During DMAI’s CMO Summit last week in Washington, DC, I had to privilege to listen to leading DMOs throughout the US discuss their international marketing efforts. While there was a consensus amongst the group that these emerging markets were important for future growth, the majority of DMOs also admitted that a limited amount of their marketing budget was being used to target consumers in these markets. And for those that were targeting internationally, the primary method for marketing abroad was utilizing trade relationships or coop programs with Brand USA.
Last week the results of a report conducted by Oxford Economics were issued showing the impact of Brand USA for fiscal year 2013. The numbers were impressive:
- 1.1 million incremental visitors to the U.S.;
- $3.4 billion in additional travel spending;
- $7.4 billion in total economic impact;
- $512 million in federal taxes;
- $460 million in state and local taxes; and
- More than 53,000 American jobs supported.
But the real value and potential of Brand USA may not yet be realized. You see, one of the reasons for the successful passage of the Travel Promotion Act was the realization that the United States’ share of global travel had declined from 2000 to 2010 and that the country’s economy was losing billions of dollars in visitor spending as a result. But this is not a problem endemic to the United States. Developed economies around the world are losing their share of the global market.
An ever increasing number of destinations have opened up and invested in tourism, turning tourism into a key driver of socio-economic progress through export revenues, the creation of jobs and enterprises, and infrastructure development. According to the UNWTO Tourism Towards 2030, international tourist arrivals in the emerging economy destinations of Asia, Latin America, Central and Eastern Europe, Eastern Mediterranean Europe, the Middle East and Africa will grow at 4.4% a year, which is double the pace of that in advanced economy destinations. As a result, arrivals in emerging economies are expected to exceed those in advanced economies by 2015.
Source markets for international tourism have traditionally been largely concentrated in the advanced economies of Europe, the Americas and Asia and the Pacific. However, with rising levels of disposable income, many emerging economies have shown fast growth over recent years, especially in a number of markets in Asia, Central and Eastern Europe, the Middle East, Africa and Latin America. In 1980, only 30% of international arrivals came from emerging economies. By 2030, that percentage will almost double to 57%.
Among the ten most important source markets in the world, Russia and China clearly stand out. Boosted by rising disposable incomes, a relaxation of restrictions on foreign travel and an appreciating currency, Chinese tourism spending has increased almost eightfold in 12 years reaching a record US$ 102 billion, up from US$ 13 billion in 2000. The Russian Federation (US$ 43 billion) is another emerging economy showing an impressive growth in recent years, becoming the 5th most valued outbound market on the back of a 37% growth in 2012.
But as the world shrinks due to globalization, and emerging destinations develop into key target markets for international tourism, it will be imperative for the U.S. to build awareness amongst this group and distinguish themselves as a sought after destination. This is the true potential of Brand USA. Local city and state DMOs may not be able to set aside funds to build the foundation in markets seen as “too developing” at the moment, and instead focus their efforts on promoting to established markets ready to book. Brand USA, however, is developing campaigns specifically designed to establish the U.S. as a dream destination in the minds of these vital future consumers.
Destinations around the world are already putting such campaigns into place. Tourism Australia and Tourism New Zealand both recently launched campaigns targeting the Indian market. Nishant Kashikar, Country Manager – India & Gulf, Tourism Australia, said of these efforts, “The campaign is designed to sustain interest in Australia and provide a further impetus to the growing visitor arrivals from India.” Nishant and Tourism Australia recognize the value in a sustained approach to growing their brand presence is these markets.
In the months ahead - and with an eye towards reauthorizing this successful program – it is crucial for decision makers to not only understand the value the Brand USA has already demonstrated to the tourism market and economy, but realize the wasted potential that would be lost without the organization’s efforts in the future.