Chile - Travel & Tourism: Increasing air connectivity and government promotional efforts to drive growth (Strategy, Performance and Risk Analysis)
There are several adventure destinations in Chile that attract tourists from across the world. Moreover, the depreciating Chilean Peso drives international tourism in the country; in 2016, international arrivals increased on a 23.2% y-o-y basis, from 4.5 million in 2015 to 5.5 million in 2016. The increase is mainly due to efforts in international marketing by the Chilean Government. The rising number of airlines worldwide with routes to Chile also supports growth. International arrivals in the country increased at a CAGR of 11.6% over the review period (2012-2016), whilst domestic trips increased at a CAGR of 6.2% over the same period. Leisure was the primary purpose for domestic tourism.
In the passenger airlines segment, the number of seats available and sold increased at a CAGR of 5.4% and 5.5% respectively over 2012-16, owing to the increase in air travel demand.
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Increasing domestic trips to drive tourist volumes
Total tourist volumes in Chile increased at CAGR of 6.9%, from 26.9 million in 2012 to 35.1 million in 2016. This volume is further forecast to increase at a CAGR of 7.0%, from 37.7 million in 2017 to 49.4 million 2021, owing to rising tourist volumes from international arrivals, mainly for leisure activities. Chile’s depreciating local currency against the US Dollar encourages domestic trips over outbound ones, along with enticing people from other nationalities to visit Chile. This led to a rise in domestic tourist volumes, which increased at a CAGR of 6.2% over 2012-16, from 20.5 million in 2012 to 26.0 million in 2016, and are further forecast to increase at CAGR of 7.0%, from 28.0 million in 2017 to 36.7 million in 2021. Moreover, in 2016, land was the primary mode of travel in Chile, accounting for 91.4% of the total domestic trips.
Increasing internet usage to drive online channels revenue
Total revenue for travel intermediaries increased at a CAGR of 5.9%, from US$7.2 billion in 2012 to US$9.0 billion in 2016, and is forecast to further increase at a CAGR of 13.8% to reach US$16.8 billion by 2021. In 2016, revenue from leisure accounted for approximately 75.5% of the total travel intermediaries’ revenue, showcasing a rise in spending by travelers on leisure activities. This trend is expected to continue over the forecast period.
Increasing investments from international brands to drive growth in the hotel segment
Though total hotel revenue declined at a CAGR of -3.7%, from US$869.1 million in 2012 to US$746.9 million in 2016, it is forecast to increase at a CAGR of 4.0% to reach US$904.1 million by 2021. Rising domestic and international tourism will support growth in hotel revenue over the forecast period. Upscale hotel’s revenue contributed the most towards total hotel revenue over 2012-16, and is likely to continue this trend over 2017-21. Rising investments from international brands in Chile will support the hotel segment’s growth.
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