June 01, 2012
Projected 16.7% increase in visitor spending for 2012 positions Nairobi as one of the fastest growing destination cities worldwide
Nairobi, Kenya, 01 June 2012 – Nairobi has been named one of the most popular destination cities in Africa in the 2012 MasterCard Global Destination Cities Index.
The Index has revealed that a projected 1.8 million visitors are expected to visit Nairobi in 2012, injecting an estimated $1.5 billion into the city’s economy. These figures translate into a 10% growth in visitor numbers and a 16.7% growth in visitor spending over the 2011 Index results.
The Index, now in its second year, is used as a barometer for understanding the global economy and the dynamic flow of commerce across the world. The Index ranks 132 global cities by their total international visitor arrivals and the cross-border spending by these visitors in the destination cities, and gives visitor and passenger growth forecasts for 2012.
Thirteen of these 132 destination cities are on the African continent and aside from Nairobi include: Accra, Cairo, Johannesburg, Casablanca, Beira, Cape Town, Dakar, Durban, Kampala, Lagos, Maputo, and Tunis.
Charlton Goredema, vice president, market manager, East Africa and Indian Ocean Islands, MasterCard Worldwide comments, “A key finding of the Index is that Nairobi ranks fourth out of 13 cities surveyed in Africa - both in terms of visitor numbers and visitor spend - highlighting its status as the financial heart of the East African region and a significant African economic hub.”
“In addition, the noteworthy 16.7% growth in projected visitor spending for Nairobi sees the city ranked in 10th position globally among the fastest growing destination cities examined in the Index,” adds Goredema.
Other leading African cities in terms of visitor numbers were Cairo, which expects 3.3 million visitors in 2012; Johannesburg, which expects 2.5 million visitors; and Casablanca, which anticipates 2.1 million visitors in the coming year.
“The Kenyan government’s identification of air transport capacity being vital to the continued growth of the country’s economy and the resulting investment in upgrading Jomo Kenyatta International Airport is now yielding results, as can be seen in the Index,” adds Gordema.
The country’s official airline – Kenya Airways – is also readying itself for growth in visitor numbers with its publically stated 2013 target of becoming the leading carrier on the continent - interlinking every African capital city and connecting the rest of Africa to the world via its Nairobi hub.
The three cities where most visitors to Nairobi are forecasted to originate from are London (203,000 people), Amsterdam (149,000 people), and Johannesburg (138,000 people).
The visitors from these top three cities will contribute considerably to the overall projected growth in visitor spending in Nairobi. Londoners are expected to spend $339m during 2012 (a growth of 8.1% from 2011); those from Amsterdam are expected to spend $118m (a 6.7% growth from the 2011) while Johannesburg visitors are expected to spend $138m (a 10.2% growth from 2011).
Dr Yuwa Hedrick-Wong, global economic advisor for MasterCard Worldwide and author of the report says, “An interesting trend that we are observing is a rise in cashless payments with many international travelers opting to make electronic transactions as opposed to paying with cash. The trend is a response to an increasing demand for safe, simple and smart payments, and highlights the rising importance of cashless commerce for both business and leisure travel.”
“Many travelers to Nairobi and Kenya are accustomed to a world beyond cash in which they use their payment cards in multiple ways. They expect the same safety and convenience when traveling abroad. This is a significant opportunity for businesses within Nairobi, and if they are to benefit from the projected 16.7% growth in traveler spend in the coming year, they should already be considering how best to facilitate consumers’ payment preferences,” added Dr. Hedrick-Wong.
In the global rankings, London topped the world’s cities by visitor numbers globally for the second consecutive year. Its number one ranking is based on a projected uplift of international visitor numbers by 1.1% to a record 16.9 million. Paris, in second position, is expecting 16 million inbound passengers, with Bangkok in third position, expecting 12.2 million visitors.
London also ranked first in cross-border expenditure, ahead of New York in second place, with estimated spending in these cities for 2012 amounting to US$21.1 billion and US$19.4 billion respectively. Bangkok makes up the top three with expected visitor expenditure in 2012 of US$19.3 billion.
While cities in Europe and the US ranked highly on the Index, Dr. Hedrick-Wong said that the strong growth figures of African destination cities - in both expected visitor numbers and spending - suggests that destination cities in Africa will continue to grow in importance in the global economy.
“Aside from Nairobi’s impressive double digit growth figures, Tunis, after the political upheaval in early 2011, is expected to show growth of 19.8% in visitor spending with a 17.7% increase in visitor numbers. Additionally, Cairo, in spite of ongoing turmoil in Egypt, expects an 8.4% growth in spending and an 8.3% growth in visitor numbers,” explained Dr. Hedrick-Wong.
“In spite of the ups and downs of the business cycle, the overall pattern is clear: cross-border travel by air is a resilient trend that is embraced by a growing number of people across Africa, underpinned by visitors’ robust willingness and capacity to spend,” concludes Dr. Hedrick-Wong.
This Index and the accompanying reports are not based on MasterCard volumes or transactional data.
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.
On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.
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 greatly between arrival cities such that even if each trip is 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).
Please note: the city rankings from the 2011 MasterCard Index of Global Destination Cities are altered retrospectively as updates in data become available.
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