Rapid slowdown of international tourism growth

Transcription

1 Rapid slowdown of international tourism growth As anticipated in the June issue of the UNWTO World Tourism Barometer, international tourism demand cooled significantly over the period May- August 28, severely constrained by the present economic uncertainties. After a sound start to the year with growth of international tourist arrivals worldwide averaging 5.7% in the first four months, demand was still strong in May (+7%). But in June, July and August growth fell below 2%. For the first eight months overall, world growth averaged 3.7% compared with the same period in 27 and, for the year as a whole, it is now projected at 2-3%. Moreover, as the current troubled economic scenario is expected to continue into 29, UNWTO s initial forecast for next year is a growth of between % and 2%. International Tourist Arrivals, monthly evolution World * Source: World Tourism Organization (UNWTO) (% change) Asia and the Pacific was the region whose performance has deteriorated most rapidly. After having grown at a sustained rate of over 7% for 18 consecutive months up to March this year, growth declined to around 1.5% in June and July and was even negative in August. The high price of oil and rising inflation have taken their toll in the region, squeezing travel budgets. Growth in Europe also stagnated over the summer months. In the Americas, Africa and the Middle East growth weakened as well, but the slowdown was much less pronounced. (Continued on page 5) Contents Quick overview of key trends 3 Short-term tourism data 28 5 World 5 Full year forecasts for 28 and 29 8 Outbound tourism: international tourism expenditure 9 Evaluation by UNWTO s Panel of Tourism Experts 11 Regions 14 Europe 14 Asia and the Pacific 19 The Americas 23 Africa and the Middle East 28 In focus 32 UNWTO Affiliate Members 32 Transport 34 Hospitality 38 The economic environment 42 UNWTO Panel of Tourism Experts Sharp decline in confidence Confidence among the members of the UNWTO Panel of Experts has continued to slide and even more steeply than in the previous period according to the latest of the three-times-yearly UNWTO Tourism Confidence Index. Both in terms of the Panel s evaluation of the period May-August (94) and regarding its prospects for the period September-December (9), the index has fallen to its lowest level since it was first compiled just after the start of the SARS outbreak in 23. The scores overall are negative, meaning that the number of experts rating actual and expected performance as worse or much worse exceed those who rate it as better or much better, with a score of 1 indicating no change, or the mid-point between positive and negative scores. (Continued on page 11) UNWTO Panel of Tourism Experts Much better Better Equal Worse Much worse T1 T2 3 4 Prospects Evaluation 5 6 Source: World Tourism Organization (UNWTO) 7 T3 8 1

2 The UNWTO World Tourism Barometer is a publication of the World Tourism Organization (UNWTO). By monitoring short-term tourism trends on a regular basis, UNWTO aims to provide all those involved directly or indirectly in tourism with adequate upto-date statistics and analysis in a timely fashion. The UNWTO World Tourism Barometer is published three times a year (in January, June and October). Each issue contains three regular sections: an overview of short-term tourism data from destination and generating countries and air transport; the results of the latest survey among the UNWTO Panel of Tourism Experts, providing an evaluation of and prospects for short-term tourism performance; and selected economic data relevant for tourism. The objective for future editions of the UNWTO World Tourism Barometer will be to broaden its scope and improve coverage gradually over time. The UNWTO World Tourism Barometer is prepared by UNWTO s Market Trends, Competitiveness and Trade in Tourism Services Section, with the collaboration of consultants, Nancy Cockerell and David Stevens. The UNWTO Secretariat wishes to express its sincere gratitude to all those who have participated in the elaboration of the UNWTO World Tourism Barometer, in particular all institutions that supplied data, and to the members of the UNWTO Panel of Tourism Experts for their valuable contributions. For more information on the UNWTO World Tourism Barometer, including copies of previous issues, please refer to the Facts & Figures section on the UNWTO website at < We welcome your comments and suggestions at <barom@unwto.org>, tel / fax Explanation of abbreviations and signs used * = provisional figure or data.. = figure or data not (yet) available : change of series mn: million (1,,) bn: billion (1,,,) Q1: January, February, March Q2: April, May, June Q3: July, August, September Q4: October, November, December T1: January, February, March, April T2: May, June, July, August T3: September, October, November, December YTD: Year to date, variation of months with data available compared with the same period of the previous year. The (sub)regional totals are approximations for the whole (sub)region based on trends for the countries with data available. Series International Tourist Arrivals TF: International tourist arrivals at frontiers (excluding same-day visitors); VF: International visitor arrivals at frontiers (tourists and same-day visitors); THS: International tourist arrivals at hotels and similar establishments; TCE: International tourist arrivals at collective tourism establishments; NHS: Nights of international tourists in hotels and similar establishments; NCE: Nights of international tourists in collective tourism establishments. Series International Tourism Receipts and Expenditure All percentages are derived from non-seasonally adjusted series in local currencies, unless otherwise indicated: $: US$ ; : euro; sa: seasonally adjusted series. The World Tourism Organization is a specialized agency of the United Nations and the leading international organization in the field of tourism. It serves as a global forum for tourism policy issues and a practical source of tourism know-how. Its membership includes 16 countries and territories and more than 35 Affiliate Members representing local governments, tourism associations and private sector companies including airlines, hotel groups and tour operators. Copyright 28 World Tourism Organization Calle Capitán Haya, 42, 282 Madrid, Spain UNWTO World Tourism Barometer ISSN: Published and printed by the World Tourism Organization, Madrid, Spain First printing: 28 (version 1/11/8) All rights reserved The designations employed and the presentation of material in this publication do not imply the expression of any opinions whatsoever on the part of the Secretariat of the World Tourism Organization concerning the legal status of any country, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. All UNWTO publications are protected by copyright. Therefore and unless otherwise specified, no part of an UNWTO publication may be reproduced, stored in a retrieval system or utilized in any form or by any means, electronic or mechanical, including photocopying, microfilm, scanning, without prior permission in writing. UNWTO encourages dissemination of its work and is pleased to consider permissions, licensing, and translation requests related to UNWTO publications. For permission to photocopy UNWTO material, refer to the UNWTO website at The contents of this issue may be quoted provided the source is given accurately and clearly. Distribution or reproduction in full is permitted for own or internal use only. Please do not post electronic copies on publicly accessible websites, UNWTO encourages you to include a link to the Facts & Figures section of the UNWTO website instead at < World Tourism Organization Capitán Haya 42, 282 Madrid, Spain Tel (34) / Fax (34) barom@unwto.org Data collection for this issue was closed on 3 October. The next issue of the UNWTO World Tourism Barometer will be published at the end of January 29. 2

3 UNWTO World Tourism Barometer, October 28 Quick overview of key trends International tourism January-August 28 Worldwide, international tourist arrivals grew at around 4% between January and August 28 compared to the same period of 27. Results show a rapid deterioration of international tourism growth since mid-28, reflecting the impact of rising oil prices at the beginning of the year and the deterioration of the economic situation, as well as consumer confidence, in recent months. On a month-by-month basis, global tourism up to May was still growing at a considerable pace, but in June, July and August growth fell below 2%. In absolute terms, the number of international tourist arrivals is estimated to have reached 641 million between January and August, up from 618 million in 27, corresponding to an additional 23 million arrivals. In 27 the first eight months represented some 68% of the total annual volume. All regions showed increases, but trends varied from region to region. Asia and the Pacific was the region whose performance has deteriorated most rapidly. Growth in Europe also stagnated over the summer months. In the Americas, Africa and the Middle East growth weakened as well, but the slowdown was much less pronounced. All subregions also reported positive results. - Europe currently stands at +2% for the first eight months of 28 (well down from the 5% growth of the last two years), and the slowdown has not spared any of its four subregions. - Asia and the Pacific s growth (+4%) is also well behind its 27 level, with Oceania and North-East Asia suffering the brunt of the downturn in demand. International Tourist Arrivals Northern Europe Western Europe Central/Eastern Europe Southern/Mediter. Eu. North-East Asia South-East Asia Source: World Tourism Organization (UNWTO) (% change over same period of the previous year) - The Americas has so far performed better than in 27 with 6% growth through the first eight months. The region appears to have only experienced a mild slowdown in July and August. - The Middle East continued its rapid expansion, with growth for the period January through August estimated at 17%. Data is still limited, though, and it is likely that this estimate will be revised. - Africa s growth is currently running at less than half the level achieved in 27, largely thanks to North Africa s strong performance, since the average growth in Subsaharan Africa has fallen significantly below its 27 level. With respect to outbound tourism, the large majority of countries that have reported data on international tourism expenditure reported increases in the first half year of 28. The strongest growth has come from emerging markets, as has been the case in recent years. Oceania South Asia North America Caribbean Central America South America North Africa Subsaharan Africa Middle East */6 8*/7 YTD (Jan-Aug)

4 The slowdown of traffic through the year, with negative growth in September, is confirmed by the air transport data as reported by IATA and various regional air transport associations. The worldwide trend through September was a 3.3% increase in passenger traffic as against a 4.8% rise in capacity, with the load factor for the period averaging 76.3%. Hotel performance data for the first eight months of the year as reported by Deloitte also indicates a slowdown. The increases in revenue per available room (revpar) and average room rates remain significant. However, the concern is about the occupancy rate which, except in the Middle East and Central and South America, continues to decline. Confidence among the almost 3 members of the UNWTO Panel of Experts has continued to slide and even more steeply than in the previous period according to the latest of the three-times-yearly UNWTO Tourism Confidence Index. Both in terms of the Panel s evaluation of the period May-August and regarding its prospects for the period September- December, the index has fallen to its lowest level since it was first compiled just after the start of the SARS outbreak in 23. Prospects The economic downturn, combined with the current uncertainties, extreme market volatility and a decline in both consumer and business confidence, are expected to continue taking their toll on demand for tourism at least in the short to medium term. So far international tourism has resisted the downturn better than other economic sectors such as construction and real estate or car manufacturing and sales. Given the current adverse conditions, the growth of international tourism is expected to slow even more between September and December of this year, and will probably show negative growth in one or more months. Overall growth for 28 is, however, still projected at 2-3%, building on the strong results of the first five months. As the current troubled economic scenario is expected to continue into 29, UNWTO s initial forecast for next year is a growth of between % and 2%. At least the first part of next year is expected to be complicated, while a gradual recovery is anticipated over the course of the year. Unlike major previous crises, such as 9/11 and SARS, the current downturn does not impact so much on the desire to travel. The major concern is about whether one can afford to travel, or wants to spend on travel, given the uncertain economic situation. As in previous crises: International Tourist Arrivals, World (% change over same period of the previous year) - Travel to destinations closer to home, including domestic travel, is expected to be favoured as compared to longhaul travel; - Segments such as visiting friends and relatives (VFR), repeat visitors, as well as special interest and independent travellers, are expected to be more resilient; - The decline in average length of stay, as well as expenditure, is projected to be more pronounced than in overall volume; - Destinations offering value for money and with favourable exchange rates have an advantage as price becomes a key issue; - Companies will and should concentrate on containment of costs in order to maintain their competitive edge; - It is more critical than ever before to work closely together in the tourism value chain between the public and private sectors, and destinations and the travel trade /97 96/95 97/ /97 99/98 /99 1/ 2/1 3/2 Source: World Tourism Organization (UNWTO) 1.3 Long-term average Tourism 22 Vision /3 5/4 6/5 7/6 Forecast 28 Forecast 29 4

5 Inbound Tourism: short-term data 28 World (Continued from page 1) In absolute terms, from January to August, destinations worldwide received an estimated 641 million international tourist arrivals, up from 618 million in the same period of 27 (when they represented some 68% of the total annual volume). This means that 23 million more arrivals have been counted for 28 so far. As already happened in 27, the Northern Hemisphere high season months of July and August again both exceeded 1 million arrivals. However, international tourism results have rapidly deteriorated through the year, first under the influence of record high oil prices and rising inflation, and later through the fear of a sustained recession. As a result, on a monthby-month basis for the four-month period under review, May showed sustained growth of 7%, following an average increase of nearly 6% in the first four months, but the average fell to less than 2% in June, and 1% in the peak travel months of July and August. In the first eight months of 28, the global tourism industry was faced with the usual challenges from natural disasters such as hurricanes, earthquakes and floods, to renewed terrorist incidents, political tensions and civil unrest. However, there was much worse brewing. The credit crunch, which had started in the United States in 27, intensified in the first half of this year, resulting in the rescue of Bear Stearns in March and in the US Government s support package for Fannie Mae and Freddie Mac in July. But this only really started to have an impact on travel and tourism demand when the financial crisis sharply escalated in August and September, culminating in the collapse, or near-collapse, of many major financial institutions. This in turn led to a spate of sell-outs and nationalisations, a freezing of credit not least in terms of inter-bank lending rising unemployment, and a sharp fall in consumer and business confidence. And through the months of September and October, the situation deteriorated almost on a daily basis. International Tourist Arrivals, monthly evolution World (million) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: World Tourism Organization (UNWTO) 27 28* International Tourist Arrivals by (Sub)region Full year Share Change Monthly or quarterly data series (% change over same period of the previous year) /5 7/6 28* 27 (million) (%) (%) YTD Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 World Europe Northern Europe Western Europe Central/Eastern Europe Southern/Mediter. Eu Asia and the Pacific North-East Asia South-East Asia Oceania South Asia Americas North America Caribbean Central America South America Africa North Africa Subsaharan Africa Middle East Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) 5

6 Meanwhile, US housing market troubles also continued to escalate, spreading to Europe in particular to the UK, Spain and Ireland and other parts of the world, notably Asia and the Pacific. Food, energy and commodity prices surged, pushing inflation higher globally and thereby eroding household real incomes. The price of oil, which peaked in July US$ 147 a barrel, has since fallen to less than half that level, but it has remained volatile, as have exchange rates, adding to the global environment of uncertainty. It was inevitable that demand, resilient until the middle of the year or even longer in some markets would falter under the strain. International Tourist Arrivals */6 8*/7 YTD (Jan-Aug) World Europe Asia and the Pacific Source: World Tourism Organization (UNWTO) (% change over same period of the previous year) Americas Africa Middle East Although regional trends may vary as new data becomes available, growth for Europe currently stands at just 2% for the first eight months compared with the same period last year, and the slowdown has not spared any of its four subregions. Asia and the Pacific s growth (+4%) is also well behind its 27 level, with Oceania and North- East Asia suffering the brunt of the downturn in demand. On the other hand, thanks both to a continued recovery in demand for travel to the USA, but also to continuing strong increases for Central and South America, the Americas has so far performed better than in 27. Growth averaged 6% through the first eight months. Moreover, although a number of destinations have not yet released results for August, the region appears to have only experienced a modest slowdown in July and August. The Middle East is once again the star performer in 28 until now, with growth for the period January through August estimated at 17%. Data, though, is still limited and this estimate is still likely to be revised. Africa s growth is currently running at around half the level achieved in 27, and this is largely due to North Africa s strong performance. In Subsaharan Africa, whose average growth has been pulled down sharply by Kenya s 4% decline, the only two countries with data available showing growth above average are South Africa and Mauritius. Detailed results for arrivals and receipts by country are included in the Regions section (pages 14-32). Prospects The net result of all the financial stresses over the past few months has been a downgrading of economic growth forecasts, which will clearly be worse during the remainder of 28 and is expected to extend into 29. The economic downturn, combined with the current uncertainties, extreme market volatility and a decline in both consumer and business confidence, will clearly take their toll on demand for tourism at least in the short to medium term. Many businesses are expected to retrench, and any such retrenchment will be quickly felt in consumer markets. Air travel will almost certainly be more adversely affected than other sectors of the industry. Even if the price of oil remains at current levels (which are still well above the average for 27), fuel surcharges may not be withdrawn completely as a stronger US dollar means continuing high prices of fuel for many non-us carriers. In addition, many airlines have been burnt by locking in fuel purchases as oil surged to record levels in mid-28. As a result, more airline collapses are likely, aircraft will continue to be mothballed and airline routes and frequencies cut in an effort to reduce capacity and sustain profitable seat load factors. This in turn will of course impact negatively on overall performance. The general consensus among UNWTO s Panel of Experts is that long-haul travel will suffer more than shorthaul demand because of fuel s much higher share of costs in the overall price of a long-haul trip. The sharp fluctuations in exchange rates are also likely to result in a change in travel patterns, with a switch in demand from some traditional destinations to those perceived as more attractively priced. This trend is already evident in some markets and, even more worrying, some key markets have shown significant overall declines in outbound over the first eight to nine months of this year. Japan, the Republic of Korea and Taiwan (province of China) are prime examples. But Brazil and South Africa could be two additional markets to see their outbound travel affected in 29. Looking ahead to next year, the US Government will implement the full requirements of the land and sea phase of the Western Hemisphere Travel Initiative (WHTI) on 1 June. The proposed rules require most US citizens entering the USA at sea or land ports of entry (in addition to airports, as is now the case) to have a passport, passport card, or WHTI-compliant document. Together with the strengthening US dollar, this should in theory result in growing demand for foreign travel among Americans. However, the problems on Wall Street have had a huge impact on Main Street, resulting in rising unemployment and exceptionally low consumer confidence. So, until such time as the US housing market bottoms out, there seems to be little prospect of a real upswing in wider US economic activity, consumer sentiment, or demand for foreign travel. 6

7 In Europe, as recession bites, inhabitants of the UK are in for a very tough 29 and, in the eurozone, the three largest economies (Germany, France and Italy) also are likely to officially enter into recession (according to the traditional definition of recession: an economy shrinking over two successive quarters) in the second half of 28, while both Spain and Ireland have witnessed a housing bubble burst and contraction in wider economic activity. In Asia, the big concern is that if the US economy does contract significantly there will be a sharp tailing-off in America s need to buy Asian exports, which for many countries in the region notably China and the Republic of Korea has been one of the main locomotives of economic growth in the past few years. Business tourism, in particular that related to the financial and business services sector, is clearly at risk of slowing down, as companies search for ways of reducing their outgoings, including the amount spent on business travel and the number of events and conferences that are held. This weakness may manifest itself through an actual decline in the number of business trips and/or through companies opting for cheaper travel and accommodation options. As such, this may result in a further weakening of the aviation sector as it becomes harder for legacy airlines to fill the front end of their planes. But, despite the less than optimistic forecasts for 29, it is important to note that, in contrast to the situation after 9/11 or the outbreak of SARS, say, the current series of crises has not dampened people s desire for travel. This means that, as soon as the economic outlook improves, pent-up demand is likely to manifest itself, contributing to a rapid recovery in travel and tourism growth. UNWTO Tourism Highlights, 28 Edition On the occasion of World Tourism Day on 27 September, UNWTO released its updated overview of basic tourism facts and figures in its Tourism Highlights, 28 Edition. The 12-page brochure presents a snapshot of international tourism in the world for 27 based on the latest available information collected from national sources. Global and regional trends and results are analysed with a range of statistics included on international tourist arrivals and international tourism receipts, major regional destinations by arrivals and receipts, and outbound tourism generating regions, as well as the ranking of top tourism destinations by arrivals and receipts, and a list of top source markets in terms of spending. Electronic copies can be downloaded free of charge from the Facts & Figures section of the UNWTO website < 7

8 Full year forecasts for 28 and 29 Growth in international tourism demand expected to cool further Given the current adverse conditions, the growth of international tourism is expected to slow even more between September and December of this year, and will probably show negative growth in one or more months. Overall growth for 28 is, nevertheless, still projected at 2-3%, building on the strong results of the first five months. As the current troubled economic scenario is expected to continue into 29, UNWTO s initial forecast for next year is a growth of between % and 2%. At least the first part of next year is expected to be complicated, while a gradual recovery is anticipated during the course of the year. International Tourist Arrivals, World (% change over same period of the previous year) /97 96/95 97/ /97 99/98 /99 1/ 2/1 3/2 Source: World Tourism Organization (UNWTO) 1.3 Long-term average Tourism 22 Vision /3 5/4 6/5 7/6 Forecast 28 Forecast 29 As on previous occasions, UNWTO, in cooperation with the Fundación Premio Arce of the Universidad Politécnica de Madrid, has prepared a forecast for the full 12 months of 28 as well as an initial forecast for 29. For 28 overall, the growth in international tourist arrivals is projected to be some one to one and-a-half percentage points lower than the overall growth of 3.7% recorded in the period January to August. Data for the first eight months accounts for nearly 7% of the full year total and the remainder of the year for some 3%. International tourist arrivals worldwide are projected to grow between 2% and 3% in 28, while in 29 this is expected to decline further to % to 2%. It is important to recognise that this anticipated softening of international tourism growth in 28, which will continue in 29, follows four About these forecasts These forecasts are developed for UNWTO by the Fundación Premio Arce of the Universidad Politécnica de Madrid and are based on econometric modelling using the series of monthly data on international tourist arrivals available for the five regions. The aim of the model is to analyse the underlying trend in the data and extrapolate this to the short-term future. The model has been tested by comparing forecasts for previous years with actual results for those years. Of course, as with any model, the forecast growth rates assume that the current conditions will not suddenly change as a result of external factors. They also include a margin of error depending on the stability of the underlying data series. These forecasts need to be read with a certain level of caution, not only because of the above mentioned, but also because the underlying data is not perfect: monthly data series are not available for all countries, although the countries with monthly series included represent roughly 9% of worldwide arrivals. Coverage is in particular comparatively limited for the Middle East and Africa, and a considerable margin should be taken into account; monthly data is typically preliminary and many countries are expected to revise their statistics at a later date; the monthly series is often based on a proxy that is not the same as the indicator used for the yearly data, e.g. for France a monthly series is used on international nights in hotels and similar accommodation instead of tourist arrivals at frontiers, while for the USA the monthly series does not include arrivals from Mexico in the border areas, etc. Forecast of growth in International Tourist Arrivals real projection 27 28* 28* 29* Jan-Aug Full year Full year World 6.6% 3.7% 2-3 % -2 % Europe 4.9% 1.7% 1-2 % -2 % Asia and the Pacific 1.4% 4.3% 2-3 % -2 % Americas 5.% 5.6% 4-5 % 1-3 % Africa 7.% 3.2% 3-5 % 2-6 % Middle East 14.5% 17.3% 9-15 % 3-8 % Source: World Tourism Organization (UNWTO) 8

9 historically strong years. Between 24 and 27 international tourist arrivals grew at an extraordinary rate of 7% a year, well above the 4% long-term average. By region, Europe and Asia and the Pacific are forecast to end 28 with a growth of between % and 2%. The other three regions are expected to do better with arrivals growth of between 4% and 5% in the Americas and between 3% and 5% in Africa. The best regional result is expected for the Middle East, where growth is forecast of between 9% and 15%, though there is a large margin as the underlying data is not very stable. The first forecast for 29 points to an overall growth of between % and 2%, with Europe and Asia and the Pacific in the same range and the Americas, Africa and the Middle East somewhat above the worldwide average. These projections are based on an extrapolation of the monthly data series on tourist arrivals available for the five regions. The model analyses the underlying trends in the data and extends these to the short-term future. In order to account for the weakening economic situation, outcomes are adjusted downwards. Outcomes also include a margin of error depending on the stability of the underlying data series. In particular, in the smaller regions of the Middle East and Africa, a considerable margin of error should be allowed for, as the forecast is based on comparatively limited information. It should be realised that in this extremely volatile environment, forecasting is a far more complicated exercise than in the relative stable situation of the past years. The econometric model used does not really allow for sudden changes, and it is very challenging to achieve satisfactory results. For that reason UNWTO will continue to monitor developments with its partner and an updated and more comprehensive forecast for 29 will be included in the next issue of the UNWTO World Tourism Barometer, to be published in January 29 on the occasion of the Spanish tourism fair, FITUR. Outbound Tourism International tourism expenditure 28 YTD Good growth in the first semester, but the third quarter may reflect decreasing demand Although an impressive 39 of the 46 countries among the 5 top spenders that have reported trends in international tourism expenditure for at least part of 28 point to continuing rises in levels of expenditure over 27, the absence of data for the third quarter of the year masks the real trends since the escalation of the financial crisis and its impact on tourism demand. Interestingly, however, the sharp slowdown seen in international tourist arrivals from the month of June is not necessarily replicated in the monthly expenditure patterns of those countries that do have up-to-date statistics. Among the ten leading source countries reporting at least six months, three recorded double-digit increases China, Canada and the Russian Federation. But Hong Kong (China), Norway, Australia, Sweden and Singapore currently lying in 14th to 18th positions in the overall expenditure ranking also exceeded 1% growth for at least the first half of 28. Within the top 5 again focusing only on countries reporting at least six months of data the strongest growth has come from emerging markets, such as Brazil, India, South Africa or Bulgaria as has been the case in recent years. Of the remaining leading spenders on international tourism, Germany, in number one position in the world s expenditure ranking, managed only a 1.5% rise in the first eight months. The USA reported a respectable 9% through the month of August, while the UK achieved 5%, as did Italy (in sixth place). Meanwhile, expenditure by French tourists abroad stagnated (though data is still subject to revision). Japan suffered a 6% fall (in eight months), while spending by residents of the Republic of Korea declined by 5% through the month of August, after very strong results in both 26 and 27. When analysing this data, it should be taken into consideration that the figures quoted are in current values, i.e. inflation is not taken into account, and part of the increase does reflect an overall rise in travel costs. Furthermore, in most cases statistics are still provisional and subject to revision. Outbound trip volume International tourism expenditure is an important indicator of outbound tourism demand, since it is more reliable than outbound trip volumes, which are measured in very different ways from one country to another. The accompanying table shows that at least 5 source countries are likely to spend in excess of US$ 2 billion on tourism 9

10 International Tourism Expenditure US$ Local currencies, current prices (% on previous year) * Series 6/5 7/6 28* 27* (billion) year YTD Q1 Q2 Q3 Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 1 Germany United States sa United Kingdom sa France China $ Italy Japan Canada Russian Federation $ Korea, Republic of $ Spain Netherlands Belgium Hong Kong (China) Norway Australia Sweden Singapore Austria Switzerland Taiwan (pr. of China) $ Untd Arab Emirates Denmark Ireland Poland Mexico $ India Brazil $ Kuwait Iran $ Malaysia Thailand Indonesia $ Saudi Arabia Finland Argentina $ Portugal South Africa sa Qatar Czech Rep Luxembourg Greece Ukraine $ Turkey $ Israel $ Lebanon $ New Zealand Hungary Egypt $ Bulgaria Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used 1

11 abroad in 28. The top ten markets, which accounted for a combined US$ 42 billion in 27, generate more than 5% of global international tourism spend. Few European countries statistical offices and / or ministries of tourism have so far released data for outbound trip volume in 28. One notable exception is the UK s Office of National Statistics, which reports a 2% increase for the first eight months much in line with the 5% increase in expenditure, if we consider that the growth in expenditure does not take account of the inflation rate. US outbound travel (by air only) was up just 1% in terms of number of trips through the month of July, according to the Office of Travel & Tourism Industries in the US Department of Commerce. Overseas trip volume also increased by 1%, while the market was up 6% to Mexico and down 5% to Canada due in large part to the strength of the Canadian dollar. The favourable currency rate proved a stimulus to travel abroad from Canada, on the other hand trips were up 11% in the first eight months of the year. Many countries in Asia and the Pacific have already reported outbound trip numbers although, as indicated above, comparisons from one market to another are difficult because of the different measures used. While China is reported to have shown a double-digit increase, most other Asian markets have been disappointing. Japanese outbound trips fell by 6% in the first eight months of 28, Taiwan (pr. of China) was down 3.5% and the Republic of Korea fell 2%. In contrast, Australian outbound trips grew by 9% over the same period and South Africa s rose 2.5% from January to July. Evaluation by UNWTO s Panel of Tourism Experts UNWTO Tourism Confidence Index falls to its lowest level since 23 (Continued from page 1) The almost 3 specialists from around 1 countries and territories who constitute UNWTO s Panel of Tourism Experts gave a rating of 93 to their evaluation of world tourism performance during the period May- August 28, down from 119 in the first four months of 28. This evaluation clearly reflects the depressed results of the summer months, in particular in the case of Asia and the Pacific and Europe. So far, it has been rare to see the overall evaluation (as opposed to the responses of individual experts, who may be responding from the point of view of distressed destinations or segments of the industry) stray into negative territory. In fact, in the six-year existence of the Index it has happened only once before for the first survey of all, made in January 23, in the wake of the SARS crisis. Moreover, the Panel members also do not expect any improvement in the next four months (September to December), giving the period a rating of just 9 (down from 112 in the May survey and 124 in January). Actually it is the first time that overall prospects are negative, meaning that the number of experts rating the performance of the next four months as worse or much worse exceed those who rate it as better or much better (a score of 1 indicates no change ). Evaluation: May-August 28 On a scale of to 2, UNWTO s Panel of Experts from around the world gave an average score of 93 to their evaluation of tourism performance in the second four months of 28 down from the 119 which they gave in May for the first four months of the year, and from the 129 given in January for the last four months of 27. Experts from Asia and the Pacific (86) are the most pessimistic reflecting the abrupt slowdown of demand that has been reported in terms of data for the region; these are closely followed by experts from Europe (87) and from the Americas (98), though these were much more balanced between those who thought there was an improvement in the last four months, those who thought there was a deterioration, and those who rated the situation as unchanged. Among experts from Africa (118) and the Middle East (133) those who voted for an improvement were still in the majority. But in all five regions the average evaluation declined in both May (for the first four months of the year) and in September (for May-September) Source: World Tourism Organization (UNWTO) UNWTO Panel of Tourism Experts Prospects Aug.-Dec. 28 (number of experts: n = 293) [] Much worse [5] Worse [1] Equal [15] Better [2] Much better

12 Much better Better Equal Public UNWTO Panel of Tourism Experts Private 75 Prospects 75 Worse 5 Evaluation 5 Much worse T1 T2 T Source: World Tourism Organization (UNWTO) Source: World Tourism Organization (UNWTO) T1 T2 3 4 Prospects Evaluation 5 6 Volume 6 No. 3 October 28 7 T3 8 Much better Better Equal Destinations Transport 75 Prospects 75 Worse 5 Evaluation 5 Much worse T1 T2 T Source: World Tourism Organization (UNWTO) Source: World Tourism Organization (UNWTO) T1 T2 3 4 Prospects Evaluation T3 8 Accommodation & Catering Much 175 better 15 Better 125 Equal 1 75 Prospects Worse 5 Evaluation Much worse 25 T1 T T3 8 Tour Operators & Travel Agencies T1 T2 3 4 Prospects Evaluation T3 8 Source: World Tourism Organization (UNWTO) Source: World Tourism Organization (UNWTO) Much better Better Equal 1 75 Worse 5 Much worse 25 General Industry Bodies & Other T1 T2 3 4 Prospects Evaluation T3 8 Consultancy, Research & Media T1 T2 3 4 Prospects Evaluation T3 8 Source: World Tourism Organization (UNWTO) Source: World Tourism Organization (UNWTO) For this edition responses have been received from experts based in Albania, Algeria, Andorra, Anguilla, Antigua and Barbuda, Argentina, Australia, Austria, Bahamas, Belgium, Belize, Bermuda, Bhutan, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Burkina Faso, Cambodia, Cameroon, Canada, Chile, China, Colombia, Costa Rica, Côte d'ivoire, Croatia, Cuba, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Germany, Greece, Guatemala, Guinea, Honduras, Hong Kong (China), Hungary, India, Iran, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Latvia, Lebanon, Liechtenstein, Lithuania, Macao (China), Malta, Marshall Islands, Mauritius, Mexico, Monaco, Morocco, Namibia, Netherlands, New Zealand, Nicaragua, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Republic of Korea, Reunion, Romania, Russian Federation, Rwanda, Saba, Saint Vincent and the Grenadines, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Swaziland, Sweden, Switzerland, Taiwan (pr. of China), Tanzania, Thailand, Togo, Tunisia, Turkey, United Arab Emirates, United Kingdom, United States, Uruguay, Venezuela and Vietnam. 12

13 Representatives of the Public Sector (12) remain more positive than the Private Sector (88) a consistent tendency since the middle of 27. Similarly, Destinations (14) were much more positive than Global Operators (7) a gap that has opened up since the beginning of this year. In spite of the concern about fuel prices and the evident distress of some carriers, representatives from the Transport sector (19) were still positive, as were experts from General Industry Bodies (17), while Tour Operators and Travel Agencies (11) were more neutral. The most negative responses and the sharpest decline among all surveyed sectors came from representatives of the Accommodation and Catering sectors (83). Representatives from Consultancy, Research and Media (82) were also strongly negative. Prospects: September-December 28 To judge from their responses, the experts are only slightly more pessimistic about the next four months than they were about the last four months: their average prediction was 9, compared with 93 for their evaluation of the last four months. Given that the available arrivals figures for August and September were much worse than those for earlier months, and that most of the panel responses were received previous to the global financial crisis of October, these results may still overly optimistic. Again the most pessimistic responses came from Asia Pacific (86) and Europe (76), with the sharper decline in ratings coming from Europe. Representatives from the Americas (99) remain close to neutral, while those from Africa (134) and the Middle East (129) are strongly optimistic. Indeed, the prospects from Africa are much stronger than they were four months ago, when they averaged just 114. It should be pointed out, however, that the numbers of experts contributing to the survey from these regions remain comparatively small. Just as they were more positive about the last four months, representatives of the Public Sector remain more positive about the prospects for the next four months (14) than the Private Sector (81). Interestingly, the Transport sector (19) is more optimistic than it was four months ago (88), at a time when international oil prices were close to their peak. All other sectors have moved into negative territory, including representatives of Accommodation and Catering (81), Tour Operators and Travel Agents (94) and Consultancy, Research and Media (76). The most startling rating comes from Global Operators, whose 55 score is by five points the weakest average rating reported by any sector since the survey began in 23. One can only assume that these travel industry professionals, whose business focuses on the whole world rather than individual regions or sectors, have the misfortune of seeing the worst-case scenario. The UNWTO Tourism Confidence Index The UNWTO Tourism Confidence Index is based on the results of an survey conducted by the UNWTO Secretariat among selected representatives of public and private sector organizations participating in the UNWTO Panel of Tourism Experts. The survey has been repeated every four months since May 23 in order to keep track of actual performance, as well as perceived short-term prospects, of the tourism sector. This allows performance and prospects to be compared over time, as well as providing a comparison of the actual performance of the past four months with prospects forecast for the same period four months earlier. Results are also broken down by region and by sector of activity. These breakdowns should, however, be interpreted with caution as they may in some cases be based only on a relatively small number of responses. The UNWTO Secretariat s aim is to continuously expand and improve the Panel sample. Experts interested in participating in the survey, in particular from countries still not included in the listing below, are kindly invited to send an to <barom@unwto.org>. How to read this data For the UNWTO Tourism Confidence Index members of the UNWTO Panel of Tourism Experts are asked once every four months by to answer the following two simple questions: - What is your assessment of tourism performance in your destination or business for the four months just ended (or about to end) as against what you would reasonably expect for this time of year? - What are the tourism prospects of your destination or business in the coming four months compared with what you would reasonably expect for this time of year? Participants should select one of the following five options: much worse []; worse [5], equal [1]; better [15], much better [2]. Results are averaged and broken down by region and by activity. A value above 1 means that the number of participants who evaluate the situation as ' better or much better, outnumber the participants who reply worse or much worse. In addition, participants are also invited to include a qualitative assessment in their own words. The analysis contained in the UNWTO World Tourism Barometer is in large part based on their comments. 13

14 Regions Europe Results Except for the expected decline in April because of the early Easter in March, growth in Europe was still significant up to May. But in May-June UNWTO s Panel of Experts was already noting a significant slowdown in growth. This slowdown has now been emphatically confirmed. Arrivals in the first eight months of the year are estimated to have increased by only 2% (compared with the 5% increases achieved in 27 and 28) and most of that growth was concentrated in the first five months of the year. For individual destinations, there are plenty of negative figures scattered around for June, July and August. The slackening demand is spread across most source regions, including the USA, the eurozone, the UK and Asia, although some favoured destinations are still seeing increases from the Russian Federation, other parts of Eastern Europe, the Middle East, the Nordic countries and South America. There are also some reports that length of stay and spending per visitor are declining. International Tourist Arrivals, monthly evolution Europe * Source: World Tourism Organization (UNWTO) (% change) The recent figures for Northern Europe are especially weak. Iceland is one of two countries, with the UK, to have reported a positive monthly figure for arrivals since May. The Nordic countries are concerned about the deteriorating world economic climate, the strong euro, higher fuel costs and uncertain air services, plus bad weather. Although some (e.g. Finland and Norway) continue to report increases in arrivals from Russia, Poland and some other Eastern European markets, the declines from Western and Southern Europe have often been larger than expected. The UK (+2%) has experienced declines in arrivals in most months since April. Possible culprits include the growing economic uncertainty in major markets, poor weather, and airline failures and route cuts. Within the UK, London hotels have been reporting strong figures, which might be an indication that Europeans have taken advantage of the cheaper pound to visit the capital. Ireland (%) faced similar problems, compounded by the strong euro, but noticed a particular weakness in travel from the USA (-4%). Western Europe also displayed a serious downturn in June to August or September, but some countries are reporting increases in arrivals in July and August, including Austria, Germany, Liechtenstein and Switzerland. Experts are less positive than they were in May, quoting the increasing impact of high oil prices (flight surcharges, car travel costs, but also high energy costs in the home), the real-estate crisis in the USA and the financial crisis in the USA and Europe. The UEFA EURO 28 Football Championships provided a boost to results for Austria and Switzerland, although other leisure segments, namely cultural travel, suffered somewhat at the same time. For the period through September, Austria reports an increase of 6% for international arrivals in commercial accommodation. Arrivals from Scandinavia and Eastern Europe have risen more strongly than those from major traditional markets like Switzerland, Italy, Belgium and the UK. Arrivals in Swiss hotels were up 4% in the first eight months of the year. It is said that the strong euro (against the Swiss franc until the month of October) has brought in travellers from Europe, while the weak US dollar has encouraged Swiss people to take longhaul holidays. Germany reports modest increases in arrivals (+3% through August), with an emphasis on markets in Eastern Europe and India. Other destinations in Western Europe are posting weaker arrivals figures. Belgium and the Netherlands were both already in negative territory in June the Netherlands being more heavily down than Belgium. Anecdotal reports from both Wallonia and Flanders point to increases in arrivals, with the former emphasising arrivals by rail and the latter large increases from the BRIC markets (Brazil, Russia, India and China). The figures from France have also been weak. It is reported that arrivals from the eurozone have held up well, and increases from Russia and the Middle East have at least partially balanced the declines from the USA, UK, Japan and China. Paris reports a 2% decline from the USA in the first half of 28. Chinese arrival numbers are said to have been affected by the adverse reaction from China to French reports about the riots in Tibet and France s willingness to receive the Dalai Llama. There is also a suggestion that, because of the economic and financial concerns, French tourists have chosen destinations closer to home, to the benefit of domestic tourism. Arrivals in Central and Eastern Europe are believed to have held up relatively well, with an estimated increase of 3% in January-August. Estonia, Latvia and Lithuania have all reported strong figures for the first half of the year, with no slackening in the second quarter. In Estonia (+5%), new ferries on the Tallinn-Helsinki route, new air services to Germany, and new hotels in Tallinn have encouraged significant promotional efforts and special offers, bringing 14

15 International Tourist Arrivals by Country of Destination Full year Change Monthly or quarterly data series (% change over same period of the previous year) Series 26 27* 6/5 7*/6 Series 28* 27 (1) (%) YTD Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Europe 462,84 484, Northern Europe 56,516 58, Denmark TCE 4, NCE(1) Finland TF 3,375 3, TCE Iceland TCE 971 1, THS(2) Ireland TF 8,1 8, TF Norway TF 4,7 4, THS Sweden TCE 4,729 5, THS United Kingdom TF 3,654 3, VF Western Europe 149, , Austria TCE 2,269 2, TCE Belgium TCE 6,995 7, TCE France TF 78,9 81, THS Germany TCE 23,572 24, TCE Liechtenstein THS THS Luxembourg TCE THS Netherlands TCE 1,739 11, TCE Switzerland THS 7,863 8, THS Central/Eastern Europe 91,21 95, Bulgaria TF 5,158 5, TF Czech Rep TCE 6,435 6, TCE Estonia TF 1,94 1, TCE Hungary TF 9,26 8, TF Latvia TF 1,535 1, VF Lithuania TF 2, TCE Poland TF 15,67 14, VF Romania TCE 1,38 1, TCE Russian Federation TF 2, VF Slovakia TCE 1,612 1, TCE Southern/Mediter. Eu. 164, , Andorra TF 2,227 2, TF Bosnia & Herzg TCE TCE Croatia TCE 8,659 9, TCE Cyprus TF 2,41 2, TF F.Yug.Rp.Macedonia TCE TCE Greece TF 16,39 17, TCE Israel TF 1,825 2, TF Italy TF 41,58 43, TF Malta TF 1,124 1, TF Montenegro TCE TCE(3) Portugal TF 11,282 12, TCE San Marino THS VF Serbia TCE TCE(3) Slovenia TCE 1,617 1, TCE Spain TF 58,19 59, TF Turkey TF 18,916 22, TF Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used (1) Including holiday dwellings (2) Hotels only (3) From 27 on, arrivals from Montenegro / Serbia are included as foreign 15

16 in tourists from neighbouring countries. Arrivals in Latvia and Lithuania were up 9% or more in the first six and seven months, but responses from the panel of experts suggest that the third quarter overall may have been less positive. Slovakia reports an increase of 14% in arrivals in the first half of the year, while the Czech Republic (+4%) and Hungary (+3%) also show reasonable increases. Poland, on the other hand, reported a decline of 9%. Since Poland joined the Schengen area in January, travellers from Russia, Ukraine and Belarus have needed visas, which has impacted negatively on demand from such important source markets. Poland also has lost some airline services, while the Czech Republic has gained some. The newest EU members, Bulgaria and Romania, report very different results: arrivals in Bulgaria were up 17% in the first six months, while those in Romania declined by 4% overall with significant double-digit drops between June and August. Both countries are making an extraordinary effort in improving the quality of their services to compete with more popular destinations in Southern Europe. Bulgaria, for example, reports improvements in infrastructure and investments in resorts, holiday villages and new products in high-value niche sectors (golf, spas and wellness, and nature and cultural tours). In Southern and Mediterranean Europe, the focus recently has been on the emergence of the Western Balkans (i.e. largely the countries of the former Yugoslavia) as significant destinations. Croatia is by far the most important, and it continued to grow exceptionally rapidly in the first five months of 28, with an increase of 3% in arrivals at commercial establishments. This growth then came to a halt in June and July, but August was up by 4%. On much smaller scales, Bosnia and Herzegovina, Montenegro and the former Yugoslav Republic of Macedonia also reported substantial rates of growth, and their increase was sustained through the second quarter of the year. Slovenia, a more mature destination, achieved more modest increases, with signs of a slowdown in the period June to September. Elsewhere in the eastern Mediterranean, Turkey continues to reinforce its position: arrivals increased by 13% in the first nine months of the year, including double-digit growth between May and August. The success of Turkey is attributed to its very attractive exchange rate (making it a competitive alternative to eurozone Mediterranean destinations for Western European holidaymakers) and its relaxed visa regime (facilitating travel from Russia, other CIS countries and the Middle East). In Greece arrivals at commercial accommodation units were down 8% in the first six months. The destination might have suffered from a higher euro and correspondingly high prices. Arrivals from important traditional markets have been declining steadily, including the USA, the UK and Germany. Cyprus also has seen no growth since March. The depreciation of sterling prompted a decline in arrivals from the UK, but it seems that arrivals from Germany have fallen more heavily. In compensation, arrivals from Russia are reported to be up 23%. The strong euro and local The monthly or quarterly statistics included in this issue have been compiled by the UNWTO Secretariat based on preliminary data as disseminated by the institutions (e.g. National Tourism Authorities, Statistics Offices, Central Banks) of the various countries and territories through websites, news releases, and bulletins, or provided through direct contacts with officials or through international organisations such as the Caribbean Tourism Organization (CTO), the European Travel Commission (ETC), Eurostat, the Pacific Asia Travel Association (PATA) or the South Pacific Tourism Organization (SPTO). Information in this issue reflects data available at the time of preparing the UNWTO World Tourism Barometer. Whenever necessary, updated data will be included over time as it becomes available and without further notice. In the tables on International Tourist Arrivals for the various UNWTO regions, series are chosen that can serve as an indicator of trends in tourism development to selected destinations. The monthly series represented do not coincide in all cases with the annual series usually reported for the various countries (e.g. visitor arrivals or nights instead of tourist arrivals) and sometimes only relate to a part of the total tourism flow (e.g. air traffic, specific entry points). Please refer to the notes on page 2 for further explanations. The (sub)regional totals are approximations for the whole (sub)region prepared by UNWTO based on trends in the countries with data available. The data on International Tourism Receipts offers additional information on the development of inbound tourism, while the data on International Tourism Expenditure serves as an indicator of trends in outbound tourism. Both series correspond to the respective Travel Credit and Travel Debit items in the Services section of the Balance of Payments. And both cover all transactions related to the consumption by international visitors of, for instance, accommodation, food and drinks, fuel, transport in the country of destination, entertainment, shopping, etc. Data includes transactions generated by tourists (overnight/same-day visitors) as well as by same-day visitors (excursionists, including cruise passengers). It does not cover expenditure on international transport contracted outside the traveller s country of residence, which is included in the Balance of Payments under the separate item Transportation, passenger services. The institutions responsible for the Balance of Payments generally estimate travel expenditure from a visitor survey or outbound survey and/or bank records of international transactions (exchange of foreign currencies in and outside the country, credit card payments, transactions between tourism businesses, etc). So as not to be influenced by exchange rate fluctuations, the percentages included in the tables are based on values in local currencies, except where otherwise indicated. Countries that are not included in this overview, but which have monthly data at their disposal, are kindly requested to contact the UNWTO Secretariat at barom@unwto.org. 16

17 International Tourism Receipts US$ Local currencies, current prices (% on previous year) * Series 5/4 6/5 7/6 28* 27* Europe 231,33 377, , Northern Europe 36,51 6,265 69, (million) YTD Q1 Q2 Q3 Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Denmark 3,694 5,562 6, Finland 1,411 2,375 2, Iceland Ireland 2,633 5,346 6, Norway 2,163 3,76 4, Sweden 4,64 9,84 12, United Kingdom 21,857 33,695 37,669 sa Western Europe 81, , , Austria 9,784 16,643 18, Belgium 6,592 1,295 1, France 3,757 46,345 54, Germany 18,693 32,81 36, Luxembourg 1,86 3,614 4, Netherlands 7,217 11,348 13, Switzerland 6,645 1,82 12, Central/Eastern Europe 2,348 38,186 48,351.5 Azerbaijan $ Belarus $ Bulgaria 1,76 2,588 3, Czech Rep 2,972 5,52 6, Estonia 58 1,24 1, Georgia $ Hungary 3,757 4,233 4, Kazakhstan ,13 $ Kyrgyzstan $ Latvia Lithuania 391 1,38 1, Poland 5,677 7,239 1, Rep Moldova $ Romania 359 1,298 1, Russian Federation 3,429 7,628 9,67 $ Slovakia 433 1,513 2, Ukraine 394 3,485 4,597 $ Southern/Mediter. Eu. 93,49 147,46 166, Albania 389 1,1 1, Bosnia & Herzg Croatia 2,782 7,92 9, Cyprus 1,941 2,4 2, F.Yug.Rp.Macedonia Greece 9,219 14,259 15, Israel 4,114 2,777 3,59 $ Italy 27,493 38,13 42, Malta Montenegro Portugal 5,243 8,377 1, Serbia $ Slovenia 965 1,953 2, Spain 29,967 51,122 57, Turkey 7,636 16,853 18,487 $ Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used 17

18 inflation (fuel and food prices) continue to erode Cyprus s price competitiveness, and high airport charges have burdened the cost of air travel. Arrivals in Israel, meanwhile, seem to be soaring: they were up 28% in the first nine months and still substantial in July, August and September. Arrivals in the western Mediterranean have been much weaker than those in the east: those in Italy and Spain have been at best flat this year. By contrast, Malta (+1%) and Portugal (+7% for international arrivals at commercial accommodation units) have seen good growth. In Malta higher fuel surcharges kicked in during the month of June: there were double-digit increases in arrivals until June, but less than 2% in July, August and September. In contrast to most other European destinations, Italy began the year weakly and saw a slight improvement in the second quarter. Arrivals from Europe were stable, with slight increases from Germany, France, Belgium, Norway and Russia balancing declines from, the UK and Spain. From overseas markets, there was a decline from the USA (particularly in guided tours), but increases from Latin America and other emerging markets. Spain (-.9% through September) reports declines in arrivals in the last four months. The trend in Portugal appears to be better. Both countries were beneficiaries of the boom in low-cost airline services, and both countries report the withdrawal of some of these services and uncertainties about the future of others. Prospects Throughout the region, experts are worried about the financial crisis, the global economic downturn, the scarcity of credit, and the expected declines in consumer spending power. Higher prices are also a concern. Many experts mention high fuel prices. International oil prices are of course already well down from their peak summer levels, but if the euro slips in value at the same time (as it was doing in October), the eurozone will see little benefit. It will also be some time before hedges against rising fuel prices taken out earlier in 28 are unwound, permitting a reduction in airline fuel surcharges. In many destinations, consumer prices in general have been rising faster than expected. However, a slower overall growth and in some countries a period of recession will presumably bring inflation down. This problem cannot be separated from the current volatility of exchange rates. Countries experiencing heavy depreciations might also see an acceleration in inflation which for international visitors might not matter (the cheaper currency would offset the higher prices), but which would be serious for domestic and outbound travellers. Along with consumer purchasing power, changing relative exchange rates are going to be an important factor in the scale and direction of tourism flows in the following seasons. UNWTO Panel of Tourism Experts Europe Much better Better Equal Prospects Evaluation Worse Evaluation Prospects 5 Much worse 25 T1 T2 T T1 Source: World Tourism Organization (UNWTO) T2 3 T3 T1 T2 4 T3 T1 T2 5 T3 T1 T2 6 T3 T1 T2 7 T3 T1 T2 8 T3 There is also an expectation that business travel and the meetings industry will turn down in line with world trade and corporate cost cutting. So far it is reported to have held up reasonably well in, for instance, France, Switzerland and Monaco, but there are reports of slowdowns in Germany, the Netherlands and Spain. More importantly, recent reports by market analysts suggest that this segment will be the first to really suffer in a major downturn. The boom in European tourism in recent years has been closely associated with the growth of low-cost airline services and of optional short breaks. It is possible to argue that in straightened times short breaks will suffer more than main holidays, that the length of main holidays will be curtailed, and that long-haul holidays will suffer more than short-haul. Evidence so far does point to a greater impact on demand for long-haul trips at least in the leisure segment. Much will depend on the viability of low-cost airlines (and indeed, given the uncertainties about the future of some major airlines, any airlines) on specific routes at current prices. If the airlines are making losses, prices must rise, or capacity be cut, or both. But overall there would seem to be little prospect for growth in European tourism over the next few months. 18

19 Asia and the Pacific Results Given that large parts of Asia have been enjoying unprecedented rates of economic growth, which have moderated only slightly so far in 28, the pessimistic reports coming out of the region about tourism and, in particular, the airline industry over the past few months have been somewhat surprising. The ratings by UNWTO s Panel of Experts s from the region have fallen sharply over the course of the year from an average 128 in January (for the four months September through December 27), which was far above neutral, to 14 for the first four months of 28 (in June), to an all-time low of 83 in September/October (for the months of May through August). This implicitly indicates a decline in business, which is also confirmed by both arrivals estimates and air traffic performance. UNWTO s monthly figures for arrivals suggest that the increasing pessimism through the year was justified, if a little premature and perhaps it is too early to tell a little exaggerated for some subregions. Arrivals were up 9% overall in the first quarter but only 3% in Q2. And from the figures so far available for July and August, it would seem that the region will be lucky to get away without a slight decline in arrivals in Q3, compared with the same period in 27. International Tourist Arrivals, monthly evolution Asia and the Pacific * Source: World Tourism Organization (UNWTO) (% change) The principal factor affecting the region as a whole, repeated by a great many Panel commentators, has been the increase in tourism costs and, in particular, the rise in aviation fuel prices and associated fuel surcharges. A number of airlines have failed and capacity on several routes has been severely cut back in many cases, simply because older aircraft have been mothballed because of their higher operating costs. Passenger numbers are reported to be down in the region both in August and September (IATA and AAPA, see section on Air Transport). The increase in travel costs has restrained consumers increasingly aware of the worldwide economic uncertainties and of the pressures on their family budgets caused by inflation. In some markets, the withdrawal of fuel subsidies and the reduction in aircraft capacity has been particularly painful. Outbound numbers from Japan, the Republic of Korea and Taiwan (pr. of China) are reported to have fallen heavily. Outbound trip volume from Japan, for example, was down 1% in August and September, and 6% for the first nine months of the year. But individual destinations have also been seriously affected by special circumstances, such as the Olympic Games in China. Though an excellent event in sporting terms and in showcasing China s emergence as a modern economic and political power, international tourism flows were somehow affected. It is important to note that experience shows that in many previous cases major sport events translated in a reduced volume of tourism demand in view of travellers expectations over higher prices and crowded sites during such activities. Security concerns led the Chinese Government to reduce the number of visas issued for all types of visitors, while many tour operators temporarily shifted their efforts to other destinations. Coupled with other problems, such as the late snowfalls in southern China and the earthquake in Sichuan in May, this led to a deterioration in the monthly arrivals figures for China from +11% in February to -11% in August and -9% in September. Overall, arrivals over the first nine months of the year were down by 1%. Elsewhere in North-East Asia arrivals generally held up better until August, when, with the exception of Macao (China), there was a marked deterioration for all destinations. The year-to-date figures are lower for Hong Kong (China) (+2%) it seems that travellers were deterred by the difficulties of travelling onwards to mainland China before and during the Olympic Games but much higher for Macao (China) (+15%), which has led arrivals growth in the subregion for the last three years. Japan exemplifies the countries in which the deteriorating economic situation has been seriously affecting both inbound and outbound travel. Respondents talk about the lack of consumer willingness to spend, with stagnant incomes and rising fuel, food and travel prices, the decline of the Japanese yen against major Asian currencies, the Olympics factor and other discouraging developments in favoured destinations, the reductions in airline services and, recently, the zero-commission policy. Outbound travel spending has indeed been declining throughout the year, continuing a trend that set in in 25. However, inbound figures were quite good, averaging +6% in the first nine months of the year but again the figures for August and September were negative. A similar pattern is shown by the Republic of Korea: arrivals (+7%) were helped by the Republic of Korea-Japan tourism exchange programme and by the diversion of some travellers who might otherwise have gone to China. With all the attention on China and India, the prosperity across most of South-East Asia has gone almost unnoticed. In the first eight months of 28 the arrivals growth in the subregion (+6%) was double that in North- East Asia, and there has been no apparent slowdown in recent months. Indonesia is into a second year of strong 19

20 growth after a troubled period from which it started to recover last year: arrivals in the first eight months of 28 rose 13%, including a 21% increase in August thanks largely to a 3% rise in arrivals in Bali over the year to date. Arrivals in Malaysia were up only 3.5% in the first nine months, but this followed an exceptional 2% increase in 27. Arrivals were 12% up in August, but September data is stagnant. Arrivals in Singapore, which are flat over the nine eight months of the year, show a sharp falling trend in recent months, in spite of several high-profile events, such as the first night-time Formula One Grand Prix. Singapore has a new ambition to become the arts and entertainment centre of Asia, which includes in 21 the inauguration of two new integrated resorts, complete with casinos. Thanks to the opening of these two high-profile resorts, plus a large number of other new attractions and products coming on line Singapore will host the first International Youth Olympics the same year, for example it is confident of a recovery of demand by 21. The Philippines has also been affected by the withdrawal of air services and by the general economic uncertainty in the region. Nevertheless, arrivals were up 6% in the first seven months of the year. International Tourist Arrivals by Country of Destination Full year Change Monthly or quarterly data series (% change over same period of the previous year) Series 26 27* 6/5 7*/6 Series 28* 27 (1) (%) YTD Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Asia and the Pacific 166, , North-East Asia 94,264 14, China TF 49,913 54, TF Hong Kong (China) TF 15,822 17, TF Japan VF 7,334 8, VF Korea, Republic of VF 6,155 6, VF Macao (China) TF 1,683 12, TF Taiwan (pr. of China) VF 3,52 3, VF South-East Asia 53,19 59, Cambodia TF 1,591 1, VF Indonesia TF 4,871 5, TF(1) Lao P.D.R. TF VF Malaysia TF 17,547 2, TF Myanmar TF TF Philippines TF 2,843 3, TF Singapore TF 7,588 7, VF Thailand TF 13,822 14, TF Vietnam VF 3,583 4, VF Oceania 1,543 1, Australia TF 5, VF Cook Is TF TF Fiji TF TF French Polynesia TF TF Guam TF 1,212 1, TF Kiribati TF VF N.Mariana Is TF VF New Caledonia TF TF New Zealand VF 2,422 2, VF Palau TF TF Papua New Guinea TF TF Samoa TF TF Tonga TF TF Vanuatu TF VF South Asia 8,866 9, Bhutan TF TF India TF 4,447 5, TF Maldives TF TF Nepal TF VF(2) Sri Lanka TF TF Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used (1) Foreign arrivals through thirteen selected Ports of Entry (2) Air arrivals only 2

21 Thailand has been the subject of negative media attention, associated with the political tensions in the capital and the border dispute with Cambodia, but its tourism industry appears to be doing well. Overall, international tourist arrivals through June show a 1% increase and passenger arrivals through Bangkok Airport were up 13% through August. The popular beach resorts, such as Phuket, Krabi and Phang-nga, are reported to be doing well, and there have been large increases in arrivals from India, Russia and other emerging markets. Reports from the Mekong region are also varied. Arrivals in Cambodia (+1%) seem to have held up well. In contrast, arrivals in Vietnam, which had been rising very rapidly during 27 and up to May this year, have been falling heavily since June perhaps in part due to the fact that its economy has overheated and inflation has soared to 25% but the overall count for the first nine month of the year is still 5% up. India, the dominant destination in South Asia, has of course been enjoying a remarkable economic boom, associated with soaring numbers of inbound and outbound travellers. But the growth in inbound numbers has been slackening throughout the year: they were up 12% in the first quarter, 9% in the second and 6% in the third (in September they were up just 1.5%), but overall growth was still much above the regional average. Elsewhere in South Asia, several destinations (including Pakistan, Bangladesh and Sri Lanka) are suffering from political turmoil and severe local economic crises. Arrivals in Sri Lanka in the third quarter were down by as much as 26%. In Nepal a welcome upturn in arrivals in the first quarter was reversed in the second and third. The Maldives reports a modest increase this year (+2%) after the 12% growth of 27. On its still modest base volume, tourism in Bhutan continues to thrive: arrivals in January-July were up 42%, with a remarkable 85% increase in July. Bhutan is boosting its status as an exotic, special interest upmarket and exclusively small destination with a range of new products, including folk festivals, nature trails and a mushroom festival. Oceania (+.4%) is reporting the weakest arrivals figures in the Asia Pacific region, as it has for several years. The monthly arrivals figures for Australia and New Zealand have been erratic, but the overall trend was flat even before the July-August downturn. High airfares and some capacity problems are restricting both long-haul International Tourism Receipts US$ Local currencies, current prices (% on previous year) * Series 5/4 6/5 7/6 28* 27* (million) YTD Q1 Q2 Q3 Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Asia and the Pacific 85, , , North-East Asia 39,428 75,231 83, China 16,231 33,949 37,233 $ Hong Kong (China) 5,97 11,638 13, Japan 3,373 8,469 9, Korea, Republic of 6,834 5,788 5,797 $ Taiwan (pr. of China) 3,738 5,136 5,137 $ South-East Asia 26,826 43,574 53,739. Indonesia 4,975 4,448 5,346 $ Malaysia 5,11 1,424 14, Philippines 2,156 3,51 4,931 $ Singapore 5,142 7,194 8, Thailand 7,489 13,41 15, Oceania 14,285 26,288 31,981.2 Australia 9,274 17,84 22, Fiji New Zealand 2,272 4,738 5, Solomon Is Tonga South Asia 4,797 11,423 13, Bangladesh Bhutan $ India 3,46 8,634 1, Iran 467 1,452 1,486 $ Nepal Pakistan $ Sri Lanka Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used 21

22 travel from Europe and the Americas, and medium-haul travel from Asia, while outbound travel from many leading Asian markets, such as Japan, the Republic of Korea and Taiwan (pr. of China), has been weak. Many Pacific islands have been subject to the recent vagaries of scheduled and charter flights: among the available figures, those for Fiji, the Northern Marianas, Vanuatu, Samoa and Papua New Guinea are up, but those for French Polynesia heavily down. Much better Better Equal Worse Much worse UNWTO Panel of Tourism Experts Asia and the Pacific T1 T2 3 4 Prospects Evaluation 5 6 Source: World Tourism Organization (UNWTO) 7 T3 8 Although several experts do disagree, especially as far as the UK market is concerned for which holidays are a priority even in times of great financial concerns there would seem to be little hope for a good wintering leisure season in Asia from Western Europe, although there might be slightly better one from Russia and elsewhere in Eastern Europe. It must now be assumed that leisure travel from Europe and the Americas will be at best flat and probably down through much of 29. Business travel from the Americas and Europe will presumably suffer in line with trade, and cash-strapped companies will be keen to economise on travel. These problems might suggest an actual decline in tourism activity. But a powerful positive factor will be the decline in oil prices. Assuming that Asian currencies remain strong, this will permit airfare fuel surcharges to be reduced and capacity to be recovered. Combined with the expected shift, in the prospering Asian economies, away from exports and investment towards more domestic consumption, this should permit continued growth in intraregional travel. Furthermore, domestic inflation rates are expected to moderate, which should ease the pressures on household budgets of the emerging middle classes, and also help fuel intraregional demand. Prospects Economic activity and incomes are still growing strongly across most of Asia Pacific (with some exceptions including Japan and Oceania), and such levels of growth should support continued increases in travel and tourism. The question, unanswerable at this moment, is how badly the Asian boom will be contaminated by the economic fallout from the international financial crisis. This applies especially to China. It scarcely seems possible that a country for which the International Monetary Fund still expects GDP growth of 9% in 29 will not soon be generating further increases in inbound and outbound tourism, and helping along the figures for neighbouring countries. But there can be little real doubt that the economic downturn will, for a while at least, stymie the growth in tourist arrivals throughout much of the region. The good news is that the Chinese outbound travel market has again picked up strongly (it was up 15% up to September) and growth is expected to continue into 29. However, some of the other leading intraregional outbound markets, such as Japan, the Republic of Korea and Taiwan (pr. of China), have been reporting quite heavy downturns in outbound travel and spending, and there is little hope for an immediate recovery: incomes in these export-oriented economies are unlikely to rise much in 29. Equally, travel from Australia and New Zealand will be affected by the sense of economic uncertainty, the decline in their currencies attendant on the decline in international commodities prices, the scarcity of consumer credit, the decline in house prices and fears about job security and incomes. 2nd UNWTO Conference on Tourism Trends and Outlook December 28, Guilin, China 28 In collaboration with the Pacific Asia Travel Association (PATA), the Boao Forum for Asia and the Hong Kong Polytechnic University In an increasingly volatile market the tourism sector faces new and more complex challenges. Financial crises, economic downturn, lack of confidence in markets are some of the factors putting constraints on a sector growing above average over the past few years. Destinations and companies are consequently under pressure to be more and more competitive in these difficult times. But the tourism sector must also look beyond the present and prepare itself for longer-term challenges and market changes. Against this background, the 2nd UNWTO Conference on Tourism Trends and Outlook Conference will: - Analyze the current economic situation and its impact on the tourism sector with a special focus on Asia and the Pacific - Debate on the short-term prospects for international tourism in 29, focusing on major source markets behaviour and changes - Identify and explore the long-term key tourism trends that will shape the future of the sector, focusing on the Asia-Pacific region For more information and registration: 22

23 The Americas Results International tourism in the Americas is in catch-up mode: it consistently lagged behind most of the rest of the world from 21 to 26, but has been growing much faster in 27 and 28. Setting aside the Middle East which has outpaced the rest of the world in all respects the Americas has shown the fastest growth in arrivals of all world regions during the current year and the most moderate slowdown in recent months. It is the only region, in fact, in which arrivals have been growing faster than they were in 27. This is mainly due to the recovery in travel to the USA, which accounts for nearly 4% of total international arrivals in the Americas. The US Department of Commerce reports a 9.5% increase in arrivals in the first seven months of the year, spread evenly across all major markets except Japan (still declining) and Mexico (now moderating). It attributes this to the weak US dollar the USA has increasingly been perceived, in particular in European source markets, as a value-for-money destination, in which the opportunities for shopping went some way to compensate for high airfares and increased promotional investments by the travel industry in international markets as the domestic market has slowed. International Tourist Arrivals, monthly evolution Americas * Source: World Tourism Organization (UNWTO) (% change) Arrivals in Canada continue to decline: they were down 4% in the first seven months of the year. Arrivals from the USA and Japan remained weak, but those from Mexico and France were stronger than expected (it is Quebec s 4th anniversary this year). The principal problem remains the strength of the Canadian dollar. Although it soon fell back from its unfamiliar parity with the US dollar in January, it did not begin to fall more quickly until October. The trade did not feel any effects from the US tax rebate, and the implementation of the Western Hemisphere Travel Initiative (WHTI) continued to affect cross-border travel. Other problems included high fuel prices (suppressing demand for both automobile and air travel) and declines in flight capacity from most major markets. Although consumer price inflation in Canada remains relatively low, tourism prices have been rising rather faster, perhaps in part attributable to the fact that the Canadian Government has scrapped the general sales tax (GST) rebate for foreign visitors. Landing charges for airlines are also considered to be high and Canada has still not signed an Approved Destination Status (ADS) agreement with China. In Mexico, arrivals in the first eight months rose 5% and international tourism receipts were up 7% in the same period. The Riviera Maya expected, but did not experience, a downturn in arrivals from the USA: it is believed that holidaymakers were diverted from more distant destinations to the area. The 28 hurricanes largely passed Mexico by, although some tour operators, fearing the worst, diverted their efforts elsewhere. Domestic travel is reported to have stabilised, and investment in new rooms (running at around 24, a year), infrastructure and ports continue apace. Arrivals in the Caribbean (+3%) were better than they were in 27, but most of the improvement was seen in the first three months of the year. In June-August arrivals were approximately flat. The recent slowdown cannot be blamed on the hurricanes which swept through the area. Although Cuba and Haiti were severely battered, the main tourist resorts were largely unaffected. Among the smaller islands, the only ones to report heavy damage to tourism were the Turks & Caicos. However, fear of hurricanes may have kept some travellers away from the Caribbean generally. A number of destinations (including the Bahamas, Bermuda and Puerto Rico) lament the withdrawal of air services, while others have noticed a slackening in demand from the USA and UK. Curaçao and Cuba report large increases in arrivals. Curaçao s 39% increase in the first half of 28 follows a 28% increase in 27. A considerable part of this increase is thanks to growth in arrivals from nearby Venezuela, while the strong euro is encouraging demand from the Netherlands. Cuba s 13% increase in the first eight months of the year reverses declines in 26 and 27. The Minister of Tourism, Manuel Marrero, said in September that the sector is bursting with vitality despite the passage of [the] hurricanes (which damaged some colonial and coastal towns, as well as picturesque hideaways in the tobacco-growing west, but spared the major tourist resorts). Other destinations reporting substantial increases in arrivals include Antigua, Bonaire, the Cayman Islands, Jamaica, St. Lucia and St. Maarten. Central America put in the strongest growth for tourism in the Americas in 25, 26 and 27. This growth moderated only slightly in the first eight months of 28, with a 9% increase in arrivals, and it was not until August that there were signs of weakness. The only country not sharing in the prosperity was Belize. Costa Rica, El Salvador, Guatemala and Nicaragua all report good increases in the first seven to eight months of the year, but the best performance was a 23% increase for Panama, following equally large increases in 26 and 27 and these figures do not include the same day visits generated by the booming cruise industry. 23

24 Arrivals have also been growing strongly in South America actually, at a higher rate so far than that achieved in the whole of 27. In August, the subregion appears to have taken over the lead among the Americas in terms of arrivals growth but it is too early to tell if this single month s performance is significant, especially as figures for the two largest destinations (Argentina and Brazil) are not yet available for this period. International Tourist Arrivals by Country of Destination Full year Change Monthly or quarterly data series (% change over same period of the previous year) Series 26 27* 6/5 7*/6 Series 28* 27 (1) (%) YTD Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Americas 135, , North America 9,595 95, Canada TF 18,265 17, TF Mexico TF 21,353 21, TF United States TF 5,977 55, TF(1) Caribbean 19,439 19, Anguilla TF TF Antigua,Barb TF TF(2) Bahamas TF 1,61 1, TF(2) Barbados TF TF Bermuda TF TF Bonaire TF TF Br.Virgin Is TF TF Cayman Islands TF TF Cuba TF 2,15 2, VF Curaçao TF TF Dominican Rp TF 3,965 3, TF Grenada TF TF Jamaica TF 1,679 1, TF Martinique TF TF Montserrat TF TF Puerto Rico TF 3,722 3, THS(3) Saba TF TF Saint Lucia TF TF St.Eustatius TF TF St.Maarten TF TF(2) St.Vincent,Grenadines TF TF Trinidad Tbg TF TF US.Virgin Is TF VF(2) Central America 7,14 7, Belize TF TF Costa Rica TF 1,725 1, TF El Salvador TF 1,279 1, TF Guatemala TF.. 1, VF Nicaragua TF TF Panama TF 843 1, TF South America 18,735 19, Argentina TF 4,173 4, TF Chile TF 2,253 2, TF Colombia VF 1,53 1, VF Ecuador VF VF Guyana TF TF Paraguay TF TF Peru TF 1,635 1, TF Uruguay TF 1,749 1, TF Venezuela TF TF Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used (1) Excluding Mexican visitors not travelling beyond the 25 miles U.S. border zone (2) Non-resident air arrivals only (3) Non-resident hotel registrations only 24

25 Arrivals in Argentina were up 4% in the first half of the year a more moderate increase than in recent years. The Ministry of Tourism reports that, in spite of the uncertain economic situation, arrivals from the USA and especially Brazil have continued to rise. As for Brazil, data for international tourism receipts shows an impressive 2% growth in the first nine months of the year, illustrating that a stronger currency has not yet taken toll in terms of inbound demand, at least in terms of earnings. There was plenty of conference business in São Paulo, resulting in high hotel occupancies. In Chile arrivals increased 8% in the first nine months, but trends were erratic: the first and third quarter were strong and the second weak,. There is much preoccupation with inflation (which is up to nearly 1%), fuel prices and the local and world economic situations, which are expected to impact on business travel and domestic leisure travel. On the other hand, tourism in Chile continues to display an ability to develop new nature-based products, niche ecotourism and cultural travel to the deserts and Aymara communities, for example. Arrivals in Uruguay are improving after several weak years: they were up 15% in the first eight months and this included a 35% increase in August. The increase in arrivals from Brazil is more than compensating for continued declines from Argentina and a tight European market. Uruguay is concentrating on health, rural and business/conference tourism to complement its traditional sun and beach tourism products. With a new government and a newfound sense of optimism, arrivals in Paraguay rose very strongly in the second four months of the year, after equally large declines in the first four months. There are new investments in hotels and a national Master Plan for Tourism, with a wide range of promotional efforts. Peru, which in 28 hosted the celebrations of World Tourism Day on 27 September, currently has the fastestgrowing economy in South America. Tourism is prospering, with lots of new investments and effective government support, and arrivals were up 13% in the first six months of the year. Ecuador and Bolivia also report good progress, but more moderate increases in arrivals. Colombia (+5% through September) stepped up intraregional promotion with good results in arrivals from Venezuela (+27%), Brazil (+2%) and Peru (+16%), while the number of arrivals from its largest source market the USA was maintained in spite of higher air fares. In Venezuela, with plenty of liquidity generated by high oil prices, outbound and domestic travel are reported to be strong. Prospects The open question now is: how badly will the crisis in financial markets affect the wider economy and consumer spending in different markets? Some respondents from the USA emphasise the continuing resilience of spending on travel. Most, however, list a catalogue of factors undermining travel demand, including high gas (petrol) prices, higher airfares, the scarcity of credit, the poor stock market performance and the housing market collapse. People are worried about their jobs, their retirement funds, their mortgages and debts, the value of their stocks, the value of the US dollar, and the general sense that the situation is out of control. Many people finance their desired lifestyles, and especially their tourism activities, by loans and credit cards. Now credit has become much tighter, and people are anyway worried about taking on new debt in this economic climate. Domestic travellers are therefore taking shorter trips closer to home and generally trading down. Business travel is also contracting in line with corporate profits. Much better Better Equal Worse Much worse UNWTO Panel of Tourism Experts Americas T1 T2 3 4 Prospects Evaluation 5 6 Source: World Tourism Organization (UNWTO) 7 T3 8 US outbound travel by air was up a modest 1% in the first seven months of 28. Travel to Europe is down by 4% but there are growth rates of between 3% and 5% in traffic to the Caribbean, Central and South America. In these circumstances, and bearing in mind that the economic situation deteriorated further during the third quarter, outbound travel is not likely to improve in the second half of the year, even with the recent declines in fuel prices and a recovery in the purchasing power of the US dollar. Nor can the Americas expect much growth in demand from Western Europe and Asia Pacific, where fears of recession are mounting and where few major markets are showing much enthusiasm about long-haul travel. There may be some growth from Russia, Eastern Europe, the Middle East and Africa, but these are still small markets for the Americas. The prospects for demand from India and China are also uncertain. Until very recently South America, still prospering and confident of its financial stability and conquest of inflation, was fairly confident that the crisis would pass 25

26 through it relatively gently. This perception may now be changing. The precipitous decline in their commodities prices and the withdrawal of easy credit terms for trade finance and investment may undermine the prosperity on which the surge in intraregional travel was based if not in the last part of 28, then in 29. The Caribbean may fare better, being closer, familiar and often (except those islands which cater for the very upmarket) relatively inexpensive destinations for US citizens. The same might be said for Central America, but expectations within the subregion seem to vary. Airlines apparently do not always share this gloom. Although there are plenty of reports of the withdrawal of air services, there are also reports of increased services to the Caribbean, Central America and some parts of South America mainly but not exclusively from the USA. Part of this may be attributed to a natural rebalancing of services between weak and strong airlines, and between more and less prosperous markets and destinations in times of economic stress. An important factor will be relative exchange rates. The US dollar has been tending to recover since the middle of the year, and over the space of a few days in October the Mexican, Brazilian and Chilean currencies lost up to a fifth of their values against the US currency. Such dramatic changes in relative exchange rates, if they persist, will have large effects on the willingness to travel and choice of destinations in different markets. In particular, the USA will become a more expensive destination. But there are some positive developments for travel to the USA. There are new visa waiver agreements for seven markets (the Republic of Korea, Estonia, Latvia, Lithuania, Hungary, the Czech Republic and Slovenia), and the Travel Promotion Act may well come into effect in 29. After being (finally) passed by the US House of Representatives, it was blocked by the Senate, but industry is optimistic it will re-emerge in the next few months as it is reportedly favoured by President Elect Barack Obama. The Act, if it is implemented, would establish a publicprivate partnership to promote the USA as an international travel destination. Travel promotion would be paid for at no cost to US taxpayers by private sector contributions and a modest fee on foreign travellers who do not pay for a US visa. It has been pointed out that the governments of nearly every other developed nation spend heavily to attract visitors; on the other hand, the individual states of the USA have compensated to some degree with their active tourism promotion abroad. 28 Edition of Turismo en Iberoamérica now available Tourism constitutes a key instrument for economic and social development in Iberoamerica, a community of 22 countries in the Americas and Europe with Spanish or Portuguese historical, cultural and economic ties. The newly released publication Turismo en Iberoamérica, Edición 28 [Tourism in Iberoamerica, 28 Edition], jointly produced by UNWTO and the Secretaría General Iberoamericana (SEGIB) [Iberoamerican General Secretariat], within the existing cooperation agreement between both institutions, shows the importance of the sector in the various countries and in the area as a whole, highlighting its opportunities and growth potential, as well as the challenges facing it. In 28, Iberoamerica received 128 million international tourist arrivals (14% of the world total of 93 million), generating US$ 11 billion, equivalent to 13% of global international tourism receipts (US$ 756 billion). An electronic copy of the 2-page publication (in Spanish and Portuguese only) is available for free download at 26

27 International Tourism Receipts US$ Local currencies, current prices (% on previous year) * Series 5/4 6/5 7/6 28* 27* Americas 13,81 154,97 171, North America 11, , , (million) YTD Q1 Q2 Q3 Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Canada 1,778 14,632 15, Mexico 8,294 12,177 12,91 $ United States 82,4 85,72 96,712 sa Caribbean 17,156 21,725 22, Anguilla Antigua,Barb Aruba 815 1,8 1, Bahamas 1,734 2,56 2, Barbados Bermuda Bonaire Curaçao Dominica Dominican Rp 2,86 3,917 4,26 $ Grenada Jamaica 1,333 1,873 1,853 $ Montserrat Saint Lucia St.Kitts-Nev St.Maarten St.Vincent,Grenadines Central America 2,958 5,469 6, Belize Costa Rica 1,32 1,732 2,29 $ El Salvador $ Guatemala 482 1,13 1,199 $ Honduras $ Nicaragua $ Panama , South America 9,215 14,375 17,69 2. Argentina 2,94 3,344 4,313 $ Brazil 1,81 4,316 4,953 $ Chile 819 1,222 1,419 $ Colombia 1,3 1,554 1,669 $ Ecuador $ Paraguay $ Peru 837 1,577 1,938 $ Uruguay $ Venezuela $ Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used 27

28 Africa and the Middle East Results In contrast to the situation in leading destination regions such as Europe and Asia and the Pacific, tourism demand for Africa and, more especially, the Middle East remained buoyant in the first eight months of 28. Indeed, evaluation by UNWTO s Panel of Experts of tourism s performance in the two regions over the period May through August 28, as well as its view of prospects for the next four months, remained strongly positive. International Tourist Arrivals, monthly evolution Africa * Source: World Tourism Organization (UNWTO) (% change) The Middle East has led the world so far in 28 with an estimated 17% increase in arrivals from January through August, growth which was sustained into July and August with 8-1% increases for those two months. Arrivals in North Africa increased by 7%, with a moderate slowdown in July and August. In contrast, arrivals in Subsaharan Africa are estimated to have increased by only 2%. South Africa bucked the trend, however, with a 7% increase in the first seven months of the year. The two principal destinations in North Africa, Morocco and Tunisia, are both reporting strong figures for arrivals. Morocco has again achieved the stronger growth (+8% in the first eight months of 28), a significant part of which comes from a double-digit growth registered in arrivals from Germany, the Netherlands, Spain and also from Moroccans living abroad. Experts in Tunisia (+5% in the first half of the year) are optimistic, especially as the local tourism industry is being enthusiastically supported by Middle Eastern investors, including three groups from the UAE: Sama Dubai, which is investing US$ 14 billion in the construction of an integrated residential and visitor resort on the Lake of Tunis; Al Maabar, which is building another at Ariana; and the Bukhatir Group, which is creating a 255- hectare City of Sports with golf, football, volley ball, basketball, handball, tennis, swimming, athletics and other sports facilities. Tunisia now boasts six golf courses, two of which have 27 holes, international diving centres and plenty of yachting clubs, and the new projects will bring in many more business and leisure facilities, as well as thousands of residential units and hotel beds. One of the key competitive edges of both Morocco and Tunisia are attractive prices compared with destinations on the northern shores of the Mediterranean, especially those in the eurozone, coupled with easy, attractively priced access and a myriad of tourism products. Egypt (statistically part of the Middle East) enjoys similar advantages, and is tapping not only Western European markets with success, but also sources further east, including Russia, Ukraine, Poland, the Czech Republic, and even India and other Asian markets. It also has strong links with other Arab markets, especially the Gulf States and Saudi Arabia. Arrivals in Egypt rose by 24% in the first six months of 28 slightly faster than in 27 and, in contrast to the situation in many other destinations, there is little evidence of a slump since then. Algeria continues to implement its Plan Qualité Tourisme Algérie, which includes performance contracts with hotel operators, ports and airports, improved border procedures, and measures to better manage beaches and their accommodation and leisure facilities. It reports that this is leading to an increase in the numbers of international and domestic holidaymakers. Currently among the list of success stories in Sub- Saharan Africa is Ghana: the buoyant economy is bringing in business tourists, who complement their visits with cultural and heritage tours. Highlights include special events (four international conferences), sports events (football) and ecotourism. Cross-border shopping trips from Nigeria and francophone neighbours are also increasing. Improving standards of infrastructure, utilities and transport (e.g. air-conditioned coaches to Lagos in Nigeria and to northern Ghana) are also helping the tourism industry. With some heavy qualifications, Nigeria, the Côte d Ivoire and Sierra Leone might also be mentioned as countries in West Africa where conditions for tourism are improving. Conditions for tourism in East Africa are mixed. There has been plenty of Arab, Indian and Chinese investment in the area, with spin-offs for business and cultural tourism, but also signs of a diminution of arrivals from traditional markets in Europe and North America as the economic downturn begins to bite. But some countries have suffered from internal problems. Arrivals in Kenya collapsed after the postelection civil unrest in December 27, and are recovering gradually: they were down 4% in the first seven months of the year, and still down 28% in July. There are also suggestions that competence is increasing in the safari holiday segment with new destinations with equally attractive natural attractions and infrastructure, such as Namibia, Botswana and Tanzania reinforcing their positioning. Tourism in Rwanda also seems to be thriving, with strong promotional efforts and investments in new hotels and resources. Attractions include the mountain national parks, bird watching, chimpanzees and gorillas, and the colourful Kwita Izina ceremony. The government 28

29 plans to upgrade the Gishwati Forest Reserve in Western Rwanda, providing better protection for its chimpanzees and extending the present replanting scheme (at one time the forest covered 1, hectares, but it has since shrunk to less than a quarter of this). International Tourist Arrivals, monthly evolution Middle East * (% change) South Africa has also been doing well in recent years, both in its role as a regional business and cultural hub and as a long-haul leisure destination. But the growth in arrivals has moderated from double-digit rates in earlier years to 8% in 27 and 7% in the first seven months of 28. The social turmoil early in 28, the rise in airfares, the local economic slowdown and growing international uncertainty constituted obstacles to stronger growth in South African tourism and this context a 7% increase in arrivals is remarkable, and with over 9 million arrivals a year (one third of the total Subsaharan count), the importance of the country to tourist development in the region can scarcely be underestimated. The Indian Ocean islands of Mauritius, Seychelles and Réunion all report moderate increases in arrivals in the first six to nine months of 28. Trends in the months June to August are varied, though, arrivals in the Seychelles have been negative since June while those in Mauritius have continued to remain positive. Source: World Tourism Organization (UNWTO) International Tourist Arrivals by Country of Destination Full year Change Monthly or quarterly data series (% change over same period of the previous year) Series 26 27* 6/5 7*/6 Series 28* 27 (1) (%) YTD Q1 Q2 Q3 Jan Feb Mar Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Africa 41,369 44, North Africa 15,74 16, Morocco TF 6,558 7, TF Tunisia TF 6,55 6, TF Subsaharan Africa 26,295 28, Kenya TF 1, VF(1) Mauritius TF TF Reunion TF TF Seychelles TF TF South Africa TF 8,396 9, TF Swaziland THS VF Tanzania TF NHS Middle East 41,366 47, Bahrain TF 4, VF Egypt TF 8,646 1, VF Jordan TF 3,547 3, TF Lebanon TF 1,63 1, TF Palestine THS THS Saudi Arabia TF 8,62 11, TF Untd Arab Emirates THS THS(2) Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used (1) Tourist arrivals in the International Airports of Jomo Kenyatta, Mobassa and Moi, as well as by Cruise Ships (2) Dubai only 29

30 The outstanding performance among the world s regions in 28 has been coming from the Middle East, with an estimated 17% increase in arrivals in the first eight months five times the world average and far ahead of any other region or subregion. Although data reported is still scattered and final data may prove the growth is overestimated at this moment, the region s much better than average performance is clearly related to the freedom to invest, namely in tourism, generated by the high oil prices of recent years. All eyes have been on the huge investments undertaken in the UAE emirate of Dubai, with an awareness that others destinations in the region, including Abu Dhabi, Qatar and Bahrain, have been making strong efforts in this sense. Arrivals in hotels in the UAE rose by 8% in the first six months of 28 (including a 9% decline in June), in spite of the usual catalogue of new air services, hotels, leisure-oriented projects, festivals and business events. The annual Dubai Summer Surprises shopping festival was generally rated a success. Visitor arrivals in Bahrain (which includes day visitors from Saudi Arabia) were up 14% in the first half of 28. Jordan, which is a growing destination for Europeans for its cultural and historical attractions, shows a 4% increase through August in a clear recovery of its 3% decline of 27. Another factor contributing to the healthy growth recorded in the Middle East is the recovery of arrivals in Lebanon on the very weak figures of 27: arrivals in the first eight months were up 29%, including increases of 97%, 71% and 34% in June, July and August the months of the 27 conflict with Israel. The average for the Middle East was also pushed upwards significantly by the strong results reported by its most visited destinations: Egypt (+24% in the first half of 28 see above) and Saudi Arabia (+54% in the first quarter). However, the monthly data for Saudi Arabia may still, as experience shows, be revised at a later stage. International Tourism Receipts US$ Local currencies, current prices (% on previous year) * Series 5/4 6/5 7/6 28* 27* (million) YTD Q1 Q2 Q3 Apr May Jun Jul Aug Sep Q1 Q2 Q3 Q4 Africa 1,411 24,654 28, North Africa 3,822 8,71 1, Morocco 2,39 5,967 7, Sudan $ Tunisia 1,682 2,275 2, Subsaharan Africa 6,589 15,944 17, Cape Verde Ethiopia $ Kenya $ Mauritius 542 1,7 1, Mozambique $ Namibia Reunion Seychelles South Africa 2,675 7,875 8,418 sa Middle East 17,457 29,922 33, Egypt 4,345 7,591 9,33 $ Jordan 723 2,6 2, Saudi Arabia.. 4,961 5, Source: World Tourism Organization (UNWTO) (Data as collected by UNWTO October 28) See box at page 2 for explanation of abbreviations and signs used 3

31 Prospects There is a general awareness among members of the Panel of Experts throughout Africa and the Middle East of the threat to local tourism posed by the financial crisis and the world economic slowdown. However, at least parts of both regions hope for continued growth through the remainder of 28. As an example, the very attractive prices and relatively short-haul flights for air services out of Europe may sustain the popularity of North African sun and beach destinations such as Egypt, Morocco and Tunisia. The desire of cash-strapped consumers to retain their holidays while restraining their spending could work to these destinations advantage. For Middle Eastern destinations, the relative recovery of the US dollar against the euro and pound sterling may somewhat weaken the area s price advantage, since most local currencies tend to track the US dollar rather than the euro. But intraregional travel, which accounts for half all arrivals in the Middle East, will of course be little affected by currency changes. Much better Better Equal Worse Much worse UNWTO Panel of Tourism Experts Middle East T1 T2 3 4 Prospects Evaluation 5 6 Source: World Tourism Organization (UNWTO) 7 T3 8 Malaysia s Berjaya Land Berhad s (Bland) subsidiary, Berjaya Leisure (Cayman) Limited (BCayman) has partnered with Libya s Oyia Co for Development and Tourism Investment (Oyia) to develop a US$ 2 billion integrated development in Tripoli, Libya. Occupying three parcels of land totalling approximately 4.1 million square metres in size, the development is expected to comprise high-end residential and commercial developments including 3,64 mid-rise apartments, 12 golf villas, a 3- room luxury hotel with serviced residences and luxury villas, and a 3-room business hotel. In addition, the development will feature a shopping mall, a medical centre, two international schools, a 1.45-million-squaremetre public park and an 18-hole signature golf course and clubhouse. The project will be carried out in phases over a seven- to ten-year period and undertaken by a joint venture company, Berjaya Oyia Development Limited, which has an initial capital of approximately US$ 8.3 million. BCayman will hold a 6% stake in the joint venture while Oyia will hold the remaining 4% stake. However, the decline in commodities prices may diminish, in the short term, the interest of international investors and traders in many Subsaharan countries. While the resulting business travel is not usually large in volume, it is useful in raising awareness of the destinations in new markets in the longer term. Oddly enough, the decline in commodities prices may also encourage governments to turn their attention back to tourism. Much better Better Equal Worse Much worse UNWTO Panel of Tourism Experts Africa T1 T2 3 4 Prospects Evaluation 5 6 Source: World Tourism Organization (UNWTO) 7 T3 8 In the Great Lakes region, Kenya and Tanzania intend to boost their promotional spending on tourism. An additional US $13 million marketing budget planned by the Kenya Government was implemented last month with half of the investment reportedly going to be spent in the USA, Russia, the Middle East and China. The rest should be spent on traditional European markets, but will also target new countries including France and Spain. Whether this can be translated into increases in tourism receipts depends on how badly affected will be the incomes of those consumers in Europe, North America and Australasia affluent enough to consider safari holidays, and how successful the marketing campaigns are in attracting the attention of the newly wealthy in Asia. South Africa, as the world s leading supplier of many minerals, is economically particularly susceptible to the downturn in commodities prices, and an economic slowdown now looks likely, with implications for intraregional travel. As for long-haul travel, a moderation in international oil prices may do something to reduce airfares, but this is unlikely to compensate for the loss of consumer confidence and spending power in its major traditional markets. Nevertheless, with arrivals still growing strongly in the first half of 28, there is good reason to hope for at least some growth in the second half, especially given the sharp fall in value of the South African rand since September. The prospects for Subsaharan African destinations are perhaps exemplified by the Indian Ocean islands. They have traditionally relied principally on European markets markets which are likely to be seriously affected by the economic downturn, especially since the islands are relatively distant and expensive. On the other hand, the islands have been increasingly favoured by Middle 31

32 Eastern, Indian, Chinese and other Asian travellers markets which may, in different degrees, remain more buoyant. The affluence in the Arabian Gulf region with oil prices at well over US$ 1 a barrel had implications mainly for outbound travel much of it for other Middle Eastern destinations like Lebanon, Egypt and Jordan but the plentiful resources for investment and an entrepreneurial sense of optimism also created a bandwagon of inward tourism development. Oil prices of US$ 6-8 a barrel are still three or four times those which the oil producers were used to in the early 2s, and OPEC has recently been taking steps to arrest, and perhaps reverse, the decline in oil prices. A slowdown from the recent extraordinary rates of growth in tourism flows is inevitable, but growth possibly at rates which the rest of the world would consider rapid is still likely. As an illustration of the local optimism, Emirates (Dubai s principal airline) has created an LCC subsidiary, flydubai, for which it has ordered 5 Boeing 737s for use on short-haul intraregional routes. It also has more than 5 Airbus A38s on order, and these may also be deployed on short- to medium-haul intraregional routes of up to four hours in length. In focus Industry trends This section covers issues related to different clusters of the tourism industry such as transport and accommodation. For that purpose, the UNWTO World Tourism Barometer counts on the regular collaboration of UNWTO s Affiliate Members. Comprising private sector representatives, educational institutions, tourism associations and local tourism authorities, the Affiliates Members are key players in the promotion of public-private partnerships that support UNWTO s overall aims promoting responsible, sustainable and universally accessible tourism and contributing to economic development and international understanding, with particular attention paid to the interests of developing countries (for further information see The Secretariat is also pleased to count on the participation of Deloitte in the section dedicated to the hospitality industry. The objective for future editions is to broaden the scope of the In focus section and expand the collaboration to other organisations and sectors, such the meetings industry, the cruise sector, etc. World Tourism: Responding to the New Challenges in the Global Economy FITUR, Madrid, Spain 29 January 29, 9: to 14: For further information, please contact: unwtoam@unwto.org 32

33 UNWTO Affiliate Members Felipe González Abad Senior Adviser, EMEA & LA Amadeus IT Group S.A. < 1. Amadeus is a global leader in technology and distribution solutions for the travel and tourism industry, and is best know for its Global Distribution System (GDS). As a company maintaining customer operations in 75 countries covering more than 215 markets, it has a privileged view of the tourism sector worldwide. The world is currently facing various financial and economic difficulties. What is your assessment of the current economic situation and how do you evaluate its impact on the tourism sector? Absolutely, the current economic situation is impacting the tourism sector worldwide, although it hasn t fully arrived in the markets yet. This crisis has two faces: what we re suffering now is the financial one, which will be followed by the economic one that will affect the market more directly. From March, the entire GDS channel has seen a monthly decline in air bookings demand, and this drop reached 12 % during the month of August. Consequently, this decreasing tendency is likely to continue, and it will heighten over the coming months. 2. With regard to the short-term outlook for the sector, what destinations/regions, products and segments will be more impacted by the current economic downturn and which will resist better and why? The segments suffering the most of the current economic situation are those with less economic capacity that usually consume less sophisticated products generating lower margins, such as the holiday segment. However, those with higher margins, and trips that are part of economic activities such as business trips will be more resilient to the current economic downturn effects. Regarding the impact on specific regions, there s a wide geographic spread on the decline in bookings in all GDSs. 3. International tourism has been through many crises before, some such as 11 September, SARS or the tsunami very recent and present in the minds of all stakeholders. Do you assess the current situation also in terms of a crisis, and what recommendations would you have to endure this hardship? Definitely, the answer is in the development of the Distribution Industry. Distribution is the closest tool to markets and final consumers. Consequently, it has a strong capacity to influence the decision of customers. The distribution industry has some 35, points of sale worldwide with an estimated at over 75, people working on this sector. This impressive machine provides the tool to solve the decline in demand. 4. Looking beyond the short-term, what do you think will be the key competitive issues for both destinations and companies in the longer term? And what measures should be taken from today to tackle such challenges? The natural procedure will be to open the range of products in terms of destinations, transportation, and related services. That is, simultaneously developing private and corporate transportation, network companies and low cost carriers operating point-to-point, as well as the associated products such as hotels and leisure initiatives. Each of those product categories will have their own margin or volume target. Distribution will help both providers and markets satisfactorily. Additionally, due to the entry of new protagonists, the Value Chain will become more complex. 5. Amadeus has always been a company in the forefront of information and communication technology. Could you give a sneak preview of some of the developments we can expect in the future in this area? In the medium term, the Metasearchers s technology will support the dynamic packaging market needs. That will make new IT intermediaries come out, and it s more than likely that final customers will pay distribution costs. This will lead to the development of new technologies to satisfy their needs. In this approach, Amadeus has launched the Amadeus Airline Retailing Platform which transforms its core travel distribution system into a full-service retail platform. UNWTO is the only UN agency which groups the public and private sector among its Members. The Affiliate Members provide: A unique networking with ministers and senior decisionmakers. Specialized events dealing with priority areas of today presented by leading industry experts. Extensive and unique documents and research reports free of charge for our Affiliates through our world class e-library. Valuable intangible benefits associated with the UNWTO brand as a hallmark of quality and ethics in tourism. Value for money: membership at 2,4 (US$ 3,6) per year. 33

34 Transport Airlines International traffic of IATA reporting carriers by region of airline registration (% change) /6 8*/7 YTD IATA s Monthly International Statistics (MIS) For the first time since the SARS epidemic of 23, the 26 or so member airlines of the International Air Transport Association (IATA) reported a decline in global international passenger traffic for the month of September 28 of -2.9% expressed in revenue passenger-km (RPK). All regions, except Latin America, were affected by the negative trend reporting declining traffic in September, with Africa and Asia Pacific the hardest hit. Since available seat capacity (ASK) still increased by 1.1%, international load factors tumbled by 4.4 percentage points from August to 74.8% in September. The deterioration in traffic is alarmingly fast-paced and widespread, said Giovanni Bisignani, IATA s Director General and CEO, on announcing the results. We have not seen such a decline in passenger traffic since SARS in 23. Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our forecast US$ 5.2 billion for this year, he added. The worldwide trend over the first nine months of this year was a 3.3% increase in passenger traffic as against a 4.8% rise in capacity, with the passenger load factor for the period averaging 76.3%. Africa was the only region to report a decline in traffic (-2.8%) for the period, but airlines based in Asia Pacific have had a fairly flat year so far (+1.2%), in particular when compared to previous years growth rates. Latin America has been the best performing region (+12.2%), followed by the Middle East (+7.6%), North America (+4.9%) and Europe (+2.5%). One of IATA s concerns is that, up to the month of August, the drop in international passenger traffic was isolated to Asia Pacific carriers. The economies of the region s two major growth markets China and India slowed and Japan saw industrial production drop 5% in August. The sharp economic downturn disproportionately impacted Asia Pacific carriers with a 6.8% drop in traffic in September. Meanwhile, the steady 5.3% international growth of North American carriers in August turned into a.9% contraction the following month. European carriers also saw traffic drop in September (-.5%) as a number of the region s economies headed towards recession. After years of double-digit growth, September s passenger traffic by Middle Eastern carriers turned to a negative 2.8%. While the region s oil-based economy remains strong, the large portion of transit traffic exposes the region s carriers to the global economic weakness. African carriers posted the largest decline in traffic (-7.8%), a continuation of the previous month s trend Overall North America Latin America Europe Africa Middle East Asia and Pacific Source: compiled by UNWTO from IATA Air traffic on international routes by month (RPKs) (% change over same month previous year) IATA AACO -5 AAPA AEA -1 ATA ALTA Source: compiled by UNWTO from IATA, AACO, AAPA, AEA, ATA and ALTA Air transport data The air transport data presented here refers to IATA members scheduled international passenger traffic, according to region of airline registration, as well as to the traffic of the member airlines of the major regional airline associations broken down by routes operated. It should be taken into account that this data reflects the vast majority of, but not all air traffic, as the carriers included are mostly full-service airlines and the traffic operated by charter and low-cost airlines is only reflected to a rather limited extent. Airline data is a particularly good indicator of short-term trends in medium- and long-haul traffic. For short-haul traffic, however, air transport is in competition with alternative modes of transport (in particular land-based, but also over water), and might be subject to shifts between different means of transport (depending on relative price, perception of safety, etc.). Furthermore, traffic is not expressed here in numbers of passengers carried, but rather measured in terms of revenue passenger-kilometres (RPK), with one RPK representing one paying passenger transported over one kilometre. This means that each long-haul passenger contributes more to total traffic measured in RPK than each short-haul passenger does. 34

35 Preliminary Air Transport Statistics Revenue Passenger-Km (RPK) Capacity Load factor Passengers 27 7/6 8*/7 Monthly data 7/6 8*/7 7/6 8*/7 7/6 8*/7 YTD Jan Feb Mar Apr May Jun Jul Aug Sep YTD YTD YTD (billion) (%) (% on previous year) (%) (%) (%) International Air Transport Association (IATA), Monthly International Statistics (MIS) Scheduled international traffic of IATA reporting carriers by region of airline registration Overall 2,366¹ ¹ North America Latin America Europe Africa (incl. Egypt) Middle East (incl. Israel, Iran) Asia and Pacific Air Transport Association of America (ATA) - Scheduled Passenger Traffic Statistics ATA US Member Airlines Scheduled mainline service 1, Domestic (incl. USA-Canada) International Atlantic Latin Pacific Asociación Latinoamericana de Transporte Aéreo (ALTA) - Member Airlines Traffic Data Total Domestic International Latin America Extra Latin America North America Europe Asia and the Pacific Charter Association of European Airlines (AEA) - Passenger Traffic of AEA Member Airlines Total scheduled Domestic Total International Cross-border Europe North Africa Middle East Total long-haul among which: North Atlantic Mid Atlantic South Atlantic Far East/Australasia Sub Saharan Africa Association of Asia Pacific Airlines (AAPA) - Consolidated Passenger Traffic International operations Arab Air Carriers Organization (AACO) - AACO members' scheduled operations Total Source: compiled by UNWTO from IATA, ATA, ALTA, AEA, AAPA and AACO ¹ All IATA carriers 35

36 Airports As might be expected, Airports Council International (ACI) reports very similar growth trends to those released by IATA for the first nine months of 28. International passenger traffic rose by 3.6%, but with a decline of 2.7% in September, while domestic traffic fell by.5% (-5.4%) in the corresponding periods, resulting in a modest 1.3% overall increase for passenger throughput over the nine months (and -4.2% for the month of September alone). For the three months ended 3 September, the overall decline was 2% the first quarterly contraction since Q2 23. International traffic is now ensnared in the downward spiral for the first time since June 23, says ACI. Traffic at major hubs in Europe declined by 3% on average in September while in the Asia Pacific region, the largest international passenger market, it plummeted by 6.6%, a result driven by key hubs: Incheon (-12.6%), Shanghai (- 16%), Narita (-1%), Taipei (-14%), Bangkok (-2%) and Hong Kong (-4.4%). European and North American international traffic fell by 2.4%. Domestic traffic presented a bleak picture across all regions (-5.4%) in September, although the decline in Asia Pacific (-.7%) was smaller than in the previous month. While India is still experiencing a double-digit decline in domestic traffic, demand in China has picked up again after the Olympics (Beijing +15%). Domestic traffic in North America dropped sharply by 7.6%, in line with the decline of 7.4% in Europe. Although domestic results dropped in Latin America and the Caribbean (-2.6%) and in Africa (-11.5%), international traffic was stable, growing at 1.5% and 4.1% respectively. As the financial crisis unfolds and strikes economies around the world, airports are taking a strong hit, says ACI Economics Director Andreas Schimm. Hopes for a quick recovery are fading. In the current economic environment, the last quarter of 28 is rather unlikely to produce a positive result and we expect that worldwide traffic growth will remain flat for the year. ATA: Air traffic on selected routes by month (RPKs) (% change over same month previous year) Domestic Latin Atlantic Pacific Source: compiled by UNWTO from ALTA Latin America The Latin America Transport Association (ALTA by its Spanish initials) reports that its member airlines overall traffic remained strong through the month of August, with a 14.3% growth in RPK in August alone and a 12.1% growth during the first eight months of the year. In spite of a 1.3% rise in capacity (ASK) in the first eight months of the year, passenger load factor increased by 1.2 points to 71.9% as compared to 27 as a whole. The number of passengers carried by ALTA members from January through August was up by 8.% over the same period in 27. ALTA: Air traffic on selected routes by month (RPKs) (% change over same month previous year) Domestic Latin America North America Europe Source: compiled by UNWTO from ALTA North America Continuing weak domestic demand in the USA for 28 so far has contributed to a slight drop in scheduled mainline service traffic overall through the first nine months (-.8%) for of US member airlines of the Air Transport Association of America (ATA). In contrast, international traffic rose by 5.5%, although growth came to a stop in the month of September (-.2%), as in other parts of the world. For the nine-month period, transatlantic routes performed by far the best of all international routes to/from the USA (+1.%) up by.3 percentage points over the same period in 27 while traffic on transpacific routes was down 2.5% and routes to/from Latin America recorded an increase in passenger traffic of 6.%. Europe Like the ATA, the Association of European Airlines (AEA) has reported a decline in domestic traffic in terms of RPK (-5.1%) for the period through September while international services recorded a 2.9% growth over the first nine months of the year. Long-haul routes averaged 2.3% growth as against 3.8% for European routes. Amongst routes showing the strongest increases in traffic demand during this period were those to/from South Atlantic (+9.4%), to/from the Middle East (+7.6%) and North Africa (+6.9%). Capacity increased by 4.3% overall on AEA members international routes, while average seat load factor declined to 76.% from 77.% for the whole of 27. North Africa 36

37 was the only route where traffic growth exceeded capacity (+5.% to a traffic increase of +5.9%). The AEA says that passenger traffic development reached a tipping point in late summer, when a marginal growth of 1.6% in August was followed by a decrease of 1.1% in September. While negative monthly figures are not unprecedented, previous decreases have been triggered by external shocks such as 9/11, SARS and the Gulf wars. This was the first traffic loss since the early 198s that was attributable to essentially economic factors. The August figure was the third in a succession of low growth figures (June 2.% and July 1.2%). AEA: Air traffic on selected routes by month (RPKs) (% change over same month previous year) Source: compiled by UNWTO from AACO Domestic Geographical Europe North Atlantic Far East/Australasia AEA members three major operating regions crossborder Europe, North Atlantic and the Far East which together account for 7% of passenger-km, increased by 1.4%,.9% and 1.5% respectively in August and slipped to declines of 1.1%, 1.1% and.8% in September. The downward trend was compounded by a strong decrease in domestic traffic, of -7.9% in August and -12.4% in September, though domestic traffic only accounts for a minor share of less than 1% in the total. The South Atlantic market continued to buck the trend with a 13.% increase in August and 9.5% in September, and some buoyancy remained in Middle Eastern markets. Load factors continued to slide as traffic development failed to match modest 3.% increases in capacity in August and 2.3% in September. While the North Atlantic, with a.5% capacity increase in August and decrease of.5% in September, was still able to record a small load factor improvement in August, according to the AEA, by September figures were down across all operating regions, for an overall loss of 2.6 percentage points translating into a massive burden on the industry s profitability. AEA s Secretary General Ulrich Schulte-Strathaus said that: In terms of response to purely economic stimuli, these figures are the weakest our industry has seen for 25 years and, with the major European economies still in transition to a recessionary state, they cannot be expected to recover in the immediate future. The toxic combination of economic slowdown, a steep decline in business and consumer confidence, and fuel price-driven inflation, which is hitting both the airlines and their customers, is challenging the very structure of the industry. Asia and the Pacific Members of the Association of Asia Pacific Airlines (AAPA) reported sharply lower passenger and cargo traffic volumes in September, as the industry felt the impact of the global economic slowdown. AAPA passenger numbers fell 6.6% over the same month in 27 and RPK was down 5.1% on capacity growth of just.8%, resulting in a 4.5 point deterioration in the average international passenger load factor, to 72.7%. Despite the sharp deterioration in the operating environment, AAPA Director General Andrew Herdman said that the first nine months of the year has been holding up pretty well. But RPK increased just 1.6% from January to September. Lower oil prices are certainly welcome but will not compensate for the expected revenue shortfall. Airlines will continue to take all possible steps to stay afloat, said Mr. Herdman, including reviewing capacity adjustments and making sure that fares remain competitive to attract incremental business. Overall, however, AAPA is braced for a very rough ride over the next few months as the global economic slowdown begins to bite hard, he added. AACO: Air traffic on selected routes by month (RPKs) (% change over same month previous year) Source: compiled by UNWTO from AACO Middle East and North Africa Total within the Arab World inter-regional According to data from the Arab Air Carriers Organization (AACO), member airlines in the Middle East and North Africa increased traffic (RPK) by 9.6% in the period January-September, one of the best performances this year. Capacity increased by 11.5% and load factor stood at 74.6% in the same period. Nevertheless, the airlines were not able to prevent a deterioration in traffic demand, with the result that negative growth (-.3%) was recorded in the month of September. 37

38 Outlook IATA s latest official forecasts, released in early September, are for an industry loss of US$ 9.3 billion over the next two years as a toxic combination of high fuel costs and dwindling demand ravages their finances. IATA said it anticipated a loss of US$ 5.2 billion this year and released 29 estimates for the first time, which predict a deficit of US$ 4.1 billion, bringing the total loss over the period to US$ 9.3 billion. In the light of the industry s operating and financial performance over the last two months, particularly with regard to the slowdown in demand for premium travel and the currency market volatility, this forecast now seems overly optimistic. But just how optimistic is not yet clear. The situation remains bleak, said Giovanni Bisignani, IATA Director General and CEO. Further bankruptcies are expected this winter as the industry enters a traditional quiet period after the peak summer season, resulting in drastically reduced cash flows as ticket revenue falls. The industry expects no respite in 29. Fuel is expected to account for 4% of airline budgets, up from 36% this year, and will continue to increase the pressure on carriers to change their business models, while governments face growing demands to lift restrictions on industry consolidation. According to IATA, wider and deeper liberalisation of air transport is needed as one important means of facilitating a more robust and sustainable air transport system. Airlines have already taken drastic action to conserve costs and the industry will fly 6 million fewer seats between October and December equivalent to a 7% reduction in costs. In Europe, at least, the slowdown in demand for air travel appears to have benefited other means of transport. Eurostar, for example, saw increases in both traveller numbers and ticket sales in the third quarter of 28. Travellers were up 6.4%, despite Eurostar s enforced closure of the Channel Tunnel on 11 and 12 September, which caused a reduced level of Eurostar services over the following weeks. Continuing problems within the US economy are impacting airline operations with worse-than-expected declines in airline capacity this winter, as the number of domestic flights is set to fall by almost 11% and capacity by 9% in Q4 28 over the same period a year ago, according to OAG (Official Airline Guide) in its revised analysis of the global travel industry s published flight schedules. The global picture has improved slightly, with the winter schedules showing a 5.2% decline in capacity and a 6.1% decline in number of flights. OAG s earlier analysis in August showed a 7% drop for both measures. The latest figures reveal that the world s airlines are expected to offer 46.3 million fewer seats for October, November and December 28, and 451, fewer flights. 38

39 Hospitality Global hotel performance starts to slide due to economic crisis The global economy has been through some turbulent times over the last six months. Across the globe, financial institutions have collapsed or been bought out, stock markets have declined significantly and some governments including the UK and USA have issued rescue packages to save their financial systems. There has also been a dramatic rise in inflation across the world, with the UK, eurozone and USA seeing rates more than double from their 27 lows, rising to levels last seen in the early 199s. As a result, consumer confidence has fallen during 28, with both individuals and corporations pulling the strings tighter on their purses and making cutbacks on their travel and leisure spend. As a result, analysis by Deloitte, the business advisory firm, reports that since the summer, global hotel performance has seen a significant slowdown in most regions, as the economic meltdown has trickled through and impacted the number of travellers staying in hotels. Despite this slowdown however, year-to-september results show that all regions apart from North America have reported double-digit revenue per available room (revpar) growth when analysed in US dollars. The title for the fastest growing region remains the same as reported in the last issue of the UNWTO World Tourism Barometer, with Central and South America coming out on top with revpar rising 23% year-to- September 28 to US$ 79. This growth has been driven predominantly by a 19% increase in average room rates to US$ 118. The region has benefited from the weak US dollar, which kept US travellers closer to home. There were mixed results across the region with São Paulo reporting the highest growth in revpar, up 38% to US$ 69. This growth was primarily driven by a 33% boost in average room rates which rose US$ 25 compared to last year and now stand at US$ 14. Other cities that reported revpar growth in excess of 25% include Caracas, Lima, Panama, Rio de Janeiro and Santiago. Hotel performance by region Occupancy (%) Year-to-September 28* 27 Change North America Canada Montreal Toronto Vancouver United States Atlanta Boston Chicago Dallas Denver Houston Los Angeles Miami New Orleans New York Orlando Philadelphia Phoenix San Diego San Francisco Seattle St Louis Washington DC Mexico Cancun Mexico City Central and Southern America Costa Rica San Jose Peru Lima Brazil Rio de Janeiro Sao Paulo Argentina Buenos Aires Chile Santiago Source: STR Global = up 28 STR Global Limited. All rights reserved = down Data for North America sourced Smith Travel Research. 28 Smith Travel Research Inc. All rights reserved Hotel performance by region Occupancy (%) Average Room Rate - US$ RevPAR - US$ Year-to-September Year-to-September Year-to-September 28* 27 Change (%) 28* 27 Change (%) 28* 27 Change (%) Europe Europe (in euros) Middle East Asia and the Pacific North America Central and South America Source: STR Global and Smith Travel Research. 28 STR Global Limited. All rights reserved 39

40 Hotel performance by region Occupancy (%) Year-to-September 28* 27 Change Europe Iceland Reykjavik Norway Oslo Sweden Stockholm Denmark Copenhagen Ireland Dublin United Kingdom London Netherlands Amsterdam Belgium Brussels Luxembourg Luxembourg Germany Frankfurt am Main Berlin France Paris Austria Vienna Switzerland Geneva Zurich Czech Rep Prague Slovakia Bratislava Hungary Budapest Poland Warsaw Russian Federation Moscow Portugal Lisbon Spain Madrid Barcelona Italy Milan Rome Greece Athens Turkey Istanbul Israel Tel Aviv Middle-East & Africa Egypt Alexandria Cairo Sharm El-Sheikh Jordan Amman Lebanon Beirut Syrian Arab Republic Damascus Kuwait Kuwait City Qatar Doha Untd Arab Emirates Dubai Abu Dhabi Saudi Arabia Riyadh Oman Muscat Kenya Nairobi South Africa Greater Cape Town Greater Johannesburg Source: STR Global = up 28 STR Global Limited. All rights reserved = down The Middle East took the silver medal in terms of revpar growth as it soared 21% to US$ 124 the highest absolute revpar in the world. The region can also be proud that it is achieving the highest occupancy at 73% as it rose just short of 5% year-to-september 28. Average room rates also grew strongly, seeing double-digit increases of 15% to secure the second highest average room rates in the world at US$ 169, just US$ 3 behind Europe. All cities across the Middle East posted doubledigit revpar growth year-to-september apart from Dubai, which saw revpar rise just 4.7% to US$ 229. The city has seen exceptional growth over the last five years, and with occupancy at 81% and average room rates at US$ 282 the highest in the region it is not surprising that growth in the Emirate is starting to slow. In Abu Dhabi, revpar shot up 4% to US$ 215 as occupancy reached 81% and US$ 56 was added to average room rates since last year to US$ 264. However, the clear winner in the Middle East was Beirut in Lebanon, which reported exceptional revpar growth of 82% to US$ 79. Occupancy rose to just short of 5% from a 36% low last year. This performance of course reflects the fact that the city continues to suffer from political instability and is struggling to attract tourists after the troubles it has experienced over the last few years. Hotels in Europe reported an 11% growth in revpar year-to-september 28, resulting in an absolute revpar of US$ 116. Improvements have been driven by doubledigit increases in average room rates which are now the highest in the world at US$ 172. Occupancy, on the other hand, has seen a slight decline to 68%. These results are misleading however, as results in euro terms are much more muted, reporting a decline of 1.6% in revpar yearto-september 28. Political stability in Israel and growing interest in both religious travel and trips to the Dead Sea are boosting hotel business across the country. RevPAR in Tel Aviv increased 33% to US$ 181 year-to-september 28 and the upward trend should continue into 29 when the city celebrates its centenary. The city has also achieved the second highest occupancy in Europe, and at 81% is less than one percentage point behind London. Jerusalem and Eilat also did well, with revpar up 31% and 24% respectively. On the flip side, Iceland s capital city Reykjavik saw one of the largest drops in revpar during the first three quarters of 28, falling 16% to US$ 1. Occupancy fell to 65.4% while US$ 19 were knocked off average room rates compared to last year and now stand at US$ 153. However, the weak Icelandic krona against the US dollar makes performance look gloomier than it actually is, with revpar in local currency seeing a 6% decline. In the eurozone, Brussels has seen strong revpar growth year-to- September, up 24% to US$ 125. This growth has been driven by average room rates which have jumped US$ 29 to US$ 178 compared to the same period in 27. Hotels in Brussels are considered less expensive compared to other capital cities in Europe which has allowed demand to stay high at 7.8%. In addition, stable corporate business from a number of European Commission conferences are helping keep hotel performance up, however demand should have been even higher as French President Nicolas Sarkozy held some meetings in Paris this year which are usually held in Brussels. In Asia Pacific, hotels reported an 11% growth in revpar year-to-september 28, to US$ 1. Average 4

41 room rates have led much of this growth, up 15% to US$ 147. Occupancy however has seen a decline, falling 4.% to 67.8%. While Bali continues to report the highest revpar growth across the region, up 34% as it recovers from the bomb attacks in 25, another city celebrating its own success was Beijing. Host to the Beijing 28 Olympic and Paralympic Games, all eyes turned to China as it opened the 28 Games in spectacular style. More than 6.5 million visitors were expected during the event and on the opening night, average room rates soared 45%. Hoteliers achieved impressive occupancy levels throughout the 28 Games, between 88% and 92%. As a result, yearto-september results for China s capital city rose 34% to US$ 19. Although occupancy plummeted 13.3%, average room rates grew a staggering 55% to US$ 178. Singapore also received a welcome boost in tourist arrivals during September, as the city hosted the inaugural Formula 1 SingTel Singapore Grand Prix. Year-to-September, revpar in the city leapt 28% to US$ 172 as a result of average room rates rising US$ 58 compared to the same period last year. North America was the only region in the world not to achieve double-digit revpar growth year-to-september 28. Although average room rates rose 4% to US$ 19, occupancy dipped slightly to 63.1% resulting in an overall revpar growth of 1% to US$ 69. New Orleans was the only city in North America which posted double-digit revpar growth, up 16% as occupancy rose 12.5% to 64.7%. Average room rates in the city also grew US$ 4 to US$ 118. In October 28, the city s football team played one of its home games in London against the San Diego Chargers as part of week long promotions to encourage Britons to visit and invest in New Orleans. In addition to the football game, the organisers hosted a mini Mardi Gras for Londoners to sample a piece of New Orleans culture. Other cities to have witnessed revpar growth above 5% year-to-september 28 included Houston, New York and San Francisco, with growth driven primarily by average room rates. In summary, it was only a question of time as to when the global hotel market would be affected by the global economic turmoil being felt across the globe. Although year-to-september results continue to show strong growth across most regions in the world, monthly results have started to show significant declines in revpar growth which will no doubt continue until the financial markets in the UK, eurozone and USA start to recover. While individuals and corporates keep a close eye on their purse strings, in the short term hotel performance will suffer. However, as long as hoteliers do not heavily discount average room rates, when demand picks up again, the industry should quickly recover. Hotel performance by region Occupancy (%) Year-to-September 28* 27 Change Asia and the Pacific China Beijing Shanghai Hong Kong (China) Hong Kong Taiwan (pr. of China) Taipei Japan Osaka Tokyo Korea, Republic of Seoul Vietnam Hanoi Thailand Bangkok Phuket Malaysia Kuala Lumpur Singapore Singapore Indonesia Jakarta Bali Island Philippines Manila India Mumbai New Delhi Australia Sydney New Zealand Auckland Source: STR Global = up 28 STR Global Limited. All rights reserved = down Analysis has been provided by Deloitte & Touche LLP using data from STR Global and Smith Travel Research. For further information please call the Tourism, Hospitality and Leisure team at Deloitte on +44 () or visit 41

42 The economic environment The economic framework has changed and deteriorated significantly since the publication of the June issue of the UNWTO World Tourism Barometer. Faced by increasingly difficult conditions, the global economy has slowed markedly over the past quarter. An unforeseen profound crisis in the global financial market, a worsening of the situation in the housing markets in a number of advanced economies, namely the USA, and high commodity prices have put an end to an unprecedented period of prosperity. It is now clear that world economy is in a downturn cycle following what the International Monetary Fund (IMF) defines as the most dangerous shock in mature financial markets since the 193s. Against this background, IMF global GDP growth projections have been marked down to 3% for 29 (from 3.9% this year), the slowest rate since 22. Advanced economies will hardly pass the positive mark (+.5% from 1.5% in 28) while growth in emerging economies will slow from 6.9% to 6.1% next year. And this outlook is still subject to considerable downside risks in view of the high degree of uncertainly and volatility existing in the markets. In its September interim assessment on What is the economic outlook for OECD countries?, OECD highlighted that limited experience with some of the main drivers of the current conjuncture as well as uncertainty about some specific influences make for a particularly unclear picture. One of the major issues at this moment is how deep the downturn will be, when the recovery will start, and how strong it will be. GDP growth measurement, methodological note World aggregated growth of Gross Domestic Product (GDP) as reported by the IMF is estimated based on GDP at purchasing power parity (PPP) instead of at market exchange rates. This is done because the purchasing power of a US dollar varies from one economy to another and also to reduce the impact of exchange rate fluctuations. As a US dollar usually buys quite a lot more goods and services in emerging economies, their GDP is more strongly weighted in the aggregate, in general resulting in a higher overall growth rate as emerging economies tend to grow faster. For instance, at market value the weight of the USA in the world total is 25% and of China 6%, while at PPP their weights are respectively 21% and 11%. World Growth of Gross Domestic Product (GDP), constant prices (%) * 9* Source: International Monetary Fund Advanced economies Growth of Gross Domestic Product (GDP), constant prices (%) * 9* Source: International Monetary Fund Emerging market and developing countries Growth of Gross Domestic Product (GDP), constant prices (%) * 9* Source: International Monetary Fund Overview of the economic growth projections by the International Monetary Fund (IMF), World Economic Outlook, October 28 GDP Growth of Gross Domestic Product (GDP), constant prices US$ bn Change over previous year (%) Current projections Trend¹ Average (%) * 29* 7-6 8*-7 9*-8* World (purchasing power parity (PPP) weighted) 54, = Memorandum: at market exchange rates = 3.1 of which: Advanced economies 39, Emerging market and developing countries 15, = Source: Compiled by UNWTO from International Monetary Fund, World Economic Outlook ( ¹ Percentage points change to previous year: - - < -1 ; - [-1,-.2] ; = [-.2,.2] ; + [.2,1] ; ++ >1 42

43 Overview of the economic growth projections by the International Monetary Fund (IMF), World Economic Outlook, October 28 GDP Growth of Gross Domestic Product (GDP), constant prices US$ bn Change over previous year (%) Current projections Trend¹ Average (%) * 29* 7-6 8*-7 9*-8* By UNWTO regions: Europe 2, = Euro area 12, = Germany 3, France 2, = Italy 2, = 1.4 Spain 1, Netherlands = Belgium = Austria Greece = Ireland Finland Portugal United Kingdom 2, = Sweden = 3. Norway Denmark Switzerland = Central and Eastern Europe (excl. CIS) 1, Russian Federation 1, Turkey Americas 18, United States 13, Canada 1, Latin America and Caribbean 3, = Brazil 1, = Mexico 1, Argentina = Venezuela Colombia Chile Peru Asia and the Pacific 13, = Japan 4, Australia New Zealand Newly Industrialized Asian Economies 1, = Korea, Republic of = 4.6 Taiwan (pr. of China) Hong Kong (China) Singapore = 5.7 Developing Asia 5, = China 3, India 1, Pakistan Indonesia, Malaysia, Philippines, Thailand 1, Iran Africa 1, = = 4.9 South Africa Algeria, Morocco, Tunisia = Nigeria Middle East 1, = Saudi Arabia Untd Arab Emirates Egypt = Source: Compiled by UNWTO from International Monetary Fund, World Economic Outlook ( ¹ Percentage points change to previous year: - - < -1 ; - [-1,-.2] ; = [-.2,.2] ; + [.2,1] ; ++ >1 43

44 IMF World Economic Outlook, October 28 For four years through mid-27, the global economy boomed, growing at an average of about 5% a year, its highest sustained rate since the early 197s, fuelled to a high degree by the expansion of emerging and developing economies. After showing the first signs of instability in the autumn of 27, in September 28 the world entered a turbulent spiral which had dramatic and unexpected effects on global confidence in financial markets. Solvency concerns led to the nationalisation of some big mortgage and insurance institutions (Fannie Mae, Freddie Mac and AIG in the USA, and Fortis and Dexia in Europe), the compulsory sales of investment and commercial banks (Merrill Lynch and Wachovia in the USA and HBOS in the UK, following in the steps of Bear Sterns last March) and the bankruptcy of others (such as Lehman Brothers and Washington Mutual in the USA). All this culminated in extraordinary interventions by governments in the USA and Europe as interbank markets froze and mutual trust evaporated, creating a severe liquidity and confidence problem. Early in October central banks worldwide acted in an unprecedented coordinated manner to ease the pressure on financial markets. The Bank of Canada, the Bank of England, the European Central Bank, the US Federal Reserve, the Sveriges Riksbank, and the Swiss National Bank all announced reductions in their interest rates. But in spite of all these measures to support key institutions, stabilise markets and boost confidence, markets remain highly volatile. The events that haunted the last two months have led the IMF to reduce significantly their evaluation of world economic prospects in 29. The major advanced economies are close to or already in recession, while growth in emerging and developing economies is also slowing. According to the IMF, business and consumer confidence indicators for the USA and the eurozone are now close to lows experienced during the recession while growth in emerging and developing economies has eased, as domestic demand and exports have moderated. Growth has so far been most resilient in commodity-exporting countries, which are benefiting from still-high export prices. By contrast, countries with the strongest trade links with the USA and Europe are slowing, while some countries that relied on bank-related or portfolio inflows to finance large current account deficits have been hit hard by an abrupt tightening of external financing. Nevertheless, as a group, emerging economies have so far resisted better than in previous situations of financial turbulence, reflecting improvements in policy frameworks and stronger public sector balance sheets. On the positive side, slower growth has reversed the escalation of oil prices, which was one of the chief concerns for tourism and a major factor fuelling inflation. Oil prices, which peaked at US$ 15 in July, slid to US$ 6 by the end of October and are now close to the level attained at the beginning of 27. Decreasing oil prices, shrinking demand and a consequent easing of inflationary pressures are also allowing central banks to react more aggressively in face of the financial crisis. Inflation remains nonetheless a risk. The IMF estimates that the 6.2% worldwide rate of 28, the highest since 1997, will be reduced to 4.6% by next year, but this is still well above the average of the last eight years. Inflation in the developed world is expected to ease from 3.6% (the highest since 1992) to 2% in 29, but concerns over inflation remain higher in emerging economies, where inflation is forecasted to moderate only slightly, from 9.4% in 28 to 7.9% in 29. Regional and country outlook The USA - entering recession In the USA, which was the initial centre of the current financial turmoil, the economy is slowing fast. Aggressive policy by the Federal Reserve, which has by October 3 cut interest rates to 1.25%, a strong stimulus package and a good export performance (fuelled by a weak US dollar) have helped to some extent. Despite the slowing economy and tighter credit conditions, most US firms have remained healthy, benefiting from relatively low leverage, high profits, and strong export demand, which explains why cuts in business spending and employment were moderate until recently. However, real GDP growth averaged only 1.25% over the most recent three quarters. Together with other indicators, such as consumer and business confidence, as well as the negative impact of the credit and financial crunches, this suggests that the economy is likely to contract in the current quarter and into early 29. IMF is forecasting a 1.9% growth rate for the whole of 28 and almost zero growth for next year (+.1%). With a recession now looking increasingly likely, the key questions are, how deep will it be and when can we expect recovery? The key determinants of the short-term outlook will be the effectiveness of government initiatives to stabilise the financial market, as well as the behaviour of households in the face of rising stress, the depth of the housing cycle, and the extent to which concerns about inflation constrain further cuts in interest rates. But it will take considerable time before market confidence is regained and consumption is expected to start showing more obvious signs of weakness. Credit availability is likely to remain tight throughout 29. Households face increasing constraints on spending as prices remain high, credit is scarce, and income growth slows. Unemployment is expected to rise to 5.6% this year and 6.9% in 29. For the IMF, particular concerns are that the credit crunch could impose ever-greater constraints on economic activity, that the downturn in house prices could extend into 21, and that inflation could prove persistent, limiting the Federal Reserve s ability to impose an even 44

45 stronger monetary policy. The principal upside potential is that US firms may be able to maintain their activities and spending better than expected, despite financial strains, which would provide greater-than-anticipated support for household incomes. Latin America and the Caribbean - are economies better equipped this time to deal with the global economic downturn? The current situation confronts Latin American economies with their first major challenge in years. Worries about the sub-prime crisis and rising oil and food prices were already on the horizon, but recent events have increased concerns and it remains to be seen how well Latin America can confront the current global economic instability. Overall, GDP growth is projected to come down from 5.6% in 27 to 4.6% in 28 and to 3.2% in 29. The sharper deceleration in 29 reflects the weaker global outlook, softer commodity prices, and more difficult external financial conditions. Growth in Brazil would come down below trend (+3.5% in 29), and activity would remain sluggish in Mexico (+1.8% in 29) as exports and remittances are affected by the US economic slowdown. Growth in Central America and the Caribbean is also expected to ease, reflecting the impact of the economic situation in the USA on remittances, trade and tourism. After four years of strong growth, the pace eased in most economies of the region during the first half of 28, largely because of moderating exports. Domestic demand has so far remained quite robust, but is expected to be further affected as the global economy slows and central banks deploy a stronger monetary policy aimed at containing inflation. In some countries, including Bolivia, Paraguay, Venezuela, and several Central American countries, inflation rates reached double-digits. Risks in Latin America relate mainly to external developments. A deeper downturn in global growth could lead to a sharper drop in commodity prices, while external financing conditions could worsen still further. Such a scenario would slow growth in the region even more, and although inflation would moderate, external positions could come under serious stress. Flexible exchange rate management would provide resilience in the face of potentially volatile foreign exchange flows. As in other parts of the world, Latin American economies are facing the global slowdown in activity, increasingly difficult external credit and financial conditions and still-high inflation. Europe - not at all immune The question posed in mid-28 of whether or not Europe would resist the turmoil of the financial and housing markets in the USA has now had a clear answer. According to the IMF, activity in Western Europe has slowed appreciably in recent months, dampened by high oil prices, tightening credit conditions, housing downturns and the US slowdown. Future prospects are for a mere.2% GDP growth in 29 for Europe as a whole. Western Europe is being hit by major shocks that are weakening economic activity, notably extraordinary financial stress. GDP growth for the eurozone is forecast to come down from 2.6% in 27 to 1.3% in 28 and.2% next year. Within the eurozone, Ireland (-.6%), Italy and Spain (-.2% each) are expected to be the countries hardest hit in 29. Germany s growth is forecast to be nil next year after a slowdown from 2.5% in 27 to 1.9% in 28. Growth is also estimated to be near zero in Portugal, France, Belgium, Austria, and outside the eurozone, in the UK. The IMF expects a very gradual recovery beginning in the second half of 29. Eurozone growth is expected to return to 1.4% in 21, while in the United Kingdom it could accelerate to 2.2%. At the same time, high oil and food prices are still keeping inflation at elevated levels. Economic growth is being slowed by a number of factors, initially mainly by rising oil prices but now increasingly by tightening financial conditions. Relative to 27, oil prices are still some 4% higher in euro terms (a trend that could worsen if the euro continues to slide against the US dollar), and together with increasing food prices are already squeezing consumption. European banks are struggling with a combinations of problems. They have been exposed to losses on their holdings of US mortgage-related assets and deteriorating overall credit quality since 27. Concerns that initially focused on liquidity are also affecting solvency; confidence in the sector has weakened and highly leveraged banks are struggling to maintain funding in the face of rising creditor concerns about balance-sheet risk. Exports are expected to slow in line with world demand. The current account is expected to deteriorate. The IMF considers that the real effective exchange rate is on the strong side of medium-term fundamentals, despite some recent weakening. By contrast, the United Kingdom s current account is in noticeable deficit, and the pound sterling has depreciated by more than 1% in real effective terms since the onset of the market turmoil. On the other side, after long economic expansion, emerging economies in Europe have also started to grow more moderately. Weaker external demand, especially owing to the cooling of demand in Western Europe, and tighter external financing conditions are affecting investment and exports, while private consumption has (as in many other economies) suffered from soaring food and energy prices. Real GDP growth forecast for the Commonwealth of Independent States (CIS) is 3.6% for 29, down from 5.% in 28 and 6.2% last year. In Russia, growth is expected to be stronger (at +5.5%), but still well below the values of 27 (+8.1%) and 28 (+7.%), reflecting decreasing oil prices, slowing world demand and tightening financial conditions. 45

46 Asia - no decoupling in sight The economic cycle in emerging Asia started to turn in early 28, and more weakness is expected ahead in response to slowing demand from advanced economies and growing strains in regional financial markets. Growth in the region is forecast by the IMF at 5.5% for 29, sliding from 6.% this year and 7.4% in 27. The main concern is that increased stresses in the global financial system and a sharper-than anticipated global slowdown could weigh on economic activity in the region. On the upside, domestic demand may prove more resilient, with falling commodity prices easing pressures on local firms and providing a boost to real incomes. But though many of the global risks are shared, the economic situation varies considerably across the region. In Japan, rising commodity prices and weakening external demand have already started to affect economic activity. IMF forecasts Japan s growth to slide further to.7% in 28 and.5% next year. Slowing external demand, rising costs, and diminishing profit expectations are taking a toll on corporate sentiment and investment plans. At the same time, high food and fuel prices and weakening wage prospects have pushed consumer confidence to low levels. But though weakness in the USA and Western Europe will weigh appreciably on activity, growth in emerging economies is expected to remain more resilient and should continue to support exports. In Australia and New Zealand the slowdown is also noticeable, after prolonged economic expansion driven by commodity and housing booms. GDP growth in Australia is projected to fall below potential, to about 2.5% in 28 and 2.2% in 29 from a strong 4.2% in 27. In New Zealand, the trend is similar, with growth slowing to.7% this year and 1.2% in 29. Growth in Asian emerging economies, though also affected, remains strong. In China, the double-digit growth of the last five years has come to a halt, but the IMF forecasts still point to a 9.3% increase in 29, following a growth of 9.7% this year. China has been affected by slowing exports but activity continues to be supported by steady investment and accelerating consumption. By contrast, in India, there are signs of weakening investment, but private consumption and export growth have held up well so far. Growth is set at 6.9% for 29, down from 7.9% this year. In the newly industrialised Asian economies (NIEs) and the Association of Southeast Asian Nations (ASEAN) economies, activity has also been decelerating. Domestic demand has softened, as rising food and fuel prices have started to weigh on consumption, while declining profit margins and weakening demand have prompted firms to scale back their investment plans. A major policy dilemma for the region is how to respond to the weakening growth outlook and global financial turbulence without losing sight of inflation risks. Downside risks to growth in emerging Asia have risen in recent months, while inflation risks have moderated as food and oil prices came down from the peaks observed earlier in the year. Policy priorities have shifted accordingly, although there remain notable differences in country circumstances. Africa and the Middle East - growing by more than 6% Up to now, Africa and the Middle East seem to be the regions least affected by the financial and economic turbulence. Economic growth in Africa is expected to improve in 29 to 6.%, after a slight downturn to 5.8% in 28 from a high of 6.2% last year. Meanwhile in the Middle East a slight improvement over 27 is expected in both 28 (6.7%) and 29 (6.2%). In Africa, despite a weakening external environment, economic expansion in oil-exporting countries is expected to soften only moderately in 28 and 29, although the strong improvement in the terms of trade in 28 in the first half of 28 will be reversed. For oil importers, the terms of trade would remain broadly stable in 28-29, with lower oil prices offset by lower export prices for metals, coffee, cocoa, and cotton. The risks to the regional growth outlook are tilted to the downside and relate mainly to slower-than-expected growth in global demand and slowing capital inflows. Recent sharp increases in food and fuel prices still pose significant challenges for price stability across Africa. Inflation is expected to rise and the impact of higher food prices on poverty is of major concern, putting past progress in this area at risk and increasing social pressures. Activity continues to grow at a robust pace in much of the Middle East, while inflationary pressures either remain high or keep rising, particularly in a number of oil exporters. Real GDP growth in the Middle East is projected at 6.7% in 28 and 6.2% next year. The effects of falling demand in advanced partner economies and increasing supply-side constraints in oil sectors are expected to be partly offset by domestic demand and activity in non-oil sectors, while the global financial turmoil has had relatively little effect on the region thus far. But, rising prices are posing important challenges for many economies. Signs of overheating are multiplying. Inflation has reached double-digit rates even in some countries with traditionally low rates, such as Saudi Arabia, and exceeds 2% in Egypt and the Islamic Republic of Iran. The surge in inflation has occurred despite limited pass-through of high fuel and, to a lesser extent, food prices to domestic markets. Full World Economic Outlook reports of the International Monetary Fund (IMF) are available for download at 46

47 Inflation Concerns about rising inflation and the spike in oil prices were high on the agenda this year. Rising commodity prices (and especially fuel and food prices) have been an important source of inflationary pressure in both advanced and developing economies and, despite the deceleration of global growth, headline inflation has risen around the world to the highest rates since the late 199s. The resurgence in inflation was particularly strong in emerging and developing economies, with many countries experiencing double-digit rates. To some extent, the difference reflects the greater weight of food prices in consumption baskets in these economies (typically in the range of 3/45% as opposed to 1/15% in the advanced economies). Although food and fuel prices may continue to subside in the coming months and economic growth will moderate, inflation is still expected to remain at important rates over the near future, particularly in emerging economies. In advanced economies, the IMF is projecting inflation to slide from 3.6% this year to 2% in 29 under the impact of the economic slowdown. For emerging and developing economies, inflation is expected to be higher (7.8% in 29) but still an improvement over 28 (9.4%). This will allow central banks, in particular the ones in advanced economies, more freedom to use monetary policy to stabilise the financial markets. According to the IMF, moderating inflationary pressures and the deteriorating economic outlook already provide scope for monetary easing in some cases, notably in the eurozone and the United Kingdom, where short-term interest rates are quite high. Oil prices Over the summer months, oil prices reached record highs, both in nominal and real terms, putting extra pressure on inflation. But the weak baseline summer demand in the face of higher prices is now being perpetuated by weakening economic prospects and, most recently, by a spiralling liquidity crisis. According to the International Energy Agency (IEA) in its Oil Market Report of October 28 ( oil prices continued to decline in September and early October as demand weakened further due to the high oil prices and the ongoing financial and economic crisis, which offset the impact of hurricanerelated outages and lower OPEC output. US crude futures fell from around a peak of US$ 15 in July to below US$ 9 in early October. However, prices remain very volatile, with unprecedented daily swings, reflecting market uncertainty. In view of the current economic slowdown, IEA s forecast of global oil demand (expressed in million barrels per day) has been consequently lowered for both 28 and 29. World oil demand is now expected to average only +.5% in 28 and +.8% in 29 as compared to +1.1% in 27. Oil demand in OECD countries is even expected to fall both in 28 and 29 (-2.2% and -1.3%, respectively) due to the rapid weakening economic conditions, the financial turmoil and high prices. Such slower growth in demand will obviously continue to affect prices, which are expected to moderate. Nonetheless, announced reductions in production by OPEC and the strong economic growth in emerging economies will tend to support oil prices. Oil; Average of UK Brent, Dubai, and West Texas Intermediate (US$ per barrel) US$ euro Source: International Monetary Fund Inflation Advanced economies (%) * 9* Source: International Monetary Fund Inflation Emerging market and developing countries (%) * 9* Source: International Monetary Fund 47

48 Interest rates After a period of easy monetary conditions during 21-25, monetary policy was tightened across the advanced economies over fears of growing inflation Looking back some months, the US Federal Reserve held its rate at 2% between April and October, after six months of steep cuts deployed as an answer to the onset of financial stress in August 27, while the European Central Bank increased its policy rate to 4.25% in early July after more than a year at 4%. Now the panorama has totally changed. Fears of rising inflation have given place to concerns about liquidity and credit constrains and for the first time central banks from a series of countries, including the USA, the UK and the European Central Bank, acted in a coordinated manner in terms of monetary policy, lowering their interest rates in an effort to bring confidence to the market and stimulate inter-bank lending. But there have been marked differences in momentary policy between the USA and Europe. While, the US Federal Reserve has been aggressively cutting interest rates since August 27 to 1% in early October (from a high of 4.75% in October 27), in the eurozone and in the UK, where interest rates are still at much higher levels, changes have been less dramatic: the European Central Bank lowered its rate to 3.75% in October (from 4.25% since July) whereas the Bank of England cut its to 4.5% after keeping it at 5% since April. In early November both banks decided to implement further anticipated rate cuts of half-a percentage point and one-and-a-half percentage points respectively. This brings eurozone interest rates to 3.25% and the possibility has been left open to impose further rate cuts. According to the IMF, the deteriorating outlook, moderating inflation pressure, and tightening financial conditions provide scope for monetary easing in both the eurozone and the UK. Employment In a slowing economic environment, unemployment emerges as one of the major concerns. According to the IMF, unemployment rates in advanced economies will rise to 5.7% in 28 and 6.5% next year, the same level as that in The situation is much more dramatic in Europe, and in particular in the eurozone where unemployment is estimated to reach 8.5% for 29. Spain (14.7%), Belgium (8.6%), France and Greece (both at 8.3%), Germany (8.%) and Ireland (7.%) will be among the hardest-hit countries in 29. Outside the eurozone, unemployment is forecast to reach 6% in the UK, up from 5.4% this year. In other advanced economies, the major concern is obviously the USA, where the unemployment rate is expected to climb from 5.6% in 28 to 6.9% in 29. Inflation (%) United States Euro area * 9* Source: International Monetary Fund Interest rate Federal Reserve and ECB (%) United States Euro area Source: Federal Reserve and European Central Bank (ECB) Unemployment rate Advanced economies (%) * 9* Source: International Monetary Fund Euro area (%) * 9* Source: International Monetary Fund 48

49 Prospects Looking ahead, financial conditions are likely to remain very difficult, restraining global growth prospects. The IMF s baseline projections assume that actions by the US and European authorities will succeed in stabilising financial conditions and avoiding further systemic events. Nonetheless, even with successful implementation of the US plan to remove troubled assets from bank balance sheets, counterparty risk is likely to remain at exceptionally high levels for some time, slowing down the return to more liquid conditions in key financial markets. Furthermore, additional credit loses are very likely as the global economy decelerates. In the USA an eventual turnaround in the housing sector and more stable oil prices should help an initial recovery in the second half of 29, but the revival is expected to be much more gradual than in previous business cycles, as tight credit conditions continue to weigh significantly on domestic demand. Other advanced economies are also expected to go through a period of extremely sluggish growth or contraction in 28 and the first half of 29, and to experience only a modest upturn in the latter part of next year. In fact, all G7 countries except Canada are now projected to grow by less than 1% on a fourth-quarter-over-fourth-quarter basis during both 28 and 29. Growth in emerging and developing economies is also projected to continue to decelerate, before picking up during the course of 29. Nonetheless, overall growth is expected to remain well above that of the global downturn. Commodity-exporting countries, particularly oil exporters, are expected to maintain their momentum, but growth in countries dependent on food and fuel imports or external financing will slow quite sharply. Unemployment rate United States (%) Source: International Monetary Fund Japan (%) Source: International Monetary Fund United Kingdom (%) Source: International Monetary Fund Germany (%) Source: International Monetary Fund 49

50 Exchange rates Since late July, the US dollar has started to recover previously lost terrain to a large number of currencies. Between June, when the euro traded at US$ 1.56 (1 US$ =.64), and October, the dollar appreciated some 17% against the euro. At the end of October, the euro traded at below US$ 1.3 (1 US$ =.77), a rate last seen at the beginning of 27. In the same period, the pound sterling and the Canadian dollar varied only little with respect to the euro, whereas the US dollar appreciated against both by 16%. On the other hand, a number of currencies stayed close to the US dollar, among which the Chinese yuan, the Hong Kong dollar and the UAE dirham, and against those the euro depreciated by a comparable percentage. Exchange rate euro to US dollar (US$ per ) Source: De Nederlandse Bank A number of currencies slid more significantly between June and October against both the US dollar and the euro. The US dollar appreciated more than 2% against the Mexican peso (+22%), Brazilian real (33%), Chilean peso (26%), Colombia peso (32%), Korean won (28%), Australian dollar (38%), New Zealand dollar (25%), South African rand (22%), Swedish krone (23%), Norwegian krone (26%), Hungarian forint (25%) and Polish zloty (24%). In all those cases the euro appreciated also, but some 17% less. The Japanese yen was one of the few currencies that bucked the overall trend, with both the US dollar (-6%) and euro (-2%) depreciating against the Japanese currency. Finally, a group of currencies moved somewhere in between, with the US dollar appreciating by 4% to 12% and the euro depreciating by -4% to -1% against them: they included the Swiss franc, Russian rouble, Israeli new shekel, Tunisian dinar, Taiwan dollar, Singapore dollar, Malaysian ringgit, Thai baht, Indonesian rupiah, Philippine peso, Argentine peso and Peruvian new sol. Exchange rate Chinese yuan renminbi Source: De Nederlandse Bank Exchange rate British pound per US dollar per euro Source: De Nederlandse Bank per US dollar per euro Exchange rate Japanese yen (1) per US dollar per euro Source: De Nederlandse Bank Exchange rate Russian rouble per US dollar per euro Source: De Nederlandse Bank 5

51 Exchange rates Currency units per US dollar Currency units per euro Average 6/5 7/ year ago J.-O.8 Average 6/5 7/ year ago J.-O % % Oct Jun Oct % % % Oct Jun Oct % US dollar Canadian dollar Mexican peso Jamaican dollar Guatemalan quetzal Honduran lempira Argentine peso Brazilian real Chilean peso Colombian peso Peruvian new sol Euro Danish krone Swedish krona Pound sterling Czech koruna Hungarian forint Polish zloty Croatian kuna Norwegian krone Swiss franc Russian rouble Turkish lira Israeli new shekel UAE dirham Moroccan dirham Tunisian dinar South African rand Japanese yen Chinese yuan renminbi Hong Kong dollar Taiwan dollar Singapore dollar Korean won Thai baht Malaysian ringgit Indonesian rupiah 9,169 9, ,99 9,288 9, ,512 12, ,946 14,445 13, Philippine peso Vietnamese dong Australian dollar New-Zealand dollar Fiji dollar Indian rupee Pakistan rupee Sri Lanka rupee Source: compiled by UNWTO based on data from De Nederlandse Bank (DNB)/European Central Bank (ECB) and the Bank of Canada 51

52 Youth Travel Matters Understanding the Global Phenomenon of Youth Travel Youth Travel Matters Understanding the Global Phenomenon of Youth Travel offers a global overview of the youth and student travel industry, by revealing the latest trends in youth travel destinations, products and innovations. The report, developed by UNWTO and the World Youth Student & Educational Travel Confederation (WYSE Travel Confederation) shows that the motivations of young travellers make this market extremely important to the key objectives of the global tourism agenda. The value of youth, student and educational travel is being recognised by educational institutions, employers, official tourism organisations and governments worldwide. This report explains the uniqueness of this segment, its wish to explore and engage with cultures. It focuses on the special mix of their travel ambitions with study, work, volunteer placements and adventure. Available in English Handbook on Tourism Market Segmentation Maximising Market Effectiveness Market segmentation is crucial for National Tourism Organizations (NTO) and Destination Marketing Organizations (DMO) in making sure that their resources are used in the most effective way. This new UNWTO/ETC manual, aimed ultimately at helping destinations improving their marketing effectiveness, is divided into four distinct sections. The first sets out the theory and rationale for segmentation. Other areas look at the current methods and practices, detailing some of the main methodologies; at practical steps to introducing or developing further segmentation-based marketing activities, and finally at best practices in the area of tourism market segmentation, including the analyses of a number of case studies. Available in English Yearbook of Tourism Statistics Data The 28 edition of the Yearbook of Tourism Statistics provides for 24 countries and territories data on total arrivals and overnight stays associated to inbound tourism with breakdown by country of origin for the period The titles of the tables are in English only. Notes are given in English, French and Spanish. Names of countries, regions and sub-regions as well as the classification included on the tables are in English only. Countries are classified in accordance with English alphabetical order. Trilingual (English, French and Spanish) UNWTO World Tourism Barometer The UNWTO World Tourism Barometer offers a unique overview of short-term international tourism trends, updated three times a year. It is developed by UNWTO with the aim to provide all those directly or indirectly involved in tourism with adequate up-to-date statistics and analysis in a timely fashion. Each issue contains three regular sections: an overview of short-term tourism trends including data on international tourist arrivals, tourism receipts and expenditure for over 1 countries worldwide and data on air transport on major routes; a retrospective and prospective evaluation of current tourism performance by the members of the UNWTO Panel of Tourism Experts; and selected economic data relevant for tourism. The UNWTO World Tourism Barometer is published in January, June and October. Available in English, French and Spanish in print and PDF version Published: 28 Price: 4 Published: 27 Price: 45 Published: 28 Price: 175 Price: 65, 3 issues (PDF version) 95 (PDF and print version) Cruise Tourism Current Situation and Trends Over the past years, worldwide demand for cruise tourism has posted some of the biggest gains within the tourism sector. The constant dynamism in cruise activity, as well as the increasing number of countries that include cruises as a key product for their tourism development, has led to update and expand the first edition of the UNWTO study on cruise tourism (23). This new study discusses subjects like the current supply and demand for cruises as well as the characteristics, trends. A new element includes the relationship between destinations and cruise lines, analysing key factors such as legislation, promotion and the economic impact of cruises through reference cases. It presents current trends in this industry in terms of innovation, safety and security, and sustainability, and identifies the major lines that will shape the sector. Available only in Spanish Structures and Budgets of National Tourism Organizations, Structures and Budgets of National Tourism Organizations (NTOs) is a benchmarking reference tool on inbound tourism promotion. The report compiles and analyses updated and comparable information on the budgets that NTOs allocate for the promotion of inbound tourism as well as their structure, functions and forms of operation in order to illustrate different forms of NTO organization and possible action in the area of inbound tourism promotion. The first part of the report is focused on the NTOs structure and functioning. The second part presents an overall view of NTO budgets for around 5 countries. Available in English, French, Spanish and Russian Compendium of Tourism Statistics Data The Compendium is designed to provide a condensed and quick-reference guide on the major tourism statistical indicators in each country. The 28 edition provides statistical information on tourism in 28 countries and territories around the world for the period It is edited in English only, with countries classified according to English alphabetical order. For easy reference in Arabic, French, German, Russian and Spanish, the text of the basic indicators and the basic references has been printed in a separate pasteboard. Multilingual (English, French, Russian, Spanish, Arabic, German) Tourism Market Trends, 26 Edition Tourism Market Trends is UNWTO s regular series of reports with a comprehensive and timely analysis of international tourism trends in the world and the various regions, subregions and countries. The series examines short- and medium-term tourism development and analyzes statistical information on a set of indicators including international tourist arrivals, international tourism receipts, arrivals by region of origin, purpose of visit and means of transport, volume of trips abroad, international tourism expenditure, etc. The full series consists of one volume providing an overview of the tourism trends in the world, World Overview & Tourism Topics, and five regional and subregional volumes presenting for each country a digest of statistical data as well as an evaluation of the past year. Available in: World Overview & Tourism Topics: English, French and Spanish Africa: English and French Americas: English and Spanish Asia: English Europe: English and French Middle East: English Published: 28 Price: 8 Published: 26 Price: 5 Published: 28 Price: 65 Published: 27 Price: 8 each Set of five regional report + World Overview 32 The World Tourism Organization is a specialized agency of the United Nations and the leading international organization in the field of tourism. It serves as a global forum for tourism policy issues and a practical source of tourism know-how. Its membership includes 157 countries and territories and more than 3 Affiliate Members representing local governments, tourism associations and private sector companies including airlines, hotel groups and tour operators. The easy way to order UNWTO publications: For further information, please contact: UNWTO Publications Department Tel. (34) Fax: (34) pub@unwto.org