Tourism Intelligence International

Roman Abramovich

www.tourism-intelligence.com

16

$23.5 billion

Russia

Alexei Mordashov
19
$21.2 billion
Russia
Source: Adapted from The Worlds Richest Billionaires, Forbes, 2008

The number of millionaires in Brazil, Russia,

India and China jumped 19% in 2007, compared
with growth of 3.7% in the U.S., its slowest
growth since 2002, according to Merrill Lynchs
World Wealth Report. The U.S. still dominates
the millionaire economy worldwide. It has more
than three million financial millionaires, defined
as those with investable assets of $1 million or
more. That's up 100,000 from 2006.

Many millionaires are from

emerging markets

Yet emerging markets captured the bulk of the

millionaire growth in 2007, with Brazil, China,
India and Russia adding 133,000 new
millionaires, accounting for a total of 817,000.
India's millionaire population grew 23% last year,
the fastest in the world. Russia is home to the
second largest number of billionaires in the world
after the United States, gaining 50 in 2007,
reaching a total of 110 (Source: Forbes
magazine).

Highest growth in
millionaires are from
emerging markets

The middle class in emerging markets is also

growing apace. In Russia for instance, the middle
class has grown from just 8 million persons in
2000 to 55 million persons in 2006 (Source:
Business Week).

Rising Middle Class

Currently, less than 100 million Chinese, around

5% of its population, can be ranked as middle
class. However, this number is expected to
increase to 700 million by 2020, accounting for
about 45% of the total Chinese population
(Source: National Bureau of Statistics).
While millionaires are popping up everywhere in
the emerging-market world, and there is a huge
growth in the middle-class population, there is the
economic challenge of trickling down income to
lower levels of society. Of course, that is not to
say that the challenges posed by income

Travel and Tourisms Top Ten Emerging Markets

Income redistribution and

poverty alleviation

15

www.tourism-intelligence.com

Tourism Intelligence International

distribution are not among the highest priorities of

most emerging-market countries. Eliminating
poverty is at the top of the agenda.
In spite of the current challenges of income
distribution and poverty alleviation, the present
looks promising for emerging-market economies,
but the future seems even brighter.
The
projections for long-term growth tell us that
emerging markets are likely to become even
weightier in the world economy tomorrow than
they are today. In this respect, a study conducted
by Goldman Sachs found startling results
regarding the growth prospects of emerging
markets. The BRIC markets could be over half
the size of todays six largest industrialised
economies by 2025, and in less than 40 years they
could overtake them. Looking ahead to 2050,
China would be the worlds largest economy and
India would be its third largest, behind the United
States.

The present is promising

The future even brighter

China, India and USA

worlds largest economies
in 2050 (in that order)

BRIC economies to
dominate the developed
world by 2050

Economic Prosperity Drove Travel Demand

Traditional Markets

Emerging Markets

Slow economic growth

Rapid economic growth

Slow growth in the number of

millionaires

Double-digit growth in the number

of millionaires

Wide and even distribution of

income

Emerging middle class

1.3.2

Paid Holidays

As we have seen in many of the developed market

economies of the USA, German and the UK, the
real drivers of growth have been post-war peace
and prosperity, paid holidays and the emergence
of the jet aircraft and chartered flights. Paid
holidays have been of paramount importance. We
have seen that emerging market economies are
growing rapidly and incomes are also growing.
But do they have enough paid holidays? Do they
use them all? What are their holiday-taking
patterns?
16

Travel and Tourisms Top Ten Emerging Markets

 Tourism Intelligence International

www.tourism-intelligence.com

The economic fundamentals are right for travel.

The one factor that could cause an even greater
take off in travel is paid holidays. As the Chinese
obtain more paid holidays, for example, the
market will boom even further.
Paid holidays in some of the top traditional travel
markets, such as the UK and Germany, averaged
4 to 6 weeks (the USA is an exception with only 3
to 4 weeks of paid holiday).

Table 1:3
Average Paid Holiday of Selected Countries
Country

Average Paid Holidays (weeks)

Germany

4 6 weeks

USA

3 weeks

UK

4 weeks

Brazil

4 weeks

China

1 2 weeks

India

2 4 weeks

Russia

3 weeks

Belarus

4 8 weeks

Bulgaria

3 weeks

Czech Republic

3 weeks

Hungary

4 8 weeks

Moldova

4 weeks

Poland

4 weeks

Romania

3 weeks

Slovakia

3 weeks

Ukraine

3 weeks

In Brazil for example, employees have an average

of four weeks annual leave in addition to 12
public holidays during the year. Also, every

Travel and Tourisms Top Ten Emerging Markets

17

www.tourism-intelligence.com

Tourism Intelligence International

Bulgarian employee is entitled (after they have

worked eight months) to paid annual leave of not
less than 20 working days. These days can be
taken all at once or in parts.
In general Indians are not in the habit of using
annual leave for regular vacations. The annual
leave pattern is varied. Government employees
who make up a very sizeable number in India
enjoy yearly public holidays ranging from 15/16
days in the Central Government to 20/25 days in
some of the states. In addition, they are allowed
15 days of leave in a year termed casual for
meeting unforeseen situations. And every year,
30 days of leave is earned by a public servant.
This leave can be converted into cash in most
cases and can be accumulated up to 180 days.
As many of these countries subscribe more and
more to western lifestyles, paid vacation leave
will increase over time. Paid leave can be a very
important driver of growth as hard working
professionals from emerging markets seek to cash
in on their vacation leave to take holidays abroad.
Imagine the potential from markets like China
and India and even Russia. Indeed, a vital nontraditional mechanism of redressing Chinese trade
is to offer Chinese more paid holidays.
1.3.3

Growth in the number of

paid holidays can positively
affect tourism demand

The Impact of Oil Prices

Travellers of yesteryear were fortunate to have

the luxury of relatively low oil prices. They also
had the luxury of a clean conscience, not having
to worry about carbon emissions. These factors,
combined with the emergence of the jet aircraft
(1958) and chartered flights made travel cheap
and easily accessible.
Cheap oil definitely
fueled the jet aircraft and the take off of the
travel and tourism boom and the deregulation of
the airline industry, decades later (1978) certainly
helped.
The emerging markets are now faced with a
somewhat different scenario. The price of oil is
high and many airlines are fighting to stay in

18

Travel and Tourisms Top Ten Emerging Markets

 Tourism Intelligence International

www.tourism-intelligence.com

business. Additionally, budget airlines have

emerged and there is increasing worry about the
impact of air-travel carbon emissions. They are
constantly adding fees and taxes that make
purchasing a ticket somewhat of a headache, not
to mention that prices are constantly changing and
getting higher.
Travellers of today are however, blessed with the
existence of low-cost carriers or LCCs, which
have made travel to nearby destinations cheap and
easily available. This is however, a blessing to be
had only by Europe, the USA and parts of Asia.
Many emerging markets are not yet enjoying the
benefits of cheap flights, having to deal with
traditional carriers.
However, as these emerging markets grow in size
and dynamism do not be surprised, as in the case
of Asia that LCCs will begin to pop up. This will
certainly enhance travel from these markets, but
primarily regionally.
Cheap Oil Fuelled Travel and Tourism Demand
Traditional Markets

Cheap oil
1.3.4

Emerging Markets

Expensive oil

Sheer Market Size

It is also important to consider the sheer market

size of the emerging market and their population
size. Emerging-market countries are home to over
half of the worlds population. The BRIC markets
and Eastern Europe alone have a collective
population size of 2.986 billion, making up 44%
of the worlds population. The population size of
the emerging markets covered in this publication
(the BRIC markets, Eastern Europe, South Africa
and the UAE) is 6.6 times the size of the top
outbound markets (USA, Germany and UK).

Travel and Tourisms Top Ten Emerging Markets

Almost half of the worlds

population is covered by
emerging markets

19