WTO World Tourism Barometer

Transcription

1 WTO World Tourism Barometer Volume 1, Nr. 1, June 23 Prospects for international tourism getting steadily better Results of this new WTO World Tourism Barometer indicate that international tourism might be close to a turning point. As the geopolitical situation has become more relaxed, conditions for international tourism are steadily improving. The data collected from about ninety major destination countries for the first four months of 23 still clearly show the effect of the Iraq conflict and of SARS. Various destinations, nevertheless, succeeded to report surprisingly good results. In particular some of the recently mostafflicted destinations in the Caribbean, South America and South Asia rebounded strongly. With the uncertainty due to the geopolitical situation gradually rippling away, the perspective is switching back towards the economic prospects. Although the world economy is still rather weak, a change for the better is expected to take place in the second half of the year. The tourism experts consulted in the framework of the WTO Panel of Tourism Experts also confirm a more positive outlook for the coming period. This is the first issue of the WTO World Tourism Barometer, a new activity of the Market Intelligence and Promotion section of WTO with the aim of monitoring the short-term evolution of tourism in order to provide the tourism sector with adequate and timely information. The WTO World Tourism Barometer is scheduled to be published three times a year (January, June and October). At the outset it contains three permanent elements: an overview of short-term tourism data from destination countries and air transport; the WTO Panel of Tourism Experts with a retrospective and prospective evaluation of tourism performance; and selected economic data relevant for tourism. The objective for future editions of the WTO World Tourism Barometer will be to extend the content and improve coverage gradually over time. The WTO World Tourism Barometer is prepared by the WTO Market Intelligence and Promotion Section. The WTO Secretariat wishes to express its sincere gratitude to all who have participated in the elaboration of the World Tourism Barometer, in particular all institutions that supplied data and the members of the WTO Panel of Tourism Experts, for their valuable and decisive contribution. We welcome your comments and suggestions at barom@world-tourism.org, tel / fax Contents Short-term Tourism Data 2 - International Tourist Arrivals 3 - Air Transport 7 WTO Panel of Tourism Experts 9 The Economic Environment 12 WTO Panel of Tourism Experts The first survey conducted among the WTO Panel of Tourism Experts shows a marked improvement in the prospects of the tourism sector. In order to be able to assess the evolution of tourism for the WTO World Tourism Barometer a panel of tourism experts has been established from a broad range of countries and sectors. In a brief questionnaire by each expert has been asked to evaluate the past four months as well as the upcoming same period of time on a five-point scale ranging from [1] much worse to [] much better. Much better Better Equal Worse Much worse average Evaluation by WTO Panel of Tourism Experts The over one hundred experts consulted, expressed a significantly more optimistic outlook on the coming four months compared to the period left behind. While the panel evaluated the past four months January to April with an average score of 2.8, for the current four months May to August an average was found of 3.6. The biggest increase in confidence is recorded for the Middle East and for Europe, whereas expectations for Asia and the Pacific are still relatively subdued. The moderate optimism as expressed by the WTO Panel of Experts towards international tourism s most important season -the summer high season of the northern hemisphere- is based on the expectation of a gradual improvement of the economic conditions, the reduction of uncertainty as a result of the relaxation of international tensions, and the waning of SARS. However, late reservations and a noticeable price sensitivity are expected to persist. (More on page 9) 2.8 Jan.-April 3.6 May-Aug. World Tourism Organization Capitán Haya 42, 282 Madrid, Spain Tel (34) / Fax (34) barom@world-tourism.org Copyright World Tourism Organization, Madrid 23 All Rights Reserved. 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. World Tourism Organization (WTO) 1

2 Short-term Tourism Data Tourism data available for the first months of 23 primarily reflect the tense geopolitical situation and the weak economic climate. The month of March shows the general fall in arrivals following the intervention in Iraq, while in April the impact of SARS is added. Background In the past two years international tourism has, first and foremost, been reigned by the combination of an overall weak economy and a high level of uncertainty because of the struggle against terrorism and the looming Iraq conflict. The global economic downturn following the boom and bubble of the late nineties put pressure on expenditure resulting in an increased price sensitivity in general and cost cutting on business travel in particular (less and cheaper). The terrorist attacks of 11 September 21 added a huge amount of uncertainty to this already difficult climate. The subsequent war on terrorism and the tension resulting from the threat of an intervention in Iraq prolonged this uncertainty even more. For tourism these abrupt changes of conditions resulted not so much in a decrease in overall volume but, above all, shifts in demand towards trips to familiar destinations closer to home by car, coach or train instead of plane. Consumers adopted a wait-and-see attitude, with late bookings as a result. Many sectors went and are still going through a difficult time, in particular airlines and all sectors dependent on long-haul traffic. Other products or segments of the market, however, have resisted well or even benefited, such as accommodation other than hotel (apartments, country houses, etc), special interest trips with a high motivation factor related to culture, sports, entertainment, or travel for the purpose of visiting family, friends and relatives (VFR). This climate has also accelerated a number of changes that were already underway. Low-cost airlines kept on growing in North America, and have developed rapidly in Europe. The Internet has strengthened its role not only as a means of information but also as a means of organising and booking trips. Individual (not organised) travel (i.e. in trade terms Fully Independent Travel or FIT) has proliferated, while tour operators have faced relatively hard times. Do-ityourself is becoming more and more fashionable for the mature and experienced travellers, vigorously stimulated by the possibilities offered by low-cost airlines and the Internet. Tourism Performance in 23 The first part of 23 has been predominantly a continuation of this scenario with the long awaited economic recovery further delayed because of the prolonged high level of uncertainty due to the Iraq conflict. Some destinations, however, started the year with considerable growth (e.g. Caribbean, Asia, United Kingdom and South Africa), but The data included in this section has been compiled by the WTO Secretariat in May and early June 23 based on preliminary data as disseminated by the institutions of the various countries and territories through websites, press releases, bulletins or provided through direct contacts with officials. In the tables for the various WTO regions, series are chosen that can serve as an indicator for the evolution of tourism in selected destinations. The monthly series represented do not in all cases coincide 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). Countries that are not included in this overview, but with monthly data for 23 at their disposal, are kindly requested to please contact the WTO Secretariat at barom@world-tourism.org. mostly compared to rather depressed levels in the first months of 22. The start of the war in Iraq in March caused an immediate plunge in demand, in particular of air traffic, interregional travel and travel to destinations perceived as close to the conflict zone. Very few destinations and sectors turned out to be immune from this new setback. A significant difference, however, this time was that National Tourism Administrations, Tourism Boards and tourism businesses were much better prepared and attempted to adapt quickly to the changed conditions, primarily focussed on shifting or reducing capacity and a rigorous cost control. In this respect the emergence of SARS was much more unexpected and disrupted the affected destinations and businesses far more severely. In response to the unfavourable climate, tourism businesses have maintained the strategy of giving priority to profitability over volume growth already put into action after 11 September 21. The focus has been on a strict cost management, a reorientation of activities towards more profitable products and markets and a broadening of flexibility in supply in order to be able to respond quickly to the changing desires of their clients and the evolution of the market. The offer of open or modular packages has been increased as well as the use of other accommodation than hotels. This process has been accelerated by the growing weight of advanced information and communication technology as a source of information and sales, in particular the Internet and call centres. National Tourism Administrations (NTA) have backed the sector with action plans in several areas such as communication, promotion and marketing. In selective cases support has been given to tourist companies, with the criteria of effectiveness and in collaboration with the private sector. At the end of 22 a good part of the NTA s, like many tourism companies, established contingency plans anticipating events that could interfere in the normal development of the sector. World Tourism Organization (WTO) 2

3 International Tourist Arrivals In the following section, an overview by region will be given of trends for the first four months of 23 based on preliminary monthly data for over ninety major destination countries with this type of data available, corresponding to more than four fifths of the international arrivals in the world. When interpreting the figures for the various regions, it should be borne in mind that in most cases they are compared to the rather weak post-11 September figures of the first months of 22. Concerning the months of March and April, it is also important to note that for many destinations the figures are irregular because of the late Easter holiday in 23 (decreasing the arrivals of March and increasing the arrivals of April). Europe The wait-and-see attitude of consumers induced by the looming war and by the economic prospects in most of the advanced economies, resulted in declines in the majority of European destinations in early 23. With the start of the military intervention in March most countries dived into the minus side, with the most severe setbacks reported by Israel, Croatia, Turkey, and Cyprus, the latter two after performing rather well in January and February. March figures are also influenced by the fact that the Easter holiday -for many European destinations considered as the start of the tourism seasonin 23 was celebrated in April. Some countries resisted the unfavourable climate better and still show positive results. The two major South European destinations, Spain and Italy, reported respectively gains of 3% in the first four months and 2% in the first three months. The United Kingdom ended the period up to April with a 1% increase over the same period of 22. In particular arrivals from Western European generating markets increased substantially (+6%), most likely helped by the cheaper Great Britain Pound towards the euro, amply compensating the losses in long-haul arrivals from North America (-12%) and other parts of the world (-%). The Nordic countries Denmark, Finland, Norway and Sweden, all show weak or negative performances, in the year-to-year variation from January to March, resulting, not from an abrupt decline in March, but from general decreases since the beginning of the year. Denmark and Sweden, though, quite improved in April. Most countries in Western, Central and Eastern, and Southern Europe are still on the minus side, noting however, that this trend can be reversed once April figures are available. This decreasing trend cannot be attributed only to the Iraq conflict, as it was already visible at the beginning of the year, showing the apparent impact of the weak economic situation in Western Europe. In International Tourist Arrivals by Country of Destination 22* 23* Monthly data Series (1) 2*/1 Series (%) (1) (%) YTD (2) Jan. Febr. March April Europe ###### 2.4 Andorra TF 3, TF Austria TCE 18, TCE Belgium TCE 6, TCE Croatia TCE 6, TCE Cyprus TF 2, TF Czech Rep TCE 4, VF Denmark TCE 2,1 -.9 NHS Estonia TF 1,36 3. TF Finland TF 2, NHS France TF 76, TF -4.1 x x x Germany TCE 17,969.6 THS Hungary VF/2 1,87 3. TCE Ireland TF,76 2. TF. x x x Israel TF TF Italy TF 39,799.6 TF Latvia TF VF Liechtenstein THS THS Lithuania TF 1, TF Netherlands TCE 9,9 1. TCE Norway TCE 3, NHS Poland TF 13, TF Portugal TF 11, NHS Slovakia TCE 1, TCE Slovenia TCE 1, TCE Spain TF 1, TF Sweden TCE 7, NHS Switzerland TF 9, NHS Turkey TF 12, TF United Kingdom VF 23, VF Source: World Tourism Organization (WTO) (Data as collected by WTO June 23) (1) 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. (2) Year to date. World Tourism Organization (WTO) 3

4 particular, Germany, accounting as the main European generating market for more than a quarter of arrivals in the majority of the countries, has given reason to worry. For the majority of European destinations wintertime is not the prime season for tourism, and the most important part of the year is still to come. At the brink of the high season a moderate optimism is expressed of a gradual recovery with late booking continuing as on of the main trend. Americas Tourism performance in the Americas varied significantly between the North of the region and the rest of the continent. In particular, the USA has obviously been pending the Iraq conflict, fear of terrorism and the rather uncertain economic situation. The United States, Canada and Mexico suffered twodigit decreases in March. Many other destinations in the region also saw weaker results in March but far less pronounced. For the US market, the rise from yellow (elevated) to orange (high) of the US Homeland Security Threat Advisory System Color Code had an immediate and strong impact on both international and domestic travel. The decrease reported by Mexico is mostly due to stricter formalities for crossborder traffic with the United States (representing an significant share of the volume, but only 1% of tourism receipts as it mostly relates to short-term visits). By contrast, arrivals to the interior of Mexico were up by 6% and receipts were up by 7%. Canadian results will also be influenced by the effect of the weaker US dollar viz. a viz. the Canadian dollar as well as by SARS, although the latter will only be visible to a full extent in the months still to be reported as the WHO travel advisory lasted from 23 to 29 April. The Caribbean is showing clear signs of resurgence, although not yet shared equally by all its destinations. Two of the major destinations, Cuba and the Dominican Republic, both comparatively lesser dependent on the US-outbound market, succeeded in recording impressive doubledigit increases. The Caribbean Tourism Organization (CTO) reported that the cruise market for the Caribbean (including some Mexican and Central American ports) is generally strong, with an increase estimated at 1% in 22. With the significant improvement of the economic prospects in the Mercosur countries, particularly in Argentina and Brazil, travel in the region is picking up. Argentina, Chile and Peru performed well in the first months of 23. In particular, Argentina is showing impressive results, continuing last year s trend of two-digit growth rates. International Tourist Arrivals by Country of Destination 22* 23* Monthly data Series (1) 2*/1 Series (%) (1) (%) YTD (2) Jan. Febr. March April Americas ###### -3.8 Anguilla TF TF Antigua,Barb TF VF air Argentina TF 3, VF(3) Aruba TF TF Bahamas TF 1, TF Barbados TF TF Belize TF 2 2. TF Bermuda TF VF air Bolivia TF THS -1.8 x x x Canada TF 2, TF Cayman Islands TF TF Chile TF 1, TF Cuba TF 1, TF Curaçao TF TF Dominica TF TF Dominican Rp TF 2, VF air Ecuador VF VF El Salvador TF VF Grenada TF TF Guyana TF TF Honduras TF 6.2 TF Jamaica TF 1, TF Mexico TF 19, TF Montserrat TF TF Nicaragua TF TF Panama TF VF Peru TF VF air(4) Saint Lucia TF TF St.Maarten TF VF air St.Vincent,Grenadines TF TF Trinidad Tbg TF TF United States TF 41, TF() Uruguay TF VF(6) US.Virgin Is TF THS Source: World Tourism Organization (WTO) (Data as collected by WTO June 23) (1) See Table on Europe. (2) Year to date. (3) Foreign arrivals to Ezeiza and Jorge Newbery Intl Airports and to the Buenos Aires Port (4) Foreign arrivals to Jorge Chavez Intl Airport () Excluding Mexican visitors not travelling beyond the 2 miles U.S. border zone (6) Excluding Uruguayan nationals residing abroad World Tourism Organization (WTO) 4

5 Asia and the Pacific The emergence of SARS, in the second half of March, appears immediately as the main determinant in the evolution of tourism in Asia in the first months of 23, seriously affecting not only the destinations under the World Health Organization (WHO) travel advisories, but the majority of the destinations in the region. The results posted over the first three or four months of the year are, almost without exception, negative and particularly striking in comparison to the region s outstanding performance in 22. The only destinations staying out of the turmoil are found in South Asia and in Oceania. India, Nepal, Maldives and Sri Lanka all report substantial increases, compensating partially for the relatively weak performance of South Asia after 11 September 21. After an overall good increasing trend in January and February, with most countries reporting often double-digit growth, in March arrivals to most destinations declined abruptly. Of course part of this decrease has to be attributed to the general slack in demand due to the Iraq conflict. Although WHO issued the first official global alert concerning SARS on 12 March 23, followed by an emergency travel advisory on 1 March, the first SARS Travel Recommendation, including the Chinese province of Guangdong and Hong Kong (China) as areas where travellers should consider postponing all but essential travel, was issued only on 2 April. Unlike in other regions, in April arrivals fell even further, with Hong Kong (China), Singapore and Taiwan (pr. of China) losing half or more of their arrivals compared to April 22 (data for China for those months is not yet available). Various other destinations in the region, such as Japan, the Republic of Korea, Macao (China), Australia, Thailand, Indonesia and the Philippines, although themselves not or only very limitedly affected by the virus, are also severely touched, decreasing by between 1% and % in April. An important factor for this has been the fact that many destinations are relatively strongly dependent on air travel through a hub in one of the affected countries. Furthermore, the lack of adequate information at the beginning of the outbreak badly aggravated uncertainty and induced a general reluctance to travel. SARS not only seriously affected long-haul markets, but also source markets in Asia (about 8% of the total inbound in Asia and International Tourist Arrivals by Country of Destination 22* 23* Monthly data Series (1) 2*/1 Series (%) (1) (%) YTD (2) Jan. Febr. March April Asia and the Pacific ###### 8.4 Australia VF 4, VF China TF 36, TF Cook Is TF TF Fiji TF TF Guam TF 1,9-8.7 TF Hong Kong (China) VF 16, VF India TF 2, TF Indonesia TF, TF(3) Japan TF, TF(4) Korea, Republic of VF, VF Macao (China) TF 6, VF Malaysia TF 13, TF Maldives TF 48.2 VF air() Nepal TF VF air New Caledonia TF TF New Zealand VF 2,4 7.1 VF Palau TF TF Philippines TF 1, VF Singapore TF VF Sri Lanka TF TF Taiwan (Pr. of China) VF 2, VF Thailand TF 1, TF Vietnam TF VF Source: World Tourism Organization (WTO) (Data as collected by WTO June 23) (1) See Table on Europe. (2) Year to date. (3) Foreign arrivals through thirteen selected Ports of Entry (4) Data obtained from the Japan Tourism Marketing Co, quoting JNTO data () Foreign arrivals at Male Intl Airport the Pacific), for instance arrivals in Australia from its second generating market Japan, fell by more than a quarter in April. The coming months will definitely still be under the influence of SARS, but with the prospect of an improvement as the number of newly reported cases and deaths is continuously declining. As consumers are regaining confidence, demand is likely to slowly start to return, with shifts to destinations where the outbreak is perceived to be under control. Several of the most affected destinations designed aggressive revitalization campaigns in an attempt to accelerate recovery. As of 24 June 23, the WHO lifted its last remaining travel advisory concerning travel to Beijing, while only two destinations are left on the list of areas with recent local SARS transmission. World Tourism Organization (WTO)

6 Africa and the Middle East Destinations in the Middle East and North Africa show a rather similar pattern, obviously reflecting the impact of the war in Iraq. All six destinations with data available for one or more months Morocco, Tunisia, Egypt, Jordan, Qatar and Lebanon started the year with a substantial increase in January. February followed with a more moderate increase, while March is showing sizeable drops. In April the losses are already more limited, or even a modest increase was registered as in the case of Morocco. All African countries that reported data for the corresponding months, increased in January and February, and decreased in March. South Africa maintained the good pulse shown in 22 (+11%), with an increase of 9% in January and 7% in February. Even during the month of March, when most destinations around the world showed declines induced by the geopolitical tension, the country only saw a slight decrease of.3%. International Tourist Arrivals by Country of Destination 22* 23* Monthly data Series (1) 2*/1 Series (%) (1) (%) YTD (2) Jan. Febr. March April Africa 29, Ethiopia TF 16.4 TF Kenya TF TF(3) Mauritius TF TF Morocco TF 4, TF South Africa VF 6, 1.9 VF Tunisia TF,64-6. TF Middle East 24, Egypt TF 4, VF Jordan TF 1, TF Lebanon TF VF air Qatar TF VF air Source: World Tourism Organization (WTO) (Data as collected by WTO June 23) (1) See Table on Europe. (2) Year to date. (3) Tourist arrivals in the International Airports of Jomo Kenyatta, Mobassa and Moi, as well as by Cruise Ships Air Transport For airlines the impact of SARS ultimately seems to be more severe than the Iraq conflict. According to data from IATA, scheduled international passenger traffic in the industry worldwide decreased by 2.6% over the first four months of 23. January and February were still positive, while March showed a decrease of 7% and April of 17%. In March all regions recorded decreases ranging from -4% to -12%, except South America which increased by 6%. The most affected regions in April were Asia and the Pacific (-36%) and North America (-22%). In spite of the losses suffered in the sector as a whole, the reporting carriers from South America (+11%), the Middle East (+6%) and Africa (+2%) still show a positive balance over the first four months of the year. % change International traffic of IATA reporting carriers by region of airline registration Jan.-April Industry data North America Source: compiled by WTO from IATA Mexico, Caribe, Central A. South America Europe Africa Middle East Asia and Pacific World Tourism Organization (WTO) 6

7 North America Traffic by the U.S.-member airlines of the ATA decreased by 1.8% in the first four months of 23. Domestic traffic just played even, while international traffic declined considerably, except on the Latin routes. January still started with an overall increase of 6% and positive figures on all routes (in comparison to a still rather depressed January of 22, see graph below). March and April clearly reflect the impact of the Iraq intervention with overall decreases of % and 7%. The impact of SARS is visible in the 36% decrease on the Pacific route in April. Europe The member airlines of the AEA reported a slight decrease of.3% from January to April. Domestic traffic was still up 2.4% while international traffic decreased by.6%. Traffic on the intra-european routes decreased by 1.3%. This will be partly due to the fact that one of the roles of the European services is to feed into the long-haul routes. On the other hand, this might be a reflection of the growing competition suffered from low-cost airlines. The biggest decrease is reported on the Middle East route (-13.9%), where a still positive January was followed by a weak February and a sharp drop in March and April. Traffic on the North Africa route was also affected but to a lesser extent (-6.2%), while traffic on the Sub Saharan Africa route continued its advance and increased by 6.% in the first four months. Traffic on the Atlantic routes has held up comparatively well, even during March and April, resulting in an overall increase of 3.% on the North Atlantic, 1.1% on the Mid Atlantic and 3.6% on the South Atlantic route. However, there is still some way to go before the traffic lost in the past years will be recovered. Traffic on the Far East and Australasia route went down by.9%. April is clearly showing the impact of SARS, although to a lesser extent than for the U.S. member airlines of the ATA. Asia and the Pacific The companies associated in the Association of Asia Pacific Airlines registered reasonable to good increases in January (+13.%) and February (+.2%), sufficient to absorb the 1.6% of April. Data for May have not yet been reported, however, a sharp drop is expected, as it will be the first month showing the full extent of the impact of SARS in the region. Preliminary Air Transport Statistics, Revenue Passenger-Kms 22* 23* 2*/1 (%) (million) (%) YTD¹ Jan. Febr. March April International Air Transport Association (IATA), Monthly International Statistics (MIS) Scheduled international traffic of IATA reporting carriers by region of airline registration Overall 1,722 ² North America Mexico, Caribe, Central A South America Europe Africa (incl. Egypt) Middle East (incl. Israel, Iran) Asia and Pacific Air Transport Association of America (ATA) Preliminary Scheduled Passenger Traffic Statistics ATA U.S.-Member Airlines All services of commercial airlines Domestic (including USA-Canada) International Atlantic Latin Pacific Association of European Airlines (AEA) Passenger Traffic of AEA Member Airlines Total scheduled Domestic Total International Geographical Europe North Africa Middle East Total Longhaul among which: North Atlantic Mid Atlantic South Atlantic Far East/Australasia Sub Saharan Africa Other.2 Association of Asia Pacific Airlines (AAPA) Consolidated Passenger Traffic, Capacity and Load Factors International operations Intra-Asia Pacific Trans-Pacific Asia-Europe Source: compiled by WTO from IATA, ATA, AEA and AAPA ¹ Year to date. ² All IATA carriers World Tourism Organization (WTO) 7

8 % change over same month previous year Revenue Passenger-Kilometres (RPKs) flown on international routes by month Association of Asia Pacific Airlines (AAPA) Association of European Airlines (AEA) Air Transport Association of America (ATA) Source: compiled by WTO from ATA, AEA and AAPA % change over same month previous year ATA: Revenue Passenger-Kilometres (RPKs) flown on selected routes by month Domestic Latin Pacific Atlantic Source: compiled by WTO from ICAO, ATA, AEA and AAPA % change over same month previous year AEA: Revenue Passenger-Kilometres (RPKs) flown on selected routes by month Domestic Geographical Europe North Atlantic Far East/Australasia Data presented here refer to scheduled international passenger traffic of reporting carriers of IATA broken down by region of airline registration, as well as to traffic of the member airlines of the three major regional airline associations broken down by routes operated. With this data it should be taken into account that it reflects the vast majority but not all air traffic, as the carriers included are mostly full-service airlines. Unfortunately, comprehensive data on the evolution of traffic operated by charter and low-cost airlines is still hard to find. Airline data is in particular a good indicator for the short-term evolution of interregional traffic. For intra-regional traffic, however, air transport is in competition with alternative modes of transport (in particular over land, but also over water), and might be subject to shifts between means of transport (depending on relative price, perception of safety, etc.). Furthermore, traffic is not expressed here in passengers carried, but instead measured in terms of revenue passengerkilometres (RPK, one RPK is one paying passenger transported over one kilometre). This implies that long-haul traffic weights relatively more in the total traffic than short-haul traffic. Source: compiled by WTO from ICAO, ATA, AEA and AAPA World Tourism Organization (WTO) 8

9 WTO Panel of Tourism Experts In spite of the Iraq conflict and SARS the mood prevailing in the tourism sector at the moment is rather positive. Representatives from the tourism sector express a clear change for the better and in most destinations and markets the worst is perceived to be over. 4 4 Evaluation by WTO Panel of Tourism Experts According to the quick survey conducted among the WTO Panel of Tourism Experts, expectations for the coming four months notably improved over the previous four months. In a short questionnaire by , a sample of selected tourism experts from public institutions and businesses all around the world were asked to evaluate the performance of the past four months, the period January to April 23, and their prospects for the coming four months, May to August 23. Of the over 1 experts that responded, the majority evaluated the past four months as worse than the four preceding months, while for the coming four months a clear majority anticipates a better performance. number Jan.-April May-Aug. [1] Much worse [2] Worse [3] Equal [4] Better [] Much better Evaluation by WTO Panel of Tourism Experts Jan.-April An average can be computed for the replies given, where a score above three indicates an improvement compared to the previous period and a score below three a deterioration. For the sample as a whole, the past four months are evaluated with an average of 2.8, just below the equal point of 3, while the coming four months are assessed with an average of 3.6. There is no big difference between the evaluation by the representatives of the public sector and of the private sector. The later group evaluated the past four months somewhat more negatively, while both groups coincide in their expectations for the coming four months. average May-Aug Total Public Private Evaluation by WTO Panel of Tourism Experts Broken down by region, it is seen that all expect the situation to improve over the four months to come. The only exception is the Americas, where a slightly lower, but still positive, outlook for the four coming months follows an already upbeat evaluation of the last four months. Those figures indicate that the American market is improving after almost two depressed years. Just like Americas, Africa was already positive over the past four months, while it is even more optimistic over the coming four. Europe shows a notable improvement of more than 1 point, although the biggest jump is found in the Middle East, from 1.8 to 3.8. The outlook for Asia and the Pacific is the most restrained and clearly reflects the concern over SARS. However, with an average expectation of just over 3 (equal) for the coming four months, the negative and positive assessments are balanced. average Europe Jan.-April May-Aug Asia and the Pacific Americas Africa Middle East World Tourism Organization (WTO) 9

10 Comments from the WTO Panel of Tourism Experts With the questionnaire of the WTO Panel of Tourism Experts a lot of valuable comments have been given by the participants concerning the determinants of the evolution of tourism in the period under review. Overall it can be concluded that the uncertainty and volatility connected with the Iraq conflict is rapidly rippling away. A clarification and gradual relaxation of the geopolitical climate is observed, although there are still many problems left to address, such as the risk of further terrorist attacks. Safety and security issues are still a major concern, and various countries see their tourism flow constrained because of difficulties with the facilitation of traffic at border crossings. SARS has presented itself as a new major problem. In particular the Asia region and the air transport sector are still facing a tough time. The occurrence of the virus affect has had a disastrous impact on intra-regional and interregional traffic during the months of March, April and May, with tourism virtually coming to a stand-still in the most affected destinations. However, various experts of the panel expressed the hope that the outbreak will be contained soon and that the worst is nearly over as the number of areas included in WHO travel advisories started to decrease rapidly, as well as the numbers of destinations classified as areas with recent local transmission. Responses have been almost immediate and many destinations have engaged in developing aggressive marketing campaigns which are expected to induce traffic to return in the coming peak season for family holidays and to contribute in restoring confidence in travel to and from the region. Generally conditions are improving although much depends on the economy. In most of the traditional generating markets the economy is still rather weak. One of the big questions is how quickly the long-awaited economic recovery will take place. By and large, a gradual but slow improvement is anticipated. For the time being, given the economic situation and SARS, the prospects for intraregional and domestic tourism are still better than for interregional travel. Also it is expected that costconsciousness will persist in the short- to mid-term. Concerning tourism demand, repeatedly mentioned is the persistence of the changes in habits seen in the past years, such as the late bookings and the trend to individual travel. Also a growing apprehension is expressed about the increased competition between destinations and products in the market. A clear concern among tourism operators has been to increase the flexibility in the products they offer in order to be able to adapt quickly to the changing markets. In terms of products, the cruise industry is reported to perform well in the Caribbean. Furthermore, MICE tourism is recovering at a slower pace than leisure tourism in the majority of the destinations. The WTO Panel of Tourism Experts is based on the results of an survey conducted by the WTO Secretariat among selected representatives from public and private sector organisations and companies. It is the first time this survey has been conducted and it is the objective to repeat the survey every four months in order to keep track of the performance and prospects in the tourism sector. Responses have been received from Argentina, Aruba, Australia, Austria, Barbados, Belgium, Brazil, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Cuba, Cyprus, Czech Republic, Dominican Republic, Dubai, Egypt, El Salvador, Estonia, Ethiopia, Finland, France, Germany, Greece, Guatemala, Hungary, India, Indonesia, Israel, Italy, Jamaica, Japan, Jordan, Lebanon, Lithuania, Macao (China), Madagascar, Mexico, Monaco, Namibia, Netherlands, New Caledonia, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Poland, Portugal, Saudi Arabia, Seychelles, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan (pr. of China), Thailand, Turkey, Uganda, United Kingdom, United States, Uruguay and Vietnam. The results broken down by region, in particular the results for Africa and the Middle East, should be taken with some caution as only a relatively small number of responses are included. For future editions of the WTO Panel of Tourism Experts it is the aim of the WTO Secretariat to extend and improve the sample, in particular the regional distribution of it. Those interested in participating in the WTO Panel of Tourism Experts are kindly invited to send an to barom@world-tourism.org On the marketing side, public / private partnership emerges as one of the positive factors influencing tourism development, together with the fact that many destinations have reinforced their marketing, mainly in domestic markets (special incentive and promotional schemes) and in neighbouring countries. Regional Prospects By region the following trends can be distinguished as the most significant: Europe Economic prospects are still relatively bleak for the countries of the European Union, in particular for Germany. Intra-regional tourism demand, however, has shown to be rather resistant in volume, although expenditure is under pressure. With the disappearance of the uncertainty, expectations for the summer season are reasonable to good, but with late bookings and pressure on prices. The stronger euro might slacken inbound tourism to euro area countries, in particular the UK market might look for more economic options, and stimulate outbound tourism from euro World Tourism Organization (WTO) 1

11 countries (both to European destinations outside the euro area, such as Turkey, Central and Eastern Europe and the United Kingdom, and interregional, in particular Trans- Atlantic and to Mediterranean destinations in North Africa and the Middle East). Furthermore, some countries betted on domestic tourism and promoted actively. Americas The region is showing an overall scenario of recovery against a background of two depressed years. Prospects are evaluated positively by the sector, due to the fact that the length of the war was less than expected. There are signs of a gradual recovery of the economic situation in the USA and good expectations arise regarding the Mercosur economies. Some destinations in Central and Southern America identified market opportunities perceiving themselves as safe destinations far from war, terrorism and SARS. The Caribbean is also reviving, and reported a notable increase in the number of arrivals of cruise passengers. The weaker dollar will stimulate intraregional travel and interregional travel to the region. Transatlantic traffic is expected to pick up from its severe depression. Toronto suffered the impact of SARS, but made a point to control the situation. Some potential Asian traffic might deviate to North-America, for instance from Japan to the west coast of the USA or to Hawaii. Asia and the Pacific SARS has abruptly changed the short-term perspective for many destinations in Asia. The virus is touching, in particular, destinations and markets that showed the highest growth rates for both inbound and outbound tourism in the last few years. Various Asian airlines are strongly affected, but did comparatively well in the last two years. The final impact of SARS will depend, above all, on the duration of the outbreak. Except for Japan, overall prospects for economic growth are good. If measures taken prove to be effective and authorities can show that the virus is under control, demand could return to normal quickly. Currently, at 24 June, the travel recommendations of the World Health Organization to postpone all but essential travel are lifted for all areas previously included. Many Asian destinations have never been affected or successfully controlled the situation, and in the short-term intra-regional tourism will shift accordingly. National Tourism Administrations and Tourism Boards designed post-crisis promotion to revive the markets and to catch the pent-up demand. Reservation levels are reported to show recovery from July on. Destinations in South Asia are less affected by SARS and are expected to resurge in 23 from their post-11 September depression, fuelled both from intra-regional and interregional markets. Middle East Last year the region moved ahead thanks to its strong intraregional potential with various destinations succeeding in tapping new markets. The focus is now on the rebuilding of Iraq, the stability of the region and the revitalisation of the Israeli-Palestinian peace-process. In this climate of overall relaxation of tension, and although safety and security is still a major concern, prospects are positive for a rebound of interregional and intraregional tourism in the second half of the year. In fact, the overall commitment to the peace process will probable permit destinations to benefit from a more positive media coverage on the region, while the euro/usd exchange rate is viewed as a likely factor for optimistic prospects over the improvement on traffic from Europe. Africa As a region, Africa performed comparatively well during the last few years and seems to be influenced more by its own immediate problems than by the geopolitical ones. Some of the African destinations functioned as a safe harbour, most importantly South Africa. Of the major tourist pullers, it is anticipated that the North African destinations Tunisia and Morocco will regain momentum in the more relaxed climate. The renewed growth of South Africa is expected to continue for some time, although the appreciation of the South African rand might slow down the pace. World Tourism Organization (WTO) 11

12 The Economic Environment According to the latest World Economic Outlook of the International Monetary Fund (IMF) presented in April 23, growth of worldwide Gross Domestic Product (GDP) is estimated to reach 3.2% in 23, almost the same as recorded in 22 (3.%). Most of the advanced economies including the major tourism source markets of North America, Western Europe and Japan are still suffering from a weak economy. However, a gradual but slow improvement is anticipated during the second half of the year. The IMF has projected an economic growth pick up to 4.1% for 24. For the Americas, growth is estimated at 2.1% in 23 with an improvement to 3.7% in 24, driven by the United States and Canada, but also by the recovery of the Latin American economies. Europe is forecasted to grow by 2.% in 23, with the euro area growth at a sluggish 1.1%. Given the rather feeble economic data that has become available after the publication of the World Economic Outlook, estimations might still have to be adjusted down somewhat. Exceptions in Europe are Central and Eastern Europe and the Russian Federation, forecasted to grow at 3.4% and 4.% respectively in 23. For 24, growth of the European economies is almost without exception anticipated to improve moderately, raising the regional average to 2.8%. In spite of the still rather stagnant Japanese economy, economic growth for Asia and the Pacific as a whole is anticipated to maintain its rate close to five per cent in both 23 and 24, with China recording even over 7%. SARS might cause a temporary slow down of this pace, but is not expected to dent growth seriously. Africa sees its growth accelerate to 3.9% in 23 and to over % in 24. Economic growth in the Middle East is expected to almost double in 23 and to maintain this level in Growth of Gross Domestic Product (GDP), constant prices 22 23* 24* 4 % change World Europe Americas Asia and the Pacific Africa Middle East Source: compiled by WTO from International Monetary Fund, World Economic Outlook, April 23 At the moment oil appears to move in an acceptable price band for both consuming and producing countries. The tension arising from the looming Iraq conflict led to a hike in oil prices, but never at an unsustainable level. Prices Oil; Average of U.K. Brent, Dubai, and West Texas Intermediate US$ per Barrel 4 passed the 3 US dollar a barrel barrier only for a short while in the beginning of 23 and since then have fallen back to an average of US$ 2. per barrel in April and May 23. Oil; Average of U.K. Brent, Dubai, and West Texas Intermediate US$ per Barrel Source: International Monetary Fund Source: International Monetary Fund World Tourism Organization (WTO) 12

13 Overview of the World Economic Outlook Projections of the International Monetary Fund (IMF) Growth of Gross Domestic Product (GDP), constant prices (annual per cent change) Current projections Trend¹ Average * 24* 2-1 3* - 2* 4* - 3* World = + 3. of which: Advanced economies = Developing countries Countries in transition = = 3. Europe = = Euro area Germany France = Italy Spain = Netherlands Belgium = Austria = United Kingdom Switzerland Sweden Central and Eastern Europe = Russian Federation Americas United States = Canada Western Hemisphere (Americas) Brazil = Mexico Argentina Venezuela Asia and the Pacific = Japan = + = 1.1 Australia Newly Industrialized Asian Economies Republic of Korea Taiwan (Pr. of China) Hong Kong (China) Singapore Developing Asia = = 6.3 China = 8.1 India = +.6 Indonesia, Malaysia, Philippines, Thailand Africa = South Africa = = Middle East = ++ = 3.1 Saudi Arabia Egypt Source: compiled by WTO from International Monetary Fund, World Economic Outlook, April 23 ¹ percentage points change to previous year: ++ >1; + <.2,1>; = <-.2,.2>; - <-.2,-1>; - - > -1 World Tourism Organization (WTO) 13