Analyse of the sector 29/11/2010
Tourism demand weakened by global economic recession

The global economic slowdown caused a dramatic drop in demand for and prices of Mongolian natural resources. The economy and tourism suffered considerably as a consequence. Domestic tourism was impacted heavily. The number of inbound arrivals fell as weak purchasing power affected both the ability to travel and the travel choices of international consumers.

 

China grows in importance

 

China has continued to grow in importance as the leading source of inbound arrivals over the review period. China’s growing economic power and geographic proximity have fuelled greater interest in Mongolia. This has helped drive growth in the number of trips to Mongolia. Chinese businesses and government have increased their demand for development and investment in the country’s natural resources, infrastructure and tourism, including highways and hotels.

 

Government involvement in tourism remains below industry’s expectations

 

As a developing economy and a small population the growing interest in Mongolia has lead to an almost exclusive focus on the country’s natural resources, often at the expense of industries with great economic potential. Many industry players feel that the government has not sufficiently promoted Mongolia abroad. At the same time, improvements in the tourism-related infrastructure have been slow. This has created a difficult environment for industry players, with smaller operators especially feeling the brunt of the economic downturn.

 

Slow recovery anticipated

 

A slow recovery in Mongolia’s tourism economy is expected. Whilst government support is expected to remain below that seen in neighbouring markets, awareness of Mongolia as an appealing holiday destination, particularly for adventure travellers, is set to help stimulate growth in international arrivals. Outbound tourist trips are forecast to recover even later since approvals are needed for outbound travels. In the long term, greater infrastructure development by the government will lead to a gradual improvement and expansion of the nation’s road and highway network, which will boost domestic travel and support international arrivals.