Developed economies struggle to expand tourist infrastructure as quickly as emerging market rivals
Tourist spending represents just 1.1% of the US’ economy and is likely to fall further behind the global average of 1.2% and versus 2.1% for Europe, shows research by UHY, the international and consultancy network.
The study found that European and major developed economies, on average, have a higher level of tourist spending in their countries as a percentage of GDP (2.1% and 1.2% respectively) compared to emerging markets (0.7%).
However, the rate of growth in tourist spending in the US over the last year was just 0.3% – up to USD$205.94 billion in the last year, from USD$205.42 billion in the previous year* – far below the 2.2% growth in emerging markets.
The US was ranked 25th in the study. UHY studied 34 countries around the world, looking at spending by tourists (including travel to the country) in the past two years as a percentage of that country’s Gross Domestic Product (GDP).
UHY explains that a main driver behind the slower rate of growth in tourist spending is that many European economies are often unable to upgrade tourist infrastructure capacity as quickly as many emerging markets.
China is heavily investing in the infrastructure needed for large numbers of international visitors. Beijing Daxing Airport will be the largest airport in the world when it opens in 2019.
While tourism represents a relatively small part of the overall US economy, in many states it is a significant segment of the economy. In New York, which is the most visited state in the country, one out of every twelve jobs in New York is tourism-related. In New York alone, USD$8.2 billion was generated in revenue in state and local taxes by tourism in 2016.
Michael Mahoney, Office Managing Director in the New York City office of UHY member firm UHY Advisors in the US, comments: “Tourism is a major battleground in the global economy – both in terms of generating hard currency and soft power and the US is lagging behind.”
“More developed economies, including many in European countries, can often find it a slower, more difficult process to increase tourism capacity.”
“While the overall level of spending is high, it is important that the Government invests in what is a key segment of many states’ local economies, as noted in the tourist activity in New York”
“As China and other emerging markets continue to invest heavily in new airports and other much needed infrastructure, the US Government should look at ways of boosting capacity to accommodate continued large numbers of tourists.”
“As globalisation continues and more people get the opportunity to travel more widely, tourism is likely to become an even more important source of jobs and a catalyst for business creation and growth. Governments need to recognise the opportunities it brings.”
Tourist spending represents 1.1% of the US economy – nearly 10% below the global average
The US sees Tourist spending increase by just 0.3% in past year
Source: IMF and UNWTO (UN World Tourism Organisation).
*In 2016, latest data available.
**Source: UN World Tourism Authority
*** National Statistics Institute (INE), July 2017