The Asia Pacific Region - Continental Profile - Western Cape Government
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Table of CONTENTS ASIA PACIFIC OUTBOUND TOURISM Unprecedented Growth in the Asia Pacific Region Asia Pacific’s Interregional Outbound Travel Tourism Expenditure Asia Pacific countries leads as Origin Markets Growth in Asia Pacific’s Socio-economic environment Tourism Forecast KEY TOURISM TRENDS IN ASIA PACIFIC Four Key Trends Key Growth Markets China Outbound Market Halal Tourism Market 1
ASIA PACIFIC OUTBOUND TOURISM TO SOUTH AFRICA Tourists Arrivals Purpose of Travel Asia Pacific Total Foreign Spending Asia Pacific Travellers Length of Stay Accommodation Type Seasonality Preferred Activities SOUTH AFRICA TOURISM COMPETITIVENESS INDEX Competitiveness Index Tourism Performance Overview ACTIVATING ASIA PACIFIC TOURISM 2020 Geographic Focus Target Market Definition Key Tourism Potentials and Opportunities for Development Perceived Constraints and Barriers 2
STRATEGIC FOCUS AREAS Expand Western Cape Experiences Marketing and Communicating: Reaching the target markets Quality Service: Human Capacity Building 3
INTRODUCTION Travel and tourism impacts the global economy significantly and is becoming one of the largest and fastest growing economic sectors. In 2018, international tourist arrivals increased by a remarkable 6 percent, recording a total of 1.4 billion. 2018 witnessed the second strongest growth year in international tourism since 2010 and reached the 1.4. billion mark two years ahead of UNWTO’s long term projection issued in 2010. This strong momentum can be attributed to a favourable global economic environment and robust outbound tourism from major source markets. Home to over half the world’s population, the Asia Pacific region has undergone dramatic changes over the past decade, with economic, infrastructure and technological development fuelling rapid travel market growth. An expanding middle class and rising disposable income in Asia Pacific markets including China, India, Indonesia and Malaysia are driving increased travel demand. In addition to rising domestic travel, a growing share of travellers is venturing abroad, many for the first time, with China’s large and growing outbound travel population. Asia Pacific households now account for one in three global traveling households, up from one out of four in 2006 (Visa Inc, 2018). Growth could accelerate even faster as more Asia Pacific households in more cities cross the 4
tipping point into the ranks of the global traveling class, adding an estimated nearly 90 mil. households by 2025. Accounting for 37% of the world’s international tourism expenditure, the contribution of Asia and the Pacific to global tourism warrants attention (UNWTO/GTERC, 2018). UNPRECEDENTED GROWTH IN THE ASIA PACIFIC REGION Asia Pacific region can be separated into 4 areas which are North-East Asia, South Asia, Oceania, and Southeast Asia. The region has played a vital role in global tourism as an outbound tourism market and demonstrated eight consecutive years of strong growth in outbound travel since 2009. Visitation out of Asia and the Pacific comprised 25% of global outbound tourism in 2017, totalled 335 million tourists and increased 7% from 2016-2017 (almost 60% on aggregate). This average growth has been maintained between 2010 and 2017, resulting in an aggregate increase of 63% during this period. Interregional travel (to other regions) witnessed a strong 10% growth from 2017-2018 indicating a positive demand for long haul travel. 5
Outbound Tourism by Region of Origin (%) Source: UNWTO (2018) Outbound tourism from the region is strongly led by the North-East Asia, primarily due to the growth of Mainland China. China’s demand for international travel can be seen in its volume of outbound trips comprising130 million trips abroad in 2017 (total departures including same-day trips, as reported by China), the majority of which to North-East Asian and South-East Asian destinations. 6
Air traffic Demand IATA reported that Asia Pacific will be the biggest driver of air traffic demand during the period of 2015-2035, and account for more than 42% of air traffic with more than half of the new passenger traffic coming from the region (IATA, 2019). Of the five fastest-growing markets globally in terms of additional passengers per year over the forecast period, four will be from Asia. 1. China (817 million new passengers for a total of 1.3 billion) 2. US (484 million new passengers for a total of 1.1 billion) 3. India (322 million new passengers for a total of 442 million) 4. Indonesia (135 million new passengers for a total of 242 million) 5. Vietnam (112 million new passengers for a total of 150 million). ASIA PACIFIC’S INTERREGIONAL OUTBOUND TRAVEL Europe is the top long-haul destination for travellers from Asia and the Pacific, accounting for 56% of Asia Pacific’s interregional travel (outside the region) and 13% of Asia Pacific travel overall (measured in arrivals in destinations). The Americas account for 22% of interregional travel from Asia and the Pacific and 5% of outbound travel overall. The Middle East represents 19% of Asia Pacific’s interregional tourism and 4% of the region’s total outbound flows. Travel to Africa is still rather low, accounting for 4% of interregional trips and 1% of Asia Pacific’s outbound travel (UNWTO/GTERC, 2018). 8
The Europe region is the fastest-growing interregional destination for Asians in the period 2010-2018 (+9% per year), followed by the Middle East (+8% per year), the Americas (+7%) and Africa (+6%). The development of economic links between Asia and the Middle East and with Africa will stimulate both business and leisure travel beyond Asia and the Pacific (UNWTO/GTERC, 2018). Asia Pacific Outbound Travel to All Regions Source: UNWTO (2018) 9
Growth (% change) in Asia Pacific outbound travel to all regions in the year 2017 and 2018. Source: UNWTO (2018) TOURISM EXPENDITURE Tourism expenditure from the region has also increased substantially, experiencing double digit growth. Asia Pacific travellers spent USD 502 billion on international tourism in 2017, some 37% of the world total, up from 24% in 2010 (UNWTO/GTERC, 2018). North-East Asia accounts for 70% of Asia Pacific’s spending, amounting to USD 352 billion. South- East Asia accounts for 14% of the 10
region’s tourism spending, while Oceania and South Asia account for 8% and 7% respectively. World’s Top 10 Spenders Source: UNWTO (2018) Mainland China represents over half (51%) of the total spending of North-East Asia, amounting to USD 258 billion. Australia is the 2nd largest tourism spender in the region, with USD 34 billion recorded in 2017. The Republic of Korea is the 3rd largest with USD 31 billion spent last year, Hong Kong (China) is 4th with USD 25 billion and Singapore is 5th with USD 24 billion. Combined, these four markets 11
represent 23% of international tourism spending in Asia and the Pacific. India, Japan and Taiwan Province of China are increasingly noted as growing source markets, totalling about USD 18 billion on international tourism in 2017. Australia and Singapore recorded a relatively low number of outbound trips, but spend the most per trip. China is the third biggest spender per trip with an average of USD 1,975, followed by New Zealand (USD 1,560) and the Republic of Korea (USD 1,150). These sources markets (with the exception of China) are high- income economies with relatively small populations, which results in high spending per trip, and also per capita. ASIA PACIFIC COUNTRIES LEADS AS ORIGIN MARKETS Mastercard’s Global Destination Cities Index (2019) which ranks the world’s top 200 cities reported the significance of the Asia Pacific region as a noteworthy origin market that deserves the attention of both the public and private sectors at global destinations. It is critical to better understand commerce patterns and deliver attractive experiences for these eager and affluent travellers from across the region. An important finding is that since 2009, mainland China has jumped six places to be the No. 2 origin country for travellers to the 200 included destinations— behind only the U.S. In addition, South Korea and Japan are promising origin 12
markets fuelling rising travel expenditure and overnight arrivals across the top 200 destinations globally. Ranking of the Asia Pacific destinations among the top 200 international origin markets. Rank Origin Market % Share Contribution To Top 3 global cities of origin 200 Global Destinations in 2018 markets By Ovn International Expenditure Arrivals 2 Mainland China 8.90% 9.40% Bangkok Seoul Tokyo 6 South Korea 3.50% 3.30% Osaka Hokkaido Tokyo 7 Japan 3.10% 3.40% Taipei Seoul Bangkok 10 Australia 2.30% 2.60% Bali Singapore New York 11 India 2.00% 2.80% Dubai Singapore Makkah 14 Taiwan 1.50% 1.50% Tokyo Hokkaido Okinawa 10 Indonesia 1.20% 1.60% Singapore Kuala Lumpur Makkah 11 Malaysia 1.10% 1.30% Singapore Bangkok 13
Chennai Source: Mastercard’s Global Destination Cities Index (2019) GROWTH IN ASIA PACIFIC’S SOCIO-ECONOMIC ENVIRONMENT The strong tourism growth in the region can be attributed to several favourable factors. Rapid economic growth in a region with increasing population, coupled with rising air connectivity, market openness and travel facilitation have largely boosted international travel in Asia and the Pacific, both within the region (intraregional) and to/from other regions (interregional). With a population of 4.2 billion inhabitants, Asia Pacific is the world’s largest region demographically, accounting for more than half of the population on the planet (56%). In 2017 the GDP of Asia and the Pacific reached USD 27.5 trillion, the highest of all world regions, measured in US dollars. Between 2000 and 2017, Asia experienced the fastest economic growth across world regions, largely driven by China and India. Most of Asia and the Pacific’s GDP is generated in North- East Asia (70%), particularly by China (44%) and Japan (18%), which are Asia’s leading economies. India (South Asia) contributes 9% to regional GDP, while the Republic of Korea and Australia (Oceania) account for about 6% and 5%, respectively. 14
Asia Pacific Population and GDP Source: UNWTO/GTERC (2018) IMF (2018) Regional Economic Outlook: Asia and Pacific report highlighted Asia as the world’s most dynamic economic region which will continue to be the main growth engine of the world. Overall per capita income in Asia still substantially lags that in the United States and Europe, but in growth terms, the region is very much at the forefront of the global economy, accounting for more 15
than 60 percent of world growth and projected to grow at 5.6 percent in 2018 and 5.4 percent in 2019. Income levels have surged in Asia and the Pacific since the past decade, with the region’s per capita GDP more than doubling from USD 3,170 in 2005 to USD 6,620 in 2017 an increase of 109%. By subregion, South Asia (+145%) and South- East Asia (+144%) recorded the highest growth. North-East Asia (+115%) also saw its per capita GDP more than double. By subregion, South Asia (+145%) and South-East Asia (+144%) recorded the highest growth. North-East Asia (+115%) also saw its per capita GDP more than double. Macao (China) has the highest GDP per capita in Asia and the Pacific, at USD 77,450, followed by Singapore (USD 57,700) and Australia (USD 55,700). 16
Source: Statista (2019) In Asia Pacific, as in many travel markets worldwide, total travel market growth is outpacing overall economic gains. With the exception of South Korea and Hong Kong, Asia Pacific travel markets are expanding faster than GDP on a local currency basis. In Malaysia, for example, travel gross bookings rose a projected 9.7% in 2018, compared to GDP growth of 4.7%. In China, the region’s largest individual travel market by a wide margin, travel gross bookings jumped 9.7%, versus GDP gains of 6.6% (PhocusWright, 2019). 17
APAC Gross Domestic Product and Total Travel Market, Annual Change (%, Local Currencies) by Market, 2018 Source: Phocuswright Inc (2019) Visa Inc (2018) reported a similar finding that outbound travel demand is outpacing income growth throughout much of the Asia Pacific. Measured by travellers’ spending abroad, demand in 12 of the major Asia Pacific economies has grown on average twice as fast in constant dollars and prices over the last decade as real economic growth, which is often viewed as a proxy for income growth. For instance, outbound travel demand in China, the regional leader, rose 22 percent per year from 2006 to 2016, compared with only 9 percent per year growth in real GDP. Trends in outbound travel from Southeast Asia are also 18
encouraging, with growth in outbound travel significantly exceeding real economic growth in the Philippines, Malaysia and Thailand. Mastercard Insights (2016) studied the regional outlook of outbound travel from 2016-2021 of 17 tourism markets in Asia Pacific and reported that outbound travel is generally growing faster than real GDP in most of these destinations except in the case of Bangladesh, Philippines and Malaysia. Myanmar is the fastest growing outbound market at 10.6 percent over the forecast period, followed by Vietnam (9.5 percent) Indonesia (8.6 percent), China (8.5 percent) and India (8.2 percent). The fastest growing developed markets are South Korea at 3.8 percent, followed closely by Singapore, Australia, and New Zealand, all of which are projected to grow by about 3.5 percent over the forecast period. Interestingly, the three growth markets Singapore, Taiwan and Hong Kong, are also the smallest in geographic size among the 14 markets covered, but the limited competition from domestic tourism destinations adds to the overall size of international tourism. The chart below locates the positions of each of the 17 Asia Pacific markets in the two-dimensional space combining real GDP growth rates vertical axis) and the growth rates of outbound travel (horizontal axis). The chart also suggests that the outbound travel growth tends to be higher than real GDP growth (as indicated by points further below the diagonal line) for the developing markets of Myanmar, Vietnam, Indonesia, Thailand, and China compared to the 19
developed markets (excluding Japan) which tend to have outbound growth much closer to the forecasted real GDP growth (as indicated by points hugging or close to the diagonal line). Outbound travel growth versus Real GDP growth Source: Mastercard Insights (2016) 20
TOURISM FORECAST According to the forecast report Tourism Towards 2030 (UNWTO, 2018), the number of international tourist arrivals worldwide will increase by an average of 3.3% a year over the period 2010 to 2030. At the projected rate of growth, international tourist arrivals worldwide are forecast to reach 1.4 billion by 2020 and 1.8 billion by 2030. Collectively, outbound travel from Asia Pacific is expected to grow by an annual rate of 6 percent over the forecast period of 2016-2021 (Mastercard, 2017). China is projected to be the largest outbound travel market by 2021, (excluding trips to Hong Kong and Macau), followed by South Korea and India. At a projected 103.4 million trips in 2021, outbound China travel will be four to five times that of South Korea and India, and will constitute almost 40 percent of all Asia Pacific outbound travel by 2021. Emerging Asia Pacific destinations currently records about 1.5 times more outbound trips than Developed Asia Pacific destinations and will grow more than twice as fast as Developed Asia Pacific (7.6 percent versus 3.3 percent) over the forecast period of 2016-2021. Given the dynamics around international travel, Asia Pacific travel could accelerate even faster than its current pace as more cities reach the necessary size to support mass tourism. Although, currently, travellers within Asia Pacific residents skew more heavily to short-haul and regional cross-border travel. as the 21
level of income and affluence rises in the rapidly developing Asia, more and more of its cities will likely grow in importance for outbound cross border tourism. In China alone, the number of cities reaching the tipping point in cross-border tourism is likely to double by 2025—adding around 80 million more households to the global traveling class (Visa Inc. 2018). Asia Pacific Outbound Trips Forecast: 2016-2021 Source: Mastercard (2016) 22
KEY TOURISM TRENDS IN ASIA PACIFIC The potential for outbound tourism growth from the Asia Pacific region is tremendous. The continued rise of the middle class, increased market openness, air connectivity, and travel facilitation are expected to fuel growth. Thus, it is important for the industry stakeholders to keep up-to-date with the key drivers impacting tourism growth, with the following being of particular influence and impact. The dominance of China: Chinese tourists are already the world’s most powerful single source of demand, yet its potential is far greater, as only an estimated 9 percent of the Chinese population have currently been issued passports. China’s National Immigration Administration revealed that for the first half of 2018, a total of 164.16 million Chinese residents applied for their passports for private purposes, a 21% increase from the previous year. 160 million, that’s half the size of America’s population and 3 times the size of UK’s population according to the World Bank. The industry expects 200 million Chinese to travel abroad in a few years’ time. The growth of this market and its development potential will continue generating tremendous business opportunities for tourism destinations, local tourism suppliers and service providers. Emerging India. The planet’s second-fastest-growing outbound market is steered by similar socio-economic drivers as China, but garners less global face-time. 23
Around 22 million Indians travelled overseas in 2017 spending approximately USD19 billion, and the UNWTO has predicted Indian outbound travellers will total 50 million in 2020, contributing USD28 billion in expenditure. The average propensity to spend of Indian holidaymakers is impressive, the LCC sector is expanding and thriving outbound niches range from destination weddings to extended family travel and MICE. Asian Millennial Travellers Millennials represent more than 45 percent of Asia Pacific’s population and 60 percent of the world’s millennials expected to live in Asia by 2020 and more than one-third of the Asian millennial travellers will originate China or India (Amaedus, 2017). With these millennials entering their peak earning and spending years, with an estimated spending of $340 billion on international travel by 2020, it’s not a market segment that destinations can afford to ignore. Within our key source markets in the Asia Pacific, markets with high proportions of millennials amongst its total leisure outbound travellers include the Philippines, China, India, Indonesia and South Korea (Euromonitor International, 2014). More so than the generations that have come before them, millennials are embracing new technology, experiences, and ways of traveling. Millennial travellers travel to take a break from their daily life while broadening their horizons. They seek authentic experiences that allow them to get a taste of the local culture and are more open to novel experiences compared to other 24
segments. These travellers value autonomy over travel experience and being extremely savvy with technology, they thrive on being connected and having information at their fingertips. Technological (R)Evolution The rapid development of technology is one of the key factors that drive the development of tourism industry. Worldwide, rapid adoption of mobile devices has changed the way travellers’ research, shop and book travel and profoundly altered how travellers’ access information while in destination. Nowhere is this shift more evident than in Asia Pacific. In 2019, Phocuswright projected that 55% of online travel bookings in the APAC region will be made via a mobile device. By comparison, mobile share of the online market will be just 25% in the U.S. and 30% in Europe. In a smartphone saturated Asia pacific region, technology is largely shaping the travel experiences of the outbound travellers from this region. China is the key driver of APAC’s mobile dominance, with mobile in 2019 to account for nearly 80% of China’s online travel gross bookings. Asia Pacific boasts three of the top five mobile travel markets worldwide: India and Japan will each have projected mobile travel penetration of 37% in 2019. To stay competitive, product and service providers must adapt to and implement new technologies to ensure traveller satisfaction. The influence of 25
technology can be analysed under 3 components which are payment methods, messaging systems, and digital advertisements. Payment method As mentioned, Chinese travellers’ have become the primary source for global tourism industry. Nielson (2017) reported that although Chinese travellers’ will still heavily rely on cash payment and cashless payment (bank cards), mobile payment can help to increase their satisfaction during overseas travel. Messaging system with extended functionality The messaging system has become more critical as a tool to connect people and for customer service, content-sharing, and information (Ho, 2018). The most significant example is WeChat. Service and product providers are required to integrate these new systems and their functionalities in their operation to stay competitive. While traveller preferences vary by market, global social networks, including Facebook, Twitter and Instagram, are popular in Asia Pacific, as well as Asia Pacific -grown players like Weibo (China) and Line (Japan). Top messaging platforms include Facebook Messenger, WhatsApp and China’s super app WeChat. Travel as a form of self-expression and self-actualization Sabre (2017) published a study detailing four new types of travellers emerging in Asia Pacific. The largest share of travellers falls into the category of ‘Explorers’, 26
who place high value on discovery and self-actualisation. Travel is about helping them grow as individuals. A one-stop approach is no longer valid in the travel market. With travel becoming an important means of self-expression, travel products and services need to be more personalized. Furthermore, as travellers crave new and novel experiences - something that is ‘share-worthy’ - hotels need to rise to the challenge and go beyond cookie-cutter rooms and services to surprise and delight guests. Meanwhile, 20 percent of travellers are ‘Connectors’ and 18 percent are ‘Opportunists’, whose travel motivations are mainly self-expression, self-indulgence, establishing status, and sharing experiences. Types of Emerging Travellers in Asia Pacific Source: Sabre (2017) 27
KEY GROWTH MARKETS 1) Chinese Outbound Market The Chinese tourists have already become the most powerful market segment. International outbound travel by China’s residents was around 68.7 million in 2016, and is forecasted to grow by an average of 8.5 percent per year to reach 103.4 million trips by 2021. Total outbound trips will grow much faster than total household growth (8.5 percent versus 0.4 percent) over the forecast period resulting in a ratio of outbound trips to households that is projected to reach 23.0 percent in 2021 from 15.6 percent in 2016. The disposable income per capita has increased (Ho, 2018) and outbound travel will be dominated by the fast-growing middle and higher-income households which together make up 35.7 percent of all households (Mastercard, 2016). The role of Chinese travellers will continue to be crucial in generating tremendous business opportunities and considerable income in the future to tourism service providers. 28
(excludes trips to HK and Macau) 2013 2014 2015 2016 2021 2016-2021 CAGR Outbound trips (mn) 38.8 48.1 61.6 68.7 103.4 8.5% Households (mn) 435.2 437.5 439.6 441.7 449.7 0.4% Total outbound trips as % of total 8.9% 11.0% 14.0% 15.6% 23.0% households Source: Mastercard (2016) Chinese travellers’ profile Nielson (2017) conducted an in-depth study and analysis of current consumption and payment behaviours of outbound Chinese tourists travelling overseas. The top three categories of expenses by outbound Chinese tourists are shopping, hotel accommodations, and dining. Regardless of destination country or region, Chinese tourists tend to always spend the largest portion of total travel expenses on shopping. Chinese tourists spent an average of USD 762 per person towards shopping on their most recent overseas trip, while non-Chinese tourists averaged USD 486. The survey showed that to the Chinese travellers, tourist attractions and the travel experience are more important factors than the costs that might be incurred. The beauty and uniqueness of the destinations were an important consideration in addition to the safety of the destination, ease of visa 29
procedures and the friendliness of the local communities. Expedia Media Solution (2017) indicated that the top 3 considerations that influence Chinese travellers’ decision making before the trip include activities, food experience and accommodations. Factors that influence Chinese travellers when traveling overseas Source: Nielson (2017) Chinese tourists expressed that they desired to have unique experiences during their travels, such as visiting historical sites, trying local cuisine, shopping for local products, and various other unique options. Chinese travellers prefer natural scenery and theme parks compared to cultural and historical attractions. In Nielson (2017) study, the Chinese travellers reflect a preference for independent or semi-independent travel followed by package travel. TrekkSoft (2019) reported that the modern Chinese traveller wants an experience of a lifetime. Chinese travellers are searching for experiences that allow them to “travel like a local”. This shift in travel behaviour shows no signs of slowing down. Chinese travellers are taking even more “independent” trips (40%), while others are taking “modular” trips (40%) and only 20% still book themselves on traditional packaged tours. 30
Chinese tourists travel overseas mainly for leisure, such as dining and shopping. However, there are minor differences in the travel objectives of Chinese travellers among the various age groups. The millennials tend to be more adventurous, the post-80s generation is more focused on shopping and romantic getaways while the post-70s prefer a relaxing travel experience. According to Travel China Guide, an average trip to countries nearby like Japan or Thailand averages 6 to 9 days. For trips further from home, to destinations like Australia, Europe and the United States, an average trip would be 12.6 days. When it comes to visiting Europe, people tend to visit an average of two countries per trip (TrekkSoft, 2019). Globally, Travel China Guide (2018) reports the following to be the top destinations for Chinese travellers: 1. Thailand 2. Japan 3. Singapore 4. Vietnam 5. Indonesia 6. Malaysia 7. Philippines 8. America 9. South Korea 10. Maldives 31
Influence of technology When it comes to mobile payments, China is leading the way. China is living in 3019 compared to the rest of the world. According to TrekkSoft (2019), by October 2017, mobile payments grew by 37.8% compared to 2016, totalling USD 12 trillion, 50 times larger than America’s. Chinese travellers favour mobile payments as it eliminates the risk of carrying cash and of exchange fluctuations. As of 2018, eMarketer reports that adults in China will spend more time on their mobile devices (2 hours 39 minutes) than they will watching TV (2 hours and 32 minutes). This is an 11.1% increase compared to 2017, taking up 41.6% of their daily media time. Consumption of short videos is said to be the key driver of increased mobile time. The two dominant service providers for mobile payments are Alipay (54%) and WeChat Pay (40%). Chinese consumers use their smartphones to scan a simple QR Code and enter their password to easily make a payment. When travelling, this habit spills across international borders with 65% of Chinese travellers making a payment via mobile, compared to just 11% of non-Chinese travellers (TrekkSoft, 2019). Companies interested in driving more Chinese travel spend are going along with the trend. Chinese tech leaders are partnering with hotel brands, retailers, and banks to create data-driven services and changing travel booking trends and methods. A few examples include: 32
• Travel agencies, hotels, and airlines are finding new ways to provide full brand experience to their customers via WeChat. i.e.: control of hotel room (Caesar Entertainment), check-in services (China Southern Airline), customer services (Air France), Loyalty Program (IHG), etc. • Alipay and WeChat are spreading rapidly throughout the world. The number of foreign airports, retail stores, hotels, and other service providers accepting Alipay and WeChat Pay has increased substantially. Destinations and hotels need to adopt diverse marketing strategies, as well as using popular Chinese technologies and media channels, to target Chinese consumers. In addition, it must closely cooperate with Chinese tour operators, leveraging on their understanding of, and influence in, the local market. 33
2) HALAL TOURISM The burgeoning growth of the global Muslim travel population signals an immense potential for Muslim travel related products and services. According to the Mastercard-CrescentRating Global Muslim Travel Index 2017 (GMTI 2017), there were an estimated 121 million Muslim international travellers in 2016, and this is projected to grow to 156 million by 2020. This market segment has been acknowledged as the ‘third one billion’ opportunity following the interest in Indian and Chinese billions (Janmohamed, 2016) and predicted to reach 30% of the world’s travel population by 2050 (Pew Research Centre, 2017). Asia and the Pacific is the home to the largest population of Muslims. Of the world’s 1.6 billion Muslims, an estimated 62% are in Asia, specifically in Indonesia, (which has the largest number of Islamic adherents in the world with an approximate 203 million), India, Pakistan, Bangladesh, Iran, China, Malaysia, Brunei Darussalam, Afghanistan and the Maldives (Pew Research, 2017 ). In addition, smaller minorities are present in Thailand, Sri Lanka, Philippines, Cambodia, Singapore and Viet Nam. The growing middle-class of Islamic countries in Asia and the Pacific with disposable income to travel has led to a lucrative outbound market of Muslim travellers that has been targeted by many “non-Muslim” countries in the region. 34
FAITH BASED NEEDS OF MUSLIM TRAVELLERS A total of 9 key faith-based needs that would influence the consumption behaviour of Muslim travellers which includes (1) Halal Food, (2) Prayer Facilities, (3) Water-friendly Washrooms, (4) No Islamophobia, (5) Social Causes, (6) Ramadhan Services, (7) Local Muslim Experiences, (8) Recreational Spaces with Privacy and (9) No Non-Halal Activities (Mastercard-CrescentRating, 2019). These factors are grouped under 3 different sections (1) need to have, (2) good to have and (3) nice to have. • Need to have Halal food is the most important factor that a Muslim traveller needs when travelling. Restaurants that can be easily identified as Halal is the mostly wanted by Muslims. Next, the availability of prayer facilities with prayer rooms, qibla directions and ablution friendly washrooms are needed by Muslim travellers. Thirdly, water-friendly washrooms as water plays an important role in purity and cleanliness for Muslims. These facilities have become easier now that there is a widespread availability of hand showers, bidets and Japanese-style toilets. With increasing hate crimes seen around the world, safety has become a primary concern for Muslims travellers. In addition, Islamophobic sentiments has been lingering in some regions and Muslim travellers are not encouraged to travel to destinations that are perceived to be unwelcoming. Also, with 35
increasing hate crimes around the world, safety and security has become a primary concern for Muslim travellers (Mastercard-CrescentRating, 2019). • Good to have Good to have services includes Social Causes, Ramadhan Services and local Muslim Experience. Driven by faith and global trend towards sustainability, Muslims are becoming more conscious of being socially responsible during their travels. Social causes include the ability to improve local living conditions, various green initiatives to perfect the environment and eco-friendly tourism practices. Ramadhan services include the provision of Suhour and Iftaar meals, prayer facilities, services during the Eid among others, Even though Muslims are most unlikely to be traveling, there are a few Muslims that wishes to be away from home during the period. Destinations that wishes to attract Muslim travellers during this period need to be able to accommodate their special needs during this month. Local Muslim experiences which refers to experiences unique to the destination that allows Muslim travellers to connect with their Muslim identity and heritage. This could include visiting Islamic heritage sites, interacting with local Muslim communities at a local mosque or experiencing the country with a Muslim tour guide (Mastercard-CrescentRating, 2019). 36
• Nice to have The nice to have services include: Recreational Spaces with Privacy and no Non-Halal Activities. Recreational Spaces with Privacy refers to facilities such as swimming pools and gyms, beaches, spas and beauty salons that provides privacy for males and females. This is especially important for females as they need to have appropriate modesty. No Non-Halal Activities are regarded as nice to have as some Muslims would prefer to avoid facilities and activities that serve alcohol or staying in gambling resort. KEY MARKET SEGMENTS Within the broader Muslim travel market in the region, two key markets have been given prominence due to their growth potential, namely the Muslim women travellers and the Muslim millennial travellers (MMT). Muslim female travellers usually travel with their friends and family to seek for new and authentic experiences. The Muslim identity and religious beliefs largely influence the Muslim women′s tourism experiences, lifestyles and travel patterns and/or behaviors. With sharing their experiences, they hope that it would be an inspiration to others. They have a stronger influence in planning their trips whether they are travelling alone, with their family or friends (Mastercard- CrescentRating, 2018). Muslim female travellers find it important to have gender- segregated facilities such as swimming pools, gyms, spas or saunas for privacy 37
as it would affect them since they are required to have appropriate modesty (Razzaq, Hall & Prayag, 2016). They would usually travel for leisure or to distress. The Muslim millennials The Muslim millennials are tech-savvy, self-empowered and enthusiastic consumers whose identities proudly encompass both faith and modernity. Muslim millennial travelers are distinct from their previous generations and other millennial travelers, with a unique set of values, needs and expectations in their travel consumption and expenditure patterns. They often spend more time and effort to conduct comprehensive research before making travel arrangements. The Muslim millennial travellers mostly travel for leisure and holidays, experiencing local culture and heritage, and visiting friends and relatives (Mastercard-CrescentRating, 2017). On average, they travel 2 to 5 times a year, and are generally cost conscious. When planning for trips, the top 3 factors that would influence them were cost of flights and accommodation, safety and tourism concerns and availability of Halal food (Mastercard-CrescentRating, 2017). For Muslim millennial travellers, they prioritise affordability, location and free Wi-Fi when selecting an accommodation. Specifically, for Muslim-friendly services and facilities, they value availability and proximity of Halal food options, mosques and prayer facilities and water-friendly facilities. When booking for flights, ticket pricing, safety records, baggage allowances and Halal meal 38
choices were important considerations. They also preferred Halal assured and certified places but would not mind dining in a seafood-only or vegetarian-only restaurant. Finally, they love to share their photos during their travels on social media pages such as Instagram, Facebook and Snapchat (Mastercard- CrescentRating, 2017). RANKING OF SOUTH AFRICA AS A MUSLIM FRIENDLY DESTINATION The global Muslim population is diverse and geographically distributed into segments in Muslim majority destinations as sizeable minorities in other destinations. According to the Regional Analysis of GMTI 2017 Scores, Africa is the third best region that is friendly for Muslim travellers (Mastercard- CrescentRating, 2017) reflecting the regions concerted efforts in adapting and improving their services to attract the Muslim travel market. South Africa is one of the destinations that is ranked well in the Global Muslim Tourism Index 2019. South Africa is ranked 29 under the GMTI global ranking and 6 under the top 10 Non-OIC destinations. It is evident that South Africa is becoming more friendly for Muslim tourists. South Africa is also ranked under the top 10 destinations in terms of ease of communications where there are outreach initiatives that includes public education, media outreach and Muslim visitor guidebooks. Cape Town has a rich Muslim history and heritage, with the Cape Malay Muslim’s making up around a quarter of the city’s population. It was ranked as 39
the 4th best travel destination for Muslim travellers in the 2017 Global Muslim Travel Index. Key Drivers in the Muslim Travel Market in South Africa • Mosques, kramats, and prayer rooms The Cape Town city offers prayer rooms in major centres and a large number of mosques found across the province. It is also the home to the oldest mosque in South Africa, dating back an impressive 200 years. There are also a number of Kramats, known collectively as the Circle of Saints or the Ring of Kramats. • Muslim Community Cape Town is the place for South Africa’s first Muslim settlers and the Cape Malay Muslim’s make up around a quarter of the city’s population. • Culture and Heritage The Bo-Kaap area in Cape Town, which was formally known as the Malay quarter, is still home for many Muslims. In the area that is popular for its rainbow- like houses, there are more than seven mosques. The Bo-Kaap museum highlights the early contribution of Muslim settlers to Cape Town and a major attraction to Muslim travellers. Halal food options Cape Town, renowned for its’ gastronomy, is the food capital of the Western Cape. Recently, halal restaurants serving these traditional dishes have been 40
increasing, making it possible for Muslim travellers to enjoy local food and observe their faith-based needs. Muslim friendly hotels Major chains, such as Hilton, One and Only, have introduced Muslim-friendly rooms. These rooms include a prayer mat and the Qur’an. The rooms are also free of alcoholic drinks. All the food that is prepared in the kitchen is made without alcohol and pork. The Hilton Cape Town City Centre kitchen is completely ‘halal’. KEY DRIVERS IN THE MUSLIM TRAVEL MARKET IN SOUTH AFRICA With the increasing growth in the Muslim Travel Market, more businesses and destinations are now entering the industry to better cater to the needs of the Muslim travellers by adapting their products and services. The increase in Muslim- friendly destinations creates a virtuous cycle, creating more opportunities for Muslim to travel. IMPLICATIONS FOR SOUTH AFRICA • Market Outreach As South Africa is ranked under the top 10 destinations in terms of communication, South Africa has outreach initiatives which includes public education, media outreach and Muslim visitor guidebooks. However, to attract more international clientele, Western Cape could leverage on these initiatives 41
as well as use the right channels and the right language medium (e.g. English, Arabic and Malay) to reach the target market in the Asia Pacific region. A concerted effort needs to be made to build online content to attract and improve its overall global Halal destination branding (Mastercard- CrescentRating, 2018) • Muslim Visitors Guides (MVG) More travel information, recommendations and tips for Muslim visitors should be curated and organised into province-specific Muslim Visitors Guides (MVG). Besides publishing it in English, the MVG should also be made available in Malay and Arabic, as these are among the common languages spoken among the Muslim population (Mastercard-CrescentRating, 2018) • Halal Tourism Stakeholder Workshops Western Cape could organise more Halal Tourism workshops to educate tourism stakeholders with varying degrees. Workshops and discussions should be carried out for better improvement of the Western Cape’s halal positioning (Mastercard-CrescentRating, 2018) • Language courses for tour guides and hospitality workers English, Malay and Arabic are some of the most widely spoken languages among the Muslim population in the region. English, Malay and Arabic language courses and training should be conducted for tour guides and 42
employees in the hospitality and tourism sector to better serve the Muslim travellers • Improve Wi-Fi Network Coverage Travellers perceive staying connected as being of high importance when travelling as it allows them to navigate their travels, search for information and book tourist services such as lodging, transportation and activities and even sharing of their travel experiences on their social media platforms to their personal network. Therefore, improving Wi-Fi network coverage and introducing Wi-Fi hotspot is important and this is not just limited to airports but other public areas such as convenient stores, restaurants, hotels and malls (Mastercard- CrescentRating, 2018) • Enabling Climate With the huge potential of Halal Tourism, the Western Cape province should develop an enabling climate for start-ups and innovation for Halal-related services to flourish. Many services in the hospitality sector today have been disrupted by the proliferation of digital technologies. By enabling a vibrant environment for start-ups, Halal Tourism services and products will be able to integrate latest technologies and business models (Mastercard-CrescentRating, 2018. • Championing Sustainability and Community Initiatives 43
With its ready beautiful locations that highlight the wonders of nature, Western Cape could package services around travel themes that promote sustainability and the care of the environment. This can further attract the Muslim millennials who are attracted to serving Islam’s message of preserving the environment while enjoying their travel experiences and travellers in general who value sustainable tourism. • Position Halal Benefits for All Guests Although Halal Tourism mainly target Muslim travellers, the concept can also have a universal appeal for non-Muslims due to numerous benefits such as peace and security, family-friendly environments and water-friendly services. The non-alcoholic nature of some Halal hotels and restaurants can also attract families who are looking for an overall environment which they perceive to be family-friendly (Mastercard-CrescentRating, 2018) • Halal Certification and Rating Halal certification and rating is necessary as it provides assurance, diminishes possible scepticism and instils trust and confidence in Muslim consumers (Mastercard-CrescentRating, 2018). As such, such Halal assurance will also be valued by Muslim travellers as they look for their idea hotels and restaurants. 44
Following this trend for standardisation, global Halal assurance and rating schemes such as Crescentrating will also assist the country in obtaining better acceptance from guests around the world. • Increase in Global Service and Governance Standard The drive to develop the tourism space represents an opportunity for South Africa to further strengthen its level of hospitality services and governance standards (Mastercard-CrescentRating, 2018). Beyond infrastructure and skills development, adequate and integrated Halal assurance across its service value chains which communicate both permissibility and high quality is key to attracting both Muslim and non-Muslim travellers to its destinations. Hotel staff should be trained and educated about Muslim travellers’ values and teachings to be able to cater to halal conscious tourists in accordance to Islamic principles (Mastercard-CrescentRating, 2018). Gender-separated facilities such as gymnasiums, spas and family entertainment will further enhance its offering for this market segment. • Differentiated Destination Strategies Western Cape can capitalise on its diverse regions to cater to a variety of Muslim travellers who may have different travelling profiles (Mastercard- CrescentRating, 2018). Muslim millennials who may be looking for more authentic experiences can savour its many off beaten tracks while still connected via WIFI to share their experiences, whereas family travellers may be 45
greeted with more warmth and developed service-oriented facilities at resorts. These differentiated activations of destination-spaces can attract a wider variety of Muslim travellers from around the world and further improve the country-branding of Western Cape as a safe and vibrant destination for all (Mastercard-CrescentRating, 2018). • Innovative Tourism Products and Experiences Western Cape con converge with other Islamic economy sectors and bundle them into innovative tourism products (Mastercard-CrescentRating, 2018). For example, the province can include Islamic heritage sites and religious travel experiences with activities pertaining to culture and heritage in a unique and innovative travel package (Mastercard-CrescentRating, 2018). • Enhanced Prayer Spaces and Facilities For Muslim women, the need for proper ablution facilities is high (Mastercard- CrescentRating, 2018). Most of the ablution areas at mosques or prayer spaces are in a public area and there is little privacy for Muslim women who are covered. By providing proper ablution areas and water-friendly facilities and thus making it convenient for Muslim travellers, it can add value to their travel experience. 46
ASIA PACIFIC OUTBOUND TOURISM TO SOUTH AFRICA Tourists Arrivals South Africa recorded 10.5 million international tourist arrivals in 2018, a +1.8% increase compared to 2017. The Asia Pacific region contributed 442, 330 arrivals in 2018. The top outbound markets were Australia, China, India, Japan and South Korea. International tourism arrivals from this region declined by -2.0% in 2018 to reach a total of 310 982. All major markets except for Japan (+0.5%) declined in 2018. China (-0.2%), India (-4.6%), Malaysia (-19.6%), Singapore (-7.1%) and South Korea (-1.4%). The tourism revenue generated from this region decreased further by -6.4% to a total of R5.3 billion. Tourist arrivals from China decreased by 0.2% in 2018 compared to 2017. For Chinese tourists, South Africa has become more of a VFR (31.1%) and business events (20.0%) destination in 2018. The share of VFR tourists increased from 25.5% in 2017 to 31.1% in 2018 MICE tourists increased from 19.4% in 2017 to 20% in 2018. The holiday travel to South Africa from this market dropped to 29.8% in 2018 from 36.3% in 2017. South Africa experienced a decline in holiday arrivals from China since 2016. However, arrivals have started to improve since April 2018 with the Western Cape recording a positive growth out of this market.
South Africa experienced stiff competition from destinations in the Europe in luring the Chinese outbound travellers. Improved air connectivity in addition to the EU-China Tourism year initiative by EU Commission President Jean- Claude Juncker and the Chinese Premier Li Keqiang in 2018 encouraged travel and investment between EU countries and China. Tourist arrivals from India declined by 4.6% in 2018 compared to 2017. The declines in volume are driven by declines in MICE, holiday and VFR tourists. Majority of the Indian travellers (1 out of every 2 tourists from India) visit South Africa as either a business traveller (corporate travel) or a MICE tourist. The share of business travellers travel increased to 25.4% in 2018 from 18.9%. The share of first-time travellers to SA increased to 54.5% whereas the repeat travellers declined. International tourist arrivals from Australia (a key source market), New Zealand and the Pacific declined by -1.8% in 2018 to a total of 131 348. Tourism receipts declined by -4.2% to R2.3 billion. The average nights increased to 15.8 nights to a total of 1.9 million bed nights. Australian arrivals declined by -0.4% to 115 846. The share of holiday arrivals dropped from 62.5% to 53.2% while VFR has increased from 24.3% to 27.4%. New Zealand declined by -11.0% and has been declining for the past 2 years since the reciprocal introduction of visas in 2017.
International arrivals from Asia Pacific INTERNATIONAL ARRIVALS 2016 2017 2018 % Growth Asia 327 890 317 181 310 982 -2% China (incl. Hong Kong) 116 946 97 069 96 915 -0.20% India 95 377 97 921 93 428 -4.60% Japan 25 802 27 410 27 541 0.50% Malaysia 8 713 9 282 7 460 -19.60% Singapore 8 367 10 964 9 093 -17.10% South Korea 18 840 22 173 21 868 -1.40% Other Asia 327 890 317 181 310 982 -2.00% Australasia 131 856 133 713 131 348 -1.80% Australia 109 146 116 257 115 846 -0.40% New Zealand 22 443 17 094 15 213 -11.00% Other Australasia 131 856 133 713 131 348 -1.80% Source: South Africa Tourism (2019)
Source: South African Tourism (2019) Provincial Distribution: Western Cape Total number of international tourists that visited Western Cape increased by 0.2% to a total of 1.7 million. Arrivals decreased from the following key source markets: UK, Namibia, Netherlands and Australia. All other source markets recorded increases in arrivals to the province. The city of Cape Town received 2.6 million international visitors in 2018 with a growth of 11.5% in international arrivals at Cape Town International Airport. Outbound travel from Asia Pacific to Western Cape recorded 191919 arrivals and the major source markets being China (57868), Australia (53843), India (31,402), Japan (11665), South Korea (7684) and New Zealand (7252).
INTERNATIONAL TOURIST ARRIVALS- PROVINCAL DISTRIBUTION 2018 Nor th Western Eastern Kwazulu Mpuma Limpop We Norther Free Gauteng Cape Cape Natal langa o st n Cape State Asia 45 196 31 1447 5 442 10 220 5 762 2 250 826 5 439 1 968 China (incl. Hong Kong) 16 688 12 265 2 707 3 080 2 143 1 140 324 2 134 827 India 13 388 6 321 859 2 479 1 297 255 273 1 798 439 Japan 3 912 3 237 388 1 165 778 198 44 287 223 Malaysia 1 149 931 149 149 188 89 15 99 60 Singapore 1 976 1 777 100 100 361 0 36 236 100 South Korea 3 037 1 956 396 770 550 439 48 319 242 Other Asia 5 045 4 659 843 2 477 445 129 86 566 77 Australasia 17 358 18 257 4 693 4 928 8 793 3 131 456 3 003 690 Australia 15 515 16 172 4 407 4 427 7 857 2 681 385 2 534 647 New Zealand 1 823 2 086 286 500 936 449 71 468 43 Other Australasia 20 0 0 0 0 1 0 0 0 Source: South African Tourism (2019) Source: South African Tourism (2019)
Purpose of Travel Travellers from Asia Pacific visited South Africa mostly for holiday and for visiting friends and relatives (VFR). A substantial share of Asian travellers also visited South Africa for MICE (21%) and Business travel (15%). Medical tourism and shopping tourism (personal and business) were not popular among the Asia Pacific travellers. Purpose of Travel 2018 Shopping Shopping Business Religio Holiday (personal) (business) traveller MICE Medical VFR n Other 27.7 21.1 0.10 27.7 0.3 7.90 Asia 0% 0.00% 0.20% 15% 0% % 0% 0% % China (incl. 29.8 12.80 0.00 31.1 0.0 5.70 Hong Kong) 0% 0.00% 0.60% % 20% % 0% 0% % 22.9 25.40 26.4 0.00 11.4 0.6 13.3 India 0% 0.00% 0.00% % 0% % 0% 0% 0% 13.40 21.1 0.00 23.4 0.0 8.10 Japan 34% 0.00% 0.00% % 0% % 0% 0% % 35.4 0.00 15.5 0.0 7.50 Malaysia 34% 0.00% 0.00% 7.50% 0% % 0% 0% % 42.6 23.6 0.00 16.7 0.0 8.30 Singapore 0% 0.00% 0.00% 8.80% 0% % 0% 0% % 27.5 13.0 1.7% 46.2 0.0 5.20 South Korea 0% 0.00% 0.00% 6.40% 0% % %% 0% % 21.0 10.60 15.3 0.00 47.0 1.1 5.10 Other Asia 0% 0.00% 0.00% % 0% % 0% 0% % 52.7 4.10 20.0 28.3 1.0 6.80 Australasia 0% 0.00% 0.00% 6.90% % 0% 0% 0% % 53.2 3.60 20.0 27.4 1.2 7.10 Australia 0% 0.00% 0.00% 7.30% % 0% 0% 0% % 48.6 7.40 0.00 36.0 0.0 4.70 New Zealand 0% 0.00% 0.00% 3.30% % % 0% 0% % Other 50.0 45.0 0.00 0.00 5.0 0.00 Australasia 0% 0.00% 0.00% 0.00% 0% % % 0% % Source: South African Tourism (2019)
Majority of the Asia Pacific travellers were first time visitors to South Africa, and a quarter of the visitors have revisited South Africa 2-3 times. First time and Repeat visitors 2018 First 2-3 4-5 6-9 10 times or timers times times times more Asia 48.30% 22.60% 10.70% 9.30% 9.10% China (incl. Hong Kong) 45.10% 25.30% 9.40% 10% 10.30% India 54.50% 19.30% 11.50% 8.50% 6.20% Japan 47.80% 19.80% 13.20% 10.60% 8.70% Malaysia 56.20% 7.80% 17.70% 6.90% 11.40% Singapore 45.10% 21.20% 11.30% 7.20% 15.20% South Korea 41.50% 27.30% 13.70% 6.20% 11.20% Other Asia 49.70% 22.30% 9.00% 10.00% 9.00% Australasia 44.40% 23.40% 12.60% 10.10% 9.50% Australia 44.80% 22.70% 12.30% 10.60% 9.60% New Zealand 41.70% 29.10% 14.70% 6.30% 8.20% Other Australasia 50.00% 0.00% 37.50% 0.00% 12.50% Asia Pacific Total Foreign Spending International tourists spent R82.5-billion in 2019 and the average amount spent by tourists directly in South Africa was R8 200. This declined by - 2.4% (R100) compared to 2017. Visitor spending in Western Cape amounted to R16.3 Bn. Cape Town (R1 147.31) and the Western Cape (R1 029.19) as a whole achieved the highest revenue among all provinces and top cities in 2018.
Total foreign direct spending by travellers from Asia and the Pacific totalled R5,338726481 and R2,307 862 394 respectively. The biggest spenders were from China, Australia, India, Japan, New Zealand and South Korea. The New Zealanders spent the highest average amount per traveller (R 21 808), followed by Australians (18 965), Chinese (18 858), Malaysians (17 480) and Singaporeans (16 389). Total Foreign Direct Spending by Travellers Source: South African Tourism (2019)
TOTAL FOREIGN DIRECT SPEND BY COUNTRY 2016 2017 2018 % Growth Asia R 3 522 281 763 R 4 204 171 081 R 5 338 726 481 27.00% China (incl. Hong Kong) R 1 075 909 313 R 1 401 438 043 R 2 371 666 767 69.20% India R 1 201 670 653 R 1 367 320 414 R 1 299 727 386 -4.90% Japan R 275 610 924 R 332 493 791 R 390 087 262 17.30% Malaysia R 145 732 789 R 146 505 728 R 120 927 328 -17.50% Singapore R 133 478 141 R 152 626 907 R 144 615 552 -5.20% South Korea R 184 941 375 R 253 039 050 R 291 084 240 15.00% Other Asia R 504 938 559 R 550 495 372 R 720 478 269 30.90% Australasia R 2 319 996 930 R 2 408 704 391 R 2 307 862 394 -4.20% Australia R 1 904 760 939 R 2 408 704 391 R 307 862 394 -4.80% New Zealand R 414 499 389 R 299 299 134 R 301 117 518 0.60% Other Australasia R 736 601 R 823 389 R 376 550 -54.30% Source: South African Tourism (2019) Average amount spent per traveller Source: South African Tourism (2019)
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