December 2012 issue

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The global market 2011

In a change from last year’s findings, the value of the global ELT sector grew in 2011 to over US$11.5 billion. Individually some markets fared better than others, as all tackled the challenging global economic climate head on. Bethan Norris looks at the statistics for 2011 and finds out which countries were winners and which were losers.

Our statistical analysis of market conditions in the eight key English language teaching destinations worldwide paints a more positive picture than last year’s report, when six countries reported a contraction in their national ELT sector in 2010 and only two pointed to marginal growth. In this year’s analysis of 2011, the results show a small increase in overall student numbers, as well as an increase in revenue for the sector. However, it should be noted that a substantial part the total revenue increase can be attributed to the fluctuation in the US dollar in the last 12 months, with the comparison of local currency revenue in each country painting a more intuitive picture of market changes.

Overall, the value of the global English language teaching sector increased from US$10.3 billion in 2010 to US$11.6 billion in 2011, an increase of 13 per cent. Student numbers increased from 1.4 million in 2010 to 1.5 million in 2011, while student weeks decreased from 11.7 million in 2010 to 11.4 million in 2011. Our survey points to unsettled fortunes within the ELT market itself, and closer analysis of the individual destinations themselves points to the true story.

Success story in Ireland
One ELT destination that is proving to be the success story of the last few years is Ireland, which has posted consistent growth figures in student weeks and student numbers in 2010 and 2011 – years when other major players in this industry have been struggling to hang on to market share. In 2011, Ireland increased its share of the global ELT market in terms of student weeks from three per cent in 2010 to 3.6 per cent, while revenue in local currency increased by four per cent year-on-year. Total student numbers increased by seven per cent – from 96,250 in 2010 to 101,107 in 2011, while student weeks increased by nearly 11 per cent to 404,428.

This year our statistics come from the language school association MEI, which has started a new annual survey of members to produce reliable data in this sector. David O’Grady, CEO, said the new statistics project, implemented through an outside data collection company, would enable the association to have a more accurate picture of the industry in Ireland in the future. In terms of the increase in business for language schools in Ireland in 2011, O’Grady puts this down to sustained growth in new student markets as schools diversify their marketing efforts. “Increases in the number of students to MEI schools from Russia, UAE, Saudi Arabia, Brazil, Turkey and Mexico have more than compensated for the decrease in numbers from traditional EU markets in the last 12 months,” he says.

While O’Grady predicts that 2012 will yield equally positive results for language schools in Ireland, he warns of caution for the medium term. “There is an underlying apprehension that 2013 will be very difficult. This [is] because of the recession in our traditional markets and because of a global uncertainty in most developed countries,” he says.

North American gains
While the picture is far less straightforward for both the USA and Canada, both countries’ ELT industries posted an increase in local currency revenue between 2010 and 2011 of 14 and 10 per cent respectively. Overall, student numbers were down slightly for both countries (from 211,538 to 211,150 in the USA and 190,147 to 186,125 in Canada), although revenue increased from US$2.5 billion to US$2.9 billion in the USA and from CAN$1.9 billion to CAN$2.1 billion in Canada, due to a slightly longer average length of stay in Canada and an increase in the average spend per week in both countries between 2010 and 2011. Although the picture for Canada and the USA is by no means entirely rosy, both countries have exhibited strong resilience in the face of challenging economic and business conditions worldwide.

Kathryn Kohut, Executive Director of AAIEP, says that new student markets are proving to be good sources of international students in the USA. “[There has been] a general increase in the number of government-sponsored students – e.g. Saudi Arabia and Kuwait.” She adds, “Some institutions noted a decline in European students due to economic issues in those countries.” The outlook for the industry in 2012 also looks positive, according to Kohut, who notes that 200 unaccredited English programmes are now seeking accreditation after a new law required all programmes to be accredited in order to issue I-20s for English language study was passed.

Gonzalo Peralta from Languages Canada also points to the King Abdullah Scholarship programme as boosting Saudi student numbers in Canada, as well as increasing the average length of stay per student. He adds, “Mexican student numbers, since Canada imposed visa requirements in 2009, have continued to decline, although not as dramatically as in past years.”

Malta holding on
Another beacon of light in the storm is Malta, which appears to be holding firm in a difficult operating climate. Despite posting another year of declining student numbers, Malta’s revenue actually increased by four per cent between 2010 and 2011. This is largely due to an increase in the average student spend per week, from 1529 to 1550, as well as a marginal increase in average length of stay, which gives Malta a total revenue in local currency of 1100.3 million (US$144.6 million).

Alex Fenech, President of Feltom, put the decline in numbers down to a number of factors, including a reduction in the number of scholarship students from Spain, events in Libya in 2011 and loss of an important contract with the Italian government. “The weak sterling made it cheaper for students to go to the UK,” he adds. “The global economic recession is [also] heavily affecting some of the important source markets, including Spain and Italy.” However, 2011 was not all doom and gloom for Malta, with a number of new student markets gaining ground. “Schools have reviewed their marketing strategies to replace lost business due to the above mentioned incidents, with new business from established markets such as Russia and emerging markets such as Turkey, Japan, Brazil and others,” says Fenech.

“Schools also reviewed certain pricing decisions taken in the past to ensure they achieved higher annual revenue and higher revenue per student week.”

s also reviewed certain pricing taken in the Australia and New Zealand downturn

So far, the global ELT industry has looked pretty resilient as new student markets make up for shortfalls experienced in other regions, but some countries are finding conditions even more challenging with little in the way of good news for the sector. New Zealand, unfortunately, is one of those destinations where English language schools are particularly feeling the strain. The Christchurch earthquakes in 2010 and 2011 has certainly had a negative effect on business for this period, and student weeks in New Zealand suffered the largest decline of any other destination at 20 per cent.

Student numbers were also down by five per cent and local currency revenue declined by a significant 23 per cent. The statistics for this country also changed this year as continuing students were included in the figures for the first time, rather than solely commencing students. If these continuing students hadn’t been included in the total figure, New Zealand’s decline in student numbers would have been even greater in 2011.

Darren Conway from English New Zealand said that despite the downturn, some positive steps were being made by the New Zealand government to help the industry in the future. “The New Zealand Crown Agency was established in September 2011 to implement the government’s ambitious plans for increasing the value of export education from NZ$2.7 billion to NZ$5 billion by 2025,” he says. “Immigration New Zealand is preparing to roll out IGMS – their Immigration Global Management System – which will provide faster, more efficient, individualised application processes for student visas.”

Australia too continued on a downward trend in 2011, with student numbers down by 4.1 per cent to 134,440 and student weeks down by 9.5 per cent to 1,510,703 in 2011. Sue Blundell from English Australia explains this continuing decline is the bursting of a bubble that had grown too large. “The previous bubble of growth between 2004 and 2008, primarily from student visa holders seeking migration pathways via vocational education, has burst. The impact has [brought] numbers back to normal levels and proportions i.e. approximately 50/50 student visa holders and non-student visa holders,” she says.

Australia is also undergoing some major regulatory changes after the Knight Review made 41 recommendations for visa reform. “There have been two tranches of change to date: November 2011 and March 2012,” says Blundell. “Major changes include the introduction of a post-study work visa, streamlined visa processing for universities, new genuine temporary entrant criteria and the removal of minimum English language levels for English language students.” Hopefully, these measures will stem the decline in business for Australia’s ELT sector in years to come.

Trouble in South Africa
Shaun Fitzhenry from Education South Africa (EduSA) sums up the situation in South Africa when he says, “2011 was quite a tough year for South Africa, as we continued to experience a loss in global market share and numbers were not as healthy as we had hoped at almost all EduSA member schools.” Despite a decline of 15.8 per cent in student weeks between 2010 and 2011, local currency revenue for the ELT sector in South Africa only decreased slightly by 2.5 per cent over the same period, thanks to an increasing average weekly spend of R4,315 (US$501) in 2010 to R5,001 (US$581) in 2011. South Africa’s market share by student weeks remains static at 0.9 per cent, 0.7 percentage points below it’s nearest rival destination, Malta.

The country’s ELT industry continues to suffer from some major hurdles, according to Fitzhenry. “The continued lack of formal government accreditation and/or recognition continues to impact on the accessibility of some key markets, while negative perceptions of the country – crime and corruption – continue to hamper growth.”

However, the outlook is far from bleak, as Fitzhenry explains. “2012 will almost definitely turn out to be a better year, mainly due to increased and concerted marketing efforts. The steady growth of EduSA membership also lends credibility to the organisation and so to member schools, and this is definitely having a positive impact on business. Almost all schools are exploring alternative markets in Africa, our natural back-door market, with some success.”

The UK feels the pressure
Last but by no means least is the UK, which threw up some surprising results for 2011. Despite fears that extensive UK visa changes would have a negative effect on student numbers in the UK, numbers actually increased by 13 per cent to 743,170 in 2011. However this figure is very much offset by a reduction in student weeks (5.7 in 2010 to 4.9 in 2011) which reduced overall student weeks by 2.4 per cent. Combined with a slight decrease in average spend per week in local currency (from UK£701 in 2010 to UK£683 in 2011) the annual local currency revenue from the ELT sector in the UK by five per cent for 2011.

CEO of language school association English UK Tony Millns, says that the statistics “tell an interesting story”, with course trends changing in line with visa restrictions and market changes. As students are increasingly finding it difficult to obtain Tier 4 student visas, schools are targeting their marketing efforts towards attracting younger students for shorter courses. “In 2011, juniors made up 21 per cent of the business in our private centres, compared with 13 per cent around 10 years ago,” he says. “This appears to be driven by two factors: the teaching of English to younger children in many countries and, of course, the increasing difficulty of getting a Tier 4 visa for older students.” He notes, “Students are on shorter, more intensive and more expensive courses than in previous years. Many of them are keen to learn as much as possible in as short a time as possible, in some cases no doubt because they are concerned about taking time away from work.”

In summary
This year’s global market survey gives hope for the future of the global ELT industry, with most markets hoping that 2012 will show an increase in the sector. There are many common challenges to be faced by language schools throughout the world – which include currency fluctuations, lack of government support and slow economies in student provider countries. However, there are also many positives to add to the mix – such as supportive government schemes regarding fast-track visa processes, the opening up of new student markets, such as in South America, Russia and Turkey, and a worldwide enthusiasm for youth travel and study overseas. There are obviously no quick-fix solutions to bolster the industry in the short-term, but it is clear that its ability to roll with the punches looks set to continue.

(Due to the complexity of the data, this article is only displayed in the digital issue of Study Travel Magazine)

Language centres: 22 centres in 12 countries
Regional sales offices: four in three countries (Switzerland, France, UK)

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