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Domestic Tourism and its Global Economic Impact

Domestic Tourism and its global economic impact

Domestic tourism can be described as tourism involving residents of one country traveling within their own country. It does not involve the crossing of international borders at entry points.

While countries often tend to focus on international tourism due to the revenue earned through exports, domestic tourism remains the leading form of tourism, representing an important tool for regional economic growth and development. With over 50% of the global population now categorized as “middle class” or “rich”, more and more people can afford to travel. 

An increasing number of households in emerging economies, which are approaching or have already reached these thresholds, including in China and India, are likely to contribute to sustained growth in domestic travel spending. 

Using the World Travel & Tourism Council’s (WTTC) annual economic impact data, this position paper assesses the importance of domestic travel to 185 countries, considers the trends driving this phenomenon, and provides policy recommendations for the continued growth of domestic travel in the global economy

Absolute size of Travel & Tourism’s domestic spending In 2017, domestic tourism represented 73% of the total global tourism spend (US$3,971 billion). While there are significant variations between countries, domestic contributions to Travel & Tourism reached 94% in Brazil and 87% in India, Germany, China, and Argentina; with China accounting for 62% of global absolute growth in domestic spending over the past ten years. 

Domestic travel is the main driving force of Travel & Tourism in major economies, Strong domestic tourism in most of these countries is driven by a growing or sizeable middle-class population, an increase in spending power among domestic consumers, the sheer size of the countries, governments’ initiatives in promoting new locations, and strong or improving transportation infrastructure and economic links between different internal regions

The rapid growth in middle-class income households in emerging markets has been an important driver of domestic Travel & Tourism, notably in the Asia-Pacific region. While there is a positive correlation between the growth of GDP per capita and domestic spending; the wide range in performance from country to country reflects the varying stages of maturity of the tourism sector, differing income levels, infrastructure development, and the geopolitical and economic landscape in each of the countries. 

The fastest-growing countries in terms of GDP per capita and domestic spending are in Asia-Pacific. Unsurprisingly, China took the first position, with a 9.2% average annual growth in GDP per capita and a remarkable 16.8% growth in domestic spending over the past decade. The Philippines and Malaysia also witnessed strong annual growth in both GDP per capita and domestic spending. 

Several African countries have also experienced a strong increase in both GDP per capita and domestic spending during 2008-17, notably Rwanda, Mozambique, Tanzania, and the Ivory Coast. Rwanda’s average 14% annual growth in domestic spending over each of the last ten years has been enabled by the prioritization of sustainable tourism, with real and tangible impacts both in terms of community development and conservation. 

While in many developing countries domestic tourism tends to be small in absolute terms, the rate of growth of Travel & Tourism domestic spending is high. To support and sustain the strong growth in the sector’s demand, capital investment in Travel & Tourism infrastructure is essential. Examining the relationship between capital investment growth and domestic spending growth, a few African countries appear as standout performers. For instance, Mozambique’s 15.8% average annual growth in capital investment 

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