places it at the top, although the recent unrest in Hong Kong will no doubt dampen numbers in 2019.

The influence of Chinese tourism is reflected in the fact that of the top 25 visited cities globally, 11 are in Asia-Pacific. Macau and Singapore, both popular with mainland Chinese tourists, feature in the top five.

The top 25 cities in growth terms, however, have largely been those in India, with Euromonitor expecting Mumbai to enter the Asian top 10 for 2019. While not in the top 25 in terms of size, Jerusalem is the fastest-growing tourist city, with annual growth of 35% over the past two years. This has been driven by relative stability and a strong marketing drive providing hotel development and investment opportunities.

China is now the single biggest source market for international tourists globally with an estimated 150 million trips in 2018, Savills says. According to the Chinese Ministry of Culture and Tourism, this is 15 times that seen in 2000 and there are no signs that this growth is abating.

In the latest issue of its Impact newsletter, Savills explains:

“While the growing number of Chinese tourists has positive implications for a city’s hospitality sector, it also has a direct bearing on a city’s retail market, particularly luxury. Chinese consumers are now the biggest spenders when it comes to luxury goods, with 76% of this spent outside their domestic market.

“London and Bangkok led the way in terms of the number of new luxury store openings in 2018, with London seeing Chinese visitor numbers increase by 69% over the past two years.

India is increasingly viewed as the future growth source market globally, thanks to a population of 1.3 billion and, like China, a rapidly growing middle class.  However, the United Nations World Tourism Organisation (UNWTO) forecasts that outbound trips from India will reach 50 million by 2020. That is double the number seen in 2017, but only where China was 10 years ago.

“While Paris has been a firm favourite for Chinese tourists, historical ties between the UK and India, plus language suggest that London will likely be a key destination market for the growing number of Indian global travellers.”

Savills says the travel demands of this generation look to be very different to that of previous generations.  For example, as climate change moves up the agenda for many economies, it’s not just on the agenda for younger generations.

“So far, this has had little impact on our appetite to travel. However, in Sweden, the ‘flight shame’ movement has been attributed to a decline in air passenger traffic and a growth in train travel. We could see this trend expand to other markets.

“Whether this movement could slow or reverse the growing trend in international travel globally remains to be seen. However, it’s likely to result in more people travelling by train and, in some cases, people avoiding international travel in favour of ‘staycations’, further boosting domestic tourist markets.”

james.wallace@realassetmedia.com