What:  Global travel is taking off again, however the destination mix is changing

Why it is important:  Some retailers might not be able to find back the pre-pandemic demand fueled by tourism.

The report indicates a solid demand for international travel for the peak season of June through August. International arrivals are expected to surpass 325 million for the first time since 2019, with growth in the mid-teens relative to the same period in 2022. Regions such as Asia Pacific, which were closed last year due to health regulations, have reopened. However, the report highlights that travelers may choose destinations with less restrictive entry requirements due to a growing backlog of unprocessed visa applications.

Through 2023, global travel has consistently risen, setting the stage for further gains during the summer season. Outbound travel from 63 out of the 113 countries monitored by the Visa International Travel Platform exceeded 2019 levels from January through April 2023. Compared to the previous year, this is a significant improvement where only 10 countries had reached this level of recovery. An additional 95 countries have achieved at least a 75% recovery rate, implying that most countries are nearing or have surpassed their 2019 levels.

However, the growth in global travel is being hindered by delays in issuing cross-border travel documents. Countries like Canada and the United States have been particularly affected by these delays, with applicants facing extended wait times. To overcome this challenge, some countries, such as Australia, have hired temporary staff to help clear backlogs.

The document-processing delays, while burdensome at the individual level, seem less impactful at a macro level. However, the visa backlog could have more long-term implications on foreign travel to the United States, especially with the growth of younger populations in countries where visas are required. These populations represent the next generation of outbound travel from key source markets. Due to visa complications, the emerging middle classes in countries like Brazil, India, and China might consider visiting other destinations that are more welcoming.

Travelers unable to obtain required entry credentials are turning to other destinations more open to their visits. The report indicates that Latin American and Caribbean travelers, who are currently subject to some of the longest visa processing delays, visited destinations that did not require visas in greater numbers in 2022. The example given is Cancun, which gained 100,000 more visitors from countries such as Colombia, Peru, Uruguay, Panama, Jamaica, and Costa Rica between 2019 and 2022. This was due to Mexico not requiring a visa for these countries, unlike the U.S., leading to Las Vegas losing a similar number of visitors.

May 23 Global Travel Insight