June 02, 2011
MasterCard Index: Growing Cross Border Expenditure Drives Global Recovery
Sydney, 2 June 2011- The global economic recovery is being driven by a select group of cities - including Sydney - according to the MasterCard Index of Global Destination Cities released today.
The Index of 132 cities shows that it is cross border spend, out of and in to destination hotspots and financial capitals, that is carrying much of the momentum of economic recovery. This Index and the accompanying reports are not based on MasterCard volumes or transactional data.
Australian holiday hotspot, Sydney, did not feature in the top twenty for visitor arrivals, but ranked highly on visitor expenditure, ranking sixth in the Index with international visitors expected to spend US$13.8 billion (A$14.05 billion) in the city in 2011.
MasterCard Australia Country Manager, Andrew Cartwright said, "Analysts and business owners in Australia have expressed concern over recent months about the impact that the continued strength of the Australian Dollar will have on visitors looking to travel to our shores, but it is heartening to see that, not only are our cities as popular as ever, visitors plan to spend more when they get here.
"What is really encouraging for our travel and tourism sector is that Sydney performs particularly well globally in terms of international visitor expenditure, coming in ahead of renowned shopping and entertainment destinations Los Angeles, Madrid and Singapore.”
The Index also looked at the growth rates of visitor expenditure in destination cities and found Melbourne, which ranks lower than Sydney in terms of overall visitor expenditure, ranked eighth in the world for predicted growth, with visitor spending expected to grow by 19% this year (see table 1).
"Melbourne is proving itself as a future hotspot for international travellers with growth in visitor expenditure expected to be almost one fifth higher this year than it was for the same period in 2010. The real winners will be the businesses that seize the opportunity this presents and prepare themselves for the expected growth in spending over the next twelve months.”
Andrew Cartwright adds: "These results should ease some concerns by those polled in the recent Tourism and Transport Forum/MasterCard survey which found that the Australian travel industry were concerned by the continued dominance of the Dollar and the detrimental impact it could have on inbound travel to Australia.
Placing these Australian results in a global context, the research showed that last year across all 132 cities, cross border spending and outbound departures were up significantly – with growth of 14.6% and 9.2% respectively, well surpassing world GDP figures.
In 2011 some destination cities are expecting visitor expenditure growth to increase up to 30% and visitor arrivals up 24%.
"Until now there has been little analysis of the impact that travel and cross border expenditure between cities has on the economies of prospering markets and historically more developed nations. The Index offers an analysis of the powerful financial flows between existing commercial powerhouses and the emerging markets, and provides a revealing insight into how these relationships may develop in the future,” said Mr. Cartwright.
Within the Asia/Pacific region Sydney again features predominantly in terms of visitor expenditure, ranking second only to Bangkok (US$14.4 billion). The other Australian city included in the Index, Melbourne, ranks eighth ahead of regional business hubs Kuala Lumpur (US$6 billion) and Shanghai (US$6 billion).
In terms of growth rates of visitor expenditures in the Asia/Pacific region, both Australian cities feature in the top ten, with Sydney in tenth position at 12.1% and Melbourne in seventh position at 19% (table 2).
"As the global economic centre continues to shift and with visitor arrivals and expenditure on arrival continuing to increase, the Asia/Pacific region is continuing to emerge as an integral area for the future of global commerce,” said Mr. Cartwright.
London tops Index with over 20 million inbound travellers
Overall London topped the Index with 20.1 million inbound passengers expected in 2011, due to Heathrow’s role as a key international airport and transfer hub and the low interest rates which are attracting tourists and encouraging businesses to invest in the city. Paris is second with 18.1 million, followed by Bangkok, Singapore and Hong Kong.
London ranks first on cross-border expenditure
New York is in second place with Paris in third. Estimated expenditures in these cities for 2011 amounted to US$25.6 billion, US$20.3 billion and US$14.6 billion respectively. Bangkok ranks fourth with visitor expenditures estimated at US$14.4 billion, followed by Frankfurt in fifth rank with US$14 billion.
|Destination Cities||2011 Rank||2011 Visitor Expenditure|
|New York||2||US$20.3 billion|
|Los Angeles||7||US$12.5 billion|
|Hong Kong||10||US$10.4 billion|
|Destination Cities||2011 Rank||2010 to 2011 Growth Rate|
The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities. Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.
For every city pair, data from the UN World Tourism Organization that document on an annual basis total numbers of outbound air passengers that travel between the two respective countries are used to create a "ratio” of outbound versus inbound air passengers between two countries.
A margin of error is unavoidable in this calculation as not every outbound passenger would return as in the case of immigration, and not all return in the same year.
On a country level, the UN Database of "Trade in Service” in the "Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included). An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.
A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great deal between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.
This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).
MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Conversations Blog and subscribe for the latest news.
Tagsinternational visitor arrivals, cross-border spending, Australia, Travel
Sydney – Key Spending Destination
Australia – Top ten internationally for visitor expenditure growth
Additional Global Highlights
Table 1: Top 10 Destination Cities by International Visitor Expenditure in 2011
Table 2: Growth Rates of Visitor Expenditures in Top 10 Destination Cities in Asia/Pacific in 2011
About MasterCard Worldwide