The travel and tourism market is changing. A recent article in the Economist, highlights the fact that we are in the travel industry’s third revolution. The first revolution came in the 1960s when cheap air travel and package tours made remote parts of the world more accessible. The second came when the internet gave consumers control over the planning of their travel.

The rise of the emerging economies has signaled the third revolution in the travel industry, marked by the increase in travel from people living in the Middle East, the BRICs (Brazil, Russia, India and China), among other places. Not only are people from these countries traveling at increasing rates but they are creating demand for new destinations, most notably in the Middle East and Asia-Pacific.

The Economist article comes in the wake of the recent study published in the April Harvard Business review that was extremely bullish on the future of the lodging sector. This study was also discussed in Hotels magazine, which ran an article in early April. The study drew numbers from the United Nations World Tourism Organisation’s (UNWTO) Tourism 2020 Vision, which forecast that the number of travelers worldwide will double between now and 2020. Authors predict that scarcity of place will lead to skyrocketing hotel rates as rising numbers of tourists compete for a finite room supply in the most desirable destinations.

Statistics in the Economist article highlight not only the scope of this shift in demand, but also the awesome size and strength of travel and tourism being generated from these emerging countries. Some highlights include:

• The World Travel & Tourism Council (WTTC) predicts employment from the global travel and tourism to rise 24% from 238m to 296m over the next decade.
• According to the UNWTO, international tourist arrivals grew by 6% last year to 900m. The total has gone up 100m in the last two years alone. The Middle East welcomed 13% more tourists last year (to 46m), Asia-Pacific was up 10% (to 185m) with much of that increase coming from within the region. Africa saw an increase of 8% (to 44m). Asia-Pacific is predicted to grow at the fastest rate in 2008.
• According to a McKinsey study, by the middle of the next decade almost a billion people will see their annual household incomes rise beyond $5,000, which is roughly the threshold at which people begin spending money on discretionary goods and services. Consumers’ spending power in emerging economies will rise from $4 trillion in 2006 to more than $9 trillion in that time period (roughly the purchasing power of Western Europe today).
• Last year the number of visits abroad by the Chinese reached 47m, 5m more than the number of foreign visitors to China. The Chinese also made 1.6 billion trips at home. According to WTTC forecasts, Chinese demand for travel and tourism will quadruple in value in the next ten years. By 2018, it is expected that Chinese demand for tourism will roughly match that of Americans.
• To speed the development of tourism and other industries, the Chinese government is racing to build roads, railways and airports. It will add 97 airports by 2020 to the 142 already in place. Investment in infrastructure will grow by double digits every year for the rest of the decade. Between 2006 and 2010, $200 billion is expected to have been invested in railways alone, four times more than the previous five years.

Growth from these emerging markets is being offset by decreased travel from the long-standing customers in rich Western countries, particularly Americans. This decrease is the result of concerns over economic conditions, rising fuel and inflationary pressure, among other worries.

Orbitz reported a decline of 6% in bookings from Americans in 1Q08. Some European operators are offering deals to Americans at stable exchange rates in an effort to lure them in. Nevertheless, WordHotels, a hotel marketing company, saw a 15% drop in business from Americans at its European hotels during the first quarter of this year.

In response to this projected increase in global tourism, hotel investors and companies are gearing up operations in the Middle East and Asia-Pacific. The number of projects being considered is staggering. Bill Marriott has been quoted as saying “[the] Middle East, India and China are the next big thing,” with the Middle East being larger than India and China eclipsing both. Marriott alone is looking to build 65 hotels in the Middle East by 2011.

But with travel and tourism expected to ramp up as predicted, hotel investors and owners should not be asking whether they should be making inroads into these parts of the world, rather they should be asking how best to do so. It might be wise for the hotel industry to build inventory to cater to all budgets.

I for one will be joining the ranks of those heading overseas to participate!