While emerging markets are taking a bit of a beating as far as growth, the expectations on the travel side of things remain healthy. As the red-hot growth cools, it leaves a newly-minted middle class that is ready, able and more than willing to spend money on travel — and much of this is fueled by the growth in smartphone technology.
This latest look at emerging markets comes from the Emerging Consumer Survey 2015 by Credit Suisse, and tracks nine key emerging countries: Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, Turkey and South Africa. It shows, in aggregate, that emerging markets will post a 13% growth rate in the area of "holidaying."
Within the past 5 years, there has been a nearly 20% growth in propensity to vacation within emerging markets. That's an enormous spurt of demand, partially fueled by the resurgence of the global economy.
The aspirations of consumers in emerging markets also continue to grow, as far as wanting to travel more. Markedly, Brazil is leading the pack by more than double. Consumers in that country are often geared to take shopping trips, primarily to close-in locations such as Miami, which drives a significant amount of travel spend into North America.
Markedly, Brazil is leading the pack by more than double. Consumers in that country are often geared to take shopping trips, primarily to close-in locations such as Miami, which drives a significant amount of travel spend into North America.
China, India and Indonesia are also quite mobile, with around 5% of consumers in those countries planning to holiday in the next 12 months. Certainly, this figure is far lower than more developed countries; nonetheless, it shows how these markets have evolved to include more traveling consumers.
Momentum as far as spending on travel is mixed, with most areas nearing stasis. India is the primary outlier here, with a positive, and improving, momentum. Saudi Arabia and Brazil are near neutral, with South Africa, Turkey and China registering negative, slowing momentum.
The key feature of this growth continues to be technology.
While it may seem that emerging markets are not as suited to technology-enabled travel, these regions are enjoying significant smartphone penetration. These phones are often the first and only connection to Web-enabled services, as many communities do not have reliable broadband and many consumers don't have desktops or laptops anyway.
The report explains further:
Our survey highlights momentum in emerging consumer smartphone ownership and web penetration. This is also reflected in the travel sector, where we highlight that 16% of our respondents used travel internet services within the previous six months, up from 12% in 2013.
Global travel distribution channels are evolving rapidly, with more emphasis on web-based bookings via both direct (company owned) and indirect channels (third party online travel agents). The associated changes in consumers’ chosen booking channel are having profound effects upon the industry value chain, especially for hotels, where margins are coming under pressure.
Clearly there is still room for growth in these emerging markets, and that's what makes them one of the most consistently appealing to travel brands. Expedia's Dara Khosrowshahi calls out the "wild, wild, East" in a recent CNBC video, which only underscores how vital these emerging markets are. They may be experiencing some slowdown, but the enormous upside still remains.
NB: Brazil flag and banknote image courtesy Shutterstock.