Travel and tourism are expected to bring $4.6 trillion a year to the Asia Pacific region by 2010 despite the threat of a U.S. recession, according to a study released Wednesday.
Continued strong tourism growth within the region will help it weather the current stock market instability and a slowdown in the U.S. economy, the Pacific Asia Travel Association, or PATA, said in a report.
"There is a lot of volatility in stock markets ... that's affecting some business confidence," John Koldowski, director of PATA's Strategic Intelligence Center, told reporters in Singapore.
But "the region is well poised, and that's why a lot of investors now are seriously looking at additional destinations within Asia Pacific to invest," Koldowski added.
The association believes the region's tourism growth will be resilient partly because two-thirds of all international arrivals into Asia Pacific are generated from within itself.
Visitor arrivals in the region are expected to grow 7.51 percent annually on average between 2006 and 2010, higher than a previous forecast of a 6 percent average growth rate in the 2007-2009 period, the report by the Bangkok-based association showed.
Asia will lead the way, claiming more than 75 percent of all international arrivals for the Asia Pacific grouping by the end of the decade, up from 64 percent currently, it said.
PATA's study, which covers 40 destinations that include the U.S., Canada, Chile, Mexico and the Pacific islands, says total arrival numbers to the Asia Pacific are projected to exceed 460 million by 2010, up from 347 million in 2006.
The study places mainland China as the region's top destination by 2010, with 35.3 percent of the market share and 160 million international arrivals, followed by the U.S. at 56 million arrivals, Macau at 38 million and Hong Kong at 35 million.
Mexico, Canada, Thailand and Singapore are also included in the top ten Asia Pacific tourist destinations.
Koldowski said hotel and resort development across the region also contributes to future tourism growth. He cited examples of hotel construction in China and India as well as casino resort projects in Singapore and Chinese-ruled Macau. The latter, a former Portuguese colony, overtook the Las Vegas Strip as the world's top gambling center in 2006.
In addition, the growth is helped by expanding air liberalization and growing airline fleets, as well as by major international events such as the Beijing Olympics to be held in August and Shanghai's 2010 World Expo.
"The Chinese destinations are booming and while much of this is domestic in nature, there is also huge demand from international visitors, particularly with interest building for the 2008 Olympic Games," said Prof. Lindsay Turner of Victoria University in Australia, one of the report's authors.
The travel boom, however, faces risks that include political conflicts in some markets such as Sri Lanka, where tourism growth is expected to shrink 3.6 percent a year on average. The island nation is the only country in the study projected to have negative growth.
Also posing threats to growth are high oil prices — which hurt airlines' profitability — and the unfolding U.S. credit crisis and uncertainty over how it may impact other economies, PATA said.
Another concern is the depreciation of the U.S. dollar, which makes travel more expensive for anyone traveling on that currency, PATA said.
"You've got a weak U.S. dollar at the moment. How long is that going to stay down? Koldowski said. "There's still possibly more pain there."