Pacific Money

Australia, Japan Top For Tourists

Tourism remains an area of great potential for the Asia-Pacific.

Australia, Japan Top For Tourists
Credit: Himeji Castle via

Australia and Japan have been rated Asia’s most tourist-friendly nations in the World Economic Forum’s (WEF’s) latest travel and tourism (T&T) competitiveness index. However, the report showed that the region’s emerging economies also have the potential to lure more tourist dollars, with the benefits extending to improved infrastructure and environments.

In its 2015 report, the Geneva-based organization rated Spain top overall among the 141 countries surveyed, with Europe dominating the top 10 places. However, the Asia-Pacific secured a number of placings in the top 20, including Australia (seventh, up four places from the previous report in 2013), Japan (ninth, up five spots), Singapore (11th, down one), Hong Kong (13th, up two), New Zealand (16th, down four) and China (17th, up a rapid 28 places).

“The region’s most developed areas – including Oceania, the Asian Tigers and Japan – all have world-class transport infrastructure, high degrees of ICT readiness and openness, and outstanding human resources. However, the best performers stand out by better valuing their natural and cultural resources and better protecting their environment,” the report said.

The WEF ranked Australia second globally on its natural resources, such as the Great Barrier Reef and other World Heritage sites, along with being placed highly for leisure and entertainment and air transport infrastructure. However, the land “Down Under” lost ground on price competitiveness (as noted recently by Pacific Money) as well as for its rigid labor practices, with further investment required in ground, port and tourism infrastructure.

With a cheaper currency benefitting overseas visitors, Tourism Australia aims to boost tourism spending to more than A$115 billion by the end of the decade, helped by an estimated A$40 billion of new tourism-related projects by local and foreign investors, including new casinos, convention centers, and hotels.

Japan welcomed a record 13 million foreign tourists in 2014, helped by a surge in Asian visitors, including a near doubling of Chinese visitors. According to the WEF, Japan ranked first in the world in customer service and second for its unique cultural heritage, with the nation also scoring highly for its communications network and efficient air and ground transport infrastructure.

“The country can rely on a strong business travel component, and is geographically situated in an area where neighboring countries’ middle classes are growing significantly,” the WEF said, although it rated Japan a lowly 119th on price competitiveness.

Singapore also scored highly, being ranked top globally for its business environment and international openness, while also earning praise for its human resources and strong air and ground transport infrastructure.

The WEF said the city-state had enjoyed increased visitor spending on sightseeing, entertainment and gaming, but like other advanced economies scored lower on price competitiveness, as well as needing to “dedicate more efforts to environmental sustainability” such as improving its water and coastal management.

The report also highlighted gains by some of the region’s emerging economies, including China, Malaysia (ranked 25th), and Thailand (35th). Southeast Asia showed “the most significant growth in international arrivals” due to its price competitiveness and emerging middle class, although it called for improved regional cooperation on visa policies, as well as increased investment in “digital connectivity, infrastructure and protection of rich but depleting natural capital.”

China attracted more than 55 million international visitors in 2013, helped by its cultural and natural resources along with business travelers to its major international conventions. According to WEF, the world’s second-biggest economy “continues to invest in its infrastructure,” although ground and tourism service infrastructure offered opportunities for further development, especially in available hotel rooms.

“To continue building on its successes and improve the industry’s competitiveness, the country should focus on policies that would further enable the business environment (80th) and increase international openness (96th). Future demand for natural tourism also depends on China addressing questions of environmental sustainability (137th) and the falling quality of its natural environment (121st),” it said.

Indonesia welcomed more than 8.8 million international tourists in 2014 and was rated in 50th place globally, helped by its price competitiveness, natural resources and heritage sites. However, the report said the Southeast Asian giant needed to place more emphasis on environmental sustainability, where it ranked 134th, along with addressing concerns over safety and security.

Elsewhere, “Incredible India” ranked 52nd, but the report said Asia’s fastest growing major economy had potential for significant growth in tourism, with 7 million visitors in 2013 compared to China’s 55 million. The WEF noted the nation’s vast natural resources, unique cultural heritage along with its price competitiveness, however it said improvements were required in tourism infrastructure, especially roads, as well as health, information technology, security and environmental sustainability.

‘Unstoppable Growth’

With the tourism industry currently employing one in 11 of the world’s workers and accounting for a similar percentage of gross domestic product (GDP), the WEF said it had shown “surprising resilience” to geopolitical tensions, terrorism threats, global pandemics, and sluggish growth in advanced economies.

The T&T industry outperformed the global economy to expand by an average of 3.4 percent per annum over the past four years, compared to 2.3 percent global GDP growth. In the next five years, the sector’s growth rate could accelerate to 5.2 percent a year, according to the World Travel & Tourism Council.

“While international tourist arrivals are correlated with economic fluctuations and sensitive to security issues, these tend to impact specific countries or regions; if one country is hit by instability, others will receive more tourists. Globally, the trend for growth seems unstoppable,” it said.

The report noted the importance of capturing new industry trends, including the increasing spending power of tourists from emerging economies, particularly China. “According to research, a family trip is the second-highest priority for the booming middle classes, after buying a car,” it said.

Shifting demographics are also influencing the industry, with the number of over-60s expected to rise from 900 million in 2010 to almost 1.4 billion by 2030. Such elderly travelers “tend to require higher standards of quality and sophistication, to have somewhat larger budgets…and to be immune to seasonality,” it said. At the opposite end of the market, younger travelers “rely especially heavily on new technologies and online services to shape their travel ‘experiences’,” with an emphasis on internet and mobile services.

“With low- and middle-income countries now receiving more international visitors than high-income countries…it is clear the T&T sector can have a significant impact on countries at all stages of development. Increasing the competitiveness of the T&T sector can produce short-term economic effects such as balance of payments gains, while investments in infrastructure to boost tourism can have considerable long-term spillover effects on the wider economy,” the WEF said.

It noted the jobs benefits, particularly for women and youth workers, along with the increasing demand for highly skilled workers in areas such as information technology, management and marketing.

“Identifying priorities, upgrading infrastructure, calibrating fiscal incentives and executing international marketing campaigns are among the tasks necessary to succeed in developing the T&T sector – tasks which are often beyond the scope of local administrations and even single national ministries. Therefore, the difference between success and failure in T&T can lie in creating strong collaboration frameworks and overcoming financial, institutional and organizational bottlenecks,” it said.

With tourism spending in Japan alone growing by nearly 150 percent from 2011 to 2014, the benefits of a more competitive exchange rate and proximity to Asia’s expanding middle class are obvious. For Asia, ensuring more of these newly rich travelers explore the region’s attractions instead of venturing further afield should keep the region’s tourism authorities preoccupied for some time to come.