Tourism is becoming an increasingly important aspect of the Mongolian economy as the demand for tourism products in Mongolia is increasing every year. Country's natural resources are one of the key drivers of growth for its tourism market. According to a recent report by the World Travel and Tourist Council's (WTTC), Mongolia's travel and tourism sector directly contributed around US$256.3 million to the country's gross domestic product in 2011, accounting for almost 4% of the total. Furthermore, it is forecast to rise by 7.3% by the end of 2012. The total contribution of the industry - direct, indirect and induced - is even larger and accounts for US$592.4 million, or 9 % of Mongolia's GDP, and is forecasted to rise by 6.4 % in 2012. The sector attracted capital investment of nearly US$ 403.759 million in 2011. This is expected to rise 15% by the end of 2012, and rise by 6.7% annually over the next 10 years to US$885.488 million in 2022.
According to the data of Mongolia's National Tourism Centre (MNTC), nearly 457,514 tourists visited Mongolia in 2011, among which China accounted for 198,191 (43.4%), followed by Russia with 102,733 (22.5%). The other three rounding out the top five were South Korea with 9.6% and the United States and Japan with 3.3% each. By the end of 2012, Mongolia is expected to attract 467,000 international tourist arrivals. Last year, an estimated 157,817 tourists came to Mongolia from different states of the European Union. A similar number of tourists came from Australia (7,093), the UK (7,120), while a slightly bigger number of travelers came to Mongolia from Kazakhstan (7,914) in 2011.
The internal tourist market is also growing. The WTTC estimates 46.3% of direct industry GDP is generated by domestic spending, totaling US$163.75 million in 2011. This is likely to rise to US$366.05 million by 2021. WTTC calculates that business travel spending accounted for 34.1% of direct sector GDP in 2011, or US$169.26 million.
The Government of Mongolia has recognized tourism as a priority sector with a great potential to contribute to socio-economic development of the country. Thus, the government is trying to channel investment into the country's tourism industry and take specific steps to encourage greater private sector participation. Currently, there are nearly 700 tour operator companies, 350 hotels, 375 tourist camps and 65 star rated hotels. The investments are needed to create a productive tourism sector. The government is using mining revenues to partially finance the country's forthcoming Khushigin Khundi International Airport, which is expected to be a key component in driving tourism growth and improving domestic links.
By 2015, Mongolia hopes to welcome 1 million visitors per year. Already, the number of people coming to Mongolia is on the rise, with visitor numbers up 11% in the past three years and revenues showing an increase of 32.5% for the same period. However, in order to realize the set target of attracting 1 million foreign visitors per year by 2015, experts believe that, the Mongolian government will need to adopt more measures and channel more investment to boost the country's tourism sector. Hence, the country's tourism industry is expected to flourish further as the robustness of Mongolia's economy and the opportunities that arise will further make tourism an attractive investment option.
(Source: Insight Alpha)