As the competition for business travelers and tourists becomes increasingly international, the U.S. still ranks as one of the top five most attractive environments for developing the travel and tourism industry, following Switzerland, Austria, Germany, and Iceland.This is the finding of the first-ever Travel & Tourism Competitiveness Report (TTCR), developed by the World Economic Forum in cooperation with international strategy and technology consultancy Booz Allen Hamilton and other partners.

Hong Kong, Canada, Singapore, Luxembourg, and the United Kingdom round out the top ten.

The rankings, covering 124 countries in total, are based on a measurement of 52 variables that impact a country’s appeal in developing travel and tourism, including the statutory regulatory framework, health and safety, infrastructure, local price levels, and aspects relating to the environment and culture. Data from international travel and tourism organizations, industry expert views, and information from the Forum’s regularly-conducted “Executive Opinion Survey” supplemented these variables. The Forum is using the information from the TTCR to build a platform for information exchange between international stakeholders in the travel and tourism industry.

“Our Travel & Tourism Index is an important milestone in enabling a strong and sustainable tourism industry to contribute effectively to international economic growth,” says Klaus Schwab, founder and president of the World Economic Forum.

U.S. GETS HIGH MARKS FOR INFRASTRUCTURE, BUT LOW MARKS FOR PRICING AND TOURISM PERCEPTION

Not surprisingly, the U.S. gets high marks for overall infrastructure and business environment for travel and tourism, ranking number one in that sub-index. It has the most well-developed air transport system in the world by a significant margin, as well as an excellent tourism infrastructure in terms of hotels and rental car company density. With 20 “World Heritage” sites and a relatively large percentage of protected land area, the U.S. is among the top three countries in natural and cultural resources.

While ranked fifth overall for human resources, difficulty in hiring foreign workers is seen a competitive disadvantage, which is a concern due to the seasonality of much of the tourism work force.

Travel & tourism generate approximately $1.7 billion in the U.S., making it the largest global market in this sector. The nearly six million employees in the industry make a significant contribution to the U.S. economy. However, the U.S. only ranks 47th in the category of “Prioritization of Travel & Tourism strategies,” lower than many other industrialized countries. “The United States does not fully exploit the large potential of the travel and tourism sector,” comments Justin Zubrod, McLean, VA-based Vice President at Booz Allen. In the U.S., tourism contributes 3.9% to the GDP, compared to 6.2% for Switzerland.

Additionally, the United States ranks 99th out of 124 countries for price competitiveness. The relatively high cost of traveling to the U.S. compared to other destinations might be a barrier to future growth. “As the world grows smaller, the competition for business travelers and tourists is heating up,” said Mr. Zubrod. “The governments of other industrialized nations, especially European ones, have made travel and tourism a priority in terms of policies and regulations concerning foreign travelers. The U.S. needs to keep up, or risk losing some of its competitive edge.”

The perception of U.S. citizens toward foreign visitors also ranked low, at 112th place. Concerns over global terrorism in particular have made U.S. citizens more skeptical towards international tourists. “The U.S. is a welcoming nation - but we need to get this message out to the world. We need to embrace international visitors to make the most of our travel & tourism potential,” said Mr. Zubrod.

COMPETITION FACTORS FOR INDUSTRIALIZED NATIONS AND DEVELOPING COUNTRIES VARY

Due to well-developed infrastructures, assured statutory framework conditions, and high levels of education, industrialized nations rank higher overall in the index than emerging ones. Only five of the top 20 countries ranked are outside of Europe and North America. For these nations, key levers for optimizing their competitiveness include increased deregulation, liberalization, and environmentally-sustainable tourism.

The travel and tourism sector is a key driver for prosperity in emerging threshold countries such as Tunisia (34), Jordan (46) and Egypt (58) and for developing countries like India (65). According to the report, these nations can increase their competitiveness in this sector through investment in their infrastructure and a fundamentally supportive legislative framework.

“Adopting a balanced regulatory framework that attracts private investors, facilitates access for domestic and international travelers, and encourages competition in the market, is a key factor driving competitiveness in the travel and tourism industry,” said Mr. Zubrod.

INDIA IS THE MOST COMPETITIVE OF THE DEVELOPING COUNTRIES

The study also found over-proportional growth in the travel and tourism sector in less-developed countries. These countries are increasingly using tourism as a growth driver for the entire economy. India is the highest-ranking of the developing countries in terms of competitiveness, with an overall ranking of 65. On its transport infrastructure, international links to the air transport network, and safety, India scores relatively high compared to some of the threshold countries in the TTCR.

India also benefits from excellent price competitiveness—it is ranked 6th overall, with very low ticket taxes and airport charges (ranked 7th) and low prices in the economy as a whole (ranked 11th). However, despite government and industry efforts to promote the country abroad (India is ranked 4th with regard to tourism fair attendance), and the exposure given to recent promotional campaigns, the assessment of marketing and branding to attract tourists remains somewhat mediocre (ranked 59th).

DEREGULATION AND PRIVATIZATION IS AN ENGINE FOR GROWTH

The positive outcome for most of the industrialized nations in the TTCR can be attributed in no small part to the deregulation and privatization of air travel, which improves international competitiveness in the overall travel and tourism sector. For example, the cross-border opening-up of European air markets and the entry of low-cost carriers have resulted in average flight prices falling by up to 18% over the past five years. This stimulated overall European expenditure on travel above the normal levels of growth in this market, by an additional 13%, or 82 million passengers. In addition, the tourism sector for European countries became significantly more efficient through deregulation and privatization. Further potential can be exploited through the continuing privatization and consolidation of air transport companies and airport operators.

TTCR STUDY PARTNERS

Booz Allen Hamilton served as the strategic design partner to the World Economic Forum in preparing the TTCR. Other organizations involved include IATA (the international air transport organization), UNWTO (World Tourism Organization), WTTC (World Travel Tourism Council) and industry partners including: Bombardier, Carlson Companies, Emirates Group, Qatar Airways, Royal Jordanian Airlines, Swiss International Airlines and Visa International.

Download a full copy of the Travel & Tourism Competitive Report from www.weforum.org or www.boozallen.com.
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