The global travel market will grow faster than the worldwide economy over the next four years, new research suggests.
The market set to expand at a 6% compound annual growth rate (CAGR) between 2024 and 2028.
Furthermore, global travel spend is expected to surpass 2019 levels for the first time since the pandemic to reach over $2 trillion this year.
This will be driven by strong travel demand in the US and Europe, as well as the growth of the middle classes particularly in India, Indonesia, the Philippines and Vietnam; globalisation and freedom of movement, and workplace flexibility.
The global travel market forecast report by London-based Forrester Research expects international travel to recover to pre-pandemic levels by 2025.
The report says: “Domestic tourism has taken off in the past four years, however the recovery of outbound travel has been impacted by political instability from the war in Ukraine and the Israel-Palestine conflict.
“International travel will exceed pre-pandemic levels two full years behind the recovery in domestic tourism.”
But Forrester notes: “Consumers are making more mindful decisions when it comes to their environmental footprint, and travel brands need to take note.
“This trend toward sustainability has far-reaching implications for the travel industry.
“Travel brands can work to encourage sustainable travel options such as promoting ‘under-touristed’ destinations, encouraging the use of public transport, and promoting eco-accredited hotels and resorts.”
The study highlights online travel agents (OTAs) as gaining market share.
It cites the leading seven OTAs as accounted for nearly 46% of global online travel spending last year, up from 40% in 2022.
OTAs have an ability to leverage their highly variable cost structures to respond to and rebound quickly from market fluctuations, according to the report.
“With 71% of its travel spending happening online, the UK leads in online travel channel share, followed by China and Australia,” it adds.
Meanwhile, consumers are exhibiting a sustained interest in travel by reprioritising travel budgets.
“We see that the share of household spending on leisure travel is trending upward,” the Forrester study adds.
“Across key markets, spending on travel accounts for up to 6.5% of total household consumption in the UK and 6.2% in the US and Germany.
“Furthermore, in Forrester’s financial services benchmark recontact survey, 2023 on finances, when asked what online purchase adults are saving for, roughly one-third of respondents in each market said that they were saving up for vacations and travel (except for metro India at 28%).
“What’s more, respondents in the UK, EU, and Australia placed travel above all other savings categories.”
However, travel recovery has been uneven across regions. The US continues to be the largest travel market, with $566 billion in total travel spending and the market forecast to grow at a CAGR of 3.8% to reach $650 billion in 2028.
The UK, China, and South Korea are among the markets with high online travel market and online retail penetration thanks to their supportive e-commerce and digital payment infrastructures.
China is seen as playing a “pivotal role” in global travel recovery.
“Strong double-digit growth in 2024 and 2025 will propel China’s outbound travel market to 99% of its pre-pandemic levels before making a full recovery by 2026,” according to the report.
Forrester forecast analyst Cindy Liu said: “UK is Europe’s second largest travel market at $77 billion in 2024.
“Though spending fell over 39% in 2020 when the pandemic hit, recovery has been swift underscoring the importance of travel in the daily lives of UK residents.
“Travel spending growth appears to be levelling out, providing some much welcome stability to the tourism industry.
“We see strong enthusiasm for international travel and in 2024 we will see a full recovery in outbound travel spending by UK residents.”