Travel Retail and Duty Free Business Intelligence    Friday 21 November 2014

NEWS

MasterCard Index of Global Destination Cities launched; key details on cross-border spend

Published: 02/06/11

Source: ©The Moodie Report

By Martin Moodie

INTERNATIONAL. In order to develop better insights on the important human dimension of globalization, MasterCard Worldwide has created the Index of Global Destination Cities.

This annual research programme describes and analyzes the global network of 132 destination cities and how they are connected through cross-border air travel and associated expenditures. Here we present a brief summary of the report – to access the complete document click on the icon to the right.

Destination cities are ranked globally in terms of the number of their total international visitor arrivals and cross-border spending by these same visitors in the destination cities.

Once the ‘gross’ total number of passengers arriving in a destination city is established, this total is then adjusted by netting out (i) returning residents of the destination city after an overseas trip and (ii) transit passengers who had arrived in the destination city only to transfer to another flight for a second destination city (more significant for ‘hub’ cities with airport capacity far exceeding the need of their local populations) and who are now returning via the same route.

A more accurate estimate of visitor arrivals is then established after these steps.

This adjusted number of visitor arrivals is then used to estimate cross-border expenditures by these visitors in the destination city.

The global top 20 destination cities by visitor arrivals are presented in Chart 1 (below).

European cities dominate with 10 out of the 20, and with London and Paris in first and second position, respectively. Cities in Asia Pacific come second, accounting for eight of the top 20. Bangkok occupies the third position, testifying to its attraction as a popular tourist destination. Dubai, in the Middle East, is ranked ninth. Only one city in North America is in the top 20, New York, which is ranked twelfth.

However, when these top 20 destination cities are ranked in terms of their growth rates of visitor arrivals expected in 2011, a very different picture emerges, as seen in Table 2. Barcelona is ranked first, and is expected to grow by an impressive +24.3% in visitor arrivals this year.

Kuala Lumpur in Malaysia is ranked second, following very closely with a growth rate of +21.8%. Istanbul is in third place with a rate of +20.4%. Shanghai and Hong Kong follow in fourth and fifth ranks, with growth rates of +18.6% and +17.4%, respectively. New York, the only North American destination city in the top ten, is expected to grow by +11.7%.

Barcelona, in the top rank, is one of two European cities among the top 10 in terms of growth rates, a complete reversal of the pattern seen in the top 20 ranking shown in Chart 1, which is dominated by destination cities in Europe (10 out of the top 20).

Instead, from the perspective of growth, six of the top 10 are in Asia, one in the Middle East and one in North America. This kind of growth pattern strongly suggests that destination cities in emerging markets in Asia will continue to grow in importance.

Global Top 20 Destination Cities by Visitor Expenditures

Chart 2 shows the top 20 ranks of destination cities by visitor expenditures. London is again the top ranked, followed by New York in second and Paris in third. Estimated visitors’ cross-border expenditures in 2011 in these top-ranking destination cities are very significant, amounting to US$25.6 billion, US$20.3 billion, and US$14.6 billion, respectively, for London, New York, and Paris. Bangkok ranks fourth with visitor expenditures estimated at US$14.4 billion, followed by Frankfurt in fifth ranking with US$14 billion.

Sydney in Australia is in sixth position, putting it in the top 10 of the world by visitor expenditures even though it is not even in the top 20 by visitor arrivals. In other words, the number of international visitors in Sydney is not among the highest, but the amount that these visitors spend in Sydney is the sixth-largest in the world. A second Australian city, Melbourne, is ranked nineteenth, with an estimated visitor expenditure of US$7.5 billion. So while the two most important destination cities in Australia may not be among the world’s top 20 in terms of visitor arrivals, they are able to attract very high visitor expenditures once visitors arrive.

While New York is the only North American destination city in the top 20 by visitor arrivals, two other American destination cities join New York in the top 20 by visitor expenditures, Los Angeles and Miami.

Overall, the world’s top 20 list consists of eight destinations in Europe, six in Asia, three in North America, two in Australia, and one in the Middle East.

From the perspective of growth in visitor expenditures in these top 20 cities, the picture again looks very different.Table 3 shows that Istanbul, which ranks twelfth by visitor expenditures in 2011, is expected to have the highest growth rate, estimated at +30.1%.

Barcelona follows in second rank at +28.2%, and Dubai in third at +24%. The two key destination cities in Asia,
Singapore and Hong Kong, are expected to grow by +23.9% and +23.6%, respectively. Melbourne, which
ranks lower than Sydney in terms of visitor expenditures, is ranked eighth in the world while Sydney fails to make it to the top 10.

European destination cities, which dominate in visitor expenditures, are conspicuous by their absence from the point of view of growth rates. Only two European destination cities, Istanbul and Barcelona, are in the top 10.


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