Future of Outbound Travel in Asia Pacific

5/21/2018 Future of Outbound Travel in Asia Pacific

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Knowledge Leadership

MasterCard Insights

1Q 2014

The Future of Outbound Travel in Asia/Pacificby Desmond Choong and Yuwa Hedrick-Wong


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1 MasterCard Insights

The Future of Outbound Travelin Asia/Pacificby Desmond Choong

and Yuwa Hedrick-WongIntroduction

Outbound travel has been growing strongly in recent

years.1 Asia/Pacific, which has been traditionally a re-

gion known for its attractive destinations for interna-

tional visitors, is also fast becoming a leading source of

outbound travel. This report presents the Asia/Pacific

regional outlook of outbound travel to 2020. Fourteen

markets in Asia/Pacific are covered in the report, an

even split between developing markets and developed

economies. The emerging markets are China, India,Malaysia, Thailand, Indonesia, Philippines, and Viet-

nam. The developed economies are Japan, South

Korea, Taiwan, Hong Kong, Singapore, Australia and

New Zealand.

Combining real GDP growth projections, household

distribution by income brackets, and survey data on

propensity for outbound travel by household in-

comes; a proprietary model has been constructed to

project outbound travel trips per household by incomebrackets in each of the fourteen markets to 20202.

These projections in turn made possible estimations of

household income threshold above which outbound

travel begins to take off. In addition, the top aspira-

tional destinations for outbound travelers from these

markets are also identified. Together, they form a re-

gional picture of how much outbound travel originat-

ing from Asia/Pacific will grow, distribution of

outbound travelers by household incomes, and where

they aspire to visit, both within the region as well asoutside of the region.

Table 1. 2014-2020 Outbound Travel Forecast

Trip TypeOutbound trips (mn)3

2011

Key: LPO - Leisure Purpose Trips Only, AP - All Purpose Trips

LPO(ex. same-day trips to HK & Macau)

LPO(ex. all HK and Macau)

AP

AP

LPO

AP(ex. cross border overland to Singapore)

AP

AP(ex. cross border overland to Malaysia)

AP(ex. non-air travel to China & Macau)

LPO(ex. Singapore and Malaysia same-day)

LPO

AP(ex. same-day trips to Malaysia & Laos)

AP(ex. overland border crossing to China)

LPO

LPO

Using China LPO(ex. same-day trips to HK & Macau)

China

China (ex HK & Macau trips)4

South Korea

Japan

India5

Malaysia

Taiwan

Singapore

Hong Kong

Indonesia

Australia

Thailand

Vietnam

Philippines

New Zealand

Total - 14 markets

Asia/Pacific Developed Markets

Asia/Pacific Emerging Markets

42.6

21.7

12.7

17.0

5.8

8.9

8.8

7.8

7.1

4.9

6.5

5.4

2.8

3.0

1.7

134.9

61.5

73.4


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Regional Overview

Collectively, the 14 Asia/Pacific markets are expected to

grow by an annual growth rate of 7.9% over the fore-

cast period of 2014-2020. The largest outbound mar-

kets in 2020 will be China, followed by South Korea

and Japan. Even if one excludes all trips to Hong Kong

and Macau (which are technically domestic trips as they

are both parts of China), Mainland China outbound re-

mains the largest in Asia/Pacific in 2020, more than

four times of that of South Korea which is the second

largest market.

Currently Japan outbound is the second largest in

the region but South Korea is projected to overtake it

sometime in 2019. Similarly, if the forecasted growth

rates persist past 2020, then India will in turn overtake

South Korea to be the second largest outbound market

by 2022.

Emerging Asia/Pacific currently has about one and a

half times more outbound trips than developed Asia/Pa-

cific (mostly due to China). And it will also grow by

more than twice as fast as developed Asia (10.1% ver-

sus 3.9%) over the forecast period. Table 1 summarizesthe actual growth rates from 2010 to 2013, and the

growth projections to 2020 for the 14 Asia/Pacific mar-

kets.

Q1 2014 2

2012

50.5

27.3

13.7

18.5

6.4

9.6

9.4

8.0

7.8

5.4

6.9

5.7

3.4

3.2

1.7

150.3

66.1

84.1

2013

61.1

34.3

15.0

17.1

7.2

10.4

10.4

8.5

8.6

6.1

7.4

6.0

3.9

3.5

1.8

166.8

68.8

98.1

2014

71.2

40.0

15.5

17.3

7.9

10.9

10.6

8.7

8.7

6.8

8.1

6.2

4.3

3.8

1.9

181.7

70.6

111.1

2020

134.0

84.8

19.2

18.4

16.5

15.2

14.2

11.8

11.6

10.6

10.0

8.7

6.4

6.2

2.3

286.3

88.7

197.5

11.1%

13.3%

3.7%

1.1%

13.0%

5.7%

5.1%

5.3%

4.9%

7.6%

3.7%

5.9%

6.7%

8.7%

3.3%

7.9%

3.9%

10.1%

2014-2020CAGR (Adjusted)

Note: Due to rounding, numbers presented throughout this document may not add precisely to the totals provided and percentages maynot precisely reflect the absolute figures.


4/44

Chart 1 locates the positions of each of the 14

Asia/Pacific markets in the two-dimensional space com-

bining real GDP growth rates (the vertical axis) and the

growth rates of outbound travel (the horizontal axis).

India is the fastest growing outbound market at 13%over the forecast period, followed by China at 11.1%

excluding trips to Hong Kong and Macau, (but China

would have a faster growth rate than India at 13.3% if

trips to Hong Kong and Macau are excluded). In the

third place is Philippines at 8.7% and in fourth place

Indonesia at 7.6%. The fastest growing developed mar-

kets are Singapore (5.3%), Taiwan (5.1%) and Hong

Kong (4.9%). It is interesting to note that these three

markets are also the smallest in geographic size among

the 14 markets covered, suggesting that limited com-

petition from domestic tourism destinations adds to the

overall size of international outbound demand.

Chart 1 also shows that outbound travel is generally

growing faster than real GDP except in the case of

Japan and South Korea where outbound travel is grow-

ing at almost the same pace as real GDP. A quick glance

at Chart 1 also reveals that in general the difference be-tween outbound travel growth and real GDP growth

tends to be higher (below the diagonal line) for devel-

oping markets (except for Malaysia) and tends to be

lower (hugging or close to the diagonal line) for devel-

oped markets.


Chart 1. Outbound Travel Growth versus Real GDP Growth

0% 2% 4% 6% 8% 10% 12% 14% 16%

JP

Outbound Trip Growth Rate

Real GDPGrowth

AU

KR

NZ

TWHK

SG

MYTH

VNPH

ID

CN

IN


5/44

In addition to estimating the overall growth rates of

outbound travel trips, it is also important to understand

the growth of outbound travel in relation to the dy-

namics of changing numbers of households as well as

household incomes in these markets. Table 2 summa-rizes the changing ratios of outbound trips to numbers

of households in recent years. Apart from Japan, all the

developed markets have a ratio of 100% or above in

2020. While a ratio of 100% means on average that

each household has one person who makes a trip

abroad each year, in practice it is more likely that a cer-

tain percentage of households make multiple trips over-

seas each year, and the remaining households do not

go abroad at all. The ratios for Singapore, Hong Kong

and Taiwan are much larger than 100% and not coin-

cidentally are also the fastest growing developed mar-

kets for outbound trips.

Among the emerging markets, Indias ratio of 3% of

outbound leisure trips to total households in 2014 is

startlingly low, even with a forecasted improvement of

almost double to 5.8% in 2020. The ratio is the lowest

in Asia/Pacific and about three times smaller than thenext lowest (Indonesia at 10.7% in 2014 improving to

15.6% in 2020). If India had exactly the same ratio as

Indonesia, then Indian outbound leisure travel would

be 28.2 million trips in 2014 (instead of 7.9 million trips)

and 44.4 million trips in 2020 (instead of 16.5 million

trips). It suggests the enormous potential for Indian out-

bound leisure travel over the next 10-20 years as the

ratio starts to approach those of the other developing

markets.

Q1 2014 4

Table 2. Number of Outbound Travel Trips as Percentage of Total Number of Households

Trip TypeOutbound trips as %of total households

2011

LPO(ex. same-day trips to HK & Macau)

LPO(ex. all HK and Macau)

AP

AP

LPO

AP(ex. cross border overland to Singapore)

AP

AP(ex. cross border overland to Malaysia)

AP(ex. non-air travel to China & Macau)

LPO(ex. Singapore and Malaysia same-day)

LPOAP

(ex. same-day trips to Malaysia & Laos)

AP(ex. overland border crossing to China)

LPO

LPO

Using China LPO(ex. same-day trips to HK & Macau)

9.9%

5.1%

68.9%

34.4%

2.2%

143.9%

118.2%

548.4%

283.7%

8.1%

75.9%

31.1%

14.5%

16.1%

100.3%

15.0%

68.8%

9.1%

2012

11.7%

6.3%

73.8%

37.4%

2.5%

150.4%

125.8%

546.4%

305.9%

8.6%

78.4%

32.8%

17.2%

16.9%

101.9%

16.6%

73.4%

10.3%

2013

14.0%

7.9%

80.2%

34.7%

2.7%

161.0%

139.3%

562.3%

332.5%

9.7%

83.1%

34.2%

19.5%

17.9%

103.5%

18.2%

76.1%

11.9%

2014

16.3%

9.1%

82.3%

35.0%

3.0%

165.5%

141.0%

566.1%

334.9%

10.7%

89.1%

35.0%

21.4%

19.0%

106.8%

19.7%

78.0%

13.4%

2020

29.7%

18.8%

99.6%

37.7%

5.8%

211.7%

188.2%

696.4%

427.8%

15.6%

102.8%

48.8%

30.0%

28.3%

122.4%

29.7%

96.7%

22.6%

Key: LPO - Leisure Purpose Trips Only, AP - All Purpose Trips

China

China (ex HK & Macau trips)

South Korea

Japan

India

Malaysia

Taiwan

Singapore

Hong Kong

Indonesia

AustraliaThailand

Vietnam

Philippines

New Zealand

Total - 14 markets

A/P Developed Markets

A/P Emerging Markets


6/44

Japan is an anomaly among the developed markets

with an outbound trip to household ratio of only 37.7%

in 2020. Japans ratio has never breached 40% from

the statistics we have seen since 1970 which is only six

years after outbound travel in Japan was deregulatedin 1964. In comparison, the ratio for South Korea is es-

timated at almost 100% in 2020. Some reasons given

by the Japan Tourism Marketing Co. for lackluster

Japanese outbound travel is that the structural change

in Japanese society owing to a declining population, a

stagnant economy, natural disasters within Japan, and

a series of negative external events since 2001 (SARs,

Indian Ocean Tsunami, Twin towers bombing, Global Fi-

nancial Crisis) has sapped the motivation for outbound

travel. Japanese consumer confidence levels since the

1990s seems to concur with this view as shown in Chart

2: Japanese consumer confidence has been consistently

pessimistic and below the other Asia/Pacific developed

market average except for the period between 2005

and 2007, and more recently in the first half of 2013.Another supporting statistic of this trend is that the

number of valid Japanese passports issued has been de-

clining since 2005 from about 35 million to about 31

million in 2010. Finally, it is worthwhile noting that

Japan has an excellent domestic tourism product

(ranked 14th in the world by the World Economic

Forum) which competes with outbound international

travel (domestic tourism in Japan accounting for 90 to

95% of total travel).


Chart 2. MasterCard Consumer Confidence Index: Japan and Developed Asia/Pacific Compared

100

90

80

70

60

50

40

30

20

10

0

H11993

Optimism Japan Asia/Pacific Developed

Pessimism

H11994

H11995

H11996

H11997

H11998

H11999

H12000

H12001

H12002

H12003

H12004

H12005

H12006

H12007

H12008

H12009

H12010

H12011

H12012

H12013

Optimism

Pessimism

Japan Asia/Pacific Developed


7/44

Table 3 shows how outbound trips are dispersed

across households by using a concentration ratio which

is simply the percentage of outbound trips taken by a

specific household income range divided by the per-

centage of total households in that income range. Forexample, if 10% of all outbound trips are accounted

for by 10% of households in a paticular income range,

then the concentration ratio is 1, suggesting an even

distrbution of outbound trips among households within

the income range. Thus, as seen in Table 3, households

with incomes over US$15,000 in Taiwan have a propen-

sity for travel similar to the population at large; whereas

Indian households with incomes over US$10,000 have

a propensity for outbound travel ten times higher than

the population at large.

Q1 2014 6

Table 3. Outbound Trip Concentration Among the Higher Household Income Brackets

OB trips of rangeas % of total

trips = A

HH in rangeas % of total HHs

= B

ConcentrationRatio (= A/B)

GDP per capitaUS$ 2014

HH IncomeRange

Taiwan

Hong Kong

Singapore

Australia

Japan

New Zealand

South Korea

Malaysia

Vietnam

Philippines

Thailand

Indonesia

China

India

>US$15k

>US$20k

>US$30k

>US$45k

>US$45k

>US$40k

>US$25k

>US$15k

>US$5k

>US$10k

>US$10k

>US$10k

>US$10k

>US$10k

95.1%

90.6%

86.1%

95.2%

85.5%

89.2%

90.5%

87.0%

80.5%

72.7%

88.5%

97.3%

92.8%

96.3%

91.7%

85.5%

77.4%

85.6%

73.8%

71.0%

64.7%

62.0%

37.5%

33.7%

39.9%

33.6%

26.4%

8.9%

1.0

1.1

1.1

1.1

1.2

1.3

1.4

1.4

2.1

2.2

2.2

2.9

3.5

10.8

22,002.03

41,420.59

53,670.98

62,127.16

41,149.60

41,806.73

25,188.93

10,651.95

2,063.76

2,938.13

6,165.62

3,432.37

7,137.89

1,389.20


8/44

A concentration ratio of "1" therefore denotes that

outbound trips are perfectly distributed across the

household income brackets. As the ratio increases, the

more concentrated outbound trips are among the

higher income households. As illustrated in Chart 3,the developed markets have a ratio between 1.0 (Tai-

wan) and 1.4 (South Korea) implying that outbound

travel is quite evenly spread across the household in-

come brackets. Among emerging markets, however, it

ranges from outbound travel being quite evenly spread

(Malaysia at 1.4) to being extremely concentrated

among the higher income households as in the case of

India at 10.8.


Chart 3. Relating GDP per Capita to Concentration Ratio

11.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

$0 $10k $20k $30k $40k $50k $60k $70k

Ratio ofOutbound Trips

to HHs

Ratio of Concentration of Outbound Tripsto Household by Income Against GDP per Capita

Share of outbound trips getting moreconcentrated at richer households

At 1.0, trips are perfectly distributed across households

GDP per Capita (US$ 2014)

KR

TW

MY

VN

TH

PH

ID

CN

IN

NZ JP

HK

SG AU


9/44

The household propensity for outbound interna-

tional leisure travel can also be analyzed in terms of

changing household incomes. As shown in Chart 4, at

household income of US$30,000 and above, the aver-

age propensity curves for developing and developedmarkets follow a similar trajectory although the peaks

of the curves are different (i.e. higher for developed

markets). What is interesting is the shape of the curves

below US$30,000. In the range of household income

between US$10,000 and US$30,000, the gap in the

propensity for outbound travel steadily narrows, sug-

gesting that in this income bracket, households in de-

veloping markets are rapidly catching up in their

propensity for outbound travel with their counterparts

in developed markets. But the gap opens up again be-

yond the US$30,000 income level. For the developing

market households the inflection point is around the

US$10,000 mark after which the propensity for inter-

national leisure travel rises rapidly till the US$30,000level. This inflection point suggests that US$10,000

household income is the threshold level of international

outbound leisure travel for the developing Asia/Pacific

markets.

Q1 2014 8

Chart 4. The Income Threshold of International Travel for Leisure

80%

70%

60%

50%

40%

30%

20%

10%

0%

Developed Country Average Emerging Asia Average

140-150k

120-130k

90-100k

70-80k

50-60k

40-45k

30-35k

20-25k

10-15k

2.5-5k

5-10k

< 2.5k 130-140k

15-20k

25-30k

35-40k

45-50k

60-70k

80-90k

100-120k

>150k

Propensityto Travel

Propensity for Travel Internationally for Leisure by Household Income (US$)

Household Income (US$)


10/44

Over 2012 and 2013, MasterCard surveyed over

22,000 people across 14 markets in Asia/Pacific to

gauge their aspirational destinations for their outbound

travel around the world. Without being prompted, they

were asked which destinations they would visit if costwere not an issue. Table 4 summarizes the results of

the top 20 aspirational destinations of the 14 Asia/Pa-

cific markets.

The destinations were identified in terms of both

cities and countries. For example, some respondents

chose London as their top aspirational travel destina-

tion, whereas others chose UK. And others even chose

Europe as their aspirational destination. So the list is a

mix of cities, countries and regions. But these destina-

tions can also be grouped into city-country combina-tions (e.g. London-UK and Paris-France) to re-calculate

their attractiveness to travelers from Asia/Pacific. For

developed Asia/Pacific travelers, the Paris (#1) - France

(#14) combination, ties with the New York (#2) - USA

(#5) combination at 10.1% each of the aspirational

mindshare. Together with London (#3) - UK (#9) com-

bination at 8.5%, Tokyo (#7) - Japan (#4) combination

at 7.0%, and Rome (#6) - Italy (#16) combination at

4.5%, these top five city-country combinations ac-

count for 56.3%of the total mindshare. Asia/Pacific

destinations represented in the top 20 make up 14.1%

of mindshare which the fourth ranked Tokyo-Japan

combination accounts for half at 7.0%. The next high-est Asia/Pacific destination is Australia (#8) with less

than half (2.4%) of the Tokyo-Japan combination as-

pirational mindshare. This bodes well for Japan which

just hit 10 million foreign arrivals for 2013 (a record)

on the back of a weakened yen and relaxing of travel

visa restrictions for inbound visitors. The government

plans to double the number of visitors to 20 million by

2020 (which coincidentally is also the year that Tokyo

hosts the Olympic Games).

The developing Asia/Pacific traveler list of top 20aspirational destinations also features Paris, London

and New York in the top ranks but what is interesting

is that Asia/Pacific destinations have a much stronger

representation with 28.5% of aspirational destinations

within the top 20 list. Singapore which did not even

appear in the top 20 developed Asia/Pacific list ranks

number two in the developing market list. The Tokyo

(#5) - Japan (#7) combination is unique in that it ranks


Table 4. Top 20 Aspiration Destinations

Paris

New York

London

Japan

USA

Rome

Tokyo

Australia

UK

Hawaii

1

2

3

4

5

6

7

8

9

10

8.5%

7.0%

6.7%

4.1%

3.1%

3.0%

2.9%

2.4%

1.8%

1.8%

Europe

Los Angeles

Hong Kong

France

Sydney

Italy

Switzerland

S. Korea

Maldives

Canada

11

12

13

14

15

16

17

18

19

20

1.7%

1.7%

1.7%

1.6%

1.6%

1.5%

1.5%

1.5%

1.2%

1.1%

Top 20 account for 56.3% of total

Of which Asia/Pacific Destinations 14.1%

Top 20 Aspiration Destinations of Developed Asia/Pacific Travelers


11/44

very highly in both lists (7.2% in the developing mar-

kets top 20 and 7.0% developed markets top 20) with

almost the same percentage. One reason for the

stronger showing of Asia/Pacific destinations within the

developing markets top 20 aspirational list is the rela-tive immaturity of outbound travel in these developing

markets. Two cases in point are the top 20 list of In-

donesian residents which features Singapore and Kuala

Lumpur (both short haul destinations) in the top five,

and the top 20 list of Vietnam residents which have

Singapore and Bangkok (both also short haul destina-

tions) in the top six. The appearance of highly ranked

aspirational yet short haul destinations illustrates the

relative immaturity of the Indonesian and Vietnamese

outbound travel market, as a mature market wouldhave realized the short haul aspirational destinations

earlier in the development cycle (i.e. short haul desti-

nations would not be aspirational in a mature market

as they are the first to be realized after which they stop

being aspirational).

The appearance of domestic destinations in the in-

dividual top 20 lists of India (Mumbai, Delhi, Goa and

Srinagar) and Japan (Okinawa, Kyoto and Hokkaido)

may go some length to explain why Japan and India

have the lowest propensity to travel internationally

among the developed and developing Asia/Pacific mar-

kets respectively (none of the other 12 markets feature

any domestic locations within their top 20 aspirationallist). In fact of the top 50 aspirational destinations for

India, 21 of them are domestic and account for 17% of

aspirational destination mindshare. It suggests that

there is still a pent up demand for domestic travel

which competes with international travel for the over-

all household travel budget. In the case of Japan, it may

explain in part why the propensity for international

travel has a lower trajectory rate as one moves higher

along the income brackets compared to South Korea

which has no domestic locations within its list of aspi-rational destinations. Similarly it may explain why

India's propensity for international outbound leisure

travel rises much more slowly after the US$10,000 in-

flection point compared to China (which shares the

same inflection point).

Q1 2014 10

Paris

Singapore

London

New York

Tokyo

USA

Japan

Hong Kong

Australia

Sydney

1

2

3

4

5

6

7

8

9

10

8.4%

6.0%

5.7%

4.3%

4.1%

3.3%

3.1%

3.0%

2.9%

2.2%

Seoul

Rome

Maldives

France

Switzerland

South Korea

New Zealand

Bangkok

Malaysia

Canada

11

12

13

14

15

16

17

18

19

20

1.8%

1.8%

1.8%

1.6%

1.6%

1.5%

1.3%

1.3%

1.2%

1.2%

Top 20 account for 58.2% of total

Of which Asia/Pacific Destinations 28.5%

Top 20 Aspiration Destinations of Developing Asia/Pacific Travelers


12/44


Market Details

Philippines

International outbound leisure travel trips by residents

of the Philippines are estimated at 3.8 million in 2014

and are forecasted to grow by an average of 8.7% per

year to reach 6.2 million trips by 2020. Total outbound

trips will grow about five times faster than total house-

hold growth (8.7% versus 1.7%) over the forecast pe-

riod resulting in a ratio of outbound trips to households

that is projected to reach 28.3% in 2020 from 19% in

2014.

Breaking down outbound trips by household in-

come, households earning above US$10,000 per

annum (which make up 34% of all households) will

generate about 73% of all outbound international

leisure trips in 2014. Projecting forward to 2020, the

higher levels of outbound travel growth will come from

the households earning above US$10,000 (34% ofhouseholds are in this category and they account for

73% of all outbound travel). The primary driver for this

is that the number of households earning above

US$10,000 are also growing much faster than the

number of households earning below US$10,000.

The propensity to travel by household income ex-

hibits a point of inflection at the US$15,000 household

income threshold, where households earning above

US$15,000 per year exhibit a propensity for outbound

leisure travel that is more than twice that of households

earning below US$15,000.

Table 5. Philippines

OutboundLeisure purpose

trips only2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)

Total outbound tripsas percentage

of total households

3.0

18.4

16.1%

3.2

19.1

16.9%

3.5

19.5

17.9%

3.8

19.8

19.0%

6.2

21.9

28.3%

8.7%

1.7%


13/44

Q1 2014 12

In terms of aspirational destinations, Paris takes top

position, followed by the medium and short haul des-

tinations of Singapore and Hong Kong. The percent-

age of Philippine residents who have selected Hong

Kong as an aspirational destination (5.8%) is the high-

est among the 14 Asia/Pacific economies; similarly the

selection of Singapore (6.3%) is the second highest

(after Vietnam at 9.9%) among the 14 Asia/Pacific

markets.

2.0

1.5

1.0

0.5

0.0

Chart 5. Philippines: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

32%

15%14%

11%

8%

2014: Average number of trips per outbound household (LHS)

Propensity to travel (RHS)

25k

35%

2.5-5k

5-10k

10-15k

15-25k

0.4

0.6

0.8 0.8

1.7

1.9

40%

35%

30%

25%

20%

15%

10%

5%

0%


14/44


Thailand

International outbound leisure travel trips by Thai resi-

dents are estimated at 6.2 million in 2014, and are

forecasted to grow by an average of 5.9% per year to

reach 8.7 million trips by 2020. As overall household

growth is expected to remain stagnant over the fore-

cast period, the ratio of outbound trips to total house-

holds is projected to reach 48.8% in 2020 from 35%

in 2014.

In Thailand about 88% of outbound trips are ac-

counted for by households earning above US$10,000

per annum in 2014. This income range accounts for

about 40% of all households. Projecting forward to

2020, the higher levels of outbound travel growth will

come from the households earning above US$15,000

(25% of households are in this category and they ac-count for 75% of all outbound travel). The primary

driver for this is that the number of households earn-

ing above US$15,000 is also growing much faster than

the number of households earning below US$15,000.


hibits a point of inflection at US$10,000 household in-

come levels at which we see a steeper increase in the

propensity to travel.

Table 6. Thailand

All Purpose Outbound trips(includes same-day

cross-border travel toMalaysia and Laos)

2011 2012 2013e 2014e 2020f2014-2020

CAGR

Outbound trips (mn)

Households (mn)


of total households

5.4

17.3

31.1%

5.7

17.5

32.8%

6.0

17.5

34.2%

6.2

17.6

35.0%

8.7

17.8

48.8%

5.9%

0.2%


15/44

Q1 2014 14

Chart 6. Thailand: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

In terms of aspirational destinations, Tokyo and

Japan take the top two positions. When combined they

account for about 20% of the mindshare for aspira-

tional destinations among Thai households. Paris and

France have a combined mindshare of 8.1%. This is fol-

lowed by the Seoul-South Korea combination at 9.3%,

then the London-UK combination at 7.5%. These topfour combinations account for about 45% of aspira-

tional destination mindshare.

Given the relative proximity of Japan (6 hours flight

time) and South Korea (5 hours) to Thailand versus Lon-

don (12 hours) and Paris (12 hours), we see Japan and

South Korea clearly benefiting much more from any

growth of outbound Thai travel (resulting from the

growth of household disposable income) over London

and Paris. That is to say it would be relatively easier for

Thai travellers to realize their aspirations for travel to

the Seoul-Korea and Tokyo-Japan over the London-UK

and Paris-France combinations.

The percentage of Thai residents who have selected

the Tokyo-Japan combination as an aspirational desti-

nation (19.5%) is the highest (Taiwan is second with

14.6%) among the 14 Asia/Pacific markets. Interest-ingly, Thailand is the only South East Asian outbound

market that did not select Paris as their number one

aspirational destination.



3.0

2.5

2.0

1.5

1.0

0.5

0.0

0.4 0.4

0.9

1.2

1.6

1.92.0 2.0

2.32.4 2.4

5-10k

10-15k

15-20k

20-25k

25-30k

30-35k

35-45k

45-70k

70-130k

< 5k >130k

100%

80%

60%

40%

20%

0%

87%85%

81%

70%70%68%

58%

42%

33%

16%15%


16/44


Malaysia

International outbound leisure travel trips by Malaysian

residents are estimated at 10.9 million in 2014, and are


reach 15.2 million trips by 2020. Total outbound trips

will grow about 4 times faster than total household

growth (5.7% versus 1.5%) over the forecast period

resulting in a ratio of outbound trips to households that

is projected to reach 211.7% in 2020 from 165.5% in

2014.


come, about 87% of outbound trips are accounted for

by households earning above US$15,000 per annum

in 2014. About 62% of all Philippines households fall

into this income bracket. Dividing these percentages

(87% by 62%) yields a concentration ratio of 1.4. A

similar ratio calculated for Thailand and the Philippines

comes in at about 2.2. As mentioned above, India has

the highest ratio among the 14 markets at 10.8.

Projecting forward to 2020, the higher levels of

outbound travel growth in Philippines will come from

the households earning above US$30,000 (28% of

households are in this category and they account for

54% of all outbound travel). The primary driver for this

is that the number of households earning above

US$30,000 is also growing much faster than the num-

ber of households earning below US$30,000.


hibit a point of inflection occurring at the US$15,000

household income levels at which we see a steeper in-

crease in the propensity to travel.

Table 7. Malaysia

All PurposeOutbound Trips

(excludes cross border landtravel to Singapore)

2011 2012 2013e 2014e 2020f2014-2020

CAGR

Outbound trips (mn)

Households (mn)


of total households

8.9

6.1

143.9%

9.6

6.4

150.4%

10.4

6.5

161.0%

10.9

6.6

165.5%

15.2

7.2

211.7%

5.7%

1.5%


17/44

Q1 2014 16

In terms of aspirational destinations, the Paris-

France combination is the most desired city-country

destination with 10.2% of mindshare, followed by the

London-UK combination at 9.8%, and Tokyo-Japan at

9.5%. In fourth and fifth position are the Seoul - South

Korea combination with 6.8% and the Sydney-Aus-

tralia combination with 6.2%. These five combinations

account for close to 42% of total aspirational mind-

share. What is interesting for the fourth and fifth

ranked combinations is that the country ranks higher

than the city which is the reverse of the top three. This

implies that the country has a stronger brand name

recognition among Malaysians than the city; in the case

of Paris (#1) and London (#2), the city brand name is

much stronger than the country (France-#29 and UK-

#14), while Tokyo (#3) is not much higher than Japan

(#4).

The percentage of Malaysian residents who have

selected the London -UK combination as an aspira-

tional destination (9.8%) is the highest among the 14

Asia/Pacific markets apart from Australia (12.6) and

New Zealand (11.6).

Given the relative proximity of Japan (7 hours) and

Sydney (8- 9 hours) to Malaysia versus London (13-14hours) and Paris (13-14 hours), Japan and South Korea

could clearly benefit much more from any growth of

outbound Malaysian travel (resulting from the growth

of household disposable income) over London and

Paris. That is to say it would be easier for Malaysians to

realize their aspirations for travel to Australia and Japan

over UK and France.

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

100%

80%

60%

40%

20%

0%

5-10k

Chart 7. Malaysia: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

70k

1.3

30%

1.4

33%

10-15k

1.7

40%

15-20k

2.3

53%

20-25k

2.6

59%

25-30k

3.3

75%

30-35k

3.6

82%

35-45k

3.6

83%

45-70k

3.7

85%

4.0

91%




18/44


Singapore

International outbound leisure travel trips by Singa-

porean residents are estimated at 8.7 million in 2014,


year to reach 11.8 million trips by 2020. Total out-

bound trips will grow about three times faster than

total household growth (5.3% versus 1.7%) over the

forecast period resulting in a ratio of outbound trips to

households that is projected to reach 696% in 2020

from 566.1% in 2014. Singaporean households have

the highest ratio of outbound trips to households

among the 14 Asia/Pacific markets. The lack of do-

mestic tourism is possibly a strong reason for such high

ratios.International outbound leisure travel trips by Sin-

gaporean residents are estimated at 8.7 million in

2014, and are forecasted to grow by an average of

5.3% per year to reach 11.8 million trips by 2020. Total

outbound trips will grow about three times faster thantotal household growth (5.3% versus 1.7%) over the


households that is projected to reach 696% in 2020

from 566.1% in 2014. Singaporean households have

the highest ratio of outbound trips to households

among the 14 Asia/Pacific markets. The lack of do-

mestic tourism is possibly a strong reason for such high

ratios.

About 86% of outbound trips in Singapore are ac-


per annum in 2014. This range accounts for about

77.4% of all households and suggests that outbound

travel is quite evenly spread across income levels. The

concentration ratio is therefore 1.1 (86% by 77.4%)

which is the lowest (tied with Taiwan which is also at1.1) among the 14 Asia/Pacific markets.

Projecting forward to 2020, growth of outbound

travel will come from the households earning above

US$100,000 (21% of households are in this category

and they account for 27% of all outbound travel). The

number of households earning above US$100,000 is

also growing much faster than the number of house-

holds earning below US$100,000.


hibits a linear type curve which is consistent with our

earlier observation that outbound travel by Singa-

porean residents is quite evenly spread across income

levels.

Table 8. Singapore

All Purpose Outbound trips(excludes cross border land

travel to Malaysia)2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

7.8

1.4

548.4%

8.0

1.5

546.4%

8.5

1.5

562.3%

8.7

1.5

566.1%

11.8

1.7

696.4%

5.3%

1.7%


19/44

Q1 2014 18

Chart 8. Singapore: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

In terms of aspirational destinations, the Tokyo-

Japan combination at 8.6% is the most desired desti-

nation followed by the New York-USA combination at

8.7%, the Paris-France combination at 8.6%, and the

London-UK combination at 7.2%. In fifth and sixth po-

sition are the Seoul-South Korea combination with

5.9% and the Sydney-Australia combination with4.9%. These six combinations account for close to

45% of total aspirational mindshare.

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

100%

80%

60%

40%

20%

0

5-20k

20-30k

30-40k

40-50k

50-60k

60-70k

70-80k

80-100k

100-140k

140k

87%85%

78%75%

67%

62%60%

7.57.47.2

6.66.4

5.65.35.1

88%

7.6

90%

7.9

93%

7.9

93%




20/44


Indonesia

International outbound leisure travel trips by Indone-

sian residents are estimated at 6.8 million in 2014, and

are forecasted to grow by an average of 7.6% per year

to reach 10.6 million trips per year by 2020. Total out-

bound trips will grow about seven times faster than



households that is projected to reach 15.6% in 2020

from 10.7% in 2014.


come, households earning above US$15,000 per

annum constitute about 75% of the all outbound in-

ternational leisure trips in 2014, and at the same time

makes up only 18% of all households. Dividing these

percentages (75% by 18%) yields a concentration ratio

of 4.2 which presents a very skewed picture of out-bound travel where a minority number of households

account for the lion's share of outbound travel. Among

the 14 Asia/Pacific markets covered Indonesia has the

second highest ratio (India is the highest at 10.8), fol-

lowed by China at 3.6. Projecting forward to 2020, the

higher levels of outbound travel growth will come from

the households earning above US$10,000 (34% of

households are in this category and they account for

97% of all outbound travel).). The primary driver for

this is that the number of households earning above

US$10,000 is also growing much faster than the num-

ber of households earning below US$10,000.



income divider. The US$15,000 income level is the first

bracket in which household propensity to consumeroutbound travel rises above 10%. Propensity to con-

sumer outbound travel rises rapidly after US$40,000.

Table 9. Indonesia

Outbound LeisurePurpose trips only

(excludes Singapore andMalaysia same-day trips)

2011 2012 2013e 2014e 2020f2014-2020

CAGR

Outbound trips (mn)

Households (mn)


of total households

4.9

60.7

8.1%

5.4

62.1

8.6%

6.1

62.9

9.7%

6.8

63.6

10.7%

10.6

67.8

15.6%

7.6%

1.1%


21/44

Q1 2014 20

Chart 9. Indonesia: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

In terms of aspirational destinations, Paris is in first

place, followed by Singapore, and both account for

more than 10% of aspirational destination mindshare

with a combined 24.9% of total mindshare. This is fol-

lowed by London at 6.7%, then Kuala Lumpur at

5.6%, which is another short haul destination like Sin-

gapore. The percentage of Indonesian residents whohave selected Paris (13.1%) and Singapore (11.8%) as

alternative destinations is the highest among the 14

Asia/Pacific markets. Interestingly, only Indonesians se-

lected Kuala Lumpur (5.6%) as a top 20 aspirational

destination. (Indian residents are the only ones who se-

lected Malaysia (4.8%) as a top 20 aspirational desti-

nation).

It is interesting that none of the top 20 aspirational

destinations are countries for Indonesians (they are all

cities). The fact that Singapore and Kuala Lumpur are

in the top five illustrates the relative immaturity of the

market, as a mature market would have realized the

short haul aspirational destinations earlier in the out-

bound travel cycle. This would seem to bode well for

Singapore and Kuala Lumpur going forward as they

stand to benefit the most from any growth in out-bound Indonesian travel.

100%

80%

60%

40%

20%

0%

2.5-5k

5-7.5k

7.5-10k

10-15k

15-20k

20-30k

30-40k

40-50k

50-70k

70-90k

90-100k

< 2.5k >100k

95%90%

85%

70%

50%

25%

18%

14%

9%

5%

0.30.5

0.70.9

1.3

2.6

3.6

4.44.7 4.9

2%2%1%

0.1



6.0

5.0

4.0

3.0

2.0

1.0

0.0


22/44


Vietnam

International outbound leisure travel trips by Viet-

namese residents are estimated at 4.3 million in 2014,



trips will grow about eight times faster than total

household growth (6.7% versus 0.8%) over the fore-

cast period resulting in a ratio of outbound trips to

households that is projected to reach to reach 30% in

2020 from 21.4% in 2014.

Households earning above US$5,000 per annum

constitute 81% of all outbound international leisure

trips in 2014 and at the same time makes up 37.5% of

all households. Projecting forward to 2020, the higher

levels of outbound travel growth will come from the

households earning above US$10,000 (11% of house-

holds are in this category and they account for 48% ofall outbound travel). The primary driver for this is that

the number of households earning above US$10,000

is also growing much faster than the number of house-




income divider after which propensity to consumer

outbound travel rises rapidly.

Table 10. Vietnam

All Purpose Outbound trips(excludes border crossing

to China on foot)2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

2.8

19.4

14.5%

3.4

19.8

17.2%

3.9

20.0

19.5%

4.3

20.2

21.4%

6.4

21.2

30.0%

6.7%

0.8%


23/44

Q1 2014 22


France combination ranks first with 13.3% of mind-

share. Singapore is in second place at 9.9%, and is

followed by the New York-USA combination with

9.6%. The Bangkok-Thailand combination is next with

9.1%, followed by the Tokyo-Japan combination with

8.3%, the London-UK combination at 8.1%, and theSeoul-Korea combination at 5.9%. These seven desti-

nations account for 64% of total aspirational mind-

share. The percentage of Vietnams travelers who

selected Paris (11.9%) and Singapore (9.9%) as aspi-

rational destinations is second highest, after Indonesia,

among the 14 Asia/Pacific markets. Interestingly, only

the Vietnamese selected Bangkok-Thailand (9.1%) as a

top 20 aspirational destination.

Like Indonesia, the fact that Singapore and

Bangkok are in the top six illustrates the relative im-

maturity of the market, as a mature market would have

realized the short haul aspirational destinations earlier

in the outbound travel cycle (i.e. short haul destinations

would not be aspirational in a mature market as they

are easily realized). This bodes well for Singapore andBangkok going forward as they stand to benefit the

most from any growth in outbound Vietnamese travel

(resulting from the growth of household disposable in-

come).

100%

80%

60%

40%

20%

0%

2.5-5k

Chart 10. Vietnam: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

10-15k

15-20k

20-25k

25-30k

30-35k

35-45k

45-70k

70-130k

130k

69%64%

51%

35%

25%

20%

10%

5.04.6

4.2

3.4

2.3

1.71.3

0.7

75%

5.4

81%

5.6

85%

5.7

86%



7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0


24/44


China

International outbound leisure travel trips by China's



reach 134 million trips by 2020. Excluding Hong Kong

and Macau as destinations, outbound trips are much

lower at 40 million in 2014, but are growing faster and

are projected to reach 84.8 million in 2020 by an aver-

age of 13.3% per annum. Total outbound trips will

grow much faster than total household growth (11.1%

versus 0.5%) over the forecast period resulting in a

ratio of outbound trips to households that is projected

to reach 29.7% in 2020 from 16.3% in 2014. Exclud-

ing Hong Kong and Macau as destinations, this ratio is

projected to reach 18.8% in 2020 from 9.1% in 2014

Households earning above US$10,000 per annum

constitute about 93% of all outbound international

leisure trips in 2014 and at the same time make up only

26% of all households. Dividing these percentages

(93% by 26%) yields a skewed concentration ratio of

3.6 reflecting a minority number of households ac-

counting for the lion's share of outbound travel.Among the 14 Asia/Pacific markets China has the third

highest concentration ratio after India at 10.8 and In-

donesia at 4.2. Projecting forward to 2020, the higher

levels of outbound travel growth will come from the

households earning above US$10,000 (26% of house-

holds are in this category and they account for 93% of

all outbound travel). The primary driver for this is that

the number of households earning above US$10,000

is also growing much faster than the number of house-




income divider, after which the propensity to consumer

outbound travel rises rapidly.

Table 11. China

Outbound LeisurePurpose trips only,excludes same-day trips to

Hong Kong and Macau

2011 2012 2013e 2014e 2020f2014-2020

CAGR

China - Outbound trips(mn)

China - Outbound trips(mn)

(ex. all HK & Macau)

Households (mn)

Total outbound tripsas percentage of total

households

Total outbound tripsas percentage of total

households(ex all HK & Macau)

42.6 50.5 61.1 71.2 134.0 11.1%

21.7 27.3 34.3 40.0 84.8 13.3%

429.6 432.3 435.1 437.8 451.7 0.5%

9.9% 11.7% 14.0% 16.3% 29.7%

5.1% 6.3% 7.9% 9.1% 18.8%


25/44

Q1 2014 24


France combination ranks first with an overwhelming

14.1% of mindshare (in 2012, Chinese arrivals rank

ninth in terms of tourist arrivals in France by origin

countries, and the first eight ranks are held by Euro-

pean countries and the US). The Sydney-Australia com-

bination follows with 7.9%, then the New York-USAcombination at 7.5%.

China is the largest source market for Maldives, the

number two ranked city location, and the number of

Chinese tourists to Maldives has grown by more than

five times in the five-year period between 2007 and

2012.

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

5-10k

10-15k

15-20k

20-25k

25-30k

30-35k

35-40k

40-45k

45-50k

50-60k

60-70k

70-80k

80-90k

90-120k

120-140k

140-150k

Chart 11. China: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

150k

5%

0.2

8%

0.3

18%

0.7

29%

1.1

48%

1.8

57%

2.1

62%

2.3

72%

2.7

79%

2.93.1 3.0

82%81%

85% 85% 85% 85% 85% 85% 85%

3.2 3.2 3.2 3.2 3.2 3.2 3.2




26/44


India

International outbound leisure travel trips by Indias res-

idents are estimated at 7.9 million in 2014, and are



will grow much faster than total household growth

(13.0% versus 1.1%) over the forecast period result-

ing in a ratio of outbound trips to households that is

projected to reach 5.8% in 2020 from 3.0% in 2014.

Among the 14 Asia/Pacific markets, India has the low-

est ratio of outbound trips to households and is about

three times lower than China outbound (9.1%, ex HK

and Macau) and Indonesia (10.7%)

Indian households earning above US$10,000 per

annum constitute about 96% of all outbound interna-

tional leisure trips (2014) and at the same time make

up only 8.9% of all households. Dividing these per-

centages (96% by 8.9%) yields a concentration ratio

of 10.8 which presents a very skewed picture of the

distribution of outbound travel by households. Amongthe 14 Asia/Pacific markets India has the highest con-

centration ratio followed by Indonesia at 4.2 (i.e. the

concentration of outbound travel in India is more than

twice as concentrated as Indonesia). As mentioned

above, China follows Indonesia with a ratio of 3.6. Pro-

jecting forward to 2020, the higher levels of outbound

travel growth will come from Indian households earn-

ing above US$7,500 (16% of households are in this

category and they account for 99.7% of all outbound

travel).




outbound travel rises rapidly. Comparing India to Chinawe see that the propensity curve for India rises much

more slowly as income increases compared to China.

Table 12. India

All Purpose Outbound trips(excludes border crossing

to China on foot)2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

5.8

257.4

2.2%

6.4

260.6

2.5%

7.2

263.8

2.7%

7.9

266.9

3.0%

16.5

285.1

5.8%

13.0%

1.1%


27/44

Q1 2014 26

In terms of aspirational destinations, the New York-

USA combination ranks first with 9.7% of mindshare.

Singapore is next at 8.8%, followed by the London-UK

combination at 6.5%, Malaysia at 4.8%, Australia at

4.3% and Japan at 4.1%. These six destinations ac-

count for 37.1% of total aspirational mindshare. Inter-

estingly, only the Indians selected Malaysia (4.8%) as atop 20 aspirational destination.

Singapore and Malaysia have the shortest flight

times from India (5-6 hours) which bodes well for the

two countries going forward as they stand to benefit

the most from any growth in outbound Indian travel.

One thing to note is that four of the top 20 aspirational

destinations selected by Indians are actually domestic.

In fact of the top 50 destinations, 21 of them are do-

mestic and account for 17% of aspirational mindshare.

This suggests that there is still a lot of pent up demand

for domestic travel in India which competes with in-

ternational travel for the overall household travel

budget and may explain in part why the propensity to

consume international outbound travel rises much

more slowly after the US$10,000 inflection point com-

pared to China (which shares the same inflectionpoint).

6.0

5.0

4.0

3.0

2.0

1.0

0.0

100%

80%

60%

40%

20%

0%

2.5-5k

5-7.5k

7.5-10k

10-15k

15-20k

20-30k

30-40k

40-50k

50-70k

70-90k

90-100k

Chart 12. India: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

< 2.5k >100k

95%

90%

85%

70%

50%

5% 0.8

2.2

0%0%0%

15%

1.1

30%

20%

1.7

40%

2.8

3.9

4.75.0

5.3

0.3



0.1


28/44


Japan

International outbound leisure travel trips by Japanese




will grow faster than total household growth which is

declining (1.1% versus -0.2%) over the forecast period



2014. This ratio is the lowest among the seven devel-

oped markets in Asia/Pacific covered. The next lowest

ratio for a developed market is Korea with 82.3%

which is more than double Japan's.

About 80% of outbound trips in Japan are ac-




travel is quite evenly spread across income levels. Pro-

jecting forward to 2020, outbound travel growth will

come from the households earning betweenUS$25,000-US$70,000 (62% of households are in this

category and they account for 42% of all outbound

travel). The total number of Japanese households is

slowly declining but households in this income bracket

are still increasing (albeit at a very low rate of growth).



income threshold, above which it rises more rapidly.

Despite the inflection point, the overall propensity

curve is still more or less linear. This is consistent with

our earlier observation that outbound travel by Japan-

ese residents is quite evenly spread across income lev-

els.

Table 13. Japan

All PurposeOutbound trips 2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

17.0

49.4

34.4%

18.5

49.4

37.4%

17.1

49.4

34.7%

17.3

49.3

35.0%

18.4

48.9

37.7%

1.1%

-0.2%


29/44

Q1 2014 28


France combination ranks first with 9.5% of mind-

share. The New York-USA combination follows at

6.8%, then the Rome-Italy combination at 5.8%, the

US state of Hawaii at 5.4%, and London at 4.7%.

Three of the top 20 aspirational destinations are (Oki-

nawa - #7, Kyoto - #12 and Hokkaido - #18). This sug-gests that there is still some pent up demand for

domestic travel which competes with international

travel for the overall household travel budget and may

explain in part why the propensity to consume has a

lower trajectory rate compared to South Korea which

has no domestic locations within its list of aspirational

destinations.

70%

60%

50%

40%

30%

20%

10%

0%

10-25k

Chart 13. Japan: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

25-35k

35-45k

45-50k

50-60k

60-70k

70-90k

90-120k

120-150k

< 10k >150k

0.60.5

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

16%

20%

26%

27%

0.7

0.8 0.80.9 0.9

1.2

1.31.4

1.729%

30% 31%

41%

44%

48%

59%




30/44


Australia

International outbound leisure travel trips by Australian


forecast to grow by an average of 3.7% per year to

reach 10 million trips by 2020. Total outbound trips will

grow about three times faster than total household




2014.

About 87% of outbound trips are accounted for by

Australian households earning above US$70,000 per

annum in 2014. This range accounts for about 70.5%

of all households and suggests that outbound travel is

quite evenly spread across income levels. Projecting for-

ward to 2020, outbound travel growth will mostly

come from households earning above US$100,000(51.6% of households are in this category and they ac-

count for 70% of all outbound travel). The primary


ing above US$100,000 is also growing much faster

than the number of households earning below

US$100,000 (which are actually declining).


hibits a linear type curve which is consistent with our

earlier observation that outbound travel by Australian

residents is quite evenly spread across income levels.

Table 14. Australia

Outbound LeisurePurpose trips only 2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

6.5

8.6

75.9%

6.9

8.8

78.4%

7.4

8.9

83.1%

8.1

9.0

89.1%

10.0

9.7

102.8%

3.7%

1.2%


31/44

Q1 2014 30

In terms of aspirational destinations, the New York-

USA combination is the most desired at 13.8%. This is

followed by the London-UK combination at 12.5%,

the Paris-France combination at 11.8%, the Rome-Italy

combination at 5.6%, and the Tokyo-Japan combina-

tion at 3.9%. These five combinations account for

close to 46% of total aspirational mindshare. It is in-teresting to note that there are five US destinations in

the top 20 (including the country itself as a destination)

which account for almost 20% of total mindshare.

2.5

2.0

1.5

1.0

0.5

0.0

80%

70%

60%

50%

40%

30%

20%

10%

0%

20-30k

30-40k

40-45k

45-50k

50-60k

60-70k

70-80k

80-90k

90-100k

100-120k

120-150k

Chart 14. Australia: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

150k

70%

65%

57%55%

53%

50%

43%41%40%39%

35%

30%27%



0.8 0.8

1.01.1 1.1 1.1

1.2

1.41.5 1.5

1.6

1.8

2.0


32/44


New Zealand

International outbound leisure travel trips by New

Zealand residents are estimated at 1.9 million in 2014,



trips will grow over three times faster than total house-

hold growth (3.3% versus 1.0%) over the forecast pe-

riod resulting in a ratio of outbound trips to households

that is projected to reach 122.4% in 2020 from

106.8% in 2014.


New Zealand households earning above US$40,000


57% of all households and suggests that outbound


jecting forward to 2020, outbound travel growth will

mostly come from households earning aboveUS$100,000 (19% of households are in this category


primary driver for this is that the number of households

earning above US$100,000 is also growing much

faster than the number of households earning below

US$100,000.




outbound travel rises more rapidly. Despite the inflec-

tion point, the overall propensity curve is still more or

less linear which is consistent with our earlier observa-

tion that outbound travel by New Zealand residents is

quite evenly spread across income levels.

Table 15. New Zealand

Outbound LeisurePurpose trips only 2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

1.7

1.7

100.3%

1.7

1.7

101.9%

1.8

1.7

103.5%

1.9

1.8

106.8%

2.3

1.9

122.4%

3.3%

1.0%


33/44

Q1 2014 32

In terms of aspirational destinations, the London-

UK combination is the most desired destination at

12.4%. This is followed by the New York-USA combi-

nation at 11.3%, and the Paris-France combination at

11.2%. These three combinations account for close to

35% of total aspirational mindshare. There are five US

destinations in the top 20 (including the country itselfas a destination) which account for almost 17% of

total mindshare.

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

80%

70%

60%

50%

40%

30%

20%

10%

0%

20%

25%

30%

41% 41%42%

45%

57%

63%64%

70%

0.81.0

1.3

1.7 1.71.8 1.9

2.4

2.7 2.7

3.2

15-25k

25-35k

35-40k

40-50k

50-60k

60-70k

70-80k

80-100k

100-130k

130k

Chart 15. New Zealand: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)




34/44


South Korea

International outbound leisure travel trips by South Ko-

rean residents are estimated at 15.5 million in 2014,



bound trips will grow much faster than total household




2014. Among the seven developed economies cov-

ered, South Korea has the second lowest ratio after

Japan (35% in 2014)


South Korean households earning above US$30,000




jecting forward to 2020, most outbound travel growth

will come from households earning above US$45,000(23.6% of households are in this category and they ac-

count for 50% of all outbound travel). The primary


ing above US$45,000 is also growing much faster than

the number of households earning below US$45,000.




outbound travel rises more rapidly. Despite this, the

overall propensity curve is still more or less linear which

is consistent with our earlier observation that outbound

travel by South Korean residents is quite evenly spread

across income levels.

Table 16. South Korea


2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

12.7

18.4

68.9%

13.7

18.6

73.8%

15.0

18.7

80.2%

15.5

18.8

82.3%

19.2

19.3

99.6%

3.7%

0.4%


35/44

Q1 2014 34


France combination is the most desired destination at

13.8%. This is followed by the New York-USA combi-

nation at 11.0%, and the London-UK combination at

6.7%. The Sydney-Australia combination follows with

7.9%, and the Rome-Italy combination comes next at

5.6%. These five combinations account for close to45% of total aspirational mindshare. There are four US

destinations in the top 20 (including the country itself

as a destination) which account for almost 16% of

total mindshare.

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

62%

59%

54%

46%

42%

37%

25%

22%21%

65%

70%

72%77%

Chart 16. South Korea: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)



20-30k

30-40k

40-45k

45-50k

50-60k

60-70k

70-80k

80-90k

90-100k

100-120k

120-150k

150k

0.9 0.91.1

1.5

1.81.9

2.32.5

2.62.7

2.93.0

3.2


36/44


Hong Kong

International outbound leisure travel trips by Hong

Kong residents are estimated at 8.7 million in 2014,



bound trips will grow about seven times faster than



households that is projected to reach 427.8% in 2020

from 334.9% in 2014. Hong Kong households have

the second highest ratio of outbound trips to house-

holds after Singapore, among the 14 Asia/Pacific mar-

kets covered (335% in 2014; Singapore at 566%). The

lack of domestic tourism in these two economies

(owing to their geographical size) is possibly the main

reason for such high ratios.

Some 74% of outbound trips in Hong Kong are ac-




travel is quite evenly spread across income levels. Di-

viding these percentages (74.3% by 60.4%) yields a

ratio of concentration 1.2 which is the 3rd lowest (afterSingapore and Taiwan which are tied at 1.1) among the

14 Asia/Pacific markets, which means outbound travel

by Hong Kong residents is the most evenly spread


Projecting forward to 2020, most outbound travel

growth will come from households earning above




earning above US$80,000 is also growing much faster

than the number of households earning below

US$80,000.




outbound travel rises more rapidly. Despite this, theoverall propensity curve is still more or less linear which

is consistent with our earlier observation that outbound

travel by Hong Kong residents is quite evenly spread


Table 17. Hong Kong

All Purpose Outboundtrips (excludes non-air

travel to China and Macau)2011 2012 2013e 2014e 2020f

2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

7.1

2.5

283.7%

7.8

2.6

305.9%

8.6

2.6

332.5%

8.7

2.6

334.9%

11.6

2.7

427.8%

4.9%

0.7%


37/44

Q1 2014 36

In terms of aspirational destinations, the Tokyo -

Japan combination is the most desired destination at

14.7%. This is followed by the London-UK combina-

tion at 8.0%, and the New York-USA combination at

6.0%. Australia follows with 5.7% and South Korea

comes next at 4.2%. These five combinations account

for close to 42% of total aspirational mindshare. Eightof the top 20 destinations are within Asia/Pacific with

Japan (#1) being the highest ranked one.

120%

100%

80%

60%

40%

20%

0%

20-35k

>140k

Chart 17. Hong Kong: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)

6.0

5.0

4.0

3.0

2.0

1.0

0.0


38/44


Taiwan

International outbound leisure travel trips by Taiwanese




will grow much faster than total household growth

(5.1% versus 0.2%) over the forecast period resulting

in a ratio of outbound trips to households that is pro-

jected to reach 188.2% in 2020 from 141% in 2014.

Close to 82% of outbound trips in Taiwan are ac-



73% of all households and suggests that outbound

travel is quite evenly spread across income levels. Di-

viding these percentages (82% by 73%) yields a con-

centration ratio of 1.1 which is the lowest (tied with

Singapore which is also at 1.1) among the 14 Asia/Pa-

cific markets.

Projecting forward to 2020, growth in outbound

travel will come from households earning above




earning above US$35,000 are also growing much

faster than the number of households earning belowUS$35,000.

Despite this, the overall propensity to travel curve by

household income is still more or less linear which is

consistent with our earlier observation that outbound

travel by Taiwanese residents is quite evenly spread


Table 18. Taiwan


2014-2020CAGR

Outbound trips (mn)

Households (mn)


of total households

8.8

7.4

118.2%

9.4

7.4

125.8%

10.4

7.5

139.3%

10.6

7.5

141.0%

14.2

7.6

188.2%

5.1%

0.2%


39/44

Q1 2014 38

In terms of aspirational destinations, the Tokyo-

Japan combination is the most desired destination at

14.7%. This is followed by the Paris-France combina-

tion at 9.2%, the New York-USA combination at

8.1%, and the London-UK combination at 5.1%.

These four combinations account for close to 37% of

total aspirational mindshare. There are four Japanesedestinations in the top 20 (including the country itself

as a destination) which account for almost 18% of

total mindshare. Nine of the top 20 destinations are

within Asia/Pacific with Japan being the highest ranked

one.

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

>60k

Chart 18. Taiwan: Propensity for International Leisure Traveland Average Number of Trips per Outbound Household by Household Income (US$)


40/44



41/44

Appendix: ResearchMethodology and Data Sources

Forecasting Methodology

The forecast of outbound travel in Asia/Pacific begins

with real GDP growth from 2014 to 2020. The IMF

WEO series of GDP forecasts released in October 2013

(for the 2014 to 2018 period) is adopted. It is then ex-

tended to 2020 extrapolating the growth trends of

2014 to 2018.

The next step is to apply the "propensity to travel"

for each household income brackets obtained from

MasterCard surveys from 2012 to 2013 (see data

source below). This is then in turn applied to the esti-

mated numbers of households in each income bracket

using estimates from Canback-Danglar, thereby gener-

ating estimates of average trips per household by their

annual incomes.

For each household income bracket the total num-

ber of outbound trips = average number of trips of the

bracket X propensity to travel of the bracket X number

of households in the bracket. Initially the distribution

of average number of trips per household across the

annual household income brackets follows the propen-

sity to travel distribution curve and then was iterativelyadjusted until the sum of total outbound trips across

all brackets equalizes with the total number of out-

bound trips at the national level for each year. This

process was done for 2011,2012 and 2013 to obtain

the average number of trips per household bracket for

the three years. The result is a model that can be ap-

plied to estimate the average number of trips per

household bracket for the 2014 to 2020 period.

Data Source

The main source of data for this project is the 2012 and2013 editions of MasterCard Worldwide Survey of Pur-

chasing Priorities. These surveys have been conducted

bi-annually since 1993 on 400 to 800 respondents per

market aged 18 - 64. Coverage extends to 27 coun-

tries across Asia/Pacific, Middle East and Africa. The

survey is extensive and feature sections on consumer

confidence, travel, dining, luxury shopping, financial

behavior and well-being.

To calculate the number of households within the

stated income brackets, data from Canback-Danglar

was used.

Data for outbound travel itself was taken from the

national statistics boards of the relevant markets. In

general we have tried to eliminate same-day excur-

sionist travel for all markets (e.g. China to Hong Kong)

as these numbers can be so large that they are several

times the tourist (i.e. overnight) travel size. Further-

more, a sizable portion of these same-day trips are

overland for reasons of day to day shopping or for day

employment (i.e. cross over for work during the day

and cross back home at night). In cases where same-

day excursionist travel are not available to net out from

overall outbound travel we have used proxies like over-land or non-air travel (e.g. Singapore-Malaysia both

ways and Hong Kong to China) This report is focused

on leisure travel and where possible we have tried to

use only leisure purpose outbound travel numbers (i.e.

extracting business and employment travel where pos-

sible). Note that there are some reports that forecast

India outbound at 50 million by 2020, but these in-

variably use all-purpose trips as their forecast base (in-

cluding trips for employment purposes). This report

focuses on leisure travel only where possible. Official

surveys on outbound travel for India indicate that close

to 60% of all outbound travel is for business or em-

ployment purposes and we have adjusted our out-

bound numbers accordingly.

Q1 2014 40


42/44


1. See Global Destination Cities Index by MasterCard World-

wide.

2. See Appendix for research methodology.

3. In general we have tried to eliminate same-day excursion-

ist travel for all markets (e.g. China to Hong Kong) as thesenumbers can be so large that they are several times thetourist (i.e. overnight) travel size. Furthermore, a sizable por-tion of these same-day trips are overland for reasons of day

to day shopping or for day employment (i.e. cross over forwork during the day and cross back home at night). In caseswhere same-day excursionist travel are not available to net

out from overall outbound travel we have used proxies likeover-land or non-air travel (e.g. Singapore-Malaysia bothways and Hong Kong to China) This report is focused on

leisure travel and where possible we have tried to use onlyleisure purpose outbound travel numbers (i.e. extractingbusiness and employment travel where possible).

4. China reports its outbound travel inclusive of same day

trips and also trips to Hong Kong and Macau which are partof China. As these are Special Administrative Regions theysit astride the line between domestic travel and international

travel for outbound mainland Chinese. As such, we presentboth views here (including and excluding outbound trips toHong Kong and Macau). For both sets of numbers we have

stripped out same day travel and estimated overnight travelonly.

5. Note that there are some reports that forecast India out-bound at 50 million by 2020, but these invariably use all-

purpose trips as their forecast base (including trips foremployment purposes). This report focuses on leisure travelonly where possible. Official surveys on outbound travel for

India indicate that close to 60% of all outbound travel is forbusiness or employment purposes and we have adjusted our

outbound numbers accordingly.


43/44

Q1 2014 42

About the Authors

Desmond Choong

Desmond Choong is a Research Economist with the

MasterCard Center for Inclusive Growth. In this capac-

ity, he sources, reviews and develops research aimed at

advancing the Center's goals. Based in Singapore, he is

an economist and business analyst with extensive ex-

perience in the Asia/Pacific region and a focus on index

modeling, market sizing and macroeconomic analysis.

He has spent thirteen years consulting for multin

Documents

Future of Outbound Travel in Asia Pacific