October 2004 issue

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Size and scale

The global English language teaching (ELT) market is increasingly recognised by governments around the world as a profitable industry, which often acts as a springboard into mainstream education for international students. However, global studies about trends and revenue earned by the sector are scarce. Using data sources from around the world, Language Travel Magazine estimates trends for the ELT market in 2003.

All study abroad professionals work towards the same goal of sending students overseas to learn a language and have an enriching study and travel experience. This in turn contributes to the globalisation and education exchange possibilities that stem from linguistic competency.

Many agents do much of their business with the English language teaching sector, yet agents and schools alike often do not have a clear idea of the bigger picture: the size and scale of the market they are operating in. For the second time, Language Travel Magazine has worked with industry commentators around the world to try and build up a picture of the global English language teaching market, to allow you to see how the efforts of each country to attract market share are pitted against current trends as to where students study.

Our methods of calculating market share, explained in detail on our website alongside this feature (www.hothousemedia.com), have varied for some countries depending on the most up-to-date information available. Therefore, the results of this year's analysis, compared with our picture of the global ELT market in 2002 (see Language Travel Magazine, August 2003, page 26), are not always directly comparable. In particular, we believe our estimation for the UK's market share by student numbers was conservative last year.

However, our results nevertheless offer a fascinating insight into how countries operate alongside each other. It seems clear that the UK remains the most dominant market within the global ELT industry, attracting well over one-third of all English language students who choose to study in an English-speaking country. Its market share has in fact increased on our estimations for last year, accounting for 40 per cent of all total student weeks.

Market share
In terms of market share, the most accurate way of analysing student volume is to assess total student weeks in each market. This measure reflects both the number of students arriving in a country to study English, and the length of time that each student studies at a school while in the country.

The average length of stay per student is certainly influenced by the host country's geographical location and its main student provider countries. If a long-haul flight is the normal mode of travel for the majority of a country's English language student population, then there will be a tendency to stay for a longer period of study once in the country.

Other factors affecting average length of stay include the age of ELT students in a country and the tendency to continue into mainstream academic studies. For example, in Malta, the preponderance of junior, vacation-oriented ELT students is reflected in the average length of stay of 2.7 weeks per student. In the UK, a lower average stay than in the USA or Canada, for example, is explained by the short-haul European market that accounts for a significant number of students at UK schools, especially in the summer season.

Because the number of students arriving in the UK to study English last year is estimated to be so much higher than in other countries, the UK remains the leader in terms of market share of student weeks, despite an overall average stay of 7.2 weeks.

The USA, Canada, Australia and New Zealand all have a higher average stay per student (see fig. 5, page 25) with the USA claiming second position in terms of total student weeks, just ahead of Canada, with 19.2 per cent market share compared with Canada's 16.2 per cent. Australia is in fourth position, followed by Ireland, then Malta and finally South Africa, which has just 0.8 per cent of the global ELT market share by student weeks.

Changes year on year
The USA retained second position in terms of volume of ELT students taught in 2003, but our analysis indicates that Canada maintained a more consistent student volume, year on year. Our processes for coming up with a figure for the Canadian market differed on last year's methodology, however, so again direct comparisons are not really possible. Data for the Canadian market is notoriously difficult to obtain, although we are grateful to Simon Williams at the Department of Foreign Affairs and International Trade, among others, for input this year.

Certainly, both the USA and Canada experienced difficulties in the operating environment last year, such as a fallout in student numbers in Canada due to Sars and a drop-off in student visitors to the USA because of stricter visa rules (see Language Travel Magazine, September 2004, page 17 and July 2004, page 19), so it is difficult to estimate if one market has suffered more than the other.

Australia's market share, at 8.8 per cent, has also declined narrowly on 2002, according to our data. Australia's own analysis indicates a slight increase in average length of stay for English language students year on year, according to the Environmetrics study produced for English Australia, although a minor reduction in overall numbers. Our analysis confirms that Australia remains in fourth position in terms of overall student weeks taught.

Next up is Ireland, which actually accepts more individual ELT students per year than Australia and Canada, although the short five-week average length of stay means that the total student weeks figure is lower. Our latest market information indicates the proportion of business accounted for by the junior sector in Ireland is higher than our estimate last year. This means our estimate for the entire market has increased, pushing up overall figures for student numbers in Ireland. It follows that the market share by weeks has increased slightly on last year.

New Zealand, in sixth position, had a very difficult year in 2003, with one school representative labelling it 'the year from hell for the private English language teaching industry' (see Language Travel Magazine, March 2004, pages 22-23). Our figures for student numbers in New Zealand come from a good source and are comprehensive. The national data available indicates that student numbers dropped year on year. Our student weeks total has dropped too.

Malta and South Africa also decreased in terms of market share by student weeks. In terms of actual student weeks, however, South Africa remained on an even keel when compared with our calculations for total student weeks in the country last year, while Malta's student weeks - influenced by a much lower (and more accurate) average stay figure this year - decreased more significantly.

Share and value by revenue
Revenue is another way of looking at market share by country. The prices charged to students for tuition and accommodation will differ according to country, although we believe student spending patterns to be similar across all markets, in terms of the additional spend on top of tuition and accommodation. It is useful to look at the global ELT market in terms of overall revenue generated to give an indication of what the industry is worth. It also reveals which destinations are most expensive for international students.

The entire ELT industry is valued at just over US$9.6 billion. The formula used to calculate the financial value of English language students is the same as last year (see website) and indicates that the value of the industry increased in 2003, from US$7.5 billion in 2002 to around US$9.6 billion.

Looking at a country's market share by revenue, the UK increased its lead on its competitors (see fig. 4). All prices used to calculate this table were in US$ and converted on the same day, but the UK's result reflects the strength of the pound sterling against other currencies, to some extent, in that the UK charges students a higher comparable price for tuition and accommodation, which leads to a higher overall spend per student.

Because Australia is slightly cheaper than other destinations and, therefore, overall spend is lower, its market share by revenue dropped, taking it just below Ireland in terms of the most significant ELT providers by revenue share.

Apart from in the UK, it is interesting to see that typical student spending in a country is similar in a number of countries, notably in the USA and Canada, Ireland and Malta (see fig.3). The lowest average spend per student is in South Africa, with New Zealand and then Australia the next seemingly cheaper destinations, in that average spend is lower.

Industry opinions
While Australia's price advantage may indeed be a lure for ELT students, Sue Blundell at English Australia notes that the strengthening Australian dollar is believed to have contributed to a slowdown in growth in student numbers in 2003. She adds that among the ELT student population, student visa holders - that is, those studying for more than three months - increased in number in 2003, while the number of short-term ELT students on visitor visas dropped by 25 per cent.

'This pattern could be interpreted as a reluctance to travel where the reason is not necessary as part of a long-term study plan,' says Blundell. 'I believe the global environment of the last two years has acted as a deterrent to large numbers of this profile of student for whom English language study is discretionary.' Restrictive factors in the last two years include the Sars outbreak, dwindling economies - particularly in Latin America - the rising value of currency in certain ELT teaching markets, and global uncertainty or unrest due to terrorism concerns.

Blundell points to a further issue hindering student growth for Australia: visa issuance. 'For a number of markets, the student visa regime remains a significant hurdle for students to jump,' she says. Her concern is echoed by industry sources in other ELT countries. In the USA, Past-President of the American Association of Intensive English Programs (AAIEP), Kelly Franklin, says that the two key issues facing US ELT providers are 'the tense world situation, followed by the continued stringent policies of the US government towards visa issuance'. And Linda Auzins at the Canadian Association of Private Language Schools (Capls) observes, 'immigration barriers to access are restricting the growth of the ELT industry in Canada'.

The ELT industry is changing rapidly, and trends within the overall market have already evolved quite considerably in the last 10 years, as new countries have entered the marketplace and aggressively marketed for students. Stuart Boag at Education New Zealand is keenly aware of global competition. 'Our products and institutions are first class, but New Zealand is not always top of mind for many potential students,' he says. 'A key challenge for New Zealand as a whole is to 'get on the radar', especially in newer markets [for us].'

Visa issuance seems certain to shape trends in years to come. In Korea, Yong-Nae Kim, President of the Korea Overseas Study Association (Kosa), observes that price and ease of visa issuance influence students. He adds that student motivation for study abroad is moving from ELT to undergraduate degree. 'The decline in demand for general English will continue,' he suggests. 'We need to develop more special programmes to allow students to have more diverse experiences.' Kim also reveals competition from new quarters. 'China has become very popular, because it is not expensive to study there compared with English-speaking countries, while the demand for Chinese has increased,' he says. 'This phenomenon will continue for a while. For the North American countries, they will continue to lose their popularity if they stick to their demanding visa procedures.'

In Brazil and in Thailand, agency associations also testify that price, visa issuance and, importantly, the ability to work in a country, will be key factors in shaping future trends. And Tongchit Lawvinitnun of the Thai International Education Consultants Association (Tieca) adds, 'Students are increasingly more interested in second and third languages in countries such as China, Germany and France.'

1. Global English language market by student numbers 2003 2. Global English language market by student weeks 2003
UK - 603,353 (46.7%)
USA - 187,272 (14.5%)
Ireland - 159,600 (12.4%)
Canada - 147,542 (11.4%)
Australia - 78,338 (6.1%)
Malta - 53,241 (4.1%)
NZ - 50,594 (3.9%)
Sth Africa - 12,000 (0.9%)

Total - 1,291,940

UK - 4,364,266 (40.6%)
USA - 2,059,992 (19.2%)
Canada - 1,741,463 (16.2%)
Australia - 945,540 (8.8%)
Ireland - 798,000 (7.4%)
NZ - 607,128 (5.7%)
Malta - 143,751 (1.3%)
Sth Africa - 84,000 (0.8%)

Total - 10,744,140

3. Average spend per week per ELT student, by country, 2003* 5. Average length of stay in weeks per country*
UK - $1,156.56
Ireland - $787.82
Malta - $784.52
Canada - $748.47
USA - $745.73
Australia - $627.69
NZ - $580.48
S Africa - $484.95

* spend includes money spent on tuition, accommodation and other, including shopping, entertainment, food, travel, etc.

Australia - 12.1
NZ - 12
Canada - 11.8
USA - 11
UK - 7.2
S Africa - 7.0
Ireland - 5.0
Malta - 2.7

* figures adjusted to reflect junior/adult and state/private sector weightings where possible

4. Estimated total revenue for the ELT industry by country, 2003
UK - $5,047,535,485 (52.5%)
USA - $1,536,187,534 (16%)
Canada - $1,303,432,812 (13.6%)
Ireland - $628,676,370 (6.5%)
Australia - $593,506,003 (6.2%)
NZ - $352,423,233 (3.7%)
Malta - $112,775,67 (1.1%)
S Africa - $40,735,800 (0.4%)

Total - $9,615,272,915

6. Market share by student weeks, 2002 and 2003
UK 2002 - 40.6 2003 - 31.5
USA 2002 - 19.2 2003 - 25.0
Canada 2002 - 16.2 2003 - 17.0
Australia 2002 - 8.8 2003 - 10.5
Ireland 2002 - 7.4 2003 - 5.0
New Zealand 2002 - 5.7 2003 - 7.0
Malta 2002 - 1.3 2003 - 3.0
South Africa 2002 - 0.8 2003 - 1.0

Web methodology
A guide to how Language Travel Magazine calculated results for each individual country in the global market analysis, issue October 2004, relating to 2003 student numbers and weeks:

A survey was carried out by Environmetrics for English Australia, as it was the previous year. 107 institutions took part in the survey and data was weighted to account for the entire industry. We checked for possible anomalies in sector trends and concluded this was the best estimate available for Australia. In terms of student weeks, we used the best available figure, which is considered to be the Environmentrics report figure of 12.07 weeks.

Usually one of the most difficult markets to quantify, we are grateful to Jay Jamieson of CLC, David Diplock and Linda Auzins at Capls and Simon Williams at the Department of Foreign Affairs & International Trade for their input into the Canada research. We compiled our market estimate by using the information we did have for some sectors and estimating the share for other sectors, in collaboration with industry specialists. Given the student weeks figure available from CLC, representing the state sector (as CLC in 2003 was known as Council for Second Language Programs -CSLP- and had state-sector members only); and the Capls student numbers and student weeks figures for 2003 relating to Capls members only; we had to use our market knowledge collaboratively to work out the share of the rest of the private market (non-Capls) and the state sector non-CSLP market. This was attained by using various industry estimates of total market size and respective knowledge of the state and private sectors.
Average stay was calculated by dividing total student weeks by total student numbers.

The Irish tourist board, Bord Failte, undertakes a sample survey of visitor arrivals and produces an estimate of ELT students in the country. They underline that there is a significant margin of error but there are no better figures available so we used this as a base figure. We then used information gleaned from our Status survey to approximate a figure for the under-16 market, which isn't accounted for in the Bord Failte statistics. We used our knowledge of the Irish marketplace to cross-check – working out the average no. of students possible at each school in Ireland. This again is a rough tool. In terms of student weeks, we used information provided in the Status survey and backed this up by talking to Bord Failte about their estimates for average length of stay.

Our figures came from the National Statistics Office and were gained by surveying all schools. This relates to both student numbers and overall average student weeks.

New Zealand
The source of the statistics used for the NZ figures was the NZ government's Department of Statistics. It surveys all English language teaching institutions in the country. In terms of student weeks, we took as a basis the Status survey result of 10.9 weeks average stay for 2002 and then increased this slightly, given anecdotal evidence from Education New Zealand that the overall average length of stay had increased year on year and our knowledge of the student profile in the country.

South Africa
We used a combination of statistics gained from the English Language Teaching Association of South Africa (Eltasa) and our Status survey, which surveyed more schools than those represented by Eltasa membership. By comparing the results of these surveys and looking at which schools had taken part in which survey, and given our knowledge of the market in South Africa, we were able to estimate the percentage of the market not accounted for by the Status survey. In terms of student weeks, we combined our Status survey results and Eltasa results to produce an overall figure.

For our figures relating to the UK, we tried to assess the market by sector, so we used figures from Arels, as the association then was before it became English UK, to determine the size of the British Council-accredited private sector. From this figure and other data, we were then able to predict the size of the British Council-accredited private sector not represented by Arels members.

The British Association of State English Language Teaching (Baselt) – as it was prior to joining English UK - was able to give us data relating to the number of British Council-accredited state sector schools, both members of Baselt and non-members, and they were able to provide numbers estimates for both sectors.

We then had to estimate the size of the non-British Council accredited sector. We spoke to representatives of various associations and to the accreditation unit at the British Council. We also used British Council estimates from two separate reports; one for the total no. of English language students in the UK and the other relating to the total number of 'non-BC-accredited' schools. These served as a guideline to come up with a total market estimate in terms of numbers and schools. Working out an average number of students per school in this sector - and assessing trends from the same sector revealed in our Status survey – was a back-up analysis employed.

In terms of student weeks, Arels provided data for average stay in weeks for their sector, so we analysed each sector separately again, using our knowledge of average length of stay in the state sector based on information from Baselt, to come up with a combined overall figure of 7.2 weeks – assuming that private schools not in the jurisdiction of Arels have similar trends in average stay as Arels members.

For calculating the USA's market share, we based our estimates on the Open Doors data, which was collected from 174 institutions. We looked at the number of IEPs in the survey and the proportion of those that were members of either AAIEP or UCIEP, and with the professional opinion of an AAIEP board representative, we estimated what market share this Open Doors data might relate to in terms of the entire market. Bearing in mind our knowledge about business patterns in the USA, we extrapolated our final figure. In terms of student weeks, we used the figure of 11 weeks from the Open Doors survey, as this source represents the most populous survey. Our Status survey result of 11.6 weeks is only fractionally different to this.

Revenue by sector
We looked at the methodology employed by a number of different reports in estimating the financial value of students and decided the most appropriate to use was the same formula used last year by Environmetrics; that for every AUS$1 spent on tuition, AUS$1.92 is spent on extras, including accommodation and spending on domestic travel, shopping, entertainment, food, etc. We then used average spending figures on tuition and accommdation per week from the relevant Status surveys, produced by Language Travel Magazine, and extrapolated the final results.

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