WTO World Tourism Barometer

WTO World Tourism Barometer Volume 3, No. 3, October 2005 On track for another strong year According to the preliminary data gathered for this issue of the WTO World Tourism Barometer an estimated 460 million international tourist arrivals were recorded worldwide in the first seven months of 2005. This represents an increase of some million arrivals compared with the respective period of 2004, or a 5.9% growth. The year-to-date increase is very much in line with WTO s initial forecasts for the full 12 months of 2005. As the updated forecast in this Barometer shows (cf. page 4), the year as a whole is expected to end with a growth of 5 to 6%. It should be stressed that this in itself can be considered exceptional. It means that international tourism is not only on track to consolidate the bumper year it had in 2004 (+10.7%), but it will also exceed the forecast longterm average growth of 4%. (Continued on page 2) International Tourist Arrivals, monthly evolution World 24 22 20 18 16 14 12 10 8 6 4 2 0-2 -4-6 -8-10 -12-14 2003 2004 2005* (% change) ----------------------------------------------------------------------- This issue of the WTO World Tourism Barometer is being published earlier than usual so as to be available at the world conference being organised by WTO in Iguazu from 3-6 October 2005 The Tourism Satellite Account (TSA): Understanding Tourism and Designing Strategies. The next issue will be published according to the regular schedule at the end of January 2006 and will contain among other information, preliminary full-year estimates for 2005. Contents Short-term tourism data 2005 2 World 2 Results 2 3 Forecast for the full year 2005 4 Evaluation by WTO Panel of Tourism Experts 5 Air transport 7 Regions 10 Europe 10 Asia and the Pacific 14 Tsunami recovery update 17 Americas 18 Africa and the Middle East 21 The economic environment 24 WTO Panel of Tourism Experts Slight decline in WTO Tourism Confidence Index The nearly 230 experts from all over the world who contributed to this issue of the WTO World Tourism Barometer by responding to our survey still believe that international tourism is on an upward growth track. Nevertheless, if we compare their overall ratings for this period and those for the period comprising the months of January through April (134), there was a six-point decline for the four months of May through August (to 128). The WTO Panel of Experts prognosis for the current period September to December 2005 is also slightly down to 129 from 132 four months ago. This confirms the relative decline in confidence observed since the last quarter of 2004. (Continued on page 5) better Better Equal Worse worse WTO Panel of Tourism Experts 175 1 1 75 Evaluation T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 World Tourism Organization Capitán Haya 42, 28020 Madrid, Spain Tel (34) 91 567 81 00 / Fax (34) 91 571 37 33 barom@world-tourism.org www.world-tourism.org Copyright World Tourism Organization, Madrid 2005 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. Please do not post copies on publicly accessible websites, WTO encourages you to include a link to the Facts & Figures section of the WTO website instead. World Tourism Organization (WTO) 1

The WTO World Tourism Barometer is an activity of the World Tourism Organization (WTO). By monitoring short-term tourism trends on a regular basis, WTO aims to provide all those involved directly or indirectly in tourism adequate up-to-date statistics and analysis in a timely fashion. The WTO 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 WTO Panel of Tourism Experts, providing an evaluation and a prospective of short-term tourism performance; and selected economic data relevant for tourism. The objective for future editions of the WTO World Tourism Barometer will be to broaden its scope and improve coverage gradually over time. The WTO World Tourism Barometer is prepared by WTO s Market Intelligence and Promotion Department with the collaboration of consultant Nancy Cockerell. The WTO Secretariat wishes to express its sincere gratitude to all those who have participated in the elaboration of the WTO World Tourism Barometer, in particular all institutions that supplied data and to the members of the WTO Panel of Tourism Experts for their valuable contributions. For more information on the WTO World Tourism Barometer, including copies of previous issues, please refer to the Facts & Figures section on the WTO website at www.worldtourism.org /facts/menu.html. We welcome your comments and suggestions at <barom@world-tourism.org>, tel +34 91 567 82 12 / fax +34 91 567 82 17. Explanation of abbreviations and signs used * = provisional figure or data.. = figure or data not (yet) available mn: million (1,000,000) bn: billion (1,000,000,000) 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 to 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 not seasonally adjusted series in local currencies, unless otherwise indicated: $: US$; : euro; sa: seasonally adjusted series. Short-term tourism data 2005 World Results (Continued from page 1) Global tourism trends confirm that growth has slowed. The first quarter s 9% rise was cut in half in quarter two (+4%), partly as a result of early Easter holidays in March this year, with March estimated at +15%, April at 0%, May at +7%, June at +6% and July at +5%. As already anticipated in the last issue of the Barometer this slowdown was to be expected as tourism tends to grow faster in the shoulder season than in the high season. This is because available transport and accommodation capacity can be constrained at times of strong demand. On the other hand, it is also a sign that world tourism is entering a more sustained phase of growth. Leisure tourism has once again outperformed business tourism boosted by the increasing availability of low fares for short-haul travel and by pent-up demand still being released for long-haul destinations. But anecdotal evidence points to a recovery in demand for business tourism including the meetings, incentives, conferences and exhibitions (MICE) sector. Cruise tourism has also recorded above average growth this year so far. Most regions and subregions have enjoyed sustained growth in tourism demand, despite normal fluctuations from one month to another. Available information suggests that Africa and Asia and the Pacific are the bestperforming regions of the world so far this year (+9% each), and Central America (+15%) is by far the leading subregion in terms of growth, ahead of North-East Asia (+12%) and South America (+10%). Given the shortage of data for some regions - in particular for Africa and the Middle East - figures should nevertheless be interpreted with caution. Many events and developments have combined to undermine tourist confidence. Even though some countries are still recovering from the impacts of the devastating Indian Ocean seaquake and tsunami, this has not noticeably influenced world, or regional, tourism trends as predicted by WTO at the beginning of the year. This is also true of more recent events bomb attacks in London, Turkey (Kusadasi, Istanbul and Ankara) and Egypt (Cairo and Sharm-el-Sheikh), which have been compounded by airline accidents and natural disasters, including floods, droughts, hurricanes and earthquakes. The industry has once again proved how resilient it is to such shocks. In terms of consumer behaviour, it is quite evident that travellers have been undeterred by external threats. At global level the impact has been negligible. It might have led to a temporary shift in travel flows, but has not stopped people travelling. At local level, in the affected areas the impact can be severe, but, in most cases, this is surprisingly short-lived. World Tourism Organization (WTO) 2

million 90 80 70 60 40 30 Evolution of international tourist arrivals by month, 2002-2005* 2005* 2004 2003 2002 Jan. Febr.March April May June July Aug. Sept. Oct. Nov. Dec. It is too early to assess the likely impact of the most recent hurricanes, Katrina and Rita, which only occurred last month. But one sector that will definitely be negatively affected by these events in the short term is the cruise business. Prior to Katrina, the industry was confidently predicting a growth of 7-8% in cruise passengers worldwide. But the decision by the US Government to charter three ships from Carnival Corporation for the next six months, to house emergency services personnel following the hurricane, means a drop in capacity of 7,000 berths, or a possible loss of over 2 million cruise passenger nights for the six-month period. Moreover, additional ships may be commandeered as reports indicate that a total of,000 berths could be needed to accommodate some of the homeless. As a result, since there is little new capacity coming on line, cruise passenger growth is expected to fall by one to two percentage points from initially expected levels. Meanwhile, Europe should show better than average growth as a number of cruise lines have moved ships from the Caribbean to the Mediterranean for this winter. Although airline fuel surcharges are now increasingly widespread, airlines and other companies have held back over the past few months from passing on full energy price rises to consumers because of the highly competitive environment in which they operate. But if energy prices rise again, most industry experts believe that tourists, and consumers generally, will suffer the brunt of the increases in future. Consumer indicators remain subdued around the world, reflected by the many issues of concern voiced by WTO s Panel of Experts from energy prices and exchange rate volatility to a feared economic slowdown and perceived declines in disposable income. International Tourist Arrivals by (Sub)region Full year Monthly or quarterly data series (% change over same period of the previous year) 2003 2004 03/02 04/03 2005* 2004 (million) (%) YTD Q1 Q2 Jan. Febr. Mar. Apr. May June July Q1 Q2 Q3 Q4 World 689 763-1.5 10.7 5.9 9.0 4.2 6.0 2.8 15.1 0.1 6.6 5.7 5.3 9.5 18.6 7.1 8.1 Europe 396.2 416.4 0.7 5.1 4.6 9.4 2.4 7.8-0.9 14.6-2.7 5.3 4.3 4.9 7.2 6.7 2.6 4.9 Northern Europe 44.2 47.9 1.8 8.5 7.3 10.2 7.2 16.1 3.0 11.8 0.5 11.4 8.8 3.2 9.8 10.0 7.1 8.1 Western Europe 136.1 138.9-1.4 2.1 2.9 6.5-0.4 3.9-2.0 16.1-9.3 2.9 3.8 4.4 2.1 3.2 0.7 3.1 Central/Eastern Europe 68.3 78.6 5.5 15.2 7.0 16.3 6.8 22.4 8.4 12.4 3.4 7.7 2.7 3.5 14.3 14.3 12.7 10.9 Southern/Mediterranean Europe 147.7 1.9 0.1 2.2 4.2 9.1 1.2 1.7-5.7 15.1-0.4 4.6 4.1 6.5 9.2 5.5-1.3 2.0 Asia and the Pacific 119.3 152.6-9.0 27.9 8.7 10.2 8.1 3.9 12.6 14.4 7.3 9.6 7.4 6.8 11.2 89.6 24.1 13.3 North-East Asia 67.6 87.6-8.8 29.6 12.2 15.7 10.6 11.4 19.8 16.2 9.8 11.6 10.1 8.2 6.8 103.7 23.7 16.8 South-East Asia 36.3 47.4-13.7 30.6 3.7 2.6 4.3-7.4 4.9 12.2 4.2 6.5 2.2 5.1 16.5 99.2 28.9 10.5 Oceania 9.0 10.2-1.0 12.5 5.9 8.4 3.4 7.7 5.5 12.5 1.3 3.1 6.0 4.2 11.8 26.6 12.6 4.0 South Asia 6.4 7.5 10.2 16.7 5.0 2.7 8.7-2.8 1.1 9.7 2.3 12.5 12.2 2.4 26.6 20.1 16.3 7.1 Americas 113.1 1.7-3.0 11.2 6.6 9.6 4.0 8.2 5.0 17.7-1.9 6.1 7.1 4.8 12.6 15.6 9.0 8.0 North America 77.4 85.8-7.1 10.9 6.5 11.3 3.5 8.7 5.3 18.6-1.9 5.4 6.8 4.4 10.6 17.0 9.2 7.3 Caribbean 17.0 18.2 6.5 6.7 2.5 4.9 1.1 5.2-1.1 9.7-2.6 3.0 3.1 0.5 8.6 10.1 5.2 1.9 Central America 4.9 5.8 4.2 17.8 14.7 16.7 12.3 16.4 9.3 24.2-0.8 23.1 18.0 14.6 18.7 14.2 12.8 22.9 South America 13.7 15.9 9.3 16.2 9.5 6.4 7.5 6.9 9.8 22.0-1.2 9.2 10.4 9.9 23.9 15.0 11.0 12.8 Africa 30.8 33.2 4.3 8.0 8.7 12.9 9.8 12.4 5.5 15.1 1.4 10.5 11.5 6.7-1.2 3.3 9.8 12.3 North Africa 11.1 12.8 6.6 15.3 8.7 6.4 11.8 7.6-1.2 13.3 4.4 16.0 14.9 7.0 19.1 18.7 14.4 10.6 Subsaharan Africa 19.7 20.4 3.1 3.9 8.7 15.9 8.5 14.5 8.5 16.0-0.3 7.3 9.1 6.4-8.5-4.4 5.4 13.1 Middle East 30.0 35.4 2.9 18.0 3.0-3.8 8.5-5.8-16 13.7 8.0 10.3 8.9 6.2 23.0 32.2 11.5 13.1 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used World Tourism Organization (WTO) 3

Forecast for the full year 2005 Year will end 5% to 6% up In the January issue of the WTO World Tourism Barometer a short-term forecast for international tourist arrivals was included for the first time. For this issue the forecast for the full 12 months of 2005 has been updated, based on the trend in arrivals growth through the month of July 2005. Forecasts have also been made for the different regions. These have been developed by WTO in collaboration with Prof. Dr. Egon Smeral, Economist from Vienna, Austria. For this forecast a REGARIMA approach was chosen (for details on the forecast methodology used, please refer to the relevant notes on methodology in the Facts & Figures section of the WTO website at www.world-tourism.org /facts/eng/barometer.htm). For the year as a whole the applied short-term forecasting models indicate a growth rate of between 5 and 6% in international tourist arrivals worldwide. While international arrivals increased by 5.9% from January through July, growth for the remainder of the year is forecast at 5.3%, resulting in an average rate of 5.7% for the year overall. This figure does of course include some margin of error, although this is much lower than in January since a good part of the year has already passed. Assuming that there are no further shocks that will influence trends, this means that, in 2005, international International Tourist Arrivals tourist arrivals will reach around 800 million. The interesting question, of course, is whether they will actually exceed the 800 million mark. The strongest growth is forecast for Asia and the Pacific (+10%), ahead of Africa (+7%) and the Americas (+6%). For Europe (+4%) and the Middle East (+3%), on the other hand, more modest levels of growth are predicted. The forecasts for Europe, Asia and the Pacific and the Americas are expected to be close to actual volumes by the end of the year, while those for the Middle East and Africa include greater margins of error since data for those regions is currently only available for a comparatively small number of countries. Results for the Middle East, in particular, should be interpreted with caution as the available data is also not considered very reliable. For this reason it would not be surprising if final results were better than currently projected. The forecasts for 2005 reflect a slowdown in the growth of international tourism in line with the deceleration of the growth of world economic output. Although the rate of growth at global level has fallen from over 10% per annum in the peak year of 2004 to between 5-6% in 2005, it must be pointed out that this year s slower growth is still significantly higher than the 4% average recorded over the period 1990-2004. And the same trend is true for the various regions, with the exception of the Middle East. The forecasts show a high degree of consistency as the world forecast derived from the aggregation of the forecasts for the five regions differs only slightly from the forecast value for world tourism per se. (% change over same period of the previous year) 30 27.9 20 2004 January-July 2005 actual data August-December 2005 forecast 2005 full year forecast 18.0 15 10 5 10.7 5.9 5.3 5.7 5.1 4.6 3.5 4.2 8.7 10.7 9.6 11.2 6.6 5.8 6.2 8.0 8.7 4.3 6.8 3.0 3.0 3.0 0 World Europe Asia and the Pacific Americas Africa Middle East World Tourism Organization (WTO) 4

Evaluation by WTO Panel of Tourism Experts Confidence remains relatively high, despite being affected by recent events (Continued from page 1) Note that the scale used for this indicator has been transformed to be more in line with usual practice for this type of confidence indicators. See the adjoining box for an explanation of the way this indicator is compiled. Regions By region, the highest scores for the May-August 2005 period were given by experts in Africa (144), the Americas (132) and Asia and the Pacific (131) all above the 130 average (see the Regions section for the corresponding graphs). Experts in the group of Global Operators, who represent members active in more than one particular region, as well as experts from the Middle East and Europe were the least optimistic with scores of 123, 118 and 1 respectively. If compared with the results of the previous period, averages for May-August 2005 are below those for January-April 2005 in all regions except Europe (1 vs 123) The sharpest declines in performances were noted by experts in the Middle East, who rated the period May- August 2005 with an average of 118, with a high value of 146 given to the period January-April 2005 (146). The trend was similar among Global Operators for whom the overall rating fell to 123 from 1. for the current four month period (September-December 2005) are more optimistic in Africa (159), Asia and the Pacific (137) and in the Middle East (132), while the lowest rating has been given by Global Operators (110). Compared with the scores of the previous period (May-August 2005), the rating has fallen for only two of the five world regions: Europe, down from 1 to 124, and the Americas, from 132 to 129. The biggest decline is evident among Global Operators (from 123 to 111). On the other hand, according to the Panel of Experts, prospects (compared with those expressed for the previous period) are very bullish in Asia and the Pacific (137 vs 131), Africa (159 vs 144) and the Middle East (132 vs 118). This reflects the recovery of confidence among experts from these regions in tourism s growth potential. better Better Equal Worse worse WTO Panel of Tourism Experts Global Operators 175 1 1 75 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 Evaluation The WTO Tourism Confidence Index The WTO Tourism Confidence Index is based on the results of an email survey conducted by the WTO Secretariat among selected representatives of public and private sector organisations participating in the WTO Panel of Tourism Experts. The survey has been repeated every four months since May 2003 in order to keep track of the actual performance, as well as the 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. It is the aim of the WTO Secretariat to continuously expand and improve the Panel sample. Experts interested in participating in the survey, in particular from countries still not included in the above listing- are kindly invited to send an email to barom@worldtourism.org. How to read this data For the WTO Tourism Confidence Index members of the WTO Panel of Tourism Experts are asked once every four months by email to answer the following two simple questions: - What is your assessment of tourism performance in your destination / 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 / 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 [0]; worse [], equal []; better [1], much better [200]. Results are averaged and broken down by region and by activity. A value above 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 WTO World Tourism Barometer is in large part based on their comments. Activities Average evaluation for the period May-August 2005 range from a minimum of 126 for the General Industry Bodies group, and for representatives of Consultancy, Research & Media, to a maximum of 145 for members of the Transport sector. If compared with the previous period (January-April 2005) ratings are generally lower, except among representatives of the group Consultancy, Research & Media (from 124 to 126) and from the Accommodation & Catering category (from 127 to 129). lower ratings for the period were recorded among representatives of Destinations (from 139 to 127) and of General Industry Bodies (from 132 to 126). The evaluation of tourism s prospects for the coming September-December 2005 period is particularly optimistic World Tourism Organization (WTO) 5

among representatives of the Transport sector (145), who have once again given a high rating, as well as among Destinations (130), and Accommodation & Catering representatives (129). are slightly better, according to representatives of Destinations (130 vs 127) and the Consultancy, Research & Media group (128 vs 126) as against their evaluation of the previous period (May-August 2005). And representatives of the Transport sector (145) also continue to rate the next months prospects highly. Experts from the categories Accommodation & Catering (129) and Tour Operators & Travel Agencies (126) are, by contrast, relatively less optimistic regarding the forthcoming period. For this edition responses have been received from experts based in Argentina, Australia, Austria, Bahamas, Barbados, Belgium, Bermuda, Bolivia, Bosnia and Herzegovina, Brazil, Canada, Central African Republic, Chile, China, Colombia, Costa Rica, Croatia, Cuba, Curaçao, Cyprus, Czech Republic, Denmark, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Germany, Greece, Guatemala, Honduras, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kenya, Lao People's Democratic Republic, Lebanon, Liechtenstein, Macao (China), Maldives, Malta, Mauritius, Mexico, Monaco, Morocco, Myanmar, Nepal, Netherlands, New Caledonia, New Zealand, Nicaragua, Norway, Pakistan, Panama, Peru, Portugal, Puerto Rico, Republic of Korea, Reunion, Sao Tome and Principe, Saudi Arabia, Serbia and Montenegro, Slovenia, South Africa, Spain, Sweden, Switzerland, Taiwan (pr. of China), Thailand, Timor-Leste, Togo, Tunisia, Turkey, Uganda, United Arab Emirates, United Kingdom, United States, Uruguay and Venezuela. WTO Panel of Tourism Experts Destinations Transport better Better 175 1 1 175 1 1 Equal Worse 75 Evaluation 75 Evaluation worse T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 Accommodation & Catering Tour Operators & Travel Agencies better Better 175 1 1 175 1 1 Equal Worse 75 Evaluation 75 Evaluation worse T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 General Industry Bodies & Other Consultancy, Research & Media better Better 175 1 1 175 1 1 Equal Worse 75 Evaluation 75 Evaluation worse T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 World Tourism Organization (WTO) 6

Air transport According to the latest data from the International Air Transport Association (IATA) passenger traffic from January through August 2005, expressed in RPK (revenue passenger-kilometres), increased by 8.3%. Middle East and Latin American airlines posted the highest growth rates at 13.8% and 12.5% respectively. Air traffic in North America and Africa (including Egypt), increased by nearly 11% over the same period of 2004, while Asia and the Pacific (+7.7%) and Europe (+6.3%) recorded single-digit growth. It should be noted that all regions, except Africa, enjoyed higher growth in July than August. The passenger load factor on international routes remained high, at almost 79% in August and over 75% for the period January-August. Capacity, expressed in available seat-kilometres (ASK) rose by 7% in the year to date more than one percentage point lower than traffic (RPK) which shows that airlines are continuing to improve cost-efficiency in an effort to mitigate the increase in fuel prices. The best load factors were achieved by airlines in North America (80.4%) and Europe (76.5%) regions were seat capacity has also increased (+8.9% and +4.6%) while capacity growth was particularly high in Latin America and the Middle East (with both recording ASK increases of just over 11%). The most widespread concern is that increasing fuel costs are seriously compromising airlines bottom-line results. But there are equally significant developments, including the following: The 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 three major regional airline associations broken down by routes operated. It should be taken into account that this data reflects the vast majority 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 in particular a good indicator for the shortterm evolution of 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. International traffic of IATA reporting carriers by region of airline registration (% change) 30 20 15 10 5 0-5 2003 2004 2005* YTD Industry results have improved but more thanks to surcharges on account of higher fuel prices than to revenues from base fares. IATA estimates that airlines are covering 40% of fuel surcharges themselves. IATA underlines the importance of managing costs and improving operating efficiency. The euro s modest decline against the US dollar has given a slight boost to the competitiveness of European airlines operating on Atlantic routes, and has contributed to bringing their growth rates closer to those of US airlines. There is very limited scope for passing on higher transport costs to end consumers due to fierce competition in this market. Slow cargo traffic growth (often considered a leading indicator for passenger traffic), of 3.5%, is considered to reflect weak growth in tangible goods trade. The only exception is in the Middle East, where cargo traffic has increased by nearly 15%. -10 Overall North America Latin America Europe Africa Middle East Asia and Pacific Source: compiled by WTO from IATA World Tourism Organization (WTO) 7

North America Air Transport Association (ATA) US member airlines recorded a 5.4% increase in passenger traffic (RPK) between January and August compared with the same period of last year. The domestic demand segment (including USA-Canada), which represents 71% of total traffic, has grown less (+3.4%) than international traffic (+10.7%), which is the segment generating revenue growth, thereby justifying an increase in capacity on international routes of 9.9%. The US air transport system has managed its capacity well overall, achieving systemwide load factor of 79.3% and 80.6% for international traffic. Nearly half of all international traffic is accounted for by Atlantic routes, which over the first eight months of the year posted an increase of 8.4% in passenger traffic (RPK) over 2004. However, the biggest increases were recorded on routes to Latin America (+15%) and Asia and the Pacific (+11%), which reflects the recovery of longhaul tourism and the dynamic economic environment in both these regions. Capacity increases during the first eight months of the year were particularly significant on Pacific and Latin American routes (+14% and +11% respectively). All routes showed a load factor improvement except those in the Pacific (-2%). Europe The Association of European Airlines (AEA) reports that total passenger traffic (RPK) among its member airlines was up 6% for the period from January through July, compared with the same period in 2004. Domestic traffic measured in RPK, which during this period represented 9% of total passenger traffic on scheduled flights, grew by a modest 2.3%. Traffic on long-haul routes (+6.4%) continues to outperform intra-european traffic (+6.1%) confirming the recovery of demand in this sector. The fastest-growing international routes are to the South Atlantic (+12.7%) with some 20.6 billion RPK, and to the Far East (+11.8%) with 75.4 billion RPK representing 29% of long-haul international traffic. By contrast, traffic on North Atlantic routes, which accounts for over 40% of all long-haul traffic, has been performing well below average at just 2% for the first seven months of 2005. Traffic to the Middle East grew by 7.5%, while North African traffic was up 6.8%. Air traffic on international routes by month (RPKs) (% change over same month previous year) 90 80 70 60 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12-10 2003 2004 2005-20 Association of Asia Pacific Airlines (AAPA) -30 2003 Association of European Airlines (AEA) 2004* -40 Air Transport Association of America (ATA) - Source: compiled by WTO from ATA, AEA and AAPA ATA: Air traffic on selected routes by month (RPKs) (% change over same month previous year) 70 60 40 30 20 10 0-10 -20-30 -40 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Source: compiled by WTO from ATA 2003 2004 2005* AEA: Air traffic on selected routes by month (RPKs) (% change over same month previous year) 70 60 40 30 20 10 0-10 -20-30 -40 Source: compiled by WTO from AEA Domestic 2003 2004 2005* Domestic Latin Atlantic Pacific Geographical Europe North Atlantic Far East/Australasia 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 Asia and the Pacific Data for the period January-July compiled by the Association of Asia Pacific Airlines (AAPA) showed a 6.8% increase in passenger traffic (RPK) among its member airlines compared with the same period in 2004. Total traffic exceeded 307 billion RPK during the first seven months of the year. Over this period, the number of passengers transported on international routes totalled 73.9 million, or 5 million more than in the same period of last year. World Tourism Organization (WTO) 8

Asian airlines had the lowest load factor among carriers in the three regions (73.3%). Capacity from January to July in terms of ASK increased by 5.7%. As this was somewhat lower than the increase experienced in demand, the load factor of AAPA member airlines improved by 0.7 percentage points. According to the Director-General of AAPA, demand remains strong but he expressed concerns regarding the rise in fuel prices, echoing the sentiment of other airline associations. Meanwhile, the growth of lowcost airlines in South-East Asia is continuing to add capacity and even more competitive pressure for the region air transport market. Preliminary Air Transport Statistics - Revenue Passenger-Kms (RPK) 2004 03/02 04/03 2005* YTD May June July Aug (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 2,000 ¹ -2.4 15.4 8.3 9.1 8.5 8.2 6.1 North America -6.1 14.8 10.0 11.2 9.1 8.5 7.1 Latin America 9.7 14.2 12.5 13.6 12.8 12.9 8.4 Europe 2.0 10.1 6.3 7.0 6.6 7.2 5.0 Africa (incl. Egypt) 1.1 10.9 10.8 9.9 13.3 7.4 8.5 Middle East (incl. Israel, Iran) 12.9 24.6 13.8 20.2 15.2 13.4 8.7 Asia and Pacific -8.7 20.7 7.7 7.6 8.1 7.4 5.8 Air Transport Association of America (ATA) Scheduled Passenger Traffic Statistics ATA US Member Airlines Scheduled mainline service 1,053-1.0 10.0 5.4 7.2 4.4 4.8 2.5 Domestic (incl. USA-Canada) 764 0.7 8.1 3.4 5.4 2.3 2.9 1.1 International 290-5.5 15.5 10.7 11.9 9.8 9.7 6.2 Atlantic 134-6.5 14.2 8.4 10.3 6.6 8.0 3.2 Latin 68 4.5 14.4 14.5 16.9 15.1 11.4 5.7 Pacific 88-10.8 18.3 11.0 11.2 11.4 11.1 11.5 Association of European Airlines (AEA) Passenger Traffic of AEA Member Airlines Total scheduled 655 1.0 9.0 6.0 7.0 6.3 7.0 0.0 Domestic 54 1.6 0.9 2.3 5.8 4.3 3.9 0.0 Total International 601 1.0 9.8 6.4 7.1 6.4 7.2 0.0 Geographical Europe 145 1.5 7.5 6.1 7.3 6.5 7.4 0.0 North Africa 7 6.8 15.8 6.8 8.7 6.4 9.3 0.0 Middle East 21-0.5 17.4 7.5 8.6 9.6 6.8 0.0 Total long-haul 429 0.8 10.1 6.4 6.9 6.3 7.2 0.0 among which: North Atlantic 183 4.0 7.3 2.0 5.9 1.6 2.2 0.0 Mid Atlantic 45 4.9 3.3 7.1 5.0 9.5 8.2 0.0 South Atlantic 33 5.4 16.9 12.7 9.2 13.2 16.0 0.0 Far East/Australasia 120-6.8 19.3 11.8 10.4 12.0 13.0 0.0 Sub Saharan Africa 48 0.9 3.5 5.3 2.7 6.2 7.3 0.0 Association of Asia Pacific Airlines (AAPA) Consolidated Passenger Traffic International operations 5-9.9 18.9 6.8 6.3 6.2 6.9 Intra-Asia Pacific 23.7 North-East Asia 30.1 North-East South-East 28.7 South-East Asia 5.6 15.7 to/from China 51.0 Trans-Pacific -9.0 16.3 Asia-Europe -8.0 13.5 Source: compiled by WTO from IATA, ATA, AEA and AAPA ¹ All IATA carriers World Tourism Organization (WTO) 9

Regions Europe Results The tentative signs of economic revival within member economies of the eurozone late last year fell victim to plummeting domestic demand, according to the latest figures reported by the International Monetary Fund (IMF). And this has somewhat undermined the confidence of European members of WTO s Panel of Experts who, for the third consecutive period, are the least optimistic of all Panel members about the short-term outlook. Admittedly, the majority agree that the region s performance has been fairly good, all things considered, but economic uncertainty seems to have coloured the views of many respondents, even about the recent past. International Tourist Arrivals, monthly evolution Europe 16 14 12 10 8 6 4 2 0-2 -4-6 -8 2003 2004 2005* (% change) Europe has certainly suffered more than its fair share of disasters in the three- to four-month period under review. Yet, despite the bomb attacks in London and Turkey, widespread flooding and forest fires, results for the months of May through July reflect steady tourism growth across the region, averaging round 5% the same as its year-todate average. And while growth for August among those countries that already have data available appears to have slowed, anecdotal evidence suggests that other countries may have performed even better in what is, in effect, peak season in this region of the world. Northern and Central and Eastern Europe have recorded the best results so far this year (+7% each) with even stronger growth than average for Northern Europe in May and June. Perhaps not surprisingly, these two regions have also performed the best in terms of economic growth. According to the IMF, growth is robust in the countries of Central and Eastern Europe, many of them new arrivals to market-based economy, although expansion has been somewhat slower than in 2004. The principal reasons are high oil prices and the economic malaise of trading partners in Western Europe. Southern and Mediterranean Europe registered a 4% increase, with the month of July the first of the two summer peak period months averaging 7%. Western Europe s average, meanwhile, is at 3% through July. Although Germans international tourism expenditure increased this year by 2% in the first seven months, a number of Destination and Industry members of the WTO Panel of Experts reported disappointing results out of the German market over the past three months. And Europe s second largest source market, the UK, is also reported by some destinations to have lost strength, although expenditure on outbound tourism grew still at 7% up to July. London suffered two waves of bomb attacks in as many weeks during the month of July. Perhaps because Londoners were expecting a terrorist attack, many seemed to take the first wave of bombings in their stride, and the same reaction was felt among tourists to the UK capital. But while there was initial confidence after the first bomb attack that it was a one-off incident, the second wave of bombings dealt a much stronger blow, raising the spectre of a prolonged terror campaign. This goes some way to explaining why comments by the UK Panel members do not accurately reflect the UK s solid performance in the three months to July 2005. Admittedly, the UK s 11% increase in year-to-date arrivals (and 10% rise in receipts) masks big fluctuations from one source market to another. Arrivals out of North America have fallen by 5% since the beginning of the year, maybe as a result of the feeble US dollar, but Western Europe is up 12% and other source regions of the world (Central and Eastern Europe and all other long-haul markets) are averaging % growth year to date. Meanwhile, Ireland s average growth has picked up to 4% (from 3% in 2004), with the UK and mainland Europe performing particularly strongly. Nevertheless, recovery of the North American market (40% of all Ireland s North American visitors come via the UK) has slowed, and there is widespread apprehension regarding a potential slowdown of the US economy following the impact of hurricanes Katrina and Rita. Concerns about high oil prices are also prevalent as the destination in heavily dependent on air traffic. Performance has been mixed across the Nordic countries ranging from a low of -3% for Denmark to +4% for Iceland and Sweden. One widely noted trend affecting performance was the poor weather in June and July, which discouraged domestic and intraregional travel and stimulated last-minute outbound travel. This helps to explain the declines in July for Norway and Denmark. Iceland s unfavourable exchange rates the euro has dropped 10% against the Icelandic krona this year have also dampened demand. Little receipts data is available but Sweden s 20% increase is certainly worth noting. Scandinavian growth is being driven by low prices due to excess capacity and resulting strong competition, some Panel members noted. Among individual markets for the Nordic region, Spain and Poland have performed well, except to Norway, the USA, Canada and Japan are doing World Tourism Organization (WTO) 10

better than average, and Germany is surprisingly strong, except to Finland, which attributes this to the fact that it is suffering sharp competition from the Baltic States. As for China, which all Scandinavian countries are targeting actively, Finland has suffered a 26% drop while Sweden is up 65%. Tourism growth for Western Europe has been slightly below expectations this year so far (+3%). Arrivals stagnated in the second quarter of the year but averaged 4% in July. The Netherlands and Germany (both +6%) have been the best performers, followed by Switzerland (+5%). France is up by almost 2% although international tourism receipts have risen 4% over the same period as long-haul source markets continue to recover (+14% from Asia and +10% from the Americas). It is also important to note that the French capital, Paris, has had an excellent year, with a 17% increase in roomnights by Americans and strong performances from the UK, Spanish and Japanese markets (except in July, in the case of Japan). Severe flooding in Switzerland and Austria has clearly had an impact, but not as severe as expected so far, at least. In fact, Switzerland has seen the return of long-haul markets in recent months, notably the USA, plus new business from Asian source markets such as India and China. Strong increases in arrivals and in international tourism receipts for many Central and East European destinations reflect the sustained growth being enjoyed by this region. Among countries with data available Latvia (+27%), Slovakia (+10%), the Czech Republic (+9%) and Estonia (+9%) have recorded the best increases in terms of tourist arrivals. The Czech capital, Prague, has performed especially well, attracting 1.7 million arrivals in the first half of 2005. International Tourist Arrivals by Country of Destination Full year Monthly or quarterly data series (% change over same period of the previous year) Series 2003 2004 03/02 04/03 Series 2005* 2004 (0) (%) YTD Q1 Q2 Jan. Febr. Mar. Apr. May June July Aug. Q1 Q2 Q3 Q4 Europe 396,184 416,396 0.7 5.1 4.6 9.4 2.4 7.8-0.9 14.6-2.7 5.3 4.3 4.9 7.2 6.7 2.6 4.9 Northern Europe 44,151 47,919 1.8 8.5 7.3 10.2 7.2 16.1 3.0 11.8 0.5 11.4 8.8 3.2 9.8 10.0 7.1 8.1 Denmark TCE 3,474 3,358 1.1-3.3 NHS(1) -3.0 3.3-4.8 4.2-3.2 7.7-6.4-5.4-3.2-4.5 7.8 2.7-1.5 0.2 Finland TF 2,601 2,840-9.5 9.2 NHS(2) 1.8 4.3 3.9 6.8 2.1 3.6 9.9 12.6-2.9-6.0 9.9-11.5-1.4 1.9 Iceland TCE 771 836 9.5 8.4 THS(2) 4.3-0.3 7.7 1.2-4.8 2.8 2.3 13.1 6.9 2.7 12.4 7.7 9.9 17.4 Ireland TF 6,369 6,575 5.0 3.2 TF 4.0 6.5 2.4 8.9-3.2 13.2-5.7 3.0 8.9 3.6 8.4 3.4-0.6 5.0 Norway TCE 3,269 3,600 5.1 10.1 NHS 1.9 1.7 3.7 6.5-2.6 3.2 2.6 7.6 2.5-0.2 5.7 8.9 2.7 4.7 Sweden TCE 2,952 3,003-1.3 1.7 NCE(3) 3.6 7.0 3.3 6.6 4.0 10.5 1.4 2.9 4.7 0.4 3.3 3.8 2.0 3.8 United Kingdom VF 24,715 27,708 2.2 12.1 VF 11.4 14.0 11.1 21.6 6.0 14.4 1.8 16.7 14.3 7.4 10.2 15.6 12.8 10.0 Western Europe 136,069 138,933-1.4 2.1 2.9 6.5-0.4 3.9-2.0 16.1-9.3 2.9 3.8 4.4 2.1 3.2 0.7 3.1 Austria TCE 19,078 19,373 2.5 1.5 TCE 3.0 11.0-9.2 8.3-1.3 31.1-27.0 3.4-5.1 3.8 3.6 5.1 0.5-4.1 France TF 75,048 75,121-2.6 0.1 NHS 1.7 2.8-0.5-2.6-7.3 15.3-10.8 3.4 4.3 5.1 0.4 0.4-1.4 2.8 Germany TCE 18,392 20,137 2.4 9.5 TCE 5.8 6.1 6.0 12.7 7.8-0.2 10.7-1.4 9.5 5.2 9.7 12.8 8.4 7.3 Netherlands TCE 9,181 9,646-4.3 5.1 TCE 6.4 16.0 14.1 13.8 19.3-9.1 7.1 0.2 4.3 3.4 13.1 Switzerland TC 6,530.. -4.9.. NHS 4.5 8.4 0.1 11.2-1.2 15.8-7.0 3.8 2.8-1.0 5.3 0.0-2.2 Central/Eastern Europe 68,1 78,649 5.5 15.2 7.0 16.3 6.8 22.4 8.4 12.4 3.4 7.7 2.7 3.5 14.3 14.3 12.7 10.9 Bulgaria TF 4,048 4,630 17.9 14.4 TF 6.3 3.7 6.6 16.3-8.9 4.2 3.4 1.9 11.5 6.9 7.4 24.6 19.4 14.7 1.4 Czech Rep TCE 5,076 6,061 10.8 19.4 TCE 8.7 13.9 5.4 19.2 10.0 13.3 0.5 9.1 5.8 24.0 22.5 20.0 15.0 Estonia TF 1,462 1,7 7.3 19.7 TCE 9.2 29.9 7.9 28.2 24.9 35.2 14.7 9.0 3.1-3.0 19.8 20.7 27.2 22.9 Hungary TF.. 12,212.... TCE 6.8 18.0 5.4 21.9 20.4 14.3 7.3 8.9 0.6-1.2 14.2 10.0 7.5 17.6 Latvia TF 971 1,080 14.5 11.2 VF 26.5 28.4 28.4 26.4 32.1 27.0 20.3 38.3 27.0 20.5 17.7 9.7 26.6 41.8 Poland TF 13,720 14,290-1.9 4.2 VF 5.2 12.3 0.3 26.1 3.8 9.1-1.5 5.0-2.5 4.5 19.8 21.9 17.0 17.2 Slovakia TCE 1,387 1,401-0.9 1.0 TCE 10.3 10.1 10.4 10.8 1.9 19.6 13.8 13.8 5.6-0.6 4.8-3.0 8.5 Southern/Mediterranean Eu. 147,713 1,895 0.1 2.2 4.2 9.1 1.2 1.7-5.7 15.1-0.4 4.6 4.1 6.5 9.2 5.5-1.3 2.0 Andorra TF 3,138 2,791-7.4-11.0 TF -17.3-17.6-17.4 -.8-6.4-16.3-11.3-9.3-14.6-8.6 Croatia TCE 7,409 7,912 6.7 6.8 TCE 7.9 18.2 3.5 14.3-9.3 34.3-4.3 3.5 5.9 11.2 21.7 0.9 8.5 10.7 Cyprus TF 2,303 2,349-4.8 2.0 TF 7.1 10.0 4.5 4.2-4.1 22.4-4.0 8.6 6.7 10.8 6.6 8.2-1.7-1.7 F.Yug.Rp.Macedonia TCE 158 165 28.3 4.8 TCE 18.9 21.1 17.9 23.6-5.0 45.1 18.6 3.6 32.8 17.6 9.0 6.5 0.3 5.5 Israel TF 1,063 1,6 23.4 41.6 TF.2.2 28.9 22.4 13.7 38.2 15.0 45.2 29.3 34.6 9.4 82.4 57.8 33.9 16.9 Italy TF 39,604 37,071-0.5-6.4 TF -7.2-6.3-7.8-11.4-16.6 6.4-7.1-7.7-8.4 13.5 2.8-15.3-17.5 Malta TF 1,089 1,156-4.0 6.1 TF 1.4 2.9 0.7 8.8-11.3 9.6-4.2 6.8-0.8 1.0-3.2 4.2 9.6 9.8 Portugal TF 11,707 11,617 0.5-0.8 NHS 3.7 6.7-0.2 7.9-0.7 11.8-3.4 5.8-3.1 9.3-3.3-1.2-2.4 6.0 Serbia & Montenegro TCE 481 580 7.4 20.6 TCE 20.4 14.5 20.4 2.9 19.6 29.4 23.1 19.4 23.7 19.9 18.9 Slovenia TCE 1,373 1,499 5.5 9.2 TCE 2.6 13.4 0.2 3.9 4.8 30.1-2.7 0.0 2.4 4.4-3.6 5.8 8.0 11.7 7.7 Spain TF 51,830 53,599-0.9 3.4 TF 6.0 7.4 4.6 5.3-0.8 16.3 0.0 5.4 7.8 7.7 5.5 3.5-1.3-0.8 10.0 Turkey TF 13,341 16,826 4.3 26.1 TF 23.2 29.7 26.2 30.5 13.8 41.5 22.8 28.3 26.2 23.2 12.5 42.4 45.6 16.9 16.7 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used (1) Including holiday dwellings (2) Hotels only (3) City hotels, resort hotels, holiday villages and youth hostels World Tourism Organization (WTO) 11

Bulgaria (+6%) has consolidated its position as a summer sun and sea destination for Europeans, recording spectacular growth out of some markets. The UK, for example, is up 39% so far this year (to the end of July), but there have also been very good increases from Denmark (+34%), France (+28%) and Russia (+13%). Many members of the WTO s Panel of Tourism Experts from Central and Eastern Europe also point out that while growth in inbound tourism is being largely driven by no-frills airlines with new airline access opening up all the time this is also boosting demand for travel by nationals, resulting in declines in domestic tourism. In Southern and Mediterranean Europe, a number of destinations have far exceeded the subregion s average year-to-date growth of 4%. Israel and Turkey (+% and +23% through August respectively) apparently not at all affected by recent terrorist attacks, Serbia & Montenegro (+20%), and the former Yugoslav Republic of Macedonia (+19%) have all registered strong double-digit increases. In contrast, Italy is 7% down on 2004 and Andorra s arrivals fell 17% in the first four months of this year. Portugal s 4% growth in overnight stays comes as welcome news, following last year s weaker than expected performance, especially since tourism to the Algarve has recovered strongly after dropping sharply before and after the 2004 European Football Cup. On the other hand, destinations such as Cyprus (+7%) may have gained from some traffic shifts from Egypt and Turkey. International Tourism Receipts Series International Tourism Expenditure US$ Local currencies (% on previous year) US$ Local currencies (% on previous year) 2004 2004 2005* 2004 2004 2005* (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J Europe Northern Europe 4,279 0.5 8.5 5.9-5.0 0.5 4.6 4.6 Ireland 5,200 0.5 3.8-2.1-0.3-0.9 3.7 3.7 3,087 10.6 13.9 13.3 6.1 10.6 4.3 5.1 3.7 Norway 8,428 20.3 30.6 21.3 15.6 18.4 16.0 11.1 20.0 6,167 5.8 0.2-0.7 5.3 19.9 20.0 19.6 20.3 Sweden 10,123 11.8 13.4 14.9 7.1 12.6 8.0 5.4 10.3 27,299 7.5 3.6 17.8 8.7 9.5 10.1 20.3 6.4-2 12 9 3 United Kingdom 55,930 4.1 5.2 7.3 4.2 8.6 6.9 12.8 3.3 5 10-3 5 Western Europe 15,412 0.4-2.0 7.4 2.5-5.6 0.5 0.5 Austria 11,415-11.7-16 -17-0.9 - -2.3-2.3 9,185 2.3 6.2 1.0 3.7-1.8-1.0-1.0 Belgium 13,954 4.2 6.4 3.4 1.8 7.3 1.2 1.2 40,842 1.5-0.7 3.8-0.7 3.6 3.8 3.6 4.8-1 5 9 2 France 28,636 11.1 8.1 18.2 9.4 8.8 10.7 7.6 14.0 10 7 26 9 27,657 8.9 9.1 9.7 8.2 8.5 4.3 3.9 7.4 8 6 8-3 Germany 72,271 1.6-0.3 1.2 0.5-3.1 2.0 5.5-3.5-10 11-10 10 3,666 11.9 15.9 12.2 8.6 12.1-1.6-1.6 Luxembourg 3,347 14.0 48.9 22.7-0.5 5.7 0.6 0.6 10,260 1.9-5.3 2.5-1.4 11.4 5.7 2.8 7.8 Netherlands 16,539 3.0 16.4 7.2-4.6-0.3 0.0 6.3-4.5 10,413 4.7 0.3 8.7 4.6 5.7 5.0 5.0 Switzerland 8,797 8.7 16.1 12.8 5.8 3.4-4.2-4.2 Central/Eastern Europe 287 7.6 11.5-1.2-1.2 Belarus $ 524 10.7 38-1.4-1.4 2,168 19.6 28.7 23.5 18.8 8.9 10.2 8.1 9.7 8 4 14 12 Bulgaria 963 17.3.9 24.9 11.9 11.4 4.7 3.4 4.4-2 13 2 8 4,169 6.8 9.3 7.8 3.7 7.4 1.9-1.8 5.2 Czech Rep 2,271 7.2 9.3 7.1 5.6 7.8 2.9-4.5 9.2 806 20.3 13.4 18.4 26.1 19.9 3.1 8.2 0.4 Estonia 365 14.2 14.5 3.2 14.4 26.7 16.2 24.1 9.5 4,061-9.3 24.2-10 -6.7-34 10.0 10.0 Hungary 2,864 0.0 2.2 1.8 15.7-21 16.6 16.6 267 13.9 29.7 13.7 0.6 33.7.8.8 Latvia 377 8.9 1.0-0.4-0.3 36.4 87.6 87.6 817 16.9 29.3 3.2.7 10.8 21.9 21.9 Lithuania 639 23.9 36.4 22.7 23.5 16.8 18.7 18.7 5,828 35.0 20.1 15.4 26.7 57.6 22.2 22.2 Poland 3,906 30.9 5.9-2.5 69.9 18.4-1.8-1.8 95 63.8 16.9 48.0 61.0 122 30.2 24.7 34.1 Rep Moldova $ 135 28.1 7.1 27.7 33.0 40.5 29.6 37.7 23.1 5 10.8 16.4 6.8 3.1-11 77.1 49.4 102.1 39 152 139 Romania 512-4.8 18.8 1.9-6.6-41 28.8 17.9 38.2 30 34 5,226 16.1 17.5 24.5 20.9-2.1 4.5 4.5 Russian Federation $ 15,730 22.1 23.1 30.4 26.6 7.6 11.1 11.1 901-8.4-16 -23-8.5 14.3 42.1 52.4 31.6 47 36 13 Slovakia 745 14.2-13 4.7 49.8 14.0 18.9 15.6 21.4 9 29 1,141 22.0 22.9 26.6 36.4 4.0 33.3 24.2 40.2 Ukraine $ 996 26.2 13.9 43.0 22.9 24.5 21.6 35.1 12.0 Southern/Mediterranean Europe 490 20.1 20.9 28.8 16.8 14.7 11.8 11.8 Bosnia & Herzg 126-8.1-2.8-13 -10 19.2 2.2 2.2 7,074-0.1 11.8-8.5 1.1 1.7-0.4-0.4 Croatia 841 12.7 36.9 24.4 4-3 -2.4-2.4 2,096-3.2-5.9 2.4-6.1-3.2 1.5 2.8-0.1-14 6 4 4 Cyprus 208-70.9 27.2 72 26.6 52.7 29.1 19.0 19.9 23.3 23.3 F.Yug.Rp.Macedonia $ 55 13.5 29.7 16.2 11.5 3.4 7.2 7.2 12,872 9.0 14.7 7.4 11.4 0.9 9.9 18.2 3.6-2 3 5 17 Greece 2,874 8.2.1 12.9-0.7 3.8 16.3 31.2-0.6-16 11 3 39 2,386 15.4 19.6 19.8 15.3 8.2 15.7 7.1 23.5 Israel $ 2,796 9.6 32.9 10.6 5.2-2.0 4.8-2.3 9.6 35,658 3.8 17.1 12.0-2.3-6.5-4.1-1.1-5.9 1-9 -8 Italy 20,544-9.4 3.9-18 -12-7.6 4.6 1.3 4 16 779 2.5 5.2-3.5 8.5 3.5-0.2-1.8 0.9 Malta 6 8.8 3.6-4.9 1.3 20.3 12.2 11.2 13.4 7,788 7.7 3.3 15.4 4.3 8.8-2.8 3.6-6.9-5 2-16 -4 Portugal 2,767 4.4 5.1 0.6 4.2 7.9 11.9 12.4 12.6 4 15 20 9 1,630 13.0 9.0 13.2 12.6 17.5 10.3 13.5 10.1 7 15 9 6 Slovenia 911 12.3 18.5 13.6 9.3 11.0 4.1 2.1 7.9 9 3 10 1 45,248 3.8 4.3-2.4 5.2 8.5-0.5-0.8-0.3-7 1 3 Spain 12,156 22.0 22.3 23.0 18.2.4 27.6 27.4 27.9 24 32 28 15,888 20.3 42.6 44.8 9.0 19.6 16.7 16.5 15.0 11 20 13 19 Turkey $ 2,524 19.5 13.0 38.4 5.8 28.2 12.5 22.3 9.4 8 10 10 2 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used World Tourism Organization (WTO) 12

The growth in receipts for the Southern and Mediterranean Europe subregion is generally more modest. In the case of the subregion s number one destination, Spain, receipts stagnated in the first half of the year (-0.5%), while arrivals rose 6% from January through August. This would seem to reflect the trend identified in 2004 of a decline in average spending per visitor due to among other factors the growth of no-frills travel to the country. Low-cost carriers (LCCs) generated 29% of all Spain s arrivals in 2004, up 33%, and have continued to gain share this year. Greece does not have yet any official arrivals data available for 2005, but its international tourism receipts rose by 10% in the first seven months of the year, and indicators from other sources suggest that the long-awaited tourism recovery has finally taken place, boosted by the country s very positive media exposure during the 2004 Summer Olympics. Inbound traffic at Athens airport is up around 12% and Greek industry representatives participating in the WTO Panel of Tourism Experts all reported positive performances. better Better Equal Worse worse WTO Panel of Tourism Experts Europe 175 1 1 75 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 Evaluation Evaluation Not surprisingly, uncertainty over oil prices and, therefore, airfares and fuel generally, is widespread. The imposition of fuel surcharges by many airlines does not appear to have discouraged demand for air transport at least for the time being. Some airports used primarily by LCCs are still recording staggering growth rates and overall traffic at European airports as reported by the Airports Council International (ACI) grew by 6% through July. The price of crude oil has fallen in recent weeks, and the accompanying panic has subsided, but fuel prices still remain high and consumer confidence has fallen. In an effort to combat the uncertainties of the elements, some countries such as Austria are developing and promoting weather-proof facilities centres offering a wide variety of indoor activities and entertainment. German cruise lines are also building new ships, and converting existing ones, to protect passengers from bad weather during winter cruises in the Mediterranean. On the positive side, countries around the region report several big events, such as conferences and exhibitions, which should stimulate demand for tourism in Europe. And the promotion of niche segments such as gastronomy (Italy and Spain), spa and wellness (Hungary) and ecotourism (several different countries) is enriching Europe s tourism product. In line with efforts to attract new and developing markets such as China and Russia national tourism authorities in Europe are also trying to put pressure on their governments and the European Union (EU) to remove blockages in visa processing and ease visa requirements. Estonia, for example, is introducing five-day visa-free entry for Russians. There is strong evidence that the need for visas has dampened demand from, say, Russia to new EU member countries over the past 16 months, as highlighted by the experiences of Poland and Cyprus. The monthly or quarterly statistics included in this issue have been compiled by the WTO Secretariat based on preliminary data as disseminated by the institutions (e.g. National Tourism Authority, Statistics Office, Central Bank) of the various countries and territories through websites, news releases, bulletins or provided through direct contacts with officials or through international organisations such as the Caribbean Tourism Organisation (CTO), the European Travel Commission (ETC), the Pacific Asia Travel Association (PATA) or the South Pacific Tourism Organisation (SPTO). Information in this issue reflects data available at the time of preparing the WTO 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 WTO regions, series are chosen that can serve as an indicator of the evolution of tourism to 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). Please refer to the notes on page 2 for further explanations. The (sub)regional totals are approximations for the whole (sub)region prepared by WTO 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 the 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. In order 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 please contact the WTO Secretariat at barom@worldtourism.org. World Tourism Organization (WTO) 13

Asia and the Pacific Results Despite the lingering impact of last December s Indian Ocean seaquake and tsunami (see separate update on page 17), Asia and the Pacific turned in one of the best performances of all world tourism regions until the end of July. But there were very mixed results from one subregion to another. International Tourist Arrivals, monthly evolution Asia and the Pacific 120 110 90 80 70 60 40 30 20 10 0-10 -20-30 -40-2003 2004 2005* (% change) Asia and the Pacific s overall 9% average increase (compared with the same period of 2004) is almost entirely attributable to the very strong performance of North-East Asia, up 12%. All countries in the subregion performed well, but the average was boosted by much better than average arrivals growth for China (+16%) and Taiwan (province of China) (+17%). Both destinations also achieved the highest increases in international tourism receipts for the subregion (+20% and +30% respectively) outperforming all other countries in Asia and the Pacific with the exception of Bhutan, up 65%, albeit from a very small basis. One interesting recent development is that the Republic of Korea has overtaken Japan to become China s leading source market. Meanwhile, a decline in Japanese arrivals in China is due in no small part to political tension between the two countries, which erupted in March / April. Political tension between Japan and the Republic of Korea has also temporarily dampened demand for travel between these two countries, despite Japan s granting of visa-free access to Koreans, as well as to travellers from Taiwan (province of China) in March 2005. A visa waiver for all tourists visiting the Aichi World Expo in the six months from end of March to September, on the other hand, helped boost Japan s foreign arrivals overall (+9%). Preliminary estimates suggest that the World Expo attracted 22 million visitors (7 million above the initial target) of whom at least 4% were from abroad. Although political tensions have clearly had a negative impact, intraregional travel within North-East Asia continues to be a main driver of growth. Neighbouring countries were major beneficiaries of Koreans 26% increase in spending abroad in the first seven months of 2005. As an example, more and more Koreans taking short weekend breaks to coastal cities in China, such as in the nearby Shandong province, whether for relaxation or to play golf and take part in other sporting activities. Hong Kong (China) (+9% in arrivals and +15% in receipts) and Macao (China) (+8% arrivals) have similarly benefited from increased intraregional demand. But Macao (China) also attributes its good results to increased air capacity, especially from no-frills airlines out of Malaysia, Thailand and Singapore. Japan s World Expo appears to have had little dampening effect on demand by its citizens for outbound travel, which increased by 8% from January through July in terms of trip volume. And China s outbound travel was up 10% in the first six months of the year. One subregion that lost out badly in terms of China s outbound travel growth in the first seven months of 2005 was South-East Asia, whose 4% region-wide average increase in arrivals masks some very different results from one country to another as the high season comes to an end. The Philippines (+10%) and Singapore (+9%) achieved the highest growth in receipts among South-East Asian countries with available data. Cambodia (+%), Lao P.D.R. (+28%) and the Philippines (+14%) were the major winners in terms of arrivals. Like Thailand (see Tsunami Recovery Update on page 17), Singapore (+8% in arrivals) and Malaysia (+4%) also suffered declines out of China. In the case of Malaysia, the drop was as high as %, attributed to incidents of petty crime. As a result, the China National Tourism Administration (CNTA) issued a travel advisory warning of the problems, as well as ordering a temporary suspension of tour programmes to the country. Similar incidents were also reported by CNTA in Singapore and Thailand and may have had a negative impact. International tourist arrivals in South Asia stagnated in the first months of 2005, although the growth trend has been positive since May. Sharp declines to the Maldives (- 45%) and Nepal (-17%) were compensated for by India s solid performance (+17% in arrivals and +20% in receipts), as well as Sri Lanka s much better than expected recovery (+13% in arrivals). India s boom in inbound tourism which has attracted almost as much interest from the tourism industry as the boom in the country s outbound travel seems to be a just reward for the public and private sectors efforts to raise tourism s profile and boost demand. Key factors include continued product improvement, air transport liberalisation and increased spending on marketing and promotions. There were also very mixed performances across Oceania, with several Pacific islands achieving higher than the subregion-wide growth of 6%. These included the Cook Islands (+7%), Guam (+8%), the Marshall Islands (+13%) and Vanuatu (+33%). Papua New Guinea recorded one of the strongest increases (+20%), albeit from a low base. New Zealand (+4%) attributes its lower than expected growth to the strong New Zealand dollar, which has nonetheless boosted outbound travel and spending abroad. World Tourism Organization (WTO) 14

The growth in Australians spending abroad (+12% in the first six months of 2005) far outpaced the country s 4% rise in international tourism receipts again attributed to a strong local currency. However, Australia s 8% increase in arrivals through July reflects a sustained demand for the country s tourism, led by developing markets such as China (+23%) and the Republic of Korea (+23%). The only markets to record declines over the period were Japan, Indonesia and South Africa. Although concerns over the price of oil and its impact on fuel costs colour the short-term forecasts of a large percentage of members of WTO s Panel of Experts, the general prognosis from and for the region is very positive. In fact, the impact of increased fuel costs is expected to hit the domestic market more than international travel, since the vast majority of international trips within the region are made by air. Abacus International, the region s leading global distribution system (GDS), says that there is no sign yet from advance bookings of a dampening of demand for air travel. But many believe that the recent imposition of fuel surcharges, especially by low-cost carriers (LCCs), will start to take effect in the last quarter of 2005. China s first LCC, Spring Airlines, was forced to raise fares only a few days after its maiden flight. And there are other signs that LCCs are struggling. LCCs have been a main driver of the growth in travel demand in Asia and the Pacific in 2004 and 2005 but, although they now number more than 15 in International Tourist Arrivals by Country of Destination Full year Monthly or quarterly data series (% change over same period of the previous year) Series 2003 2004 03/02 04/03 Series 2005* 2004 (0) (%) YTD Q1 Q2 Jan. Febr. Mar. Apr. May June July Aug. Q1 Q2 Q3 Q4 Asia and the Pacific 119,334 152,629-9.0 27.9 8.7 10.2 8.1 3.9 12.6 14.4 7.3 9.6 7.4 6.8 11.2 89.6 24.1 13.3 North-East Asia 67,595 87,576-8.8 29.6 12.2 15.7 10.6 11.4 19.8 16.2 9.8 11.6 10.1 8.2 6.8 104 23.7 16.8 China TF 32,970 41,761-10.4 26.7 TF 15.8 19.9 13.3 19.8 16.8 22.9 9.8 15.5 15.0 12.7 1.9 87.2 22.7 17.9 Hong Kong (China) VF 15,537 21,811-6.2 40.4 VF 8.7 10.8 8.5 8.3 20.0 5.7 11.9 7.5 5.8 3.8 14.7 208.4 30.1 17.0 Japan TF 5,212 6,138-0.5 17.8 TF 9.0 10.3 7.2-4.1 24.4 14.1 6.9 6.4 8.3 10.5 10.9 56.0 8.9 6.5 Korea, Republic of VF 4,753 5,818-11.1 22.4 VF 5.6 15.0 1.4 8.2 18.3 18.6 10.0-0.1-5.0-2.3 1.4 6.5 61.8 19.3 14.2 Macao (China) TF 6,309 8,324-3.9 31.9 TF 8.4 11.7 7.4-3.0 34.0 8.6 4.4 11.1 6.7 2.9 17.2 79.9 26.7 21.2 Taiwan (pr. of China) VF 2,248 2,9-24.5 31.2 VF 17.0 18.8 17.5 14.8 16.4 24.5 17.7 22.3 13.2 10.2-10.9 246.2 29.6 14.5 South-East Asia 36,268 47,380-13.7 30.6 3.7 2.6 4.3-7.4 4.9 12.2 4.2 6.5 2.2 5.1 16.5 99.2 28.9 10.5 Cambodia TF 701 1,055-8.8.5 TF 49.9 52.8 51.6 39.5 54.7 68.4 68.5 42.5 41.9 44.4 42.3 21.8 87.9 43.9 34.8 Indonesia TF 4,467 5,321-11.3 19.1 TF(1) -4.1-3.0-4.8-2.7-3.9-2.4 3.6-6.8-9.7-4.8 20.6 51.2 18.4 10.0 Lao P.D.R. TF 195 236-9.3 21.2 VF 28.2 23.0 33.8 19.7 44.9 39.5 61.0 Malaysia TF 10,577 15,703-20.4 48.5 TF 4.0 4.6 2.5-1.0 3.9 11.4 4.0 7.0-3.1 7.3 38.4 127.4 51.5 15.4 Myanmar TF 206 242-5.3 17.7 TF -2.7 0.7-7.0 2.6 4.2-5.0-0.1-3.9-18.5-6.1 3.5 56.1 22.2 13.2 Philippines TF 1,907 2,291-1.3 20.2 TF 13.5 11.0 14.5 6.0 13.0 14.6 8.9 18.1 16.8 18.1 17.0 53.2 16.3 5.0 Singapore TF 5,705.. -18.5.. VF 8.4 8.5 7.9 2.5 6.1 17.0 7.6 7.5 8.7 9.2 3.0 186.6 29.9 17.6 Thailand TF 10,004 11,651-8.0 16.5 TF -7.8-10.1-30.1-0.5 8.2-7.3 0.2 4.4 75.1 14.0 2.3 Vietnam TF........ VF 22.7 17.9 29.7 4.4 22.4 32.7 18.5 40.8 30.4 8.4 32.7 0.7 85.9 31.5 0.7 Oceania 9,045 10,172-1.0 12.5 5.9 8.4 3.4 7.7 5.5 12.5 1.3 3.1 6.0 4.2 11.8 26.6 12.6 4.0 Australia TF 4,354.. -1.5.. VF 7.8 12.3 3.0 10.0 10.3 16.7 1.7 4.2 3.4 6.4 7.5 24.8 9.5 3.2 Cook Is TF 78 83 7.6 6.4 TF 7.2-4.2 11.9 2.0-20.1 5.4 13.8 15.1 7.9 19.4-6.3 4.5 14.8 10.7 French Polynesia TF 213 212 12.5-0.4 TF -3.7 2.8-8.9 8.0-2.1 3.2-7.0-11.6-7.9-4.7-2.4 4.8 3.6-7.3 Guam TF 910 1,160-14.1 27.5 TF 8.2 5.3 10.0 12.4-2.2 6.5 11.4 6.7 12.2 12.4 47.6 49.7 24.4 1.3 Marshall Is TF 7 7 19.9-2.4 TF 13.2-1.8 29.8 6.1-2.7-8.3-0.4 78.6 22.6-14.8-19.7 19.6 4.1 N.Mariana Is TF 452.. -3.0.. VF -1.3-0.2-2.0 2.3-2.1-0.9 0.4-0.2-5.6-2.8 3.2.4 22.4 3.4 New Caledonia TF 102-1.9-2.0 TF 3.0 14.9-8.9 28.6 0.8 16.1-6.9-11.5-8.4-5.2-0.3-5.6 1.4 New Zealand VF 2,104 2,348 2.9 11.6 VF 3.9 5.8 3.6 2.3 5.1 10.6-5.2 2.3 16.9-2.8 9.0 23.8 13.3 6.0 Palau TF 68 95 16.6 39.1 TF -6.2 3.7-18.0 5.5 11.7-6.2 0.7-21.9-29.3-3.4 33.9 129.2 21.4 23.1 Papua New Guinea TF 56 59 4.7 5.0 TF 19.6 8.2 34.5 28.7-18.3.4 49.6 23.8 31.0 13.1 17.0 9.3 8.3-12.0 Samoa TF 92 98 3.8 6.2 TF -5.7 0.0-10.4 8.7-5.3-4.0-16.3-14.1-0.6 4.9 11.3 2.3 6.5 Vanuatu TF 61 1.9 20.3 VF 32.7 10.8 43.3 11.3-29.2 60.3 107 43.8-7.4 22.6 104.2 43.2 -.9-8.9-4.8 South Asia 6,427 7,1 10.2 16.7 5.0 2.7 8.7-2.8 1.1 9.7 2.3 12.5 12.2 2.4 26.6 20.1 16.3 7.1 Bhutan TF 6 9 12.5 47.6 TF 68.1 144.9 20.5 273 76.5 161 13.0 56.3 0.6 35.4 15.5 116.4.0 India TF 2,726 3,371 14.4 23.6 TF 16.6 18.7 18.4 14.5 17.3.2 16.5 23.8 16.0 5.4 20.2 28.8 23.6 23.9 Maldives TF 564 617 16.3 9.4 TF -44.8-54.8-40.9-69.7 -.8-44.0-46.4-40.0-33.2-31.4-31.3 10.6 23.1 11.2-2.6 Nepal TF 338 360 22.7 6.5 VF(2) -17.2-32.0-18.0-15.6-42.8-35.5-37.9-6.6 0.9 9.2 16.4 48.6.5-6.3-14.3 Sri Lanka TF 1 566 27.3 13.1 TF 12.9-5.1 38.6-23.5-15.9 31.2 37.8 35.5 42.3 12.3 9.5-2.8 23.6 17.2 (Data as collected by WTO October 2005) 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 World Tourism Organization (WTO) 15

the region, only two operate at a profit AirAsia and Virgin Blue. Reflecting the increased pressures of competition, combined with rising operating costs and limited access to lucrative routes, two Singapore-based LCCs Jetstar Asia and the Qantas subsidiary Valuair are merging to form a new company, Orange Star. And more consolidation in the form of mergers and shakeouts can be expected over the coming months. better Better Equal Worse worse WTO Panel of Tourism Experts Asia and the Pacific 175 1 1 75 Evaluation T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 Unfavourable exchange rates are a source of concern to some travel industry executives in Australia and New Zealand, but the outlook for the region generally over the last quarter of 2005 is excellent. The recently inaugurated Hong Kong Disneyland is sure to be a major attraction, drawing visitors from all over the region, possibly at the expense of tourism to Macao (China) and Southern China. However, a number of events scheduled in Macao (China), such as the Grand Prix, should help to sustain demand through the remainder of the year. WTO s Panel of Tourism Experts is generally very bullish about the region s prospects to the end of 2005. Advance bookings through European tour operators suggest that demand for long-haul travel from most key markets has almost fully recovered and that Asia will attract a significant share of the overall demand. India, Thailand and Indonesia are high up the Europeans wish lists and should be among the major beneficiaries assuming that oil-induced price increases, airline capacity shortages and unfavourable travel advisories do not have a negative impact. International Tourism Receipts Series International Tourism Expenditure US$ Local currencies (% on previous year) US$ Local currencies (% on previous year) 2004 2004 2005* 2004 2004 2005* (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J Asia and the Pacific North-East Asia,739 47.9 11.5 149 43.8 35.4 20.3 24.7 18.6 16 20 20 15 China $.. 9,007 26.2 15.2 179 10.5 0.8 15.4 15.4 Hong Kong (China) 13,8 15.8 2.4.5 10.0 10.3 8.9 8.9 11,202 18.6 12.0.3 13.9 5.2 7.1 9.6 5.4 4 6 6 6 Japan 38,129 23.5 4.4 70.3.7 11.4 3.1 8.7 0.3 0 2-1 -4 5,697 6.6 6.9 34.9 5.8-12 -8.9-1.6-16.0-6 - -16-7 Korea, Republic of $ 9,499 15.2 3.6 30.6 5.9.2.5 22.8 28.9 24 44 20 23 4,040 35.7-3.6 129 48.1 27.6 30.2.4 35.1 Taiwan (pr. of China) $ 8,170 26.1 20.2 77 5.9 22.1 9.2 6.8 11.5 South-East Asia 4,798 18.8 15.2 44.3 16.3 6.3-3.9-3.0-4.8 Indonesia $ 3,7 13.8-6.0 52.9 40.2 1.6 7.4 1.2 17.0 8,198 38.9 28.6 109 43.9 8.3 3.9 3.9 Malaysia 3,093 8.7 15.3 6.4 11.3 2.0-0.6-0.6 2,012 30.2 24.0 61.7 22.2 20.7 10.4 15.2 5.5 7 17-5 Philippines $ 1,315 9.0-27 16 19 46 4.1 16.0-5.8-20 8-3 5,090 30.4 9.7 87.2 28.1 18.8 8.5 8.9 8.1 Singapore 7,744 37.5 32.6 72.2 27.7.9 2.9 3.2 2.6 10,034 24.3 14.5 60.0 26.3 13.0-1.1-5.2 4.0 Thailand 4,517.3.1 59.0 39.5 53.5 9.7 13.1 6.8 Oceania 12,952 10.7 9.9 26.6 9.1-6.6 4.4 5.3 2.9 Australia 9,407 13.8 8.0 28.5 10.1 11.2 12.2 13.2 11.2 4,951 9.0 2.1 17.4 19.6 4.8-4.6-3.0-7.0 New Zealand 2,360 17.2 14.1 30.6 19.2 6.0 3.0 11.0-1.9 18 5.0 17.0 9.3 8.3-12 17.6 8.2 Papua New Guinea.. South Asia 12.0 43.3 16.3 116 52.9 65.0 148 21.8 14 52 13 Bhutan $.. 4,769 35.4 51.4 35.6 30.1 27.4 19.8 19.8 India $ 5,072 41.7-6.3 61.4 47.5 79.2 56.2 56.2 186 36.9 104 68.0 31.4 27.9-4.4-10.2 2.4 Pakistan $ 1,275 37.9 7-7.5 35.4 0.5-15.1-27.5 4.6 513 22.0 26.1 12.0 3.6 28.0 8.5-3.6 38.4 40 36 39-14 Sri Lanka 296 11.2 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used World Tourism Organization (WTO) 16

Tsunami recovery update The end of September marks nine months since the devastating tsunami that swept the Indian Ocean on 26 December 2004. While rehabilitation is expected to take another six months to two years and full recovery of the hardest hit areas including job regeneration could take even longer tourism has proved to be more resilient than expected. Indonesia s Aceh Province, which suffered most of the damage caused by the quake and tsunami, is not an important tourism region. But poor perceptions of distance have meant that potential tourists to the country are mostly unaware of how far Aceh is from the main tourist areas. And the country suffered a further earthquake on the island of Nias at the end of March. So the impact on travel demand for Indonesia, which was mitigated during the first few months of the year as a result of a huge influx of aid workers, has nonetheless been fairly significant. The yearto-date decline to the end of July is just over 4%. However, the positive performance of Bali, up 5.5% over the seven-month period, has helped to stem the losses. Moreover, short-term prospects are bullish because the Indonesian Government has further liberalised visa requirements, allowing visitors from 14 more nations to purchase visas when they arrive in the country. Last year, an initial 21 were granted the visa-on-arrival facility. The Maldives is the destination that has suffered the most as a result of the tsunami, in terms of a decline in tourism demand. Arrivals fell by 45% from January through August, attributed largely to a drop in consumer confidence and in airline capacity. China, France, Japan and Republic of Korea are the markets most affected, reflecting the fact that consumer confidence is not a regional characteristic. According to the latest data available, there are 72 resorts open in the islands, eleven remain closed and are being renovated, and four are still under construction. On the positive side, some markets appear to have picked up strongly after a decline in the first quarter of 2005. Russia is one example, down a relatively modest 9% after the first eight months (in terms of outbound holiday trips from Russia to the Maldives). In addition, marketing and promotion have been stepped up by the Maldives Tourism Promotion Board (MTPB), with several roadshows in major source markets already undertaken or planned. If the current target of the MTPB is achieved, the overall decline in arrivals should be less than % for the full year, and next year should see a strong recovery. Although Sri Lanka s year-to-date foreign arrivals count was up 13% to end-june 2005 thanks to a more than 30% increase in the three months from March through May and a 42% rise in June the destination s arrivals mix has been very different from its traditional breakdown. As statistics gathered by the Pacific Asia Travel Association (PATA) confirm, hotel occupancy in Colombo City has risen, but there are still significant declines in the southern regions of the country, which is where most of Sri Lanka s tourism plant is located. While some of this year s growth is due to aid workers and Sri Lankan expatriates returning to the country to help in the rehabilitation, Indian leisure arrivals up 47% have been boosted by the introduction of visa-free entry and improved air links. Meanwhile, China, which has not been a significant source for Sri Lanka until now, is a main focus of the country s 2005 marketing and promotion, since the first direct flights between the two countries were launched in mid-june this year by Sri Lankan Airlines. Direct air arrivals in Thailand for the first eight months of 2005 through Bangkok s Don Muang Airport were up just under 3% compared to last year. And estimates for total international arrivals in the first five months pointed to an 8.5% increase. Given that forward bookings for winter 2005/06 are encouraging it now seems more than possible that the 13.4 million target of the Tourism Authority of Thailand (TAT) will be achieved this year a growth of nearly 15%: A key priority is to restore confidence in important Asian markets such as China, Taiwan (province of China), Hong Kong (China) and the Republic of Korea all well down on 2004. These four markets between them accounted for % of all arrivals in 2004. The Thailand-wide arrivals' statistics nonetheless highlight the fact that tourists are exploring other parts of the country, including the seaside resort of Hua Hin and the northern city of Chiang Mai. But air traffic and accommodation statistics for Phuket, for example, confirm that there is still some way to go. Overland travel from Malaysia and Singapore, meanwhile, will be harder to attract back, given the incidents in the south of the country, while the recently signed open sky agreement with the USA may contribute in the medium term to improve arrivals figures. For further updates on each destination s progress, see WTO s dedicated Tsunami Recovery website at <www.world-tourism.org /tsunami/eng.html> Trends in international tourist arrivals in key tsunami-affected destinations Full year YTD 2005/2004 2003 2004 03/02 04/03 2004 2005* 05*/04 Jan Feb Mar Apr May Jun July Aug (0) % (0) % % Indonesia¹ 3,691 4,541-9.8 23.0 2,558 2,454-4.1-2.7-3.9-2.4 3.6-6.8-9.7-4.8 Bali² 993 1,458-22.8 46.9 952 1,005 5.5-2.0 19.3 17.4 4.7-0.5 3.5 7.0 Maldives³ 564 617 16.3 9.4 416 230-44.8-69.7 -.8-44.0-46.4-40.0-33.2-31.4-31.3 Sri Lanka 1 566 27.3 13.1 275 311 12.9-23.5-15.9 31.2 37.8 35.5 42.3 Thailand 4 6,877 8,188-9.7 19.1 5,3 5,406 2.9-18.7 7.3 17.6-3.8 4.9 8.2 5.9 7.9 Source: WTO, based on data gathered by PATA from respective member national tourism organisations (NTOs) 1 Arrivals through 13 ports of entry 3 Air arrivals 2 Direct foreign tourist arrivals 4 At Bangkok Int'l Airport (excludes overseas Thais) World Tourism Organization (WTO) 17

The Americas Results The Americas are enjoying another good year with regionwide growth averaging 7% through the end of July. Central America, up 15%, has been the best performer, followed by South America, up 10%. North America achieved a more modest 7% growth, although this was still above the world average. However, as in a number of subregions around the world, the monthly increases appear to be progressively slowing, after a vigorous 2004. Growth for the Caribbean, meanwhile, has varied sharply from one group of islands to another, with the result that the average increase for the first seven months of 2005 was only 3% somewhat down on the industry s expectations. International Tourist Arrivals, monthly evolution Americas 22 20 18 16 14 12 10 8 6 4 2 0-2 -4-6 -8-10 -12-14 -16 2003 2004 2005* (% change) Interestingly, while the overall evaluation of recent performance by WTO s Panel of Experts in the region is less and less optimistic as the year wears on, respondents to WTO s Barometer questionnaire are nonetheless quite bullish about prospects. Moreover, this is despite the perceived impact of the recent hurricanes, Katrina and Rita, on tourism. Admittedly, the first responses that WTO received to the questionnaire, which was distributed just as Katrina hit, were the most negative. Reactions voiced in more recent responses have been far more measured, with the experts generally agreeing that the negative impact will not be prolonged. The USA recorded an 8% increase in arrivals and 13% in receipts, and a number of its markets showed doubledigit growth. These included Mexico (+10%), Brazil (+23%), Argentina (+12%), China (+20%), Italy and Sweden (+19%), France (+16%) and Spain (+12%). Canada was the only one of North America s destinations to record a weak performance (-0.1% in arrivals and +3% in receipts) through July. Its stagnation in arrivals is entirely due to a decline in the US market, primarily attributable to unfavourable exchange rates for Americans travelling to Canada, as well as other factors such as decreased road traffic due to higher fuel prices. If the USA is excluded from its total count, growth rises sharply to 10%. Mexico s 11% increase in arrivals (and 16% rise in receipts) is attributed by WTO s Panel of Experts to a wide range of factors, including greater investment in infrastructure such as the cruise port in Puerto Vallarta as well as resorts, not to mention greater funding for marketing and promotion. In spite of the strong impact of hurricane Emily on the Yucatan area, overall results for the country are very positive, in particular regarding receipts and the cruise sector. As predicted by WTO in late 2004, Latin America has attracted a large share of US outbound travel growth this year because of the relatively favourable exchange rates. Although the US dollar has since recorded a modest appreciation against the euro, it did lose significant ground last year. So many Americans decided not to travel to Europe this year. As a result, US travel to Europe rose by only 2% through June 2005 compared with an 11% growth for Asia and the Pacific, 15% for Mexico and 17% for Central America. Two major reasons were given by WTO s Panel of Experts for the Caribbean s lower than expected performance this year inadequate airlift and hurricanes. Reduced airlift and an early and extremely active hurricane season explain Jamaica s modest 1% growth, for example, and this has clearly been a problem for many of the smaller islands, such as Curaçao (-2%). Among the Caribbean islands that have performed well, the following should be mentioned: Anguilla (+13%), St Lucia (+11%) and St Vincent and the Grenadines (+26%). Major destinations such as Cuba (+10%) and the Dominican Republic (+7%) also performed much better than average for the subregion, in terms of tourism growth. As is the case in other regions of the world, increased investment by governments in tourism, especially in marketing, promotion and infrastructure development, plus improved public-private sector cooperation, have contributed to boosting demand in Central and South America. Despite the strong Real, Brazil attracted a 17% increase in international tourism receipts in the first seven months of 2005 although, to put things in perspective, spending abroad rose by 71% over the period as the economic situation continued to improve in the country. Chile has reported that the current 2005 winter season will be the best of the past five years with arrivals up to July increasing by 11%, fuelled in particular by the good performance of the Brazilian market. Many other Central and South American countries attracted double-digit growth in the year to date as well (the actual number of months varies from one country to another), including Honduras (+24%), Nicaragua (+22%), Costa Rica (+16%), Colombia (+15%), Guatemala and Peru (+13% each), Argentina, Ecuador and El Salvador (+12% each). The overriding concern of governments and the private sector in the Americas region is what will happen to the price of oil and how much of the recent increases will be passed on to consumers in the form of increased fuel and World Tourism Organization (WTO) 18

petrol/gas costs. Fortunately, hurricane Rita did less damage than feared and oil prices have now fallen somewhat, but they are still uncomfortably high. Americans believe that the resulting higher fuel prices will hit domestic travel most, since so many trips within the USA are by private car or recreational vehicle, but there does not appear to be a consensus on the issue. Some expect long-haul travel to slow significantly because of the higher share of air transport in the overall price of a trip. International Tourist Arrivals by Country of Destination Full year Monthly or quarterly data series (% change over same period of the previous year) Series 2003 2004 03/02 04/03 Series 2005* 2004 (0) (%) YTD Q1 Q2 Jan. Febr. Mar. Apr. May June July Aug. Q1 Q2 Q3 Q4 Americas 113,051 1,710-3.0 11.2 6.6 9.6 4.0 8.2 5.0 17.7-1.9 6.1 7.1 4.8 12.6 15.6 9.0 8.0 North America 77,417 85,846-7.1 10.9 6.5 11.3 3.5 8.7 5.3 18.6-1.9 5.4 6.8 4.4 10.6 17.0 9.2 7.3 Canada TF 17,534 19,1-12.6 9.2 TF -0.1 4.3-1.6 1.1 3.8 7.4-7.1-2.7 1.9-1.5-3.4 17.4 10.6 4.8 Mexico TF 18,665 20,618-5.1 10.5 TF 11.1 12.3 8.0 10.1 7.4 18.7 6.3 7.7 9.9 16.6 14.6 7.7 9.1 10.5 United States TF 41,218 46,077-5.4 11.8 TF(1) 7.8 12.7 3.8 9.9 4.4 21.4-3.8 7.7 8.1 11.7 20.2 7.3 5.6 Caribbean 17,049 18,187 6.5 6.7 2.5 4.9 1.1 5.2-1.1 9.7-2.6 3.0 3.1 0.5 8.6 10.1 5.2 1.9 Anguilla TF 47 54 6.8 14.9 TF 12.5 16.5 8.8 18.6 11.6 19.7 1.9 8.9 19.1 11.1 18.9.3 16.5-0.6 Antigua,Barb TF 224 245 13.1 9.4 TF(2) -3.9 4.1-10.6 5.0-2.9 10.1-14.5-7.6-7.3-9.5 19.0 12.2 4.5 2.6 Aruba TF 642 728-0.2 13.4 TF 7.6 13.4 15.3 1.8 23.9 0.9-2.4 14.0 18.5 11.6 10.2 Bahamas TF 1,510 1,561-0.2 3.4 TF(2) -1.8-4.1-0.9-3.3-7.5-2.0-10.0 3.0 6.0 1.7 7.9 9.8-5.2-9.7 Barbados TF 531 552 6.7 3.8 TF -1.9 1.9-5.4 5.6-1.1 1.4-0.6-10.0-5.8-3.9 11.5 1.9 4.9-2.7 Bermuda TF 7 272-9.7 5.9 TF 2.1 12.4 3.9 8.9 2.4 20.9 8.9 3.1 1.4-12.2-7.0-5.1 12.2 28.6 Bonaire TF 62 63 19.2 1.6 TF 5.0 15.5-7.1 5.8 9.0 34.3-12.3-4.5-2.6 9.3 6.3 11.9-10.5-4.9 Br.Virgin Is TF 271 332-4.0 22.6 TF -11.2 9.6-9.4-6.2-20.8 52.5-4.5-13.5-11.6-71.6 10.5 29.1 6.9 31.0 Cayman Islands TF 294 260-2.9-11.6 TF -53.1-56.2-51.9-62.6-58.8-49.5-54.5-52.7-47.9-49.8-49.2 8.6 17.6 2.2-76.0 Cuba TF 1,847 2,017 11.5 9.2 VF 9.6 8.1 7.9 10.6 3.7 9.9 10.6 2.0 10.3 20.9 12.6 12.0 2.7 1.0 Curaçao TF 221 223 1.6 0.9 TF -2.1 7.5-7.4 3.6-0.9 20.0-16.6-0.4-1.9-14.2 8.1 5.1 1.7-9.1 Dominican Rp TF 3,282 3,4 16.8 5.1 TF 7.0 8.0 7.7 8.6 0.8 14.8 1.9 12.6 9.9 8.3 0.9 8.9 6.5 2.5 2.6 Grenada TF 142 134 7.5-6.0 TF -36.2-30.4-24.1-37.4-29.5 -.7-36.2 6.0 13.3-1.4-40.9 Jamaica TF 1,3 1,415 6.6 4.8 TF 1.2 7.9-2.4 6.9 2.4 13.5-5.7-0.8-0.5-5.6 7.0 12.0 1.7-1.7 Martinique TF 453 471 1.4 3.9 TF 2.6 8.7 3.0 9.5 13.6-11.3-2.1-6.0 1.7 12.5 11.6 Montserrat TF 8 10-12.6 14.1 TF 7.3 7.3 10.1 2.8 8.5 21.2 18.2 20.5 22.1 Puerto Rico TF 3,238 3,541 4.9 9.4 THS(3) 2.7 3.1 2.3 0.2 1.6 6.8-1.5 6.6 2.8 5.4 8.6 8.4 4.9 Saba TF 10 11-9.1 10.0 TF -4.4 18.8 13.4 14.0 27.2-41.1-29.1 6.0 6.9 11.8 4.6 Saint Lucia TF 277 298 9.3 7.8 TF 11.1 15.6 12.5 20.7 5.7 21.4 29.1 8.7-5.6-3.6 3.0 3.2 11.0 15.1 St.Eustatius TF 11 11 7.1 5.7 TF -4.7-1.6-6.0-2.0 3.5-17.2-0.3 10.3 6.7 16.2-8.3 St.Maarten TF 428 475 12.3 11.1 TF(2) -2.5-2.1-3.0 2.4-7.8-0.7 0.4-7.3-3.3 19.0 13.1 9.0 2.7 St.Vincent,Grenadines TF 79 87 1.2 10.4 TF.5 43.4 31.9 17.5 89.0-12.7 12.8 14.4 6.1 9.5 Trinidad Tbg TF 409 443 6.5 8.2 TF 9.0 14.3 2.9 52.4-11.3 19.3-12.2 16.2 9.8 12.2 6.2 5.5 10.7 US.Virgin Is TF 538 544 3.5 1.1 TF 11.4 15.8 7.1 13.0 13.5 20.0-3.6 22.5 4.7 1.0 19.9 10.4-0.2 Central America 4,899 5,771 4.2 17.8 14.7 16.7 12.3 16.4 9.3 24.2-0.8 23.1 18.0 14.6 18.7 14.2 12.8 22.9 Belize TF 221 231 10.5 4.5 TF 4.0 4.9 0.0 4.6 9.3 0.9 3.5 12.6-0.4-1.4 6.2 Costa Rica TF 1,239 1,453 11.3 17.3 TF 15.9 13.3 14.9 4.7 20.3 14.9 29.7 31.3 13.0 1.5 22.3 El Salvador TF 857 966-9.8 12.7 TF 12.3 7.2 17.7 10.2-8.0 18.5-1.7 28.9 29.6 7.5-4.1.9 26.0 Guatemala TF 880 1,182-0.5 34.3 TF 12.6 26.9 2.5 20.6 26.0 33.4-10.7 17.5 4.3 6.6 21.2 48.0 38.5 29.9 Honduras TF 611 672 11.1 10.1 TF 24.3 30.9 14.6 37.1 19.4 37.3-6.9 34.2.4 35.4-6.2 7.1-12.0 57.7 Nicaragua TF 526 615 11.5 16.9 TF 21.7 35.3 8.5 24.6 36.4 45.6-9.4 13.7 24.8 19.3 14.7 15.6 18.2 Panama TF 566 652 6.0 15.2 VF 4.8 3.1 8.8 7.4-6.5 7.7 3.0 16.0 11.5 1.3 32.1 11.8 6.1 South America 13,686 15,906 9.3 16.2 9.5 6.4 7.5 6.9 9.8 22.0-1.2 9.2 10.4 9.9 23.9 15.0 11.0 12.8 Argentina TF 2,995 3,353 6.2 12.0 TF 11.7 12.1 11.2 15.4 8.1 8.8 14.3 Bolivia TF 370 405 10.8 9.5 THS 2.0 10.0-5.7 16.0 14.0 0.8 5.4 8.6-32.9 8.7-0.4-3.6 28.9 Chile TF 1,614 1,785 14.3 10.6 TF 10.9 13.9 4.3 10.0 14.5 19.1 2.4 9.5 1.5 13.5 21.1 14.2 7.2 0.4 Colombia TF 582 744 23.0 27.8 VF 15.4 15.4 19.7 39.2 16.6.3 Ecuador VF 761 793 11.4 4.1 VF 11.5 23.3 1.0 4.9 24.5 45.1-13.3-15.7 35.8 8.8 9.1 9.9-4.1 3.6 Guyana TF 101 122-3.3 20.9 TF -7.1 0.0-11.7-7.6-18.7 24.8-33.1 8.9 1.9-13.0-1.9 23.0 28.7 32.5 1.6 Paraguay TF 268 309 7.2 15.3 TF 9.0 10.3 7.5 5.5 11.1 15.3 3.1 12.7 7.3 9.3 16.4 15.5 10.9 18.2 Peru TF 1,024 1,203 18.8 17.5 VF 13.0 12.9 12.9 13.0 12.8 13.0 13.4 12.8 12.6 13.5 17.5 17.5 17.5 17.5 Suriname TF.. 138.... TF 24.4 24.4 63.8 0.2 23.6 Uruguay TF 1,420 1,756 12.9 23.7 VF 2.2 7.0-12.0-1.7-1.3 49.5-34.3 10.8 7.0 3.2 10.6 40.1 23.2 11.6 14.0 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used (1) Excluding Mexican visitors not travelling beyond the miles U.S. border zone (2) Non-resident air arrivals only (3) Non-resident hotel registrations only World Tourism Organization (WTO) 19

The most negative scenario is that higher oil prices will result in reduced disposable income as expenditure is diverted to cover increased fuel costs, and that this could also slow economic growth in the USA and lead, in the longer term, to lower employment and income growth. The record number of airlines now in Chapter 11 Bankruptcy Protection three of the seven largest carriers in the USA (Delta and Northwest recently joined United, while US Airways just exited) could also reduce airline capacity in the longer term and cause prices to rise. better Better Equal Worse worse WTO Panel of Tourism Experts Americas 175 1 1 75 T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 Evaluation Currency fluctuations are cited as another unknown factor that may affect tourism demand in the short to medium term. The strong Real and Mexican peso are concerns for Brazil and Mexico, for example. Meanwhile, the Canadian dollar is at a nine-month high against the US dollar which is likely to continue favour outbound travel by Canadians more than inbound travel and is up 13% against the euro this year so far. (See for details the table on exchange rates at the end of the chapter on the Economic Environment.) On 5 April this year, the US Departments of State and Homeland Security announced the Western Hemisphere Travel Initiative (WHTI), which will require all travellers to and from the Americas, including the USA, Canada and Mexico, the Caribbean, Bermuda, Central and South America, to carry a passport or other accepted documents (still to be determined) that establishes the bearer s identity and citizenship to enter or re-enter the USA. Passports are currently not required. If the WHTI does come into effect, as planned, by the end of 2006 for air and sea travel and by the end of 2007 for the Mexican and Canadian land borders, it is expected to result in a sharp drop in travel to those countries since most Americans do not currently have passports. As reflected by some of the examples cited above, the threat of hurricanes is a serious concern because it undermines business as well as consumer confidence. Destinations would do well to take note of Visit Florida s response to the problem. As a result of the constant threat of hurricanes during its summer peak tourism period, it decided to significantly increase advertising to raise Florida's profile as a destination. And it started offering to pay for 'Cover your event' insurance to soothe the fears of convention organisers. By August this year, some US$ 4.2 million in coverage had been reportedly arranged and, in Orlando, Florida's biggest tourism region which draws half the state's visitors only five of the 988 meetings scheduled for this year had been cancelled. International Tourism Receipts Series International Tourism Expenditure US$ Local currencies (% on previous year) US$ Local currencies (% on previous year) 2004 2004 2005* 2004 2004 2005* (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J Americas North America 12,843 13.1-0.5 21.2 18.5 16.0 3.4 5.5 1.5 Canada sa 16,017 10.8 9.6.0 10.8 4.3 7.6 8.5 6.7 10,753 14.9 14.4 14.8 11.9 18.1 16.4 19.4 14.7 13 14 17 12 Mexico $ 6,959 11.3 10.6 8.5 9.6 16.0 14.5 12.3 16.5 9 17 74,481 15.7 13.2 30.3 15.5 6.7 13.3 11.8 15.5 16 16 15 11 United States sa 65,635 14.3 9.6 27.0 13.4 8.7 9.2 9.7 9.9 14 7 9 6 Caribbean 1,884 7.2 10.3 21.3-5.9-4.6-3.0-3.0 Bahamas.. 5.5 17.8-14 12.4 18.0 18.0 354 1.7 0.0-19 17.9 23.6 18.4 18.4 Bermuda 232 2.7 2.9 2.0 3.6 1.7 0.0 0.0 3,180 2.3-1.4 6.1 0.7 5.3 17.8.8 7.7 Dominican Rp $.. -2.8-3.4 Central America 1,358 13.3 27.1 0.4 4.2 19.0 21.0 21.0 Costa Rica $ 404 14.8 0.3 18.1 14.5 24.3 3.4 3.4 337 17.1 30.0 29.6 48.3 64.3 57.3 57.3 El Salvador $ 240 22.1 2.3 0.5 38.8 45.9 770 28.4-2.2 22.7 34.2 70.0 12.7 14.1 11.9 19 8 9 11 Guatemala $ 649 7.9 19.1 36.7 12.6 7.4 11.8 3.8 8 2 2 7 South America 2,563 27.8 44.6 20.0 18.4 26.3 31.3 31.3 Argentina $ 2,964 18.0 29.9 16.7 9.8 13.2 23.7 23.7 3,222 30.0 64.5 29.4 10.1 22.6 17.2 14.7 15.2 18 14 14 34 Brazil $ 2,871 27.0 40.6 6.2 20.2 45.7 71.3 47.7 82.7 37 136 89 97 1,091 0.0 37.6 27.9 24.5 18.3 15.7 18.1 11.1 Chile $ 892 15.1 7.4 39.0 7.9 12.4 7.6 14.8-0.6 1,032 18.7-3.7 14.5.3 32.9 20.3 20.3 Colombia $ 1,290 24.6 19.4 17.1 24.6 32.9 16.8 16.8 367-9.6-9.5-9.6-9.6-9.6-9.4-9.4 Ecuador $ 391 10.3 10.3 10.3 10.3 10.3 1.3 1.3 1,078 14.7 16.5 15.8 16.2 9.5 14.5 12.2 17.0 Peru $ 620 3.7 4.4 3.8 2.7 4.5 3.4 3.5 3.3 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used World Tourism Organization (WTO) 20

Africa and the Middle East Results Although diversification of Middle East (largely) oil-based economies through tourism is a relatively recent phenomenon, governments in the region have been actively making efforts to tap tourism s potential. Improved product development, enhanced funding for tourism and an increase in marketing and promotion have all facilitated the task and helped to secure good return on investment. In addition, according to WTO s Panel of Experts from the region and particularly from Africa tourism growth has been stimulated by the public and private sectors increasingly working in partnership. International Tourist Arrivals, monthly evolution Africa 18 16 14 12 10 8 6 4 2 0-2 -4-6 2003 2004 2005* (% change) Regional results nonetheless need to be interpreted with caution as overall trends can only be considered estimates, given the wide gaps in country coverage. As an example, Africa s 9% growth for the year to date through the month of July is based on North Africa and SubSaharan Africa, both with a 9% increase. Yet in SubSaharan Africa data is only available for four countries out of the 19 making up the subregion. Admittedly, these four countries between them generated 43% of the subregional arrivals count in 2004, but the average has clearly been boosted by Kenya s 30% growth. After a disappointing 2003, when demand was severely affected by travel advisories, Kenya bounced back strongly last year, and first half-year results for 2005 confirm that this recovery has been sustained. This is due to a number of different factors, notably the increased involvement of the country s many different stakeholders in addressing issues such as safety and security concerns, enhanced tourism promotion and improvement of the country s tourism product. In addition, the Kenya Tourist Board has been allocated increased funding by government and a new private sector lobby group, the Kenya Tourism Federation, has been established to represent private sector interests. Although the South African rand has continued to appreciate in value, anecdotal evidence suggests that this has not had a marked impact on foreign tourism demand for South Africa (+7%). However, since arrivals data is only available for four months of this year, the argument remains to be substantiated. The destination has also benefited from new airline capacity. International Tourist Arrivals by Country of Destination Full year Monthly or quarterly data series (% change over same period of the previous year) Series 2003 2004 03/02 04/03 Series 2005* 2004 (0) (%) YTD Q1 Q2 Jan. Febr. Mar. Apr. May June July Aug. Q1 Q2 Q3 Q4 Africa 30,763 33,234 4.3 8.0 8.7 12.9 9.8 12.4 5.5 15.1 1.4 10.5 11.5 6.7-1.2 3.3 9.8 12.3 North Africa 11,092 12,791 6.6 15.3 8.7 6.4 11.8 7.6-1.2 13.3 4.4 16.0 14.9 7.0 19.1 18.7 14.4 10.6 Morocco TF 4,761 5,1 10.7 15.5 TF 6.2 6.0 10.7 5.7-2.3 14.7 4.2 16.1 13.0 2.6 20.9 15.8 15.1 11.5 Tunisia TF 5,114 5,998 1.0 17.3 TF 9.9 7.6 12.5 10.0-0.1 12.2 4.6 15.9 16.2 14.3 4.7 19.0 24.0 14.6 13.5 Subsaharan Africa 19,671 20,443 3.1 3.9 8.7 15.9 8.5 14.5 8.5 16.0-0.3 7.3 9.1 6.4-8.5-4.4 5.4 13.1 Kenya TF 866 1,132 3.4 30.7 VF(1) 30.2 34.9 24.2 34.2 34.2 36.2 15.3 28.2 28.2 10.4 12.9 34.8 27.8 Mauritius TF 702 719 3.0 2.4 TF 5.0 7.1 2.4 9.8 4.2 6.8-4.7 3.7 10.7 5.3 1.5-3.5 3.1 7.2 Seychelles TF 122 121-7.7-1.0 TF 3.4 5.0-3.4 3.6-6.8 18.4 1.0-16.7 6.7 5.3 14.0-4.2-10.5 1.6 9.4 South Africa VF 6,640 6,815 1.4 2.6 TF 7.2 10.3 12.1 5.0 13.7-1.7-0.8 0.8 2.8 7.3 Middle East 29,999 35,391 2.9 18.0 3.0-3.8 8.5-5.8-15.7 13.7 8.0 10.3 8.9 6.2 23.0 32.2 11.5 13.1 Bahrain TF 2,955.. -6.7.. VF 2.1-2.5 26.7-55.0 21.3 16.3.4 18.0 14.8 11.1 Egypt TF 5,746.. 17.1.. VF 13.2 16.5 13.0 12.0 10.1 26.1 13.1 12.0 13.8 5.9 52.3 79.9 23.3 7.6 Jordan TF 2,353 2,853-1.3 21.2 TF 9.1 3.1 15.0 8.9-9.2 9.6 10.2 20.4 14.8 31.6 47.3 17.4 3.7 Lebanon TF 1,016 1,278 6.3.8 TF -15.7-10.9-19.2 2.4-19.4-16.3-34.4-19.8-9.1-15.4 31.4 52.2 16.2 60.2 Saudi Arabia TF 7,332 8,580-2.4 17.0 TF -21.9-21.9-21.4-41.3 1.0 17.2 17.9 3.5 31.7 Untd Arab Emirates THS 5,871.. 7.8.. THS(2) 7.6 5.7 9.8 7.4-0.1 10.0 8.5 12.5 8.3 10.9 7.9 8.0 8.6 (Data as collected by WTO October 2005) 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 World Tourism Organization (WTO) 21

A more proactive approach to tourism development by government is a major reason cited for Mauritius s 5% increase in arrivals through July. Air transport has been liberalised, with increased charter airlines now serving the destination, and plans are underway to make Mauritius a duty-free shoppers paradise, as well as developing new meetings, incentives, conferences and exhibitions (MICE) business. International Tourist Arrivals, monthly evolution Middle East 65 60 55 45 40 35 30 20 15 10 5 0-5 -10-15 -20-2003 2004 2005* (% change) North Africa s 9% average growth was boosted by Tunisia s double-digit arrivals growth (+10% through August) and the country s arrivals seem to be increasing month by month. Growth for Morocco, on the other hand, which was in double digits for three out of four of the months from March to June, slowed somewhat in July. However, there are signs that this was a temporary blip and that there is increased interest among foreigners not just in visiting Morocco, but also in buying holiday homes in the country. Traffic to North African destinations was also boosted by nationals living abroad visiting their home country. Every summer many North African immigrants residing in France and other Western European countries travel over land through Spain to cross the strait of Gibraltar to Morocco or Algeria. In order to process this flow in a coordinated way Spanish traffic, port and other involved authorities cooperate in the so called Operación paso del Estrecho, divided in salida (departure) from 15 June to 15 August and the retorno (return) from 15 July to 15 September. In these two periods in total 2.7 million passengers were counted and 665 thousand cars (both ways), up 7.1% and 8.7% on 2004 respectively a historical record according to the responsible Spanish ministry. The Middle East s average (+3%) has been very negatively affected by an estimated 22% decline in the first quarter of 2005 for Saudi Arabia, which accounted for more than 24% of the region s total arrivals in 2004. Arrivals were particularly hard hit in February, a trend common to other Middle East destinations, as the Eid al- Adha holiday was in January this year rather than in February as in 2004. Despite a series of terrorist incidents in the region notably in Lebanon and Egypt most countries, including Egypt, have performed well so far this year due, in no small part, to the implementation of successful recovery programmes. Moreover, given that the Saudi data is estimated, there is a strong possibility that the results may not be as poor as initially feared. Egypt s arrivals, meanwhile, were up 13% to the end of July, although they might have slowed that month following the car bomb attacks in Sharm-el-Sheikh. No official data is available for the Syrian Arab Republic, but a report by the Syrian Government points to a 55% increase in package tourists from Western Europe this year, boosted by the government s decision to grant visas on arrival for Western tourists on group tours. Jordan s arrivals increased by 9% through the month of June with Western tourists generating a 7% rise and the United Arab Emirates (Dubai only) recorded an 8% increase over the same period. In both cases the growth was attributed at least in some part to the decision by a significant share of tourists originally planning to visit the Lebanon to switch destinations. International Tourism Receipts Series International Tourism Expenditure US$ Local currencies (% on previous year) US$ Local currencies (% on previous year) 2004 2004 2005* 2004 2004 2005* (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J (million) year Q1 Q2 Q3 Q4 YTD Q1 Q2 A M J J Africa North Africa 3,921 12.6 15.2 2.8 10.7 22.4 22.6 19.1 44.5 32 62 43-3 Morocco 568-3.9-19 6.2 2.2-1.3-0.3-9.4 10.7 1,910 16.7 13.2 24.8 22.8 19.4 11.6 10.8 12.1 Tunisia 326 5.0 Subsaharan Africa 109 17.0 15.3 11.0 28.3 12.2-1.5-5.1 2.1 Cape Verde 78-0.4-1.6 0.4-2.3 1.7-2.6 14.4-16.8 853 20.8 37.9 28.2 14.6 6.9 4.2 9.1 1.1-6 12-2 -5 Mauritius 5 16.2 22.1 20.1 18.2 6.2 95-2.4 1-26 -14.3 22.5 11.9 3.3 21.7 Mozambique $ 134-4.0 15.3 11.7-0.3-37 20.3 22.2 18.7 403 4.3-3.9 6.8 6.0 7.6 5.2 5.2 Namibia 87 1.6 5.2 3.6-4.1 1.4 0.7 0.7 5,648-6.2-9.3-8.5-4.7-2.5 2.6 0.6 4.7 South Africa sa 2,668-20.0-5.9-21 -27-23 11.2 10.6 11.9 Middle East 6,1 33.6 58.9 45.3 29.3 14.0 12.1 12.1 Egypt $ 1,7-4.8 4.7-8.0 1.9-16 20.2 20.2 6,542 15.6 37.4 37.4 Saudi Arabia 4,406 5.8 2.5 35.6-2.0-3.8 (Data as collected by WTO October 2005) See box at page 2 for explanation of abbreviations and signs used World Tourism Organization (WTO) 22

The outlook for tourism in Africa would seem to be excellent, according to WTO s Panel of Experts in the region, who are far more bullish than experts in any other part of the world. Once again, this appears to be due in large part to improved public-private sector cooperation, especially in marketing and promotion. As for the Middle East, there are clearly concerns as to the impact of recent terrorist attacks and the continuing unrest in the Lebanon. But past experience suggests that consumer confidence tends to recover quite quickly. The Egyptian Government's swift and confident response to the Luxor attacks of 1997, for example, enhanced the image of the country as one where everything is being done to try to make tourists safe. In addition to undertaking a major, multi-million dollar confidenceboosting campaign in key consumer markets, it paid tour operators to continue programming the destination, assuming the risk on their behalf. The strategy paid off, with the result that the Taba Heights bomb attacks in October 2004 had almost negligible impact on travel and tourism demand. And the industry has gone from strength to strength since then. So this augurs well for the recovery of tourism in Sharm-el-Sheikh, scene of the car bomb attacks of 22 July this year. Meanwhile, the car bomb attack that killed former Prime Minister Rafik Hariri in Beirut early this year has clearly dampened tourism demand for the Lebanon (-16%) and is expected to continue having an effect. For example, the number of Turkish tourists is said to be down by about,000 in 2005 so far. The month of October will be quiet because of Ramadan as in most of the Middle East and North Africa region but demand should pick up again from November and revert to 2004 levels by next spring, ready to welcome summer business from Gulf Arabs, a mainstay of Lebanon's tourism industry. better Better Equal Worse worse better Better Equal Worse worse WTO Panel of Tourism Experts Africa 175 1 1 75 Evaluation T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 WTO Panel of Tourism Experts Middle East 175 1 1 75 Evaluation T1 03 T2 03 T3 03 T1 04 T2 04 T3 04 T1 05 T2 05 T3 05 World Tourism Organization (WTO) 23

The economic environment No major changes from previous Outlook World economic development remains largely outlined with the scenario outlined by the International Monetary Fund (IMF) in the April edition of its World Economic Outlook. The recently issued September edition of the IMF report remains optimistic about world economic growth for 2005 and 2006 (+4.3% for both years). However, it qualifies this optimism, citing certain factors that relate with geopolitical risks, the rise in oil prices which has so far only had a moderate impact, growing feelings of protectionism, and a possible tightening of financial markets. High energy prices are taking their toll on certain indicators and dampening business confidence. This situation accentuates the need to reduce obstacles to investment in all areas, including oil refining and energy conservation. continuing at a good pace in economies such as Venezuela (7.8%), Argentina (7.5%) and Chile (5.9%). Mexico is expected to grow by 3%. The IMF is rather optimistic about the current economic development of Latin American countries and expects that growth will be more sustainable and resilient this time than in previous upturns. Growth of Gross Domestic Product (GDP), constant prices (%) 6 5 4 3 2 1 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05* 06* Source: International Monetary Fund Regional differences that had already been highlighted in previous editions of the World Economic Outlook have become more acute in 2005. The USA (3.5%), China (9%), India (7.1%) with a clear expansion of its services sector and increased industrial production, Canada (2.9%) and Japan (2%) continue to be on an upward growth trend. It should be noted that, despite the US budget deficit, the US dollar has appreciated slightly against many national currencies, as well as the euro over the first eight months of the year. Two other developments of note: the Federal Reserve raised its federal funds rate target to 3.75%, and the consumer confidence index dropped 12 points in September. Europe is not showing clear signs of a recovery, due in large part to weak consumer demand. The IMF forecasts growth of 2.5% in 2005, and 1.2% for the euro zone. Slow growth is forecast for some key countries for international tourism, such as France (1.5%), Belgium (1.2%), Germany (0.8%), the Netherlands (0.7%) or Italy (0%). Above average growth is expected for Spain (3.2%), Sweden (2.6%) and Austria (1.9%). The UK s performance (1.9%) is still also above average, although growth has slowed markedly since 2004 (3.2%). The less mature economies in Europe remain comparatively robust. The group of Central and Eastern European countries excluding the Community of Independent States (CIS), is expected to grow by 4.1%, slightly less than the Russian Federation (5.5%) or Turkey (5%). The performance of developing countries and emerging economies will also differ due to the effects of oil and commodity prices, their access to industrialization processes and to international markets, as well as to strictly national factors. After enjoying strong growth in 2004, a certain slowdown is expected this year in Latin America and the Caribbean (4.1%), particularly in Brazil (3.3%). This is due to a contraction of demand as a result of inflation-fighting measures and political uncertainties that have arisen in certain countries. It is worth noting that growth is The rise in oil prices has boosted GDP growth in the Middle East countries, and has led to a substantial improvement in their current account balances and fiscal positions. Economic growth ranging from 4.8% to 6% is expected for Egypt, the United Arab Emirates (UAE) and Saudi Arabia. In Africa, forecast growth is 4.5%. The three North African countries Morocco, Algeria and Tunisia are expected to grow at 3.7%, somewhat below the regional average. Sub- Saharan Africa overall is expected to grow by 4.8%, slightly above the regional average, with South Africa at a notable 4.3%. Certain countries are benefiting from the rise in oil prices, while other countries are worse off because of it. However, they are generally all benefiting from higher exports of other commodities, greater macroeconomic stability, and the progress being made in structural reforms. World trade in goods and services will increase by 7% this year and by a few tenths of a percentage point more in 2006, thanks to the strong boost provided by imports and exports from emerging and developing economies. Despite this high level of activity and a favourable economic outlook, inflation pressures seem to be under control, and consumer prices are expected to rise by 2.2% in the advanced economies during 2005, and by 5.9% in emerging and developing countries. Oil; Average of UK Brent, Dubai, and West Texas Intermediate (US$ per barrel) 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 Source: International Monetary Fund World Tourism Organization (WTO) 24 70 60 40 30 20 10

Overview of the economic growth projections by the International Monetary Fund (IMF), World Economic Outlook, September 2005 GDP Growth of Gross Domestic Product (GDP), constant prices US$ bn Change over previous year (%) Current projections Trend¹ Average (%) 2004 2000 2001 2002 2003 2004 2005* 2006* 04-03 05*-04 06*-05*1995-2004 World 40,895 4.7 2.4 3.0 4.0 5.1 4.3 4.3 ++ = 3.8 of which: Advanced economies 32,398 3.9 1.2 1.5 1.9 3.3 2.5 2.7 ++ = 2.7 Emerging market and developing countries 8,497 5.8 4.1 4.8 6.5 7.3 6.4 6.1 + 5.1 By WTO regions: Europe 14,837 4.6 2.2 2.0 2.3 3.6 2.5 2.8 ++ - - + 2.6 Euro area 9,465 3.8 1.7 0.9 0.7 2.0 1.2 1.8 ++ + 2.1 Germany 2,755 3.1 1.2 0.1-0.2 1.6 0.8 1.2 ++ + 1.4 France 2,046 4.1 2.1 1.3 0.9 2.0 1.5 1.8 ++ + 2.3 Italy 1,680 3.0 1.8 0.4 0.3 1.2 0.0 1.4 + - - ++ 1.5 Spain 1,041 5.8 3.5 2.7 2.9 3.1 3.2 3.0 = = = 3.7 Netherlands 608 3.5 1.4 0.1-0.1 1.7 0.7 2.0 ++ ++ 2.4 Belgium 352 3.7 0.9 0.9 1.3 2.7 1.2 2.0 ++ - - + 2.1 Austria 295 3.4 0.8 1.0 1.4 2.4 1.9 2.2 + + 2.3 United Kingdom 2,133 4.0 2.2 2.0 2.5 3.2 1.9 2.2 + - - + 2.9 Switzerland 358 3.6 1.0 0.3-0.4 1.7 0.8 1.8 ++ + 1.4 Sweden 347 4.3 1.0 2.0 1.5 3.6 2.6 2.8 ++ = 2.7 Central and Eastern Europe (excl. CIS) 744 3.9 3.1 3.1 4.1 5.6 4.1 4.4 ++ - - + 3.5 Russian Federation 582 10.0 5.1 4.7 7.3 7.2 5.5 5.2 = - - 3.6 Turkey 303 7.4-7.5 7.9 5.8 8.9 5.0 5.0 ++ - - = 3.8 Americas 14,733 3.8 0.8 1.2 2.5 4.5 3.6 3.4 ++ = 3.1 United States 11,734 3.7 0.8 1.6 2.7 4.2 3.5 3.3 ++ = 3.3 Canada 993 5.2 1.8 3.1 2.0 2.9 2.9 3.2 + = + 3.4 Latin America and Caribbean 2,006 3.9 0.5 0.0 2.2 5.6 4.1 3.8 ++ - - 2.6 Mexico 675 6.6-0.2 0.8 1.4 4.4 3.0 3.5 ++ - - + 3.7 Brazil 604 4.4 1.3 1.9 0.5 4.9 3.3 3.5 ++ - - = 2.2 Argentina 152-0.8-4.4-10.9 8.8 9.0 7.5 4.2 = - - - - 1.5 Venezuela 108 3.7 3.4-8.9-7.7 17.9 7.8 4.5 ++ - - - - 0.7 Colombia 97 2.9 1.5 1.9 4.1 4.1 4.0 4.0 = = = 1.8 Chile 94 4.5 3.4 2.2 3.7 6.1 5.9 5.8 ++ = = 4.0 Asia and the Pacific 10,010 5.7 3.8 5.0 6.1 6.7 6.1 5.8 + 5.0 Japan 4,671 2.4 0.2-0.3 1.4 2.7 2.0 2.0 ++ = 1.2 Australia 618 3.2 2.5 4.0 3.3 3.2 2.2 3.2 = + 3.8 Newly Industrialized Asian Economies 1,7 7.9 1.3 5.3 3.1 5.6 4.0 4.7 ++ - - + 4.4 Korea, Republic of 680 8.5 3.8 7.0 3.1 4.6 3.8 5.0 ++ ++ 4.5 Taiwan (pr. of China) 305 5.8-2.2 3.9 3.3 5.7 3.4 4.3 ++ - - + 4.3 Hong Kong (China) 164 10.2 0.5 1.9 3.2 8.1 6.3 4.5 ++ - - - - 3.4 Singapore 107 9.6-1.9 3.2 1.4 8.4 3.9 4.5 ++ - - + 4.7 Developing Asia 3,199 6.7 5.6 6.6 8.1 8.2 7.8 7.2 = 6.7 China 1,654 8.0 7.5 8.3 9.5 9.5 9.0 8.2 = 8.5 India 665 5.4 3.9 4.7 7.4 7.3 7.1 6.3 = = 6.0 Indonesia, Malaysia, Philippines, Thailand 624 5.3 2.5 4.6 5.4 5.8 4.9 5.4 + + 3.0 Africa 686 3.2 4.0 3.5 4.5 5.2 4.5 5.7 + ++ 3.8 South Africa 213 4.2 2.7 3.6 2.8 3.7 4.3 3.9 + + 3.0 Algeria, Morocco, Tunisia 163 2.2 4.1 3.7 6.2 5.0 3.7 5.6 - - - - ++ 4.1 Nigeria 71 5.4 3.1 1.5 10.7 6.0 3.9 4.9 - - - - + 4.2 Middle East 646 4.4 3.2 2.4 6.1 5.2 5.0 4.6 4.1 Saudi Arabia 1 4.9 0.5 0.1 7.7 5.2 6.0 4.7 - - + - - 2.9 Untd Arab Emirates 104 5.0 8.0 4.1 11.3 8.5 5.6 4.2 - - - - - - 6.4 Egypt 77 5.4 3.5 3.2 3.1 4.1 4.8 5.0 + + = 4.8 Source: Compiled by WTO from International Monetary Fund, World Economic Outlook (www.imf.org/external/pubs/ft/weo/weorepts.htm) ¹ Percentage points change to previous year: - - < -1 ; - [-1,-0.2] ; = [-0.2,0.2] ; + [0.2,1] ; ++ >1 World Tourism Organization (WTO)

Exchange rates On of the most notable recent developments in the international economy was the long anticipated change in China s currency regime. China started a reform of its exchange rate after having maintained the yuan/renminbi pegged to the US dollar at a rate of 8.28 for almost a decade changing it into a managed floating regime with reference to a basket of currencies, including the euro. Simultaneously, the yuan was revalued by 2 % against the US dollar on 21 July, with the result that the exchange rate was adjusted to 8.11 yuan per US dollar. Although the adjustment is still modest, there is scope for a further gradual, but limited, loosening in the medium term. Another fairly significant development is the slight recovery of the US dollar. In January 2005 the US dollar began to gain back part of the value it had lost in 2004 visà-vis other major currencies, after having reached a low in December 2004 with an exchange rate of US$ 1.34 per euro. In line with this trend, between May and August the greenback strengthened against the euro (+3.3%), the sterling pound (+3.5%) and the Japanese yen (+3.7%), as well as against a large number of other European and Asian currencies. However, in the case of the euro, the year-onyear variation is still favourable to the European currency, with the euro exchanging in August 2005 at US$ 1.23 compared with US$ 1.22 in August 2004. On the other hand, the US dollar has still lost against other currencies, such as the Canadian dollar (-4% between May and August), the Mexican peso (-2.6%) and the New Turkish lira (-1.8%). The euro has also slipped against the New Turkish lira (-5%), as well as against all the North American currencies: -7% against the Canadian dollar and -5.7% against the Mexican peso in the three months from May to August. Over the same period, the euro also fell against Asian currencies, except for the yen and the New Zealand dollar, and it has stayed virtually in line (+0.2%) with sterling. The South African rand has continued its rise against the euro, in 2003 one euro bought 8.53 rands, but in August 2005 this was down to 7.95 rands. Exchange rate ECU/euro to US dollar (US$ per Ecu/ ) Exchange rate euro to US dollar (US$ per ) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 1990 1991 1992 1993 1994 1995 Source: De Nederlandse Bank Exchange rates 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 Source: De Nederlandse Bank World Tourism Organization (WTO) 26 I-02 II-02 III-02 IV-02 I-03 II-03 III-03 IV-03 I-04 II-04 III-04 IV-04 I-05 II-05 III-05 IV-05 Currency units per US dollar Currency units per euro Average 03/02 04/03 2004 2005 year ago M.-A.05 Average 03/02 04/03 2004 2005 year ago M.-A.05 2003 2004 % % Aug. May Aug. % 2003 2004 % % Aug. May Aug. % US dollar - - - - - 1.13 1.24 19.6 10.0 1.22 1.27 1.23 1.0-3.2 Canadian dollar 1.40 1.30-10.9-7.0 1.31 1.26 1.21-8.3-4.0 1.58 1.62 6.6 2.2 1.60 1.59 1.48-7.4-7.0 Mexican peso 10.80 11.29 11.4 4.5 11.39 10.98 10.69-6.2-2.6 12.21 14.04 33.3 14.9 13.87 13.93 13.14-5.3-5.7 Euro 0.88 0.80-16.4-9.1 0.82 0.79 0.81-0.9 3.3 - - - - - Danish krone 6.57 5.98-16.4-8.9 6.11 5.86 6.07-0.6 3.5 7.43 7.44 0.0 0.1 7.44 7.44 7.46 0.3 0.2 Swedish krona 8.07 7.34-16.7-9.1 7.54 7.24 7.60 0.7 4.9 9.12 9.12-0.4 0.0 9.19 9.19 9.34 1.7 1.6 Pound sterling 0.61 0.55-8.0-10.8 0.55 0.54 0.56 1.4 3.5 0.69 0.68 10.1-1.9 0.67 0.68 0.69 2.4 0.2 Czech koruna 28.15.64-13.6-8.9.98 23.81 24.08-7.3 1.1 31.85 31.89 3.4 0.1 31.63 30.22 29.59-6.4-2.1 Hungarian forint 224 202-12.7-9.8 204 198 199-2.7 0.2 4 2 4.4-0.8 249 2 244-1.8-3.0 Polish zloty 3.89 3.64-4.7-6.4 3.64 3.29 3.29-9.6 0.0 4.40 4.53 14.1 2.9 4.43 4.17 4.04-8.7-3.1 Slovenian tolar 207 192-13.5-7.0 197 189 195-1.1 3.3 234 239 3.5 2.2 240 240 240-0.2 0.0 Norwegian krone 7.08 6.73-10.9-4.9 6.84 6.37 6.44-5.9 1.2 8.00 8.37 6.6 4.6 8.33 8.08 7.92-5.0-2.0 Swiss franc 1.34 1.24-13.3-7.7 1.26 1.22 1.26 0.0 3.8 1.52 1.54 3.7 1.5 1.54 1.54 1.55 0.9 0.5 new Turkish lira 1. 1.43-1.6-4.6 1.48 1.37 1.35-9.0-1.8 1.69 1.78 17.7 4.9 1.80 1.74 1.65-8.1-5.0 Japanese yen 116 108-7.3-6.7 110 107 111 0.1 3.7 131 134 10.9 2.6 135 135 136 1.1 0.5 Australian dollar 1.54 1.36-16.4-11.5 1.41 1.31 1.31-6.7 0.6 1.74 1.69 0.0-2.7 1.71 1.66 1.61-5.8-2.6 New-Zealand dollar 1.72 1.51-20.2-12.4 1.53 1.39 1.44-5.9 3.3 1.94 1.87-4.6-3.6 1.86 1.77 1.77-5.0 0.1 Singapore dollar 1.74 1.69-2.6-3.0 1.72 1.65 1.66-3.1 0.7 1.97 2.10 16.5 6.7 2.09 2.10 2.04-2.1-2.5 Hong Kong dollar 7.79 7.79-0.2 0.0 7.80 7.79 7.77-0.4-0.2 8.81 9.69 19.4 10.0 9. 9.89 9.55 0.6-3.4 Taiwan dollar 34.40 33.41-0.4-2.9 34.12 31.30 32.10-5.9 2.6 38.91 41.56 19.1 6.8 41.54 39.73 39.46-5.0-0.7 Korean won 1191 1144-4.2-3.9 1157 2 1021-11.8 1.9 1347 1423 14.6 5.6 1409 1272 15-10.9-1.3 South African rand 7.54 6.44-28.0-14.6 6.45 6.34 6.47 0.3 2.0 8.53 8.01-13.9-6.1 7.85 8.05 7.95 1.2-1.2 Source: compiled by WTO based on data from De Nederlandse Bank (DNB)/European Central Bank (ECB)

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