World’s Destination Cities Spearheading Financial Recovery: New MasterCard Index
Research on 132 Destination Cities Reveals Year-on-Year Growth in International Visitor Arrivals and Expenditure Led by Emerging Markets
PURCHASE, N.Y., Jun 01, 2011 (BUSINESS WIRE) –
The world’s most prominent cities, including those hit hardest by the financial crisis, are leading global recovery through their connectivity and as destination cities for international visitors, according to the MasterCard Worldwide Index of Global Destination Cities released today.
The latest Index from MasterCard is a new approach to understanding the global economy from the perspective of connectivity between global cities, especially in terms of international travel and cross-border expenditures. The emergent picture depicting this network of connectivity between these global destination cities can serve as a new road map for a deeper understanding of the dynamic flow of global commerce.
“The leading cities of the world – the global cities – are the very nodal hubs that knit the global economy together. Without these global cities, there would be no global economy,” observed Dr. Yuwa Hedrick-Wong, global economic advisor, MasterCard Worldwide.
“While cities have been measured by their processing of capital and goods and services in the past, data on the human dimension of globalization – cross-border travel by air and expenditures – has not been as readily available. Global trade and investment are important, but better human connectivity would certainly complement them in driving global commerce forward on a more balanced and productive foundation.”
Based on the Index it is projected that destination cities across five continents will record visitor and expenditure growth of up to 30% in 2011. Of all the cities reviewed in the Index, only three show declining visitor arrivals and two show declining visitor expenditures.
The MasterCard Index of Global Destination Cities ranks cities in terms of the number of their total international visitor arrivals and the cross-border spending by these same visitors in the destination cities, and gives visitor and passenger growth forecasts for 2011. This Index and the accompanying reports are not based on MasterCard volumes or transactional data.
Overall London topped the world’s cities by visitor numbers with 20.1 million inbound passengers expected in 2011, ahead of Paris in second with 18.1 million.
Cities in Asia/Pacific account for eight of the top twenty1 with Bangkok ranked third, projected to have 11.5 million visitors this year, followed by Singapore with 11.4 million and Hong Kong with 10.9 million visitors. Only one city in North America is in the top twenty, New York, which is ranked twelfth with 7.6 million inbound passengers expected.
In terms of growth in visitor arrivals, Barcelona tops the global list, expected to grow by an impressive 24.3% in visitor arrivals this year, with Kuala Lumpur in Malaysia ranked second, following very closely with a growth rate of 21.8%. Istanbul ranked third place with a growth rate of 20.4%.
London also ranked first on cross-border expenditure, ahead of New York in second place, and Paris in third. Estimated expenditures in these cities for 2011 amounted to US$25.6 billion, US$20.3 billion and US$14.6 billion respectively. Bangkok ranks fourth with visitor expenditures estimated at US$14.4 billion, followed by Frankfurt in fifth rank with US$14 billion.
The Mayor of London Boris Johnson said: “London has yet again proved it is the epicentre of global trade and the best world city to do business with. To ensure the capital continues to lead the field during these tough economic times, we must all work closely together to make sure we develop its unique environment to meet the needs of international businesses.”
According to the Index, Istanbul has the highest growth rate in the world in terms of cross border expenditures, estimated at an astonishing 30.1% for 2011, ahead of Barcelona at 28.2%, and Dubai in third rank at 24%. Strong growth in expenditure is recorded in Asia/Pacific cities, with Singapore (23.9%), Hong Kong (23.6%), Tokyo (20.8%) and Taipei (20.3%) all featuring in the top ten destination cities, ahead of Melbourne (19%), Seoul (18.6%) and Bangkok (18.6%).
Dr. Hedrick-Wong said that many emerging market destination cities are showing robust growth with increases in both visitor arrival and cross-border expenditure, with many showing growth rates exceeding 20%.
“Growth of outbound travel and expenditures is clearly a resilient secular trend that will continue to shape the future of globalization,” he said. “In the post-crisis global economy, cities and their urban economies will become even more important in connecting global commerce, facilitating the exchange of ideas and flow of knowledge.
“As the global center of economic gravity shifts inexorably to the dynamic emerging markets in Asia, Latin America, Central and Eastern Europe, and Africa, cities there will correspondingly play ever bigger roles in knitting the world together.”
For more insight and commentary from Dr. Yuwa Hedrick-Wong, please visit The Heart of Commerce blog.
Houston leads US cities on visitor numbers
Houston, Texas ranks top of the US cities with a visitor growth increase of 14.3%, followed by New York with 11.7% and Washington DC with 10%.
Chicago top on cross-border expenditure
The Index records substantial growth in visitor expenditure for 2011 with Chicago ranked first with 18.8%, followed by Toronto with 17.8% and New York closely behind with 17.3%.
Istanbul beats Europe’s established guard
Turkey’s largest city ranks seventh with 9.4 million visitor arrivals, and also ranks highly on visitor growth, ahead of Western European destination cities such as Frankfurt, Rome and Amsterdam.
European capitals low on visitor growth
Seven out of the top ten European capital cities – behind Amsterdam (ranked 3rd) – record visitor growth in the single digits percentages. By comparison, out of the top ten Asia/Pacific cities by visitor growth, none falls below 10%.
Chinese cities top Asia-Pacific on growth
In the Asia/Pacific region, Beijing and Shanghai are in second and third ranks with visitor growth rates for 2011 estimated at 20.2% and 18.6% respectively, reflecting their rising attraction as China’s most important destination cities. Shanghai also ranks second regionally on visitor expenditure with growth rates of 24.3% for 2011. Beijing also ranks third in both number of visitors to Dubai and how much they spend there.
Australia: a big spending destination
Australia’s two most prominent cities attract very high visitor expenditures. Globally, Sydney is ranked sixth with an estimated visitor expenditure of US$13.8 billion, even though the city does not even feature in the top ten by visitor arrivals. The city of Melbourne also ranked 19th with an estimated visitor expenditure of US$7.5 billion.
Middle East & Africa
Cairo2, Tunis rank high on visitor growth
Cairo and Tunis both recorded strong regional visitor growth for 2011 with 21.6% and 19.9% respectively. Cairo also ranks second for the region in growth of expenditure with an increase of 27%.
Riyadh’s rise confirmed by regional rise
Huge visitor expenditure growth is recorded for the city of Riyadh for 2011, which ranks first in the region, with an impressive growth rate of 35.5%. Dubai and Abu Dhabi in the UAE ranked third and fourth respectively, with growth rates estimated at 24% and 21.8%.
Nairobi edges Johannesburg in Sub Sahara
According to the Index, visitor expenditures are expected to grow at 20.8% in Nairobi, exceeding the growth rate of Johannesburg, the only other Sub-Sahara African destination city in the top ten.
Latin American cities record contraction
Of the top ten destination cities in visitor arrivals, the Venezuelan capital Caracas, Quito (Ecuador), and Santo Domingo (Dominican Republic) are expected to see a contraction in growth rates for 2011 because many of their top origin cities are seeing a reduction in outbound traveler numbers.
Lima signals emerging market trend
The Index finds emerging market destination cities recording both high visitor arrival and expenditure growth. Peru’s capital, Lima, growth rates for visitor arrivals and expenditure are 20.3% and 25.7% respectively.
The MasterCard Worldwide Index of Global Destination Cities is compiled using international flight and flight capacity information purchased from OAG Global, a provider of international aviation data. Flight schedules are also used for calculating flight frequency between pairs of cities. Airlines also publish on a regular basis their historical load factor, and advance flight schedules, which are then used to estimate the actual outbound passenger departures, and for forecasting outbound passenger departures in the coming year.
On any given flight there are visitors from the departure country, returning residents of the destination city after visiting the departure country, and a third group: non-residents connecting through the departure country to the destination city on their way to a second destination city. This group can be a low proportion of the passengers for typically non-hub cities, but very high for destination cities that are “hubs” such as Singapore, Amsterdam, and Frankfurt.
On a country level, the UN Database of “Trade in Service” in the “Travel Component” provides estimates of how much each year residents spend abroad (air fare paid in home country not included). An algorithm is applied to this total outbound expenditure and estimated total number of outbound passengers to derive an estimate of average per outbound passenger’s expenditure overseas.
A margin of error is also unavoidable in such estimates, as not all outbound trips are of equal length, and the cost of living varies a great between arrival cities such that even if each trip of equal length, expenditure per passenger between different arrival cities would still be very different.
This margin of error is reduced significantly by imposing a minimum of expenditures in the algorithm, after a number of iterative testing (US$500 per trip for bordering arrival country and US$700 per trip for non-bordering arrival country).
About Dr Yuwa Hedrick-Wong, Ph.D., Global Economic Advisor,
Dr Yuwa Hedrick-Wong is a business strategist and economist with 25 years of experience gained in over thirty countries. He was appointed Global Economic Advisor to MasterCard Worldwide in 2009. Prior to this role, he was Economic Advisor to MasterCard in Asia/Pacific, a position he held since 2001. As economic advisor, he chairs a MasterCard Knowledge Panel of leading economists, policy analysts, academics and business strategists for regular exchange and knowledge sharing. In 2007 he was appointed Advisor at Southern Capital Group, a private equity fund; and in 2008 he was appointed to the Investment Council of ICICI, India’s largest private bank.
Yuwa is also currently Adjunct Professor at the Sauder School of Business, University of British Columbia, Vancouver, B.C. Canada, and is a frequent speaker at numerous international high-profile conferences.
About MasterCard Worldwide
As a leading global payments company, MasterCard Worldwide prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2010, $2.7 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 23 billion transactions each year and has the capacity to handle 160 million transactions per hour, with an average network response time of 130 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard(R), Maestro(R), and Cirrus(R); its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass(TM) and MasterCard inControl(R). MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com. Follow us on Twitter: @mastercardnews.
1 All figures for Tokyo estimated in this Index will be subject to change as the impacts of earthquake and tsunami evolve going forward.
2 Estimates for Cairo and Tunis will need to be re-assessed due to the events unfolding there.
SOURCE: MasterCard Worldwide
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