Travel and Tourism sector contributes significantly to BD economy

Aviation News: The policy makers’ neglect to development of travel and tourism is still continuing. Political turmoil badly affected the sector in 2013. Yet research of World Travel and Tourism Council (WTTC) for 2014 has found travel and tourism is making significant contribution to economy of Bangladesh and it is rising.

The development planner of Bangladesh has this far ignored the importance of travel and tourism sector in the economic development of the country. They are yet to accept the truth, that travel and tourism is an important economic activity in most of the countries in the world. Bangladesh can also be enormously benefitted from direct, indirect and induced economic impact, if travel and tourism become an importance component of economic development.

The research findings of the WTTC for 2014 as well as for past few years carry solid proof of the potential of travel and tourism sector in economic development of the country.

WTTC research
It may be recalled that, The World Travel and Tourism Council (WTTC) has been investing in economic impact research for over 20 years in order to assess and quantify the value of Travel and Tourism’s contribution to GDP and employment.
The WTTC has produced reports and forecasts of the sector’s impact in 184 countries and 24 geographic and economic regions in the world.

The year 2013 proved to be another successful year for the Travel and Tourism industry. The latest WTTC annual research, conducted in conjunction with its research partner Oxford Economics, shows Travel and Tourism’s contribution to world GDP grew for the fourth consecutive year in 2013, helped especially by strong demand from international travellers.

Visitor exports, the measure of money spent by these international tourists, rose by 3.9 per cent at a global level year on year, to US$1.3trillion, and by over 10 per cent within South East Asia. It is clear that the growth in Travel and Tourism demand from emerging markets continues with pace, as large rising middle classes, especially from Asia and Latin America, are willing and more able than ever to travel both within and beyond their borders.

Contribution to GDP
According to WTTC research, the direct contribution of Travel and Tourism to Bangladesh GDP was Tk 222.6 billion, 2.1 per cent of total GDP in 2013, and is forecast to rise by 7.7 per cent to Tk 239.8 billion in 2014, and to rise by 6.1 per cent per annum between 2014 and 2024, to Tk 434.7 billion, 2.2 per cent of total GDP in 2024.

The total contribution of Travel and Tourism to GDP was Tk 460.3 billion, 4.4 per cent of GDP in 2013, and is forecast to rise by 7.9 per cent in 2014 and to rise by 6.5 per cent per annum to Tk 935.5 billion, 4.7 per cent of GDP in 2024.

This primarily reflects the economic activity generated by industries such as hotels, travel agents, airlines and other passenger transportation services (excluding commuter services). But it also includes, for example, the activities of the restaurant and leisure industries directly supported by tourists.

Contribution to employment
In 2013 Travel and Tourism directly supported 1,328,500 jobs-1.8 per cent of total employment. This is forecast to grow by 4.0 per cent in 2014 and rise by 2.7 per cent per annum to 1,809,000 jobs–1.9 per cent of total employment in 2024.

In 2013, the total contribution of Travel and Tourism to employment, including jobs indirectly supported by the industry, was 3.8 per cent of total employment of 2,846,000 jobs. This is expected to rise by 4.2 per cent in 2014 to 2,965,000 jobs and rise by 3.0 per annum to 3,974,000 jobs in 2024, 4.2 per cent of the total.

This includes employments by hotels, travel agents, airlines and other passenger transportation excluding commuter services. It also includes the activities of the restaurant and leisure industries directly supported by tourists.

Visitor Exports
Visitor exports are a key component of the direct contribution of Travel and Tourism.

In 2013, Bangladesh generated Tk 8.3 billion in visitor exports. In 2014, this is expected to grow by 7.1 per cent, and the country is expected to attract 435,000 international tourist arrivals.

By 2024, international tourist arrivals are forecast to total 611,000, generating expenditure of Tk 15.5 billion, an increase of 5.7 per cent per annum.

Investment
Travel and Tourism is expected to have attracted capital investment of Tk 40.5 billion in 2013. This is expected to rise by 3.4 per cent in 2014, and rise by 6.5 per cent per annum over the next ten years to Tk 78.5 billion in 2024.

Travel and Tourism’s share of total national investment will rise from 1.5 per cent in 2014 to 1.6 per cent in 2024.

Different components
Leisure travel spending (inbound and domestic) generated 73.1 per cent of direct Travel and Tourism GDP in 2013 Tk276.9 billion compared with 26.9 per cent for business travel spending Tk102.0 billion.

Business travel spending is expected to grow by 8.6 per cent in 2014 to Tk110.7 billion and rise by 5.5 per cent per annum to Tk188.4 billion in 2024.

Leisure travel spending is expected to grow by 6.5 per cent in 2014 to Tk 294.9 billion, and rise by 6.0 per cent pa to Tk527.0 billion in 2024.

Domestic vs Foreign, 2013
Domestic travel spending generated 97.8 per cent of direct Travel and Tourism GDP in 2013 compared with 2.2 per cent for visitor exports (i.e., foreign visitor spending or international tourism receipts).

Domestic travel spending is expected to grow by 7.0 per cent in 2014 to Tk 396.7 billion, and rise by 5.8 per cent per annum to Tk699.9 billion in 2024.

Visitor exports are expected to grow by 7.1 per cent in 2014 to Tk 8.9 billion, and rise by 5.7 per cent per annum to Tk15.5 billion in 2024.

It may be mentioned that the total contribution of Travel and Tourism to GDP is twice as large as its direct contribution.

Defining the economic contribution
Travel and Tourism is an important economic activity in most countries around the world. As well as its direct economic impact, the industry has significant indirect and induced impacts. The UN Statistics Division-approved Tourism Satellite Accounting methodology quantifies only the direct contribution of Travel and Tourism. But WTTC recognises that Travel and Tourism’s total contribution is much greater, and aims to capture its indirect and induced impacts through its annual research.

Direct contribution
The direct contribution of Travel and Tourism to GDP reflects the ‘internal’ spending on Travel and Tourism (total spending within a particular country on Travel and Tourism by residents and non-residents for business and leisure purposes) as well as government ‘individual’ spending – spending by government on Travel and Tourism services directly linked to visitors, such as cultural (e.g., museums) or recreational (e.g., national parks).

The direct contribution of Travel and Tourism to GDP is calculated to be consistent with the output, as expressed in National Accounting, of tourism-characteristic sectors such as hotels, airlines, airports, travel agents and leisure and recreation services that deal directly with tourists. The direct contribution of Travel and Tourism to GDP is calculated from total internal spending by ‘netting out’ the purchases made by the different tourism sectors. This measure is consistent with the definition of Tourism GDP, specified in the 2008 Tourism Satellite Account.

Total contribution
The total contribution of Travel and Tourism includes its ‘wider impacts’ -the indirect and induced impacts- on the economy.

The ‘indirect’ contribution includes the GDP and jobs supported by:
Travel and Tourism investment spending – an important aspect of both current and future activity that includes investment activity such as the purchase of new aircraft and construction of new hotels;

Government ‘collective’ spending, which helps Travel and Tourism activity in many different ways as it is made on behalf of the ‘community at large’ – for example, tourism marketing and promotion, aviation, administration, security services, resort area security services, resort area sanitation services, etc;

Domestic purchases of goods and services by the sectors dealing directly with tourists – including, for example, purchases of food and cleaning services by hotels, of fuel and catering services by airlines, and IT services by travel agents.
The ‘induced’ contribution measures the GDP and jobs supported by the spending of those who are directly or indirectly employed by the Travel and Tourism industry.

Global scene
In 2013, Travel and Tourism’s total contribution to the global economy rose to 9.5 per cent of global GDP (US$7 trillion), not only outpacing the wider economy, but also growing faster than other significant sectors such as financial and business services, transport and manufacturing. In total, nearly 266 million jobs were supported by Travel and Tourism in 2013 – 1 in 11 of all jobs in the world. The sustained demand for Travel and Tourism, together with its ability to generate high levels of employment continues to prove the importance and value of the sector as a tool for economic development and job creation.

The outlook for Travel and Tourism in 2014 is also very positive, with Total Travel and Tourism GDP growth forecast to reach 4.3 per cent. Much of this growth is being driven by higher consumer spending as the recovery from recession gathers pace and is becoming firmly established. Tourists are expected to spend more per trip and stay longer on their holidays in 2014, while long haul travel, especially among the European markets, is also expected to gain a greater share of international tourism demand. Profitability for travel companies should also start to edge up, bringing opportunities for further job creation in the process.

Travel and Tourism forecasts over the next ten years also look extremely favourable, with predicted growth rates of over 4 per cent annually that continue to be higher than growth rates in other sectors. Capitalising on the opportunities for this Travel and Tourism growth will, of course, require destinations and regional authorities, particularly those in emerging markets, to create favourable business climates for investment in the infrastructure and human resource support necessary to facilitate a successful and sustainable tourism sector.

At the national level, governments can also do much to implement more open visa regimes and to employ intelligent rather than punitive taxation policies. If the right steps are taken, Travel and Tourism can be a true force for good.

– Raquib Siddiqi