World tourist arrivals: from 800 million to 900 million in two years In 2007, international tourist arrivals grew by an estimated 6% to reach a new record figure of nearly 900 million – an astonishing achievement given that the 800 million mark was only reached two years earlier. This represents nearly 52 million more arrivals than in 2006, well over the total count for either the Middle East or Africa. In fact, world tourism enjoyed its fourth consecutive year of growth in 2007 above the long-term forecast of 4.1% and, surprisingly, it even exceeded the 5.5% increases recorded in 2005 and 2006.
All the different regions registered increases above their long-term average, with the Middle East leading the regional growth ranking, with an estimated 13% rise to 46 million international tourist arrivals. The Middle East is emerging as a strong tourism destination with visitor numbers climbing much faster than for the world overall. In second place was Asia and the Pacific up by 10% to 185 million, followed by Africa, with +8% to 44 million. Africa confirmed its good momentum sustaining the growth of 2006, and has now averaged 7% growth a year since 2000. The Americas (+5%) did much better than last year, achieving 142 million arrivals, driven by the good results in North America as the USA doubled its growth rate. Europe, the world’s largest destination region, with a share of over 50% of all international tourist arrivals, grew by 4% to reach 480 million. (Continued on page 3)
Contents Short-term tourism data 2007 3 World 3 Forecasts for 2008 5 Trends & prospects 6 Outbound tourism: international tourism expenditure 7 Evaluation by UNWTO’s Panel of Tourism Experts 9 Regions 12
Europe 12 Asia and the Pacific 17 The Americas 21 Africa and the Middle East 26
In focus 29 UNWTO Affiliate Members 29 Transport 31 Hospitality 36
The economic environment 38
UNWTO Panel of Tourism Experts Experts evaluate 2007 with a high mark and continue optimist over 2008 The 280 or so experts from around the world who contributed to this issue of the UNWTO World Tourism Barometer have been especially upbeat about recent trends – as well they might have been – evaluating 2007’s performance at 143. This is the highest score since the boom year of 2004, when the annual confidence index reached 144, and reflects the continued healthy performance of global tourism. Moreover, their expectations for 2008 are still positive (132), implying a continuation of growth, albeit with a gradual slowdown compared to previous years. (Continued on page 11)
The UNWTO World Tourism Barometer is a publication of the World Tourism Organization (UNWTO). By monitoring short-term tourism trends on a regular basis, UNWTO aims to provide all those involved directly or indirectly in tourism with adequate up-to-date statistics and analysis in a timely fashion. The UNWTO World Tourism Barometer is published three times a year (in January, June and October). Each issue contains three regular sections: an overview of short-term tourism data from destination and generating countries and air transport; the results of the latest survey among the UNWTO Panel of Tourism Experts, providing an evaluation of and prospects for short-term tourism performance; and selected economic data relevant for tourism. The objective for future editions of the UNWTO World Tourism Barometer will be to broaden its scope and improve coverage gradually over time. The UNWTO World Tourism Barometer is prepared by UNWTO’s Market Trends, Competitiveness and Trade in Tourism Services Section, with the collaboration of consultant, Nancy Cockerell. The UNWTO Secretariat wishes to express its sincere gratitude to all those who have participated in the elaboration of the UNWTO World Tourism Barometer, in particular all institutions that supplied data, and to the members of the UNWTO Panel of Tourism Experts for their valuable contributions. For more information on the UNWTO World Tourism Barometer, including copies of previous issues, please refer to the Facts & Figures section on the UNWTO website at <www.unwto.org/facts/menu.html>. We welcome your comments and suggestions at <[email protected]>, tel +34 915678206 / fax +34 915678217.
Explanation of abbreviations and signs used * = provisional figure or data .. = figure or data not (yet) available | : change of series 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 with the same period of the previous year. The (sub)regional totals are approximations for the whole (sub)region based on trends for the countries with data available. Series International Tourist Arrivals TF: International tourist arrivals at frontiers (excluding same-day visitors); VF: International visitor arrivals at frontiers (tourists and same-day visitors); THS: International tourist arrivals at hotels and similar establishments; TCE: International tourist arrivals at collective tourism establishments; NHS: Nights of international tourists in hotels and similar establishments; NCE: Nights of international tourists in collective tourism establishments. Series International Tourism Receipts and Expenditure All percentages are derived from non-seasonally adjusted series in local currencies, unless otherwise indicated: $: US$ ; €: euro; sa: seasonally adjusted series.
Data collection for this issue was closed on 29 January. The next issue of the UNWTO World Tourism Barometer will be published at the end of June 2008.
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Short-term tourism data 2007
World (Continued from page 1) The additional 52 million arrivals estimated by UNWTO for 2007, over 2006’s level, was split 19 million for Europe, 17 million for Asia and the Pacific, 6 million for the Americas, 5 million for the Middle East and 3 million for Africa. As always, it is important to stress that these are preliminary estimates, with statistics for individual countries based, in some cases, on only 9-10 months of full year results, and in the case of regions such as Africa and the Middle East, based on data for only a limited number of countries. Countries with monthly data series available cover some 90% of worldwide arrivals. An assessment is made for missing data based on trends for the (sub)region. In addition, data reported by countries at this stage is generally provisional, and can still be revised. Experience, however, shows that the worldwide estimate will be accurate at this time of the year. So, although no major changes are expected to occur in terms of trends, individual numbers and growth rates may still vary. A month-by-month analysis of international tourist arrivals in 2007 shows that growth was remarkably steady through the year. 2007 tourism performance is all the more
impressive because of the many different factors potentially impacting negatively on demand – from the continued volatility of aviation fuel prices (resulting in fuel surcharges by airlines), exchange rate fluctuations (and notably the continued weakness of the US dollar), and the economic slowdown and credit crunch in the last few months of the year. Health and security concerns persisted, with the occurrence of isolated terrorist incidents, and isolated outbreaks of avian flu, foot and mouth disease and other health scares in different countries. There were also floods, hurricanes, landslides and forest fires.
International Tourist Arrivals, monthly evolution World (% change)
Once again, as already stated in the October issue of the UNWTO World Tourism Barometer, 2007 results confirm tourism’s resilience regarding external factors such as turbulence in financial markets, increasing interest rates, tighter credit conditions, rising fuel prices and security and health issues. This has been considerably buoyed up by the strong world economy. Since 2004 world economic output has experienced the longest period of sustained growth for more than two decades. Economic and tourism growth has been driven in large part by emerging market and developing countries, as seen from the 2007 data. While the more mature developed countries grew at the still respectable rate of 5.1%, the emerging market and developing countries grew at 7.7%. Access to last-minute inventory through online channels has continued to stimulate latent demand in more mature source markets, but also increasingly in less mature travel regions like Asia and the Pacific, where accessible pricing has opened up travel to an increasing number of people. The strong economic growth of the Asian economies, for example – China, India, Hong Kong (China) and Singapore – has resulted in greater disposable income which, in turn, has resulted in growing demand for foreign travel. (See the section on the Economic environment on page 38).
International Tourist Arrivals, monthly evolution World (million)
Receipts tend to follow arrivals growth Data for international tourism receipts is still sketchy as most countries have reported data for the first three quarters of the year only. Furthermore, data on exchange rates vis a vis the US dollar and inflation is necessary for a reliable analysis. So it would be premature to make detailed pronouncements. Full world and regional estimates will be analysed in the next issue of the UNWTO World Tourism Barometer, to be published in June 2008. However, the experience of past years suggests that the growth in receipts tends to track the growth in arrivals fairly closely. In 2006, the difference was less than one percentage point. Of the 50 destinations that top the ranking by international tourism receipts, 44 have data available for at least part of 2007. Of these, 23 countries (52%) have reported stronger growth than in 2006. Available information on international tourism receipts measured in local currencies in current prices (ie not taking inflation into account) for the top destinations in the world shows very varied performances. While the USA, the world leader in terms of receipts, recorded a 14% growth in the first 11 months of 2007, Spain increased its receipts by 3% in the first ten months. France and Italy, third and fourth in the ranking, have reported only minor increases so far. On the other hand, China (+23%) has shown the fastest growth of the top five and is likely to oust Italy from fourth position in the ranking. Detailed results for arrivals and receipts by country are included in the ‘Regions’ section (pages 12-28).
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Forecasts for 2008 Growth slowing to a lower pace For 2008, the increase in international tourist arrivals is projected to be around 3-4%, some percentage points lower than in 2007, but still close to the anticipated long-term growth rate of 4.1% a year through 2020. This forecast reflects a slowdown of growth after four consecutive years of strong growth, in line with the less favourable economic prospects that have started to emerge. Compared with previous year forecasts, this year’s involves a rather high level of uncertainty, as the current economic outlook is a lot less clear than in the past (see the chapter on the Economic environment for a more in-depth assessment). Except for the Americas, most regions are expected to sustain their current growth trend, but at a somewhat slower rate. Asia and the Pacific is forecast to record the highest growth in 2008, at +8-10%, followed by the Middle East at +6-10% and Africa at +6-8%. It is important to note that, as underlying data for the Middle East is the least consistent, the margin of error for the forecast is wider. Europe is expected to average +3-4%, while the Americas, at +1-3%, is set to see a more significant slowdown, a few percentage points down on 2007’s 5% increase. This will be due in particular to North America, which accounts for two thirds of all arrivals in the region. In the subregion much will depend on the development of the US economic situation and its impact on outbound travel to the neighbouring destinations of Mexico and Canada, as well as on the implementation of the Western Hemisphere Travel Initiative (WHTI). (For further details, see the Americas section on pages 21-25).
Forecast of growth in International Tourist Arrivals2007* Forecast 2008
These projections are based on an extrapolation of the monthly data series on tourist arrivals available for the five regions. The model analyses the underlying trends in the data and extends these to the short-term future. In order to account for the weakening economic situation, outcomes are adjusted slightly downwards. Of course, as with any model, the forecast growth rates assume that the current situation will not drastically change as a result of external factors, a case particularly important for 2008 as several uncertainties are casting a shadow on this year’s prospects.
They also include a margin of error depending on the stability of the underlying data series. In particular, in the smaller regions of the Middle East and Africa, a considerable margin of error should be allowed for, as the forecast is based on comparatively limited information.
International Tourist Arrivals, World% change over same period of the previous year
About these forecasts These forecasts are developed for UNWTO by the Fundación Premio Arce of the Universidad Politécnica de Madrid and are based on econometric modelling using the series of monthly data on international tourist arrivals available for the five regions. The aim of the model is to analyse the underlying trend in the data and extrapolate this to the short-term future. The model has been tested by comparing forecasts for previous years with actual results for those years. Of course, as with any model, the forecast growth rates assume that the current conditions will not suddenly change as a result of external factors. They also include a margin of error depending on the stability of the underlying data series. These forecasts need to be read with a certain level of caution, not only because of the above mentioned, but also because the underlying data is not perfect: – monthly data series are not available for all countries,
although the countries with monthly series included represent roughly 90% of worldwide arrivals. Coverage is in particular comparatively limited for the Middle East and Africa, and a considerable margin should be taken into account;
– monthly data is typically preliminary and many countries are expected to revise their statistics at a later date;
– the monthly series is often based on a proxy that is not the same as the indicator used for the yearly data, e.g. for France a monthly series is used on international nights in hotels and similar accommodation instead of tourist arrivals at frontiers, while for the USA the monthly series does not include arrivals from Mexico in the border areas, etc.
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Trends & prospects Prospects The general optimism expressed by the members of UNWTO’s Panel of Experts has been somewhat overshadowed in recent weeks, or even days, by the unexpected developments stemming from the global stock market crisis and its impact on the economic outlook. Among the uncertainties for 2008 that could have an impact on tourism demand, the economic situation and stock market volatility are clearly high up the list. The impact of increasing interest rates on people with excessive household debt is also of major concern. The same is true for exchange rate fluctuations. The continuing weakness of the US dollar – which has not yet had a major impact on demand for foreign travel by Americans – could augur badly for the coming 12 months. Nevertheless, there are a number of positive factors likely to influence tourism demand this year. First, China’s hosting of the summer Olympic Games in August has already received widespread media coverage, and this is expected to continue over the coming months, stimulating demand for travel to China and other parts of Asia. As far as Asian outbound markets are concerned, experts believe that the first two thirds of 2008 are likely to be even better than 2007, due to the Olympics, sustained economic growth, rising numbers of middle-class travellers, and an increase in supply. However, the last half, or third, of the year could be more difficult, particularly due to the economic situation in the USA, as this could have repercussions on Asia and the Pacific. If Europe stays out of recession, the favourable exchange rates – notably for the inhabitants of the eurozone – will favour foreign travel, especially to long-haul destinations. Moreover, the introduction of the Airbus A380 should expand supply and bring down the price of air travel. However, if oil prices remain high, there may well be a switch from long-haul travel to destinations closer to home among mature travel markets such as Europe. Destinations such as North Africa may start to look even more attractive than they were in 2007.
Climate change 2007 has been the year in which climate change has definitely entered the agenda and UNWTO has played an active role in formulating how the tourism industry can adapt to, and mitigate, the climate challenge.
Climate change is a universal challenge and the world community has agreed to respond to it, in parallel with its commitments to the Millennium Development Goals (MDGs). Tourism will play its part in the global response in solidarity with other sectors. The industry has a special responsibility and opportunity – in the world’s poorest and emerging countries tourism is one of the principle services’ exports with a strong comparative advantage. Tourism is also a proven weapon in the war on poverty. Responsible growth patterns must find ways to capitalise on this.
During 2007, UNWTO was actively involved in helping the tourism sector:
Assess the inter-relationship of climate change and tourism. Through a science-based report on the economic, operational and market impacts as well as the challenges and opportunities.
Consider meaningful response patterns. Based on multi-stakeholder evaluation and recommendations contained in the Davos Declaration Framework. The Declaration (augmented by ministerial decisions in London and Cartagena) sets out directions for change for the tourism sector and calls on stakeholders to establish a long-range low-carbon emission roadmap with immediate concrete action plans supporting global response, and coherent with the commitments to the Millennium Development Goals.
Participate in the global response framework. This includes a tourism input – alongside other economic sectors – to the recent UN Climate Summit in Bali, Indonesia, as well as within UN Secretary General Ban Ki-moon’s systemwide roadmap to support adaptation, mitigation, technology and finance.
In 2008, UNWTO’s focus will be on: Increasing awareness of the Davos Declaration
Framework, and Encouraging its implementation by all stakeholders.
As a first step, UNWTO’s General Assembly has made the theme of World Tourism Day 2008 Tourism Responding to the Challenge of Climate Change – and the organization and its members will undertake a year-long campaign around this theme.
See the Davos Declaration at: www.climate.unwto.org, and see also www.unep.org, www.wmo.ch and www.ipcc.ch.
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Outbound tourism International tourism expenditure Early indicators point to another year of good growth in 2007 Some 50 countries around the world each generate at least US$ 1.5 billion in international tourism spending annually. Available data from those countries reporting results for the first three quarters of 2007 points to another year of good growth in international tourism expenditure. In fact, current statistics suggest that the majority of source markets recorded stronger growth than in 2006. Of the 44 countries that have reported at least half-year trends for 2007, some two thirds (30) have done better than in 2006. Nevertheless, as indicated in the UNWTO World Tourism Barometer published in October 2007, the strongest growth in international tourism spending last year seems to have been recorded again by emerging markets. The leaders so far, in terms of percentage growth, are Brazil (+42%) and Ukraine (+32%), while five other markets have also shown increases of 20% or more – the Russian Federation (+22%), Hungary (+28%), Argentina (+27%), Egypt (+23%) and South Africa (+20%). A further eleven source countries also achieved double-digit rises in expenditure, and the total number is expected to grow by the time full-year data is filed by all countries. Growth appears to have been slower among the leaders of the expenditure ranking. Among the top 20, which accounted for a combined US$ 500 billion in spending in 2006 – some 70% of total international expenditure worldwide – the strongest performers in 2007, according to the latest available data, were: the Russian Federation (+22%), the Republic of Korea (+12%) and Canada (+11%). China can be expected to join this group as unofficial industry estimates also point to double-digit growth. It is of course difficult to determine at this stage whether there will be any change in the leaders’ ranking for 2007. Germany’s welcome healthy increase of 6% after 2006’s stagnation is likely to maintain the market in number one position, ahead of the United States (+6%), whose expenditure was also higher than in 2006. And, despite slower growth for the United Kingdom (+4%), France (+2%) and Japan (0%), none of these three risks being overtaken in the world ranking. All monthly and quarterly data on international tourism expenditure reported by the various source markets is at this stage preliminary and still subject to future revision. Experience suggests that updates generally tend to result in improved performances, so final data is most likely to be somewhat higher. While the absolute volumes of international tourism expenditure are measured in US dollars, the year-to-date
changes are expressed in local currencies at current prices. So the effect of exchange rate fluctuations is mitigated, but inflation is not (yet) taken into account. As year-on-year trends expressed in US dollars are greatly influenced by exchange rate fluctuations, care should be taken in analysing international tourism expenditure trends in US dollars, the common currency used for the annual rankings by UNWTO.
About receipts and expenditure data For destination countries, receipts from international tourism count as exports and cover all transactions related to the consumption by international visitors of, for example, accommodation, food and drink, fuel, domestic transport, entertainment, shopping, etc. They include transactions generated by same-day as well as overnight visitors. Receipts from same-day visitors can be substantial, especially in the case of neighbouring countries where a lot of shopping for goods and services is carried out by cross-border, same-day visitors. However, the values reported as international tourism receipts do not include receipts from international passenger transport contracted from companies outside the travellers’ countries of residence, which are reported in a separate category. With financial data measured in different currencies it is fairly complicated to determine accurately variations in relative terms, as receipts have to be expressed in a common currency like the US dollar or the euro and are generally also reported at current prices, thus not taking account of changes in exchange rates and inflation. Over 2005 and 2006, the US dollar and the euro maintained a fairly steady exchange rate, although both currencies did fluctuate against a range of other currencies. On the contrary, 2007 has been characterised by a weakening US dollar. Based on the yearly average, the US dollar lost 9% against the euro, from 0.80 euro in 2006 to 0.73 euro in 2007 (or from 1 euro to US$ 1.26 to 1.37) (see page 42). In order to account for exchange rate fluctuations and inflation, international tourism receipts in US dollar values were computed back to the local currencies of each destination, weighted by the share in the total, and deflated by the corresponding rate of inflation. Although the data becomes more comparable as a result, care should nevertheless be taken in interpreting the trends as statistics, in most cases, are still provisional and subject to revision. For the totals, an assessment is made by UNWTO for countries that have not yet reported results, based on the previous year’s value and the trend for the (sub)region. Unlike arrivals, where revisions generally more or less balance out, receipts data tends to be revised upwards.
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International Tourism Expenditure
US$ Local currencies, current prices (% on previous year)
1995 2000 2005 2006 Series 05/04 06/05 2007* 2006
(billion) YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
(Continued from page 1) The 280 or so specialists from some 100 countries and territories, who constitute the UNWTO Panel of Experts, have corroborated the positive results registered in international tourism in 2007. Their evaluation for last year, at 143, is seven points above the one they gave for 2006 a year ago (136). As for 2008, and despite increasing concerns about the economic situation in key tourism source markets worldwide – not to mention the impact of other factors such as the sustained high price of oil and exchange rate fluctuations – confidence in the prospects for the coming 12 months is still high, with the Panel rating 2008 at 132, the lower level since 2003, but still well above a ‘neutral’ 100. Clearly, the worldwide average score given by the Panel masks some significant variations from one region and sector to another, but the respective ratings for both the year just passed and the one now in progress remain on the positive side across the industry, regardless of geographical location. Public and private sector representatives differ in their analysis of last year’s tourism’s performance (with scores of 139 and 146, respectively), with the private sector being surprisingly, and for the first time, more buoyant than the public sector. The opposite is true for their assessment of Prospects for 2008 (136 and 130), as in this case representatives of the private sector are more pessimistic. By region, the highest scores for the Evaluation of 2007 were given by experts in the Middle East (168) and Africa (157). Experts in Asia and the Pacific rated the year just passed at 140 – virtually the same as their Evaluation of 2006 in January 2007 – while experts in Europe gave a rating of 142 to 2007’s tourism performance – above their Evaluation a year ago for 2006 (138) and considerably higher than their expected outlook then for 2007 (131). Global Operators, meanwhile, proved the least positive of all the experts who contributed their comments to this issue of the UNWTO World Tourism Barometer, with a score of 128 to 2007’s performance – 22 points down on the score they gave to 2006 12 months ago. By activity, scores for 2007 are highest among General Industry Bodies (155), Transport Companies (150) and Tour Operators & Travel Agencies (146). The lowest scores among respondents came from representatives of the Accommodation & Catering sector (131). For 2008, Prospects continue to be rather positive (132). In terms of regions, the most optimistic Prospects have come from the Middle East (150), Africa (143) and surprisingly the Americas (139). Experts in Europe are the least bullish about the coming year (127) and experts in Asia and the Pacific are expecting a slower growth in 2008 (133) compared with the year just passed.
By activity, the most optimistic forecasts by far have come from representatives of Tour Operators and Travel Agencies (141), Destinations (137) and General Industry Bodies (136). Apart from the Accommodation & Catering sector (121) and Consultancy & Research (126), all other sectors rated 2008’s Prospects above 130, but all are less bullish about the industry’s likely tourism performance in 2008 than they were at the start of last year for 2007.
The UNWTO Tourism Confidence Index The UNWTO Tourism Confidence Index is based on the results of an email survey conducted by the UNWTO Secretariat among selected representatives of public and private sector organizations participating in the UNWTO Panel of Tourism Experts. The survey has been repeated every four months since May 2003 in order to keep track of actual performance, as well as perceived short-term prospects, of the tourism sector. This allows performance and prospects to be compared over time, as well as providing a comparison of the actual performance of the past four months with prospects forecast for the same period four months earlier. Results are also broken down by region and by sector of activity. These breakdowns should, however, be interpreted with caution as they may in some cases be based only on a relatively small number of responses. The UNWTO Secretariat’s aim is to continuously expand and improve the Panel sample. Experts interested in participating in the survey, in particular from countries still not included in the listing below, are kindly invited to send an email to <[email protected]>. How to read this data For the UNWTO Tourism Confidence Index members of the UNWTO Panel of Tourism Experts are asked once every four months by email to answer the following two simple questions: - What is your assessment of tourism performance in your destination or business for the four months just ended (or about to end) as against what you would reasonably expect for this time of year? - What are the tourism prospects of your destination or business in the coming four months compared with what you would reasonably expect for this time of year? Participants should select one of the following five options: much worse [0]; worse [50], equal [100]; better [150], much better [200]. Results are averaged and broken down by region and by activity. A value above 100 means that the number of participants who evaluate the situation as '“better” or “much better”, outnumber the participants who reply “worse” or “much worse”. In addition, participants are also invited to include a qualitative assessment in their own words. The analysis contained in the UNWTO World Tourism Barometer is in large part based on their comments.
For this edition responses have been received from experts based in Albania, Algeria, Anguilla, Antigua and Barbuda, Argentina, Australia, Austria, Bahamas, Bangladesh, Belgium, Belize, Bermuda, Bhutan, Bolivia, Brazil, Bulgaria, Cambodia, Cameroon, Canada, Chile, China, Colombia, Costa Rica, Côte d'Ivoire, Croatia, Cuba, Curaçao, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Ethiopia, Finland, France, Germany, Greece, Guatemala, Guinea, Hong Kong (China), Hungary, India, Iran (Islamic Republic of), Ireland, Israel, Italy, Jamaica, Japan, Jordan, Kenya, Latvia, Lebanon, Liechtenstein, Lithuania, Malaysia, Malta, Marshall Islands, Mauritius, Mexico, Monaco, Morocco, Netherlands, New Zealand, Nicaragua, Nigeria, Norway, Panama, Peru, Philippines, Portugal, Puerto Rico, Reunion, Romania, Russian Federation, Rwanda, Serbia, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Tanzania, Thailand, Togo, Turkey, Uganda, United Arab Emirates, United Kingdom, United States, United States Virgin Islands, Uruguay, Venezuela and Vietnam.
Four-month period In addition to giving an Evaluation of world tourism performance over the 12 months of 2007, as well as rating Prospects for 2008, the members of the UNWTO Panel of Tourism Experts were asked, as usual, to evaluate the performance of the past four months, September to December 2007, and to assess the Prospects for the coming four months, January to April 2008. In general, it can be deduced that the experts believe the tourism industry performed slightly less well during the
last four months of 2007 than over the year as a whole, since the overall rating was 13 points lower (129). Again, the Panel’s overall rating for 2008’s Prospects for the months of January through April 2008 is at 124 – eight points below their expectations for the full year ahead, as a result of the uncertainties prevalent at the beginning of this year. By region, the highest scores for the period September to December 2007 were given by experts in Africa (145), the Middle East (141) and the Americas (132), while experts in Europe (123) gave lower ratings. Europe was the only region for which the score was lower than for the previous four-month period. Prospects for the coming four months (January-April 2008) vary quite sharply from one region to another. Experts are most optimistic in the Middle East (155) and Africa (136) and the least optimistic in Europe (117), while the Americas and Asia and the Pacific received scores of 128 each. By activity, the average Evaluation for the period September to December 2007 ranges from a maximum of 136 from representatives of the Transport sector to a minimum of 121 from Accommodation & Catering. As for the assessment of tourism’s Prospects for the current January to April 2008 period, Transport representatives (132) are again the most bullish, while the least optimistic scores have come from the Accommodation & Catering sector (110).
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Regions
Europe Results In line with the global trend, Europe fared much better than expected in 2007, with the current estimate for the full year at over 4% as against an initial 3% forecast. Given that Europe is the world’s most mature destination region, accounting for over 50% of all international tourist arrivals, this increase is impressive as it would mean an additional 19 million arrivals. The anticipated growth is also reflected in the positive score of 142 given by UNWTO’s Panel of Experts for 2007’s performance.
The region’s healthy growth in 2007 is due in a significant part to Southern and Mediterranean Europe’s strong performance – at +7%. Increases for all other subregions were modest by comparison, as well as being well down on their respective growth levels in 2006. Western Europe managed +3%, Central and Eastern Europe and Northern Europe +2% each, the latter sharply down on last year’s 8% increase. Admittedly, there were only a few mega-events last year to draw in the crowds – the most important being the Rugby World Cup in France and the America’s Cup in Valencia, Spain. And there were a number of concerns as voiced by UNWTO’s Panel of Experts at the beginning of 2007 – from increases in interest rates, the strength of the euro and sterling (or, more to the point, the weakness of the US dollar), uncertainties over consumer spending, the impact of the higher VAT rate in Germany, and even issues such as climate change and global warming. Yet, despite these preoccupations, there is little evidence that consumers in Europe reduced their travel or spending on travel abroad. On the contrary, the continued expansion of low-cost airline (LCC) services boosted intra-European short-break travel and, while some long-haul markets were weak – notably Japan and the USA to the UK – preliminary
estimates suggest that emerging long-haul markets to Europe were generally buoyant.
The monthly or quarterly statistics included in this issue have been compiled by the UNWTO Secretariat based on preliminary data as disseminated by the institutions (e.g. National Tourism Authorities, Statistics Offices, Central Banks) of the various countries and territories through websites, news releases, and bulletins, or provided through direct contacts with officials or through international organisations such as the Caribbean Tourism Organization (CTO), the European Travel Commission (ETC), Eurostat, the Pacific Asia Travel Association (PATA) or the South Pacific Tourism Organization (SPTO). Information in this issue reflects data available at the time of preparing the UNWTO World Tourism Barometer. Whenever necessary, updated data will be included over time as it becomes available and without further notice. In the tables on International Tourist Arrivals for the various UNWTO regions, series are chosen that can serve as an indicator of trends in tourism development to selected destinations. The monthly series represented do not coincide in all cases with the annual series usually reported for the various countries (e.g. visitor arrivals or nights instead of tourist arrivals) and sometimes only relate to a part of the total tourism flow (e.g. air traffic, specific entry points). Please refer to the notes on page 2 for further explanations. The (sub)regional totals are approximations for the whole (sub)region prepared by UNWTO based on trends in the countries with data available. The data on International Tourism Receipts offers additional information on the development of inbound tourism, while the data on International Tourism Expenditure serves as an indicator of trends in outbound tourism. Both series correspond to the respective Travel Credit and Travel Debit items in the Services section of the Balance of Payments. And both cover all transactions related to the consumption by international visitors of, for instance, accommodation, food and drinks, fuel, transport in the country of destination, entertainment, shopping, etc. Data includes transactions generated by tourists (overnight/same-day visitors) as well as by same-day visitors (excursionists, including cruise passengers). It does not cover expenditure on international transport contracted outside the traveller’s country of residence, which is included in the Balance of Payments under the separate item ‘Transportation, passenger services’. The institutions responsible for the Balance of Payments generally estimate travel expenditure from a visitor survey or outbound survey and/or bank records of international transactions (exchange of foreign currencies in and outside the country, credit card payments, transactions between tourism businesses, etc). So as not to be influenced by exchange rate fluctuations, the percentages included in the tables are based on values in local currencies, except where otherwise indicated.
Countries that are not included in this overview, but which have monthly data at their disposal, are kindly requested to contact the UNWTO Secretariat at [email protected].
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Northern Europe’s disappointing performance can largely be attributed to the stagnation in demand for the UK (+0.7%), the subregion’s leading destination. Demand was affected by a number of different factors: the weakness
of the US dollar, the UK’s growing reputation in Europe as an expensive destination, two spells of severe flooding, attempted terrorist attacks in London and Glasgow, and outbreaks of foot and mouth disease. In the last four
International Tourist Arrivals by Country of Destination
Full year Change Monthly or quarterly data series(% change over same period of the previous year)
Series 2006 2007* 05/04 06/05 07*/06 Series 2007* 2006
(1000) (%) YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
(1) Including holiday dwellings(2) Hotels only(3) City hotels, resort hotels, holiday villages and youth hostels(4) From 2007 on, arrivals from Montenegro / Serbia are included as foreign
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Volume 6 • No. 1 • January 2008
months, demand was reportedly further depressed by the credit crunch and fragile consumer confidence in the USA. Most key long-haul markets registered a decline in the first 11 months, with the exception of China (up more than 30%), and the best growth from Europe came from Italy (+12%). Arrivals from the USA were down 7%. Ireland (+5% through November) suffered from the strong euro in long-haul markets, but arrivals from continental Europe continued to rise, boosted by increased airline capacity. Among the Nordic countries, Iceland (+11%) achieved the highest growth, followed by Finland (+7% in terms of overnight stays over 11 months). Demand from Russia continues to drive Finland’s growth. Thanks to marketing and promotional efforts, during the first 11 months of 2007 Russian tourists spent 28% more nights in Finland than in 2006, and Russian developers are investing highly in eastern Finland, in terms of holiday homes and resorts. Experts from Sweden (+5%), Norway (+2%) and Denmark (0%) all cited the poor summer weather in Scandinavia in 2007, which resulted in declines from key markets. Nevertheless, economic conditions were good, stimulating intra-regional travel. The best performers in Western Europe last year were Switzerland (+7%) and Liechtenstein (+6%), with Swiss experts citing growth from emerging markets, such as China, India and Russia, plus short breaks and buoyant business travel demand as key factors. But a steady growth in demand for France (+3% in arrivals at hotels and similar establishments through October) and Germany (+4%), the subregion’s leading destinations in terms of arrivals volume, also contributed significantly to the overall trend. In France, the opening of the TGV Est route (to eastern France, Luxembourg and Germany) and the shorter journey time on the Eurostar route from London boosted rail tourism. And the Rugby World Cup was even better for hotels than expected, especially in Paris. Germany reports that the goodwill effect from its hosting of the FIFA World Cup in 2006 was still in evidence last year, at least in terms of European demand. But the rest of the world was weaker because of the FIFA World Cup base effect and the strong euro. Among the other Western European destinations, Austria (+2%) picked up in the last two months thanks to good snow conditions. Belgium showed only a modest 1% increase (for the first nine months), while arrivals in the Netherlands rose by 3% through October. The trend is attributed to increased LCC services, coupled with sustained economic growth in most European markets. However, there were declines from the USA and Japan. Central and Eastern Europe’s less than 2% increase masks some wide variations from one destination to another. Of the three Baltic States, Latvia (+12%) and Lithuania (+11%) both recorded double-digit increases, sustaining the healthy trends of the last couple of years. However, Estonia (-4%) had a disappointing year, attributed most importantly to price increases, a lack of new stimuli for growth (e.g. new attractions and new
transport connections), and insufficient direct flights from the main European source markets. Arrivals from Finland have now fallen for three consecutive years. There were mixed results for countries in Central Europe. While Poland was up 6% (through September), the Czech Republic and Slovakia achieved only a 2% increase (also to September) and Hungary suffered a third year of negative growth (-8% in nine months), which is blamed on the difficult competitive situation – in particular, high prices, high VAT, and the strong local currency. But niche products (e.g. river cruises) have been doing well. Growth for the Russian Federation (+1% to Septem-ber) and Bulgaria (+2% over the same period) was below target, although Bulgaria benefited from its accession to the European Union, improvements in infrastructure and significant investment in resort areas, airports and holiday villages. EU membership has clearly contributed to boost tourism demand for Romania over the past 12 months (+13% to November), but another positive factor was Sibiu’s status as European Cultural Capital in 2007, which helped raise awareness of the country’s cultural attractions. The region’s star performer in 2007, Southern and Mediterranean Europe, owes a lot of its growth to the popularity of the Mediterranean for cruises and the trend to pre- and post-cruise stays in, or close to, the most popular ports. The subregion included a number of strong players, including the newer Balkan states. Serbia (+49% to November), Montenegro (+165% to October), Bosnia and Herzegovina (+19% over 11 months) and the Former Yugoslav Republic of Macedonia (+13% for the same period) all cited improved quality and expanded capacity as factors generating growth. Slovenia (+8%) attributes its healthy result to increased advertising and promotions in key markets. And the destination’s image is expected to be enhanced even more by Slovenia’s presidency of the EU in the first half of 2008. Growth to Croatia – at 7%, but on a much larger base than for its neighbours – was driven by increased LCC access and a booming second-home market. Among Europe’s leading sun and beach destinations, Cyprus (+0.6%) was the only one recording weak growth, blamed at least in part on drastic increases in landing and other fees imposed at Larnaca and Paphos airports twice during the year. Malta (+11%), on the other hand, benefited strongly from the introduction of LCC services in late 2006, which boosted individual (FIT) travel and especially short breaks. Turkey (+18%) staged a solid recovery in 2007 following a 7% decline in 2006. Istanbul has continued to grow rapidly as a city destination, both for leisure and business tourism, while Antalya, the main resort region on the south coast, is increasingly price-competitive for European markets because of the favourable exchange rates. But the destination has also attracted more and more tourists from Russia, the Ukraine and other CIS countries. Greece (+10% arrivals in all accommodation units for ten months) seems to have continued to benefit from the Olympics effect, especially from long-haul markets. The forest fires in August received much media attention, but
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Volume 6 • No. 1 • January 2008
they appear to have had little effect on tourism demand, at least as far as the preliminary arrival figures indicate. Portugal’s 10% increase through the month of September, which represents a consolidation of last year’s 6% growth, was driven in a large part by increased LCC traffic. Finally, the subregion’s two leading tourism destinations, Italy (+7% to October) and Spain (+2%) also made significant contributions to the overall growth in visitors to the
Mediterranean. The lower than average results in Spain were due to falls from Germany, Belgium and the Netherlands, stagnation from the UK and slower growth from France. Surprisingly, the much smaller US market was 22% up, benefiting among other destinations in Spain the region of the capital Madrid, where overall arrivals grew by 12%.
International Tourism ReceiptsUS$ Local currencies, current prices (% on previous year)
2000 2006 2007* Series 05/04 06/05 2006 2007*(million) Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec
The continued expansion of LCCs and spectacular price flexibility among traditional airlines, together with the trend towards self-tailored travel arrangements and dynamic packaging, boosted demand from short-haul markets, while Italy was cited by experts in several different long-haul markets – notably the USA and Japan – as the most popular destination in Europe last year. Prospects As already indicated, the prospects for Europe’s tourism in 2008 remain overall positive, according to UNWTO’s Panel of Experts, although the recent stock market concerns, together with the credit crunch and exchange rate uncertainties, are expected to result in slower growth in the coming year. The increased attention being paid to climate change within the EU and within different countries could well have an impact as well, especially as some – like the Netherlands – plan to introduce air taxes.
Factors shaping tourism in Europe in 2008 include the hosting of several events such as the Euro 2008 Football Cup by Switzerland and Austria, Liverpool’s draw as Cultural Capital of Europe, and the Zaragoza International Expo in Spain. The open skies agreement between the EU and the USA, set to become effective late March, is also expected to impact on demand for Europe, but more in the mid term. In the shorter term, the enlargement of the Schengen area to nine new countries – and Switzerland will follow later this year becoming the 25th Schengen state – should facilitate intra-European travel, especially for those from outside the EU who want to travel across different countries. However, not all Schengen members are so optimistic. Some are concerned that non-EU tourists will be discouraged from travelling to some countries as visas may be more expensive and more difficult to obtain. The first four months of the year are the off-peak season in Europe, except for the Easter break and for skiing, which has got off to a very good start thanks to better snow conditions than seen for some years. This augurs well for the winter sports season in early 2008. However, the fact that Easter falls early this year will make the winter season a lot shorter.
Other positive factors cited by experts for Europe’s tourism include increased passport ownership among US citizens as a result of the Western Hemisphere Travel Initiative (WHTI), and the gradual introduction of the Airbus A380, which will enable higher passenger volumes per landing / take-off at key airports on selected routes over the course of 2008. The UK is also counting on the opening of London Heathrow’s Terminal 5 at the end of March to ease traffic flows, although there is evidence that more travellers are trying to bypass London airports because of delays and hassles due to stepped up security and immigration controls. On the other hand, a further weakening of the US dollar and a slowdown of the global and European economies on the back of the financial market turmoil are factors to consider. Traffic might also be affected by continuing high oil prices resulting in further fuel surcharges being imposed by airlines. British Airways recently upped its fuel surcharge, for example, which now stands at £116 per return long-haul flight to the UK. The risk of terrorism is still significant and avian flu continues to be a concern. The UK is particularly concerned about possible further outbreaks of foot and mouth disease and / or blue tongue disease disrupting visits to rural areas, although the impact of these disease outbreaks was very limited in 2007. Of far greater concern is the introduction of biometric visas in early 2008 for all nationals who require a visa in order to visit the UK, with the potential for further increases in visa fees. On the positive side, London will start gearing up to promote the 2012 Olympics once Beijing 2008 is over. According to reports from different countries, demand is growing faster than average for high-quality products and individual tourism. The mass-marketed products of the leading budget and mid-market tour operators seem to be growing much more slowly than in former years, losing market share to smaller enterprises, specialists and consumers self-tailoring their own holidays. This is likely to continue having a huge impact on distribution channels.
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Volume 6 • No. 1 • January 2008
Asia and the Pacific Results Asia and the Pacific was the world’s second best perform-ing region in 2007, thanks to a growth in arrivals of 10%. And it included the world’s top two best performing subregions – South-East Asia (+12%) and North-East Asia (+10%) – with South Asia (+8%) also among the leaders in terms of annual growth. In fact, only one subregion, Oceania (+1%), was well under the regional average. This healthy result is all the more remarkable given that it reflects sustained growth achieved by the region over the past few years. 2004 marked a record in terms of percentage growth (+27%), but it was followed by further strong increases of 8% in both 2005 and 2006 – even after the December 2004 tsunami – and now, an even more impressive +10% in 2007.
Asia and the Pacific: Inbound TourismInternational Tourist Arrivals (million)
In North-East Asia, Macao (China) lead the field for the second year (+21%), while Taiwan (province of China) and the Republic of Korea (+5% each), stayed far from the subregional average. China continues to reinforce its position as one of the world’s tourism leaders, with a 10% increase. Among its top 16 generating countries, no fewer than 11 recorded double-digit growth, with the Korean and Russian markets up around 20%. It should be noted that, according to the China National Tourism Administration, outbound trip volume rose by an even higher 18%, primarily benefiting Asia and the Pacific. Japan was one of the beneficiaries of China’s out-bound travel growth, recording a 14% increase in arrivals overall through November, led by a spurt in demand from other Asian countries. Tourism to Japan was also boosted in 2007 by the weakness of the yen, particularly in comparison with the soaring Korean won, euro and British pound. As might be expected, this has had a dampening effect on Japanese outbound travel, down 2% in trip volume (from January through November) and -0.4% in international travel expenditure. Hong Kong (China) had a good year (+8%), boosted primarily by a 24% increase in visitors from the Chinese mainland, to 1.3 million. Of these, 52% travelled under the
Individual Visit Scheme, a year-on-year rise of 39%. As already indicated, South-East Asia was the region’s and the world’s star performer last year, led by Lao P.D.R. (+37% for the first ten months) and Malaysia (+20% through October also). Apart from its staging of Visit Malaysia Year (VMY), Malaysia benefited from an increase in airlines operating to the country, particularly low-cost carriers (LCCs). VMY was accompanied by aggressive promotional campaigns, and the country has seen an increase in demand from new niche markets, such as health and wellness and educational tourism. Lao P.D.R. was not the only country in Indochina to show strong growth in 2007. Cambodia (+19% to November) and Vietnam (+16%) are also very much in vogue and recorded increases well above average. The major challenge for these destinations is, and will continue to be, to balance growth in tourist arrivals with higher yield tourism. UNWTO’s Panel of Experts says that it is essential for countries to focus on length of stay and per diem expenditure and attempt to nurture and grow these numbers. This may require a rethink of some of the major source markets, e.g. China, which is known for high-volume, but sometimes low-yield tourism. Indonesia (+15% at its 13 main entrance points through November) expects to close the year with a record number of visitors, boosted by a resurgence of tourism to Bali. The Philippines’ 9% growth, although impressive, is slightly lower than targeted for the year, attributed largely to supply constraints, particularly in terms of international airline seat capacity. Key markets driving the growth were the Republic of Korea and China, while the Japanese market has fallen to about 4% per year. Demand from Russia, meanwhile – mostly out of Vladivostok – has been growing extremely rapidly, albeit from a small base. So far, the solution to the air policy constraints has been to take advantage of loopholes in the form of charter flights. Tourism to Thailand (+4% through October) showed much slower growth than in 2006 (+20%), a year of recovery from the Tsunami impact. There were a number of positive developments – such as an increase in low-cost and legacy airline services to / from the country, the continued recovery of the tsunami-afflicted areas, including Phuket, Krabi and Phang Nga, and new hotel capacity coming on line. But the political situation continued to be of concern, even after the new constitution draft was given content by voters in August and general elections were scheduled for late December. And the strength of the Thai baht has made the destination more expensive. Singapore (+5% for the first 11 months) had another good tourism year, setting several records as it welcomed its ten millionth visitor in December. The sustained growth has encouraged an increasing number of investors to build hotels, new attractions and new tourism infrastructure because of their confidence in positive returns. Apart from Sri Lanka (-12%) and Pakistan (-7%), all the countries of South Asia that have filed data with UNWTO recorded double-digit increases in arrivals in
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Volume 6 • No. 1 • January 2008
2007, contributing to a 8% growth for the subregion overall. The decline in demand for tourism to Pakistan is understandable, and demand is likely to remain unstable in the short term given recent political events. The picture for Sri Lanka, meanwhile, is very mixed. The drop in arrivals was the sharpest in May last year, at -40%, after the attack on Bandaranaike International Airport and the subsequent curfew imposed on night flights. Demand did not really pick up until November, but the last two months of the
year showed a robust arrivals gains of 20% and 56%. December’s growth was due to the cricket test matches in Galle, which attracted some 10,000 cricket fans. In addition, the Middle East market recorded a 29% increase from January through November, and other markets showed healthy turnarounds. India (+13%) and the Maldives (+12%) sustained good growth in international arrivals in 2007, with the Maldives now full recovered from the impact of the
International Tourist Arrivals by Country of Destination
Full year Change Monthly or quarterly data series(% change over same period of the previous year)
Series 2006 2007* 05/04 06/05 07*/06 Series 2007* 2006
(1000) (%) YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
December 2004 tsunami. Other good news for South Asia is Nepal’s 27% increase, making it the best performing destination in the subregion in 2007. The surge in arrivals, which comes after the signing of the peace agreement to end the ten-year Maoist insurgency and political turmoil, has driven average occupancy in five-star hotels in Nepal to 82% – up from 70% in 2006. No data is available so far for Bangladesh, although the industry is estimating an increase of 27%. However, the steady growth in arrivals seen in the first eight months did not continue to the end of the year. After the first floods, the second stunned the whole nation, and then a further calamity – the Sidr-a cyclone – hit the country in mid November, devastating most of the southern districts of Bangladesh. Almost 40% of natural vegetation and some wildlife of the Sundarbans were destroyed. Transport and communication infrastructure also sustained considerable damage and destruction. There were mixed results as well for Oceania (+1%) in 2007. Australia (+2%) did much better than in 2006, despite increases in travel costs associated with a stronger
local currency, higher fuel prices and high load factors on inbound air routes. One reason for this was probably the political unrest in competitor inbound destinations. Growth for New Zealand (+2% over 11 months) has come primarily from Australia where an intensive marketing campaign was conducted, compensating for the unfavourable exchange rate. Demand from Japan and the Republic of Korea was down, but other markets remained fairly stable. Some believe that arrivals would have been higher if New Zealanders had not taken a large share of the seats on flights out of the country en route to the Rugby World Cup in France in October-November. Of the many island states that have reported 2007 trends to UNWTO, the most impressive performance has come from the Marshall Islands (+37% to September). Growth is attributed to several factors: the expansion of marketing efforts in Taiwan (province of China), the republic’s membership of the South Pacific Tourism Organization (SPTO), additional charter flights from Japan Airlines, and completion of the new RMI International Conference Center.
International Tourism Receipts
US$ Local currencies, current prices (% on previous year)
2000 2006 2007* Series 05/04 06/05 2006 2007*(million) Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec
Prospects The continuing good economic situation in the region is one of the major factors impacting positively on 2008 prospects for Asia and the Pacific. Interestingly, UNWTO’s Panel of Experts from the region has given a two-point better rating for 2008 Prospects (133) than the score they gave for last year 12 months ago to 2007 Prospects (131). One of the main contributing factors to this optimism is China’s hosting of the summer Olympic Games in Beijing from 8-24 August. Hong Kong (China) will also benefit from the Olympics as some equestrian events are scheduled for the Chinese Special Administrative Region. But, in addition, the Hong Kong Tourism Board is stepping up its investment in promotions, in part because of aggressive competition from Macao (China).
UNWTO Panel of Tourism Experts Asia and the Pacific
Japan is expecting a strong increase in foreign arrivals – to around 9 million – thanks mainly to the weak yen and growing leisure demand from Asian markets. And 2008 marks the 25th anniversary of Disneyland Tokyo. Japan has also taken over from Germany as President of the Group of Eight major industrial nations (G8) and will host a series of meetings culminating in the G8 leaders’ summit from 7-9 July on the northern island of Hokkaido. This should generate widespread publicity for the country, raising awareness of Japan’s attraction. Malaysia, Indonesia and Thailand plan to boost tourism between the three countries under the Indonesia Malaysia Thailand Growth Triangle (IMT-GT). The five-year plan involves a number of tourism campaigns and special events, such as the IMT-GT Travel Fair to be held from 11-13 January in Songkhla, Thailand. Singapore has embarked on a major campaign to spruce up its tourism appeal. In addition to its two new casino resorts, expected to open by 2010, it aims to become an arts and entertainment centre and it will host its first Formula One Grand Prix late this year. Some 1,700 new hotel rooms are coming on line in 2008 – a welcome development, as the city state’s hotels are currently operating at full capacity – and the Singapore Flyer, a giant observation wheel scheduled to open during the first quarter, is also expected to become a major attraction
Hanoi will also have five more deluxe hotels by the end of this year totalling 2,200 more rooms, and five more are being built in Ho Chi Minh City. These will go some way to easing capacity, but if Vietnam is to reach its goal of 5 million foreign arrivals in 2008, it could do with 15,000-20,000 additional rooms to cater to the increase. The ongoing peace process and greater political stability should help Nepal sustain its 2007 growth in tourism. Airline connections have also improved, with several new international airlines operating to Nepal. Also in South Asia, Bhutan’s centenary celebrations of monarchy and the coronation of the Fifth King of Bhutan this year are generating a lot of interest from potential foreign tourists. However, the situation in Sri Lanka looks rather less promising, at least for the first few months of 2008. A number of key source countries have recently updated their travel advisories following back-to-back bomb blasts and other sporadic violence-related incidents in many parts of the country. In India, the shortage of rooms in major metro cities is adversely affecting the flow of tourists, as well as to other destinations. Experts believe these accommodation constraints will have serious implications for the forthcoming 2010 Commonwealth Games. It is estimated that some 40,000-50,000 rooms are required in the budget category alone for tourists visiting Delhi and the surrounding areas during the games. Finally, the tourism industry in Oceania is relatively bullish about tourism prospects for 2008, although opinions are mixed – particularly among South Pacific islanders. But Australia and New Zealand are also counting on Airbus A380 services to stimulate demand from abroad through lower fares.
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Volume 6 • No. 1 • January 2008
The Americas Results Central and South America led the Americas in terms of international arrivals growth in 2007, with +11% and +8% respectively – at least, as far as preliminary estimates suggest. But the subregion recording the most impressive performance – in comparison with anticipated trends – was North America, up an estimated 5%, as against only +1% in 2006. The Caribbean, on the other hand, was the only subregion in the world to record a decline (-1%), down from +3% the previous year. The four subregions combined generated a total of some 142 million arrivals – up 5%, close to the average growth worldwide.
The fact that the evaluation of 2007’s performance (140) by UNWTO’s Panel of Experts was 16 points above their evaluation score for 2006 (124) leaves little doubt that the Americas is more positive about tourism’s recent performance than it was a year ago. And the bullish outlook for the coming year is reflected in their rating of 139 for 2008’s prospects. Nevertheless, the experts in the region voiced a number of concerns and reservations about the short to medium term – notably related to the economic situation in the USA, including the sub-prime mortgage crisis and unfavourable interest rates – and it is clear that the general optimism is not shared equally by the industry in all subregions. North America’s sharply improved results in 2007 are in most part due to the long overdue recovery of demand for the USA (+10% for the first ten months). Growth was reportedly strong (+9% to +12%) from all world regions except Asia (+4%), which was dragged down by Japan, and final figures for 2007 are expected to have set new records for both arrivals and receipts. Among the top 20 overseas markets, the fastest growth has been from India, China, France, Venezuela, Brazil, Spain, Ireland, Italy and Sweden (all up over 10%). The growth in arrivals is attributed not just to the low US dollar, but also to a decline in visa wait times, as well as to clarification of the rules (leading to confusion in 2006, especially in France and Italy) about what documents were needed to enter the
USA. Arrivals from Canada and Mexico have also performed very well. Arrivals from Mexico to the interior grew by a stunning 17%. However, results for travel to destinations within the 40 kilometre (25 mile) US border zone still have to be factored in later. In the case of Canada (+9%), results will not be much of a surprise as the Canadian dollar is now worth more than the US greenback. In contrast to the USA’s results, Mexico (+0.5% through November) and Canada (-1% over the same period) were much weaker last year. As far as Canada was concerned, the weak trend is blamed on the slowdown in the US economy, motor vehicle and aviation fuel prices (same-day automobile traffic from the USA was 18% down), a shortage of air capacity on some routes (especially from Asia) and, most importantly, the continued appreciation of the Canadian dollar. Nevertheless, the need to price Canadian tourism products in US dollars, because of the importance of the US market, means that Canadian prices have remained competitive in euros and sterling. Although some long-haul markets have bucked the trend and shown good growth (traffic from Europe was up by 4%), arrivals from Japan have continued to slip (-15%). After a difficult 2006 as a result of Hurricane Wilma in 2005, which had a significant impact on tourism infrastructure in the affected areas, Mexico (+0.5%) showed a slight improvement in 2007. Tourist arrivals to the interior grew by 3.4% through November, but traffic in the border area was down by 3.5%, pushing the overall results down. Cruise passengers on the other hand, increased by 8%, contributing to Mexico’s 7% growth in receipts. By now the areas affected by the 2005 hurricane are fully recovered and capacity has even increased in some areas such as Cancun, which reports a significant volume of extra rooms. Cancun also benefited from increased promotions of golf tourism, weddings, groups and convention business. Meanwhile, the industry in Puerto Vallarta is also very upbeat about tourism due to improved infrastructure and diversified attractions. The weak results of the Caribbean (-1%) can be blamed in large part on the new rules for the Western Hemisphere Travel Initiative (WHTI), whose Phase I was implemented in early 2007, requiring passports for US and non-US air travel to and from the USA and Canada, Mexico and the Caribbean. Among the Caribbean islands reporting data, Anguilla, Bonaire, Curaçao and St. Eustatius all achieved double-digit increases. In the case of Curaçao, this was due to a doubling of incoming airline capacity, notably from Venezuela, boosted by Venezuelans’ access to US dollars and credit at special rates for travel. Among the leading Caribbean destinations, Puerto Rico was down 7% from January through July. Due to its special status with the USA, travellers to Puerto Rico are not affected by the WHTI, but the destination was still affected by the decrease in demand for the Caribbean in the US market. Cuba’s arrivals declined by 7% through the month of September, attributed to the USA’s continued enforcement of its blockade. Travel from Spain was also reportedly damaged by the US acquisition of Spanish
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Volume 6 • No. 1 • January 2008
operators last year, and the consequent application of US blockade rules. And over-valuation of the convertible peso continued to damage price-competitiveness.
International Tourist Arrivals by Country of DestinationFull year Change Monthly or quarterly data series
(% change over same period of the previous year)Series 2006 2007* 05/04 06/05 07*/06 Series 2007* 2006
(1000) (%) YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
Results in the Bahamas (-2% in the first ten months) may have been negatively influenced by reduced room capacity due to refurbishment. There was also a decline in stayover cruise passengers, since the biggest new cruise ships cannot be accommodated at Nassau. But tourism from Europe and Canada did well. The Dominican Republic (+0.4%) had a flat year and Jamaica saw arrivals grow by 1%. In both cases, the solid performance of the traffic from Europe and Canada was not enough to balance the declines in arrivals from the USA. In the case of Jamaica, besides the impact of WHTI, other factors such as the return of competitors, notably Mexico, after they had repaired their hurricane damage from 2005 and 2006, were also significant. In addition, Jamaica itself was hit by Hurricane Dean in August. With the exception of Belize (+1% for nine months), all the countries in Central America achieved better than average growth in 2007. This was due in no small part to greater regional prosperity and interest in tourism, especially after the implementation of the Central America-Dominican Republic-United States (CAFTA-DR) Free Trade Agreement. Panama (+27% through the month of November) was one of the best performers and the trend is set to continue as the government has signed important cooperation agreements with the Inter-American Development Bank, the Spanish Government and the United Nations Development Programme – a UNDP/UNWTO project for the development of a Master Plan 2007-2020. Costa Rica saw arrivals grow by 12% (note that data for the last five months are estimates) due to vastly improved airline capacity into the country. El Salvador (+5% for the first 11 months) is now benefiting from greatly improved confidence in the sector, bolstered by increased promotional and support activity by the government. The country has also seen the first major hotel investments since the 1980s and 1990s. Increased airline competition has reduced fares to their lowest ever, in spite of high fuel prices. Guatemala (+8%) benefited among other factors from the meeting of the International Olympic Committee in Guatemala City. The inauguration of airline services by two new carriers to Nicaragua (Aeroméxico and Spirit) in 2007 clearly boosted demand (+7%). Nevertheless, the country suffered a number of problems, including a severe energy crisis and the aftermath of Hurricane Felix. Hurricane Felix, which hit Nicaragua in September, was widely reported in major markets, although only the Caribbean coast – where tourism is still relatively insignificant – was affected. Gaps in coverage – especially the absence of data on arrivals to Brazil, which has suffered from unfavourable exchange rates over the past 12 months, as well as a lack of airline capacity – mean that South America’s estimated 8% growth in arrivals in 2007 may still prove somewhat optimistic. However, among the subregion’s leading destinations, only Uruguay (+0.2%) turned in a weak result, according to preliminary estimates. This was
attributable to a 7% decline from Argentina due to the closure of land access between both countries via the General San Martín International Bridge. By contrast, there was an impressive 33% increase in receipts as a result of the change in source markets – arrivals from Brazil grew 17% – and an increase in average length of stay. The same may be true for Brazil where receipts up to November grew by 15%. Argentina (+11% in the first three quarters of the year) owes its strong performance to continuing regional prosperity and stability, a favourable exchange rate against the US dollar, euro and various neighbouring currencies (arrivals from Brazil grew as much as 35% in the third quarter), and to its wide range of attractions. And the last four months of the year proved an excellent high season for the cruise business and the meetings industry. Chile (+12%) has enjoyed continued prosperity and investments in new products, which have stimulated growth in arrivals from neighbouring and long-haul markets. The improved security situation and buoyant economy in Colombia (+14% to November) is leading to greater business and consumer confidence, but US travel advisories remain in place. At present, business travel is the best performing sector, and there is a need to extend the recovery to leisure and recreational tourism. 2007 proved an excellent year as well for Ecuador (+13%), due to improved communications – especially via the internet – government policies and programmes. The country’s range of products has also expanded, with efforts made to involve rural communities in tourism. Peru’s tourism (+11%) has received much favourable press over the past 12 months, notably about Machu Picchu, which has undoubtedly helped to stimulate demand, while Venezuela’s arrivals (+6% to September) might have been even better if the country had not suffered from an estimated 30% shortfall in airline capacity. But this is partly due to the fact that more Venezuelans were travelling abroad as a result of the government’s subsidising the dollar exchange rate for travellers. Prospects Despite the low US dollar, current forecasts for international arrivals in the USA in 2008 predict only a relatively modest 4% growth – largely due to economic concerns for key markets around the world. Nevertheless, the industry hopes that the recent signing by the US Government of a Memorandum of Understanding with China will boost leisure arrivals from that source, although it may take longer to have an impact. Until now, Chinese citizens were only allowed to travel to the USA with business visas or to visit family and friends. But the new agreement allows the USA to promote the destination for group leisure tours. Canadians are of course concerned that, as one of the few countries in the world still not on the list of destinations allowed to promote itself to leisure groups
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Volume 6 • No. 1 • January 2008
from China, they will lag behind. But the country has still seen very good growth out of China, predominantly from segments such as educational tourism, youth tourism, meetings and conferences.
The impact of the recently announced decision by the US Congress to delay the implementation of Phase II of the WHTI remains unclear, but is being well received by the industry in the Caribbean. Due to be implemented in February 2008, Phase II of the WHTI stipulates that all adult travellers are to present proof of citizenship, such as a birth certificate, and proof of identity, such as a driver’s license, when entering the USA through land and sea ports of entry on the borders of Canada, Mexico and the Caribbean. But the latest information is that this will not now be implemented for another 12 months. Meanwhile, the US State Department has approved the technology for issuing passport cards, which US citizens can use when travelling between the USA and the Caribbean, Canada, Mexico and Bermuda. Currently, the US Government is expected to limit the use of passport cards to sea and land travel and therefore only the cruise industry will see an immediate impact. The State Department is to begin accepting applications for the new passport cards shortly, and expects to begin issuing the passport cards in April or May. The cost of the passport card is expected to be approximately half the cost of a regular US passport (or less than US$ 50). Interestingly, some 10.3 million full passports were issued in the first eight months of 2007 – a 37% increase over the same period in 2006 – showing that US travellers who may have otherwise chosen to stay at home as a result of Phase I of the WHTI instead travelled abroad. And a survey of these new passport holders suggests that 90% plan to travel internationally in 2008. However, these plans may well be postponed due to the escalating credit crunch and stock market crisis in recent weeks. While the UNWTO Panel of Experts is still generally bullish about US outbound travel’s prospects, some experts issued a note of caution. Americans may only be now beginning to understand the magnitude of the problem of the housing crisis, and though high-income American travellers are still strong in their travel behaviour, the outlook for 2008 is unclear due to the deteriorating
economy, the cost of fuel, an increase in mortgage costs, a loss of disposable income, the increasing cost and hassle of travel, volatility and the variable stock market. Canada is expected to be hurt by a slowdown in the US economy, and from a further appreciation of the Canadian dollar. The country may also suffer from a decrease in arrivals from China, now diverted to the USA. On the other hand, a weaker economic situation in the USA could also benefit the destination as long-haul travel could be replaced by traffic to nearby countries. On the positive side, the warm-up promotions for the 2010 Winter Olympics in Vancouver should also have an impact. Also positive is Mexico’s announcement in November of a plan to pump pesos into a monarch butterfly reserve to boost tourism and create jobs in an impoverished area where illegal logging threatens the monarch’s habitat. The 50 million pesos (US$ 4.6 million) plan will buy equipment and advertising for the Monarch Butterfly Biosphere Reserve, a 124,000-acre (50,180-hectare) wooded park in Mexico’s Michoacan state, where clouds of orange- and black-winged butterflies nest each winter after flying south from Canada and the USA. In Central and South America, the positive tone is expected to continue in spite of the obvious concerns over the US economy. Destinations in Central America will expand their current joint promotions to the US source market following the positive experience of a similar strategy in Europe and many destinations in the region will continue to benefit from a strong euro driving growth in long-haul arrivals. Peru will continue to profit from the increased exposure of Machu Picchu, following its designation as one of the New Seven Wonders of the World. The country will also host several international meetings, such as the APEC 2008 meeting, the fifth European Union - Latin America and the Caribbean (EU-LAC) Presidential Summit to be held in Lima in May, and World Tourism Day on September 27. Meanwhile, Panama’s authorities report the existence of proposals for an extra 2,000 hotel rooms in 2008. And Love in the Time of Cholera, filmed in Cartagena de Indias, promises to help put Colombia back on the map of ‘must see’ destinations.
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Volume 6 • No. 1 • January 2008
International Tourism ReceiptsUS$ Local currencies, current prices (% on previous year)
2000 2006 2007* Series 05/04 06/05 2006 2007*(million) Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec
Africa and the Middle East Results The Middle East continues to be one of the tourism success stories of the decade so far, despite ongoing tensions and political and / or civil unrest in several parts of the region. And trends so far point to another strong year with an increase of well over 10% in international tourist arrivals. Moreover, in their Evaluation of the Middle East’s tourism performance in 2007, the UNWTO Panel of Experts gave an impressive score of 168 – the highest ever. The star performers in 2007 were undoubtedly Saudi Arabia with +51% up to September (it is important to note that data might be revised at a later stage) and Egypt (+20% to October) as a result of new resorts and successful advertising and promotional campaigns by the ministry of tourism in traditional and emerging markets. Various other destinations also recorded increases well above average, including Palestine (+106% through the month of September) and the Syrian Arab Republic (+31% over the same period), the latter much influenced by traffic from Iraq. It should be noted that Israel (+24%) (while part of UNWTO’s European region, it is analysed here within the context of the Middle East), also staged a good recovery. This is attributed to a number of factors, including visa-free access for citizens of Russia and all
other former Soviet states from February 2007. But arrivals from West European markets also rose by more than 30%.
Although Lebanon showed a healthy rebound in the second half of 2007, the year as a whole still closed at 4% down, due to the results of the first two quarters. Demand was boosted by the intraregional market and the resilience of the Lebanese Diaspora, but the difficulties are not yet over. Diplomats have ratcheted up efforts to resolve a stalemate over whom to appoint as president of the country, but Lebanon’s duelling political factions still
International Tourist Arrivals by Country of Destination
Full year Change Monthly or quarterly data series(% change over same period of the previous year)
Series 2006 2007* 05/04 06/05 07*/06 Series 2007* 2006
(1000) (%) YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4
appear far apart. The standoff, which is not likely to be resolved until February at the earliest, has prolonged the country’s political instability, with a negative impact on tourism demand. Bahrain (-17% for the first nine months of 2007) and Jordan (-3%) were not able to consolidate their bumper results of 2006. Yemen’s arrivals (-1%) were also lower than expected. Dubai, meanwhile (+7% through September), appears to have had another good tourism year, thanks to an enhanced image, growing popularity as a leisure and business destination, new products and markets, and favourable exchange rates for key tourism source countries. Africa was one of the best regional performers in 2007, with a growth in arrivals of 8%, thereby maintaining the good momentum of 2006. Clearly, there are a large number of gaps in coverage, so trends could change but, for the moment, North Africa (+9%) appears to have done slightly better than Subsaharan Africa (+8%). This is primarily due to Morocco’s 14% rise – a continued healthy performance that reflects the concerted efforts of both government and the private sector to develop infrastructure, focus on market and product diversification and open up the country’s skies. Algeria has also reportedly done well, especially in the adventure tourism sector, although no data is available to substantiate trends. In contrast, Tunisia’s second year of slower than average growth (an estimated +2%, nearly the same as in 2006) might be due, to some extent, to the absence of low-cost carriers operating to the country.
In Subsaharan Africa, a number of countries have turned in good results, notably Mauritius (+16%), the Seychelles (+14%), Kenya (+13% to September), Mozam-bique (+11%) and South Africa (+8% to November). South Africa benefited last year from the devaluation of the rand and increased marketing spending in core generating markets, with a focus on niche market segments like sports and adventure tourism, and cultural activities. Awareness of South Africa has continued to grow in the build-up to the country’s hosting of the FIFA Soccer World Cup in 2010, but the country has also hosted a number of other important events.
International Tourism Receipts
US$ Local currencies, current prices (% on previous year)
2000 2006 2007* Series 05/04 06/05 2006 2007*(million) Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 Jul Aug Sep Oct Nov Dec
Prospects Short- to medium-term prospects for both the Middle East and Africa seem bullish at present. Indeed, the UNWTO experts from both regions are more optimistic than experts in any other regions of the world, with those in the Middle East rating Prospects at 150 for 2008 – the highest among all regions – and Africa’s experts giving a rating of 143.
Preliminary trends suggest that, in the Middle East, Egypt and the United Arab Emirates (UAE) will be strong performers this coming year. Apart from new resorts on offer, Egypt is improving access to the country with open skies for charter carriers from the first quarter of the year. And Dubai is set to see the opening of the first resort inside the man-made island, Palm Jumeirah, this autumn. With over 1,500 rooms and several recreational options, including an aquapark and conference facilities, Atlantis will surely be a strong attraction for the destination. The Emirate is also seeing an excellent year for cruise business. Costa Cruises now has two ships operating out of Dubai, and demand is growing rapidly, with other emirates also getting in on the act. In addition, Abu Dhabi is developing a range of exciting new attractions to compete with Dubai and draw in new leisure tourists. In North Africa, Algeria and Libya are worth watching closely. Algeria is investing in new products and opening up access to new markets, and a number of contracts have been signed in Libya with foreign firms to build tourist resorts between Tripoli and Al-Khoms. The Libyan Government is looking to tourism to reduce its dependence on oil and gas revenues. Improved air access and sustained marketing efforts between the public and private sectors are key factors boosting tourism demand in different parts of Subsaharan Africa, according to comments from the Panel of Experts. Ghana is the host of the Football Cup of Nations, which is sure to boost arrivals to the country. New products are also important, such as the new ecolodge being built on the edge of Nyungwe National Park in Rwanda. The country’s efforts to protect nature and rare species have been widely publicised, as was last year’s young gorilla-naming ceremony. More and more destinations such as Namibia,
Botswana or Zambia are seeing a strong development in products aimed at higher-end segments of the market. 2008 will see Abercrombie & Kent open four new camps in Zambia (from a total of seven planned for the country) while in Botswana, a new lodge, Pamulani, is set to open on Lake Malawi by July.
But one country’s tourism is in the doldrums. Kenya’s tourism industry is deeply worried about cancellations in hotel and other bookings following violent protests over the elections on 27 December. Normally, at this time of year, hotels, lodges, and other tourism attractions are almost fully booked. But, as of mid-January, occupancies across the country were running at 15-30%. Coastal tourism has been hit even harder than the country’s famed wildlife attractions because the coast relies on charter flights from Europe for the bulk of its business. Several European countries, including the UK and France, have issued travel advisories discouraging their citizens from non-essential travel to Kenya, and foreign travel insurance companies have pulled coverage from the area. The good news is that travel advisories are now being partially lifted. The UK Foreign Office says it no longer advises against all but essential travel to the African country. But it continues to warn against travel to certain areas, and it is clear that the security and political situation in Kenya remains unpredictable. This situation may also at some point impact on demand for Tanzania as many tour programmes feature both destinations. On the other hand, it may also prove the contrary as tours are diverted from Kenya to Tanzania. The destination will surely see a boost in the meetings industry since, in 2008, it is hosting the African Travel Association (ATA) Annual Congress, the Leon Sullivan Foundation meeting and the International Federation of Air Traffic Controllers Associations (IFATCA) Annual Conference.
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Volume 6 • No. 1 • January 2008
In focus Industry trends This section covers issues related to different clusters of the tourism industry such as transport, accommodation and travel distribution. For that purpose, the UNWTO World Tourism Barometer counts on the regular collaboration of UNWTO’s Affiliate Members. Comprising private sector representatives, educational institutions, tourism associa-tions and local tourism authorities, the Affiliates Members are key players in the promotion of public-private partner-ships that supports UNWTO’s overall aims – promoting responsible, sustainable and universally accessible tourism and contributing to economic development and international understanding, with particular attention paid to the interests of developing countries (see for further information www.unwto.org/afiliados). The Secretariat is also pleased to count on the participation of Deloitte through its HotelBenchmark™ Survey, in the section dedicated to the hospitality industry. The objective for future editions is to broaden the scope of the In focus section and expand the collaboration to other organisations and sectors, such the meetings industry, the cruise sector, etc.
UNWTO Affiliate Members Georgios Drakopoulos General Manager SETE, Association of Greek Tourist Enterprises <www.sete.gr>
1. What factors do you identify as drivers of growth in European markets? From the point of view of the European tourism industry, what do you think will be the major factors influencing tourism in 2008?
I strongly believe that destinations’ performance is mostly – up to 80% – dependent on long-term planning, while 20% is influenced by other variables. Europe has always been the leader of worldwide tourism. Culture, diverse civilisations and quality of life have been key competitive factors for European tourism. Therefore, the strong performance of European, and notably of Mediterranean destinations, is no surprise. However, more important than growth itself is to make such growth sustainable. This will mean that societies can benefit from it, acknowledging, at the same time, the importance and role of tourism as a major growth driver. As for 2008, there are at least three factors that I consider will influence this year’s performance. First, the exchange rate between the euro and the US dollar: a strong euro is not a favourable variable – price-wise – in the effort to attract and keep more tourism within Europe. However, as destinations cannot exert any influence on this, they should focus on improving supply in terms of value for money. Another important driver to consider this year is the extension of the Schengen area to new destinations. This offers a fantastic possibility for more people to travel more easily than ever before within a huge territory, and is expected to contribute to a boost in international travel to and from the countries which recently joined Schengen. And finally, the 2008 European Football Cup in Austria and Switzerland. The tournament may redirect flows within Europe. Extra movement can be expected in this area and maybe less towards the south. 2. The European Union is at the forefront of international efforts to combat climate change, how do you thing the new measures that are going to be introduced in Europe could affect the European tourism industry?
The issue of climate change is of major priority in the international agenda. One of the first things I have learned in my professional life is that the environment is a very important ‘asset’ for any tourism destination or business.
New Service!!! Free access to the WTOelibrary for our Affiliate Members! JOIN NOW and benefit from the most up-to-date reports and statistics in the world of tourism For further information, please contact:
Therefore, the fact that the tourism industry has already started the discussion and prioritised actions in favour of the environment is definitely positive. Climate and environmental changes happen over long periods. Managing them requires equally long-term planning by both the tourism sector and society at large. If the concept of long-term planning becomes common practice for all tourism destinations, there will be a big benefit. On the other hand, I do not consider that this will impact in terms of a reduction in travel. People need to travel and will travel. And proper actions should be implemented in order to minimise the negative effects. The World Tourism Organization (UNWTO) and the tourism sector cannot be indifferent in mitigating and reducing CO2 emissions. The sector has to reduce its energy consumption and improve energy efficiency. And for that, it has to be sensitised and provided with the necessary tools to be able to improve its performances and contribute to reducing CO2 emissions. The constituency of UNWTO’s Business Council represents an excellent industry network and an asset for the Organization in consolidating the work that it executes in the area of sustainable tourism development, and in particular of climate change. To work further in this area, UNWTO’s Business Council, through the network and technical expertise of its partners, is developing a project aimed at promoting and implementing initiatives addressing issues on climate change and CO2 emissions reduction by improving energy efficiency in the hotel accommodation sector. This project is a partnership between UNWTO, the International Hotel & Restaurant Association (IHRA), the United Nations Environment Programme (UNEP), the French Environment and Energy Management Agency (ADEME) and the European Renewable Energy Council (EREC). The project will assist SME hotels to improve their sustainability and competitiveness. The hotel industry is among the most energy-intensive sectors of the tourism industry, while being an important source of employment. Europe has approximately 5.45 million hotel rooms - nearly half of the world total, of which SME’s account around 90% of the total number of rooms. The project focuses on action to foster energy efficiency and the rational use of energy resources in the accommodation sector. Key target groups include SME hotels, hotel associations and national tourism bodies; destination management organisations; tour operators; suppliers and manufacturers of energy efficiency and renewable energies. The objectives are to develop and disseminate tools and materials to change SME hotels management actions and investment decisions in their use of energy; promote the exchanges of know-how and experience between SME hotels as energy users, and the suppliers and manufacturers; raise awareness of this issue among SME hotel managers, decision-makers, staff and consumers; and stimulate the establishment of networks with commitments to disseminate and promote energy efficiency and renewable energies.
3. Public-private sector cooperation is considered critical to enhancing tourism competitiveness. National Tourism Administrations alone cannot address tourism most pressing challenges; instead, new kinds of partnership with the private sector are needed. Is there a real meaning for public-private partnerships (PPPs) in tourism?
I would say that besides the various benefits of public private partnerships, for the public and the private sector to work together is an absolute necessity. In some destinations, tourism policies are sometimes too volatile to political changes. This may impact in the continuity and consistency of destination planning and management. The private sector can and should contribute to tourism development through is long-term vision, and support the development of such vision by national governments. However, efficient partnerships do not depend only on tourism ministries and National Tourism Administrations, but on the whole of the government. Therefore, we should be oriented towards the creation of an intergovernmental culture of tourism. In the UNWTO, the Affiliate Members offer a unique platform to build much stronger and effective partnerships for tourism.
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Volume 6 • No. 1 • January 2008
Transport Airlines ICAO 2007 Air Traffic Preliminary figures for 2007 released by the International Civil Aviation Organization (ICAO) indicate that domestic and international passenger traffic of the airlines of its 190 contracting states increased by about 6.6% over 2006, in terms of revenue passenger-kilometres (RPK). Passengers (PAX, passengers counted on each leg of a trip) carried on scheduled services grew by around 6% to 2.2 billion. In general, traffic growth in 2007 outpaced the increase in available seat capacity (ASK). As a result, the global passenger load factor reached almost 76.5%, up from approximately 75.8% in 2006. International passenger traffic grew at a rate of 7.3%, only slightly slower than the 2006’s 7.6%. High growth rates were recorded across all regions. European traffic, which accounts for nearly 40% of international traffic, grew by 6.4%. Asia and the Pacific (28% share) was up by some 6.6% and North America (17% share) increased by about 5.5%. For their part, the Middle East (7% share) grew by almost 19%, and Latin America and Africa, which together account for 7% of international traffic, rose by 5.8% and 6.8%, respectively. Domestic passenger traffic in North America grew by 2.9% in 2007. This growth is significant given the large base of almost 59% of the world total and the much lower 0.6% growth rate in 2006. Asia and the Pacific (around 27% of total domestic traffic) grew by a very strong 14% compared with 12.5% in 2006. For Europe (8% share) growth was stagnant at 2006 levels, while Latin America (4% share) grew by 6%. IATA Monthly International Statistics (MIS) Traffic results for the first 11 months of 2007 released by the International Air Transport Association (IATA) point to year-on-year growth of 7.5% in the international scheduled airline services of its members (expressed in RPK) – up from just under 6% in the same period of 2006. Capacity, as measured in ASK, grew by 6.3% and average passenger load factor increased by one percentage point to 77%, showing that the strong demand more than absorbed the extra supply. The Middle East remains the fastest growing region by a wide margin, posting an increase of 19% from January through November, continuing the trend of the last three years. Africa, including Egypt, ranked second with a growth of nearly 9%, followed by Latin America (+7.8%) and Asia Pacific (+7.4%). “It’s a mixed picture,” said Giovanni Bisignani, IATA’s Director General and CEO on announcing the results. “The
global economy ended 2007 on a surprisingly strong note. The November surge in passenger demand has been critical in combating high oil prices and helping airlines end 2007 with an industry profit of US$ 5.6 billion – the first since 2000. But against a backdrop of robust world trade, slug-gish freight growth has continued to be a disappointment”.
International traffic of IATA reporting carriers by region of airline registration(% change)
Source: compiled by UNWTO from IATA
-5
0
5
10
15
20
Overall North America Latin America Europe Africa Middle East Asia and Pacific
06/05 07*/06 YTD
Air traffic on international routes by month (RPKs)(% change over same month previous year)
2006 2007Source: compiled by UNWTO from IATA, AACO, AAPA, AEA, ATA and ALTA
Air transport data The air transport data presented here refers to IATA members’ scheduled international passenger traffic, according to region of airline registration, as well as to the traffic of the member airlines of the major regional airline associations broken down by routes operated. It should be taken into account that this data reflects the vast majority of, but not all air traffic, as the carriers included are mostly full-service airlines and the traffic operated by charter and low-cost airlines is only reflected to a rather limited extent. Airline data is a particularly good indicator of short-term trends in medium- and long-haul traffic. For short-haul traffic, however, air transport is in competition with alternative modes of transport (in particular land-based, but also over water), and might be subject to shifts between different means of transport (depending on relative price, perception of safety, etc.). Furthermore, traffic is not expressed here in numbers of passengers carried, but rather measured in terms of revenue passenger-kilometres (RPK), with one RPK representing one paying passenger transported over one kilometre. This means that each long-haul passenger contributes more to total traffic measured in RPK than each short-haul passenger does.
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Volume 6 • No. 1 • January 2008
Preliminary Air Transport StatisticsRevenue Passenger-Km (million) Capacity Load factor Passengers
International Ai r Transport Association (IATA), Monthly International Statistics (MIS)Scheduled international traffic of IATA reporting carriers by region of airline registration
Source: compiled by UNWTO from IATA, ATA, ALTA, AEA, AAPA and AACO¹ All IATA carriers
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Volume 6 • No. 1 • January 2008
Airports The strength of air travel in 2007 is confirmed by statistics from the world airports’ body, Airports Council International (ACI). Worldwide passenger traffic rose by more than 7% over the first 11 months of 2007, ACI shows. The Middle East was the best performing region, up 19%, followed by Africa (+13%). Airports in Latin America and Asia Pacific achieved increases in passenger traffic of around 7.5%, Europe was up 6.5% and North America 4.5%. North America US airlines achieved a 2.3% increase in scheduled mainline services in 2007, based on the results of the Air Transport Association of America (ATA) for the first 11 months of last year. While domestic traffic increased by only 1%, international traffic grew by 5.4% – about the same increase as in 2006. Passenger capacity is expected to have risen by some 5% and load factors by 0.6 percentage points. Demand growth was higher on Atlantic (+8.6%) and Latin American routes (+5.5%). By contrast, both traffic and capacity on Pacific routes were sluggish.
ATA: Air traffic on selected routes by month (RPKs)(% change over same month previous year)
Although final figures will not be available from the US Bureau of Transportation until May 2008, the past two years (2006-2007) are expected to show the first back-to-back net profit for US airlines since 1999-2000, according to the ATA. While the ultimate margin will undoubtedly be sub-par by typical standards for Corporate America, the ATA says, the two consecutive years of profitability come as a welcome relief after an unprecedented five-year loss of US$ 35 billion. The association also considers that all signs point to another year of improving fuel efficiency, despite air traffic congestion and resultant taxi-out and airborne delays. Comparable load factors are likely to be accompanied by individual airline efforts to realise higher yields by increasing business travel as a share of total traffic.
Latin America Members of the Association of Latin American Airlines (Asociación Latinoamericana de Transporte Aéreo – ALTA) carried 99.6 million passengers from January through November 2007, up 8% over 2006’s level. Passenger traf-fic in kilometres flown (RPK) rose by 7%, while capacity (ASK) increased by nearly 9%, resulting in a one percent-age point decline in average seat load factor, with inter-national routes at 72.5% and domestic routes at 68.0%. In the first months of 2007 operations were still suffering the impact of Varig’s restructuring, but all scheduled traffic flows recovered positive ground from July. Routes to / from Europe have been most affected and are still 9% down in RPK.
ALTA: Air traffic on selected routes by month (RPKs)(% change over same month previous year)
Europe The Association of European Airlines (AEA) reports a 5.1% increase in the passenger traffic carried by its 33 members on scheduled airline services in the first 11 months of 2007, with domestic traffic rising by 1.5%. Routes to / from the Middle East showed the biggest growth (+9.9%), followed by those within geographical Europe (+7.1%).
AEA: Air traffic on selected routes by month (RPKs)(% change over same month previous year)
Long-haul routes recorded a traffic increase of 4.6% overall, with the South Atlantic (+12.0%) performing well ahead of other AEA long-haul routes. Traffic to / from the
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Volume 6 • No. 1 • January 2008
Far East / Australasia, for example, increased by only 3.3%, down from a 9.8% growth in 2006. Europe’s airlines face the imposition of pollution limits for the first time following a deal struck in Brussels at the end of last year. The landmark agreement brings aviation into the EU’s emissions trading scheme, making air travel subject to restrictions on carbon dioxide emis-sions in recognition of its environmental impact. The deal – which still needs approval from Euro MPs and EU transport ministers – mirrors the emissions trading scheme already in place for European industries. Asia and the Pacific For the first 11 months of last year, the international passenger traffic of members of the Association of Asia Pacific Airlines (AAPA) grew by 4.8% – up nearly one percentage point over 2006’s level. Growth in demand was followed by a slower increase in capacity (+2.3%), which lead to a significant improvement of load factors from 75.5% in 2006 to 77.2% in 2007. The Centre for Asia Pacific Aviation (CAPA) forecasts that a surge in capacity for Asia Pacific and Middle East airlines will result in one of the busiest years in new airline activity in the region this decade in 2008. Several carriers are also preparing to establish offshore hubs through cross-border joint ventures, as well as through the utilisation of increasing rights available under more liberal air services agreements. Extra domestic hubs are also planned by some carriers. The projected deliveries of many new aircraft in 2008, combined with the proliferation of new entrants and a possible global economic slowdown, will result in the most competitive airline conditions ever seen in Asia. For airports, these developments will provide unprecedented route expansion and traffic growth opportunities, CAPA predicts.
Middle East Data from the Arab Air Carriers Organization (AACO) confirms that Middle East and North Africa-based airlines had a strong year. Year-to-date traffic growth through November reached 18.2%, while capacity increased by 14.3%. Load factor improved to 74%, up from 70% in 2006. The number of passengers carried also grew by 18%.
AACO: Air traffic on selected routes by month (RPKs)(% change over same month previous year)
Prospects Prospects for the world’s air transport industry in 2008 appear to be broadly positive, but the outlook is overshadowed by concerns about slower economic growth, particularly in the USA, and the wider impact of soaring oil prices. And while further growth in emerging Asian markets is expected to offset some of this impact, IATA is expecting passenger demand growth to slow to 5%. High oil prices and the impact of the credit crunch will see industry profitability slip to US$ 5 billion in 2008 – the second cut in IATA’s profit forecast for the current year. At the same time, capacity expansion is forecast to accelerate, with aircraft deliveries rising to 1,281 from 1,041 in 2007. Explaining the 2008 downgrade, Bisignani, IATA’s CEO, said: “The spike in fuel prices was expected to add US$ 14 billion to the industry’s fuel bill, taking it to US$ 149 billion based on an average price of US$ 78 per barrel. This means that in 2008 fuel will account for 30% of operating costs. Since 2001 efficiency gains have been impressive, with 64% improvement in labour productivity, 25% reduction in sales and marketing unit costs, and a 16% decrease in non-fuel unit costs. The challenge for 2008 will be much more of the same – efficiency everywhere.” Both Airbus and Boeing beat records in orders for new aircraft, with Asian and Middle East carriers among major buyers. Boeing notched up 1,413 aircraft orders, against Airbus’s 1,341. The European company did, however, deliver more aircraft – 453, or 12 more than Boeing. The strength of orders and deliveries underlines a revival in airlines’ fortunes. The return to profitability of many airlines after years of losses, plus heavy price discounting by Airbus and Boeing, has led to a rush of orders in the past couple of years. Sales are now expected to slow considerably this year for both companies, but the manufacturers should be cushioned by their bulging order books that will take several years to fill. A worry for Boeing’s customers, investors and suppliers, however, is the company’s announcement that it will push back the inaugural flight for the Dreamliner by as much as three months. The latest delay means Boeing will not be able to begin delivering the jet until early 2009. It had hoped the 787’s first flight would be conducted sometime at the end of the first quarter of 2008. On the issue of climate change, the 36th Annual Assembly of the International Civil Aviation Organization (ICAO) in September 2007 agreed to a programme of action to address the issue of aircraft emissions more effectively. A resolution adopted by consensus called on the ICAO Council to form a new Group on International Aviation and Climate Change, composed of senior government officials. Its purpose is to develop an aggressive Programme of Action on International Aviation and Climate Change. The programme will feature an implementation framework for states to use in achieving emissions’ reductions, including voluntary measures,
technology improvements, more efficient operational measures, improvements in traffic management, positive economic incentives, and market-based measures. The new programme will also include specific ways of measuring progress, the identification of global aspirational goals in the form of fuel efficiency for international aviation, and progress reports from member states. ICAO will convene a high-level meeting for the purpose of reviewing the programme and taking next steps in late 2009 or, at the latest, early 2010. The Assembly agreed that market-based options are valuable tools for addressing aircraft emissions. A majority of the delegations felt, however, that states should not apply emissions trading systems to the airlines of other states except in cases of mutual agreement.
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Volume 6 • No. 1 • January 2008
Hospitality Double celebrations for global hoteliers The global hotel market had an excellent year in 2007 according to preliminary data from the HotelBenchmark™ Survey by Deloitte. All regions – Asia Pacific, Central and South America, Europe and the Middle East – are not only celebrating double-digit growth in revenue per available room (revPAR) but also in average room rates. Hoteliers in Central and South America took the gold medal in 2007, seeing the strongest growth in revPAR up 22% to US$ 75. This has largely been driven by average room rate increases of 19%. Panama City stole the show in the region, recording a 49% increase in revPAR to US$ 100 followed by the Brazilian city of São Paulo, which saw revPAR swell 35%. Average room rates have been driving much of this growth as the city continues to thrive on demand from the meetings industry. However, São Paulo’s growth is inflated in US dollar terms due to the real appreciating 21% against the US dollar during 2007. The Middle East took the silver medal on the world stage with revPAR increasing 17% to US$ 105, exceeding growth in both Europe and Asia Pacific for the fourth consecutive year. 2007 also marked the fourth year of double-digit growth for the region. As in previous years, average room rates were the main driver, up 11% to US$ 146 while occupancy increased 5% to 71.6%. The boom in Oman continued in the latter half of 2007 as demand for hotel rooms continued to exceed supply. Muscat posted a whopping 53% increase in revPAR to reach US$ 152 – giving the luxury destination the title of the strongest growing market in the Middle East. Oman is investing in long-term tourism and is hoping to double its room capacity by 2012. Several mixed-used developments are in the pipeline which will include hotels, marinas, shopping centres, golf courses and exhibition venues. Egypt also enjoyed double-digit revPAR growth in every market tracked by the survey – showing further recovery from the terrorist attacks in late 2005 and early 2006. Popular holiday destinations saw the strongest growth with occupancy increasing 32% to 77.2% in the Red Sea Resorts*. A further increase in average room rates of 8% to US$ 72 resulted in the Red Sea Resorts achieving the second highest revPAR growth across the Middle East – up 42% to US$ 56. Whilst Oman and Egypt are the
winners in terms of growth, Dubai, not surprisingly, continues to achieve the highest absolute occupancy and average room rates at 84.6% and US$ 284. However not every destination in the Middle East had a great year. RevPAR in Beirut fell 30% to US$ 44 in 2007. Continued political instability is presenting challenges to the local tourism industry and, as a result, a number of new hotels due to open in Beirut have been put on hold. In Europe, revPAR was up 16% to US$ 111 to end the year – although growth levels in local currency are more conservative at 7%. While the region’s sports and cultural event calendar was not as full during 2007 compared to the prior year, Europe still remains on top of the world when it comes to revPAR performance. A number of key cities, including London and Paris, have been able to capitalise on stronger economic conditions and high-profile events such as the Tour de France Grand Départ in London, and the biennial Paris Air Show and Rugby World Cup in France. Overall, revPAR in London and Paris increased by 20% and 21% respectively during 2007. Moscow boasted the highest average room rate across Europe at US$ 369 – up 26% - followed by Geneva and Paris at US$ 359 and US$ 292 respectively. Iceland’s capital city Reykjavik saw its fortunes change in 2007 with revPAR increasing 21% compared with the 1.4% decline witnessed in 2006. Iceland Express, a privately owned budget airline has been making the country more accessible by offering competitive fares and regular flights to 13 airports across the region since last summer. Tel Aviv and Jerusalem also enjoyed double-digit revPAR growth of 31% and 22% respectively. Hotels in Asia Pacific have seen the slowest growth of any region, but a 13% revPAR rise does not tell the full story. Markets such as Bali and Mumbai also saw exceptional revPAR increases of over 45% during 2007 to US$ 77 and US$ 203, respectively. The South-East Asian island of Bali also recorded the highest occupancy growth during the year, up 32% to 70.5% as visitor confidence returned following years of setbacks. In Mumbai, growth has been driven purely by average room rates, up US$ 85 over the previous year to US$ 270 on the prior year. The development boom continues across China, and although some cities are seeing performance figures fall off slightly due to the vast number of extra rooms being added to their inventory, 2008 welcomes the Olympic Games to Beijing where hotel performance is expected to bring in some gold medals of its own.
Hotel performance by regionOccupancy (%) Average Room Rate - US$ RevPAR - US$
The global hotel industry has seen some spectacular results over recent years, with many regions seeing double-digit revPAR growth. However, 2007 was the first year in which we have witnessed all regions posting double-digit growth in both average room rates and revPAR. Strong economic fundamentals have underpinned hotel performance, stimulating both business and leisure travel. The outlook for 2008 remains good. However, hotel performance is expected to be held back slightly, as the pace of worldwide economic growth slows. * The HotelBenchmark figures quoted for Red Sea Resorts are based on data from January to November 2007. The HotelBenchmark™ Survey by Deloitte is the market leader in monitoring global hotel performance tracking over 7,800 hotels in 485 markets across 140 countries on a daily and monthly basis. For further information please call +44 (0) 20 7007 3974 or visit www.HotelBenchmark.com. Hotel performance by region
Occupancy (%)2007 2006 Change
EuropeIceland Reykjavik 67.4 66.8 0.9Norway Oslo 72.2 71.3 1.3Sweden Stockholm 73.0 72.3 1.0Denmark Copenhagen 71.6 74.0 -3.2Ireland Dublin 75.6 78.8 -4.1United Kingdom London 83.1 82.6 0.6Netherlands Amsterdam 79.3 81.1 -2.1Belgium Brussels 73.8 71.8 2.8Luxembourg Luxembourg 70.7 66.5 6.3Germany Frankfurt am Main 60.9 62.0 -1.6
Berlin 71.4 67.9 5.2France Paris 77.7 74.9 3.8Austria Vienna 75.6 75.9 -0.3Switzerland Geneva 67.0 64.5 4.0
The economic environment IMF World Economic Outlook Since the last issue of the UNWTO World Tourism Barometer, which included the economic prospects for 2008 based on the October 2007 edition of the World Economic Outlook (WEO) of the International Mone-tary Fund (IMF), the short-term economic outlook has generally become rather more pessimistic. Last October, 2008 still was poised to be the fifth consecutive year of strong economic growth, in particular in emerging markets and developing countries. But since then, economies worldwide have shown increased volatility and confidence has weakened due to the uncertainty about the sub-prime mortgage crisis and economic prospects, in particular for the USA. At this very moment, a lot of contradictory information is circulating, and it is rather difficult to clearly assess the precise economic prospects for 2008 as opinions among experts vary widely, the pessimists at one extreme envisioning a recession spreading worldwide, to optimists with the cautious message of a mild slowdown. Volatility in financial markets Fears of a recession in the USA did cause stock markets to tremble in the week of 21 to 25 of January. On Monday, stock markets worldwide started with a massive drop in share prices. On Tuesday, the Federal Reserve slashed its benchmark interest rate by an exceptional three-quarter of a percentage point to 3.5%, down from 4.25%. In the meantime, the European Central Bank (ECB) maintained rates at 4%, putting emphasis on fighting inflation. By the end of the week, most stock markets had rebounded to a considerable extent. In the midst of the stock market shock, the IMF issued the following statement on 22 January: “The volatile weakening experienced in many equity markets during the past few days has underscored the burden that the current financial market turmoil represents for the global growth outlook. Moreover, the process of restoring financial market stability will be complex and protracted. Thus, a significant 2008 slowing in the global expansion already appears inevitable, and downside risks still predominate. The United States has been most affected by recent eco-nomic and financial developments. Thus, today's 75-basis point reduction in the Federal funds rate was appropriate and helpful. Financial market prices are consistent at pre-sent with expectations of significant future rate declines. In any case, there is no doubt that the Federal Reserve will respond with alacrity to new fundamental and financial developments. In addition, targeted and timely fiscal measures could provide near-term support for demand.”
Economic growth to slow in 2008 The IMF was due to release an update on the World Economic Outlook growth forecast on 25 January, just before this issue of the UNWTO World Tourism Barometer was due to close, but it was postponed for a week. In the regular Press Briefing of the IMF, on 24 January, Mr. Masood Ahmed, Director, External Relations Department, said that since the IMF had made the projections for the October World Economic Outlook, a number of the downside risks that had been identified in that projection had since materialised. This will result in a downward effect on the projections of growth for 2008 compared with 2007 for a number of economies. Furthermore, it was noted that the IMF still sees a period of lower than potential growth as the most likely scenario for the USA, given the economy's good starting position, with elements such as high profits, strong corporate and household balance sheets, and support also from the macroeconomic policies. Clearly there are risks on the downside as already identified, but the most likely scenario remains for the US economy a period of lower than potential growth. IMF Managing Director Dominique Strauss-Kahn said on 26 January at the World Economic Forum Annual Meeting 2008 in Davos, Switzerland, that revised forecasts will indicate a slowdown even if emerging markets appear to be doing well. The experience of the previous week showed that the markets are not decoupled yet. Low interest rates, high liquidity, a breakdown in credit and risk management practices, and a shortcoming in US financial regulation and supervision had produced an economic ‘perfect storm’ in the financial world. “I think we have to recognise the failure in this system and the overall regulation," said Strauss-Kahn. “The first priority is to restore normal function in financial markets, which means that the central banks should provide funding to inter-bank markets.” Furthermore, he suggested that the slowdown might decrease the price of commodities, including oil, which would provide room for a more active monetary policy.
Interest rate Federal Reserve and ECB (%)
Source: Federal Reserve and European Central Bank (ECB)
UN World Economic Situation and Prospects 2008 According to the United Nations report World Economic Situation and Prospects 2008 (WESP 2008, www.un.org/esa/policy/wess/wesp.html), the world economy is facing serious challenges in sustaining the strong pace of economic growth seen over the past few years. While the baseline forecast is for world economic growth to moderate somewhat in 2008, the risks associated with the bursting of the housing bubble in the United States, the related unfolding credit crisis, the decline of the US dollar, large global imbalances and high oil prices are all pointing to the downside. 2007 - Robust growth and improvement of employment During 2007, world economic growth was robust and notably broad-based. More than 100 economies achieved 3% growth of per capita output or more. Developing country growth averaged nearly 7%. Remarkably, economic growth in Africa strengthened in 2007 to near 6%, and in the baseline scenario this pace is expected to accelerate to over 6% in 2008. Amidst robust economic growth, the employment situation continued to improve in 2006 and 2007 in a large number of economies. In the developed and transition economies, as well as in a number of developing countries, strong employment growth led to declining unemployment rates and has in many instances put upward pressure on wages. Many developing economies, however, witnessed only small employment gains despite robust output growth. In Africa, unemployment and underemployment rates remain especially high as labour-force increases continued to outstrip limited employment creation. In the outlook, it is expected that employment growth will retreat or remain modest in most economies in 2008 as a result of slower overall economic growth. Uncertainties for 2008 This economic prosperity may be reversed, however. The major uncertainty for 2008 now emanates from the US economy. A further slowdown in the world’s major economy will hit many of the poor nations hard, as it will slow world trade and put an end to the boom in commodity prices that benefited them over the past years. The ongoing housing downturn in the United States became much more serious in the third quarter of 2007, with the meltdown of sub-prime mortgages triggering a full-scale credit crunch that reverberated throughout the global financial system. Central banks of the major economies have adopted various measures to attenuate financial stress. But these actions do not address the root causes of huge imbalances between financial surplus nations, such as China, Japan and the major oil producers, and the deficit countries, the
United States in particular. These imbalances need to be addressed, the UN advises, through economic stimulus in the surplus countries to offset the effects of demand deflation in the USA. Significant spill-over effects of financial turmoil originating in the US sub-prime mortgage markets have spread to major European countries and, to a lesser extent, to Japan and other developed economies. Their 2008 growth prospects have been downgraded by UN economists, indicating that other major developed economies are still not strong enough to replace the United States as the engine of global growth.
Oil; Average of UK Brent, Dubai, and West Texas Intermediate(US$ per barrel)
Source: International Monetary Fund
0102030405060708090
100
99 00 0 1 0 2 03 04 05 0 6 07 08
US$euro
Developing countries have advanced but will be tested 2008 could be the fourth straight year in which the growth of developing economies averages close to 7%. Strong demand has created jobs and reduced unemployment in most countries, albeit at a lesser rate than overall economic growth. Inflation has been tame, outside of some least developed countries experiencing commodity booms. As their weight in the world economy increases, developing countries as a group could be perceived as running the table, in economic terms. The share of world trade of economies that are developing and in transition increased from 35% in 2000 to over 40% in 2007. Terms of trade for most primary commodity-exporting countries improved for the fifth year in a row in 2007, while the external financing costs for emerging market economies remain low. Investments have flooded many emerging market economies, owing to their higher growth rates and - in a notable role reversal - their perceived relative security compared with the high uncertainty reigning in developed country financial markets. Export-led economic growth has enabled developing countries to amass over US$ 3 trillion in international currency reserve holdings, a full three quarters of the world total. These reserves provide a buffer against possible adverse shocks, but also pose challenges to economic management of their economies in avoiding strong currency appreciations. Being invested in dollar-
40
Volume 6 • No. 1 • January 2008
denominated assets, the build-up of large monetary reserves by developing countries is part and parcel of the problem of the large global imbalances as developing countries act as the financier of the US external deficit. Further US dollar depreciation will erode the value of their reserve holdings, and a diversification into other currencies could precipitate an even steeper fall of the dollar. There are other indications that 2008 could pose the severest economic test in some time for the developing world. The slowing of the USA and other developed economies will take air out of the rising commodity prices which have buoyed developing countries’ growth. The slowdown will undercut world trade, which in 2007 had already tailed off from the high growth rates of 2004 and 2006. Also apparent in 2007 was greater volatility in investment flows - and emerging market economies have already had experience with investment booms that turned to busts. Pessimistic scenario In an alternative scenario, which takes into account the possibility of a sharper-than-expected decline in house prices in the United States and a hard landing of the US dollar, the US economy would fall into a recession, while global growth would be significantly lower than the baseline. Given that inflation-adjusted prices for houses rose by about 90% in the United States in the ten-year period leading up to 2006, there is substantial room for a downward adjustment in housing prices, UN economists say. The risk is compounded by household indebtedness that has risen sharply in the USA in recent years. A 15% drop in housing prices would be likely to affect consumer demand and take 2% off of US growth, bringing the US economy to a virtual standstill in 2008. The economies of Japan and Western Europe, already operating near production potential, are not in a position to take up the slack. It is notable that trade is taking on an ever-greater role in global economic growth, with exports now averaging nearly 40% of GDP for all economies outside the USA. The domino effect of a US recession would be to knock down export growth from China, Europe and Japan, in turn reducing their demand for exports from developing countries. The housing bubble in the USA and other developed countries is organically linked with the global financial imbalances that have developed over the past ten years. Significantly, most economies that have experienced a substantial appreciation of house prices have also undergone widening current account deficits. With a US net external liability position of roughly US$ 3 trillion in 2007, the perception exists that the US debt position is approaching an unsustainable level. The risk of a disorderly unwinding of global imbalances has probably increased, the UN notes, with the downward spiral of the housing market in the USA and associated debacle in the
sub-prime mortgage market. A hard landing for the US dollar would further depress US demand for goods from the rest of the world, reducing exports from developing nations and cutting into the standard of living of US households.
41
Volume 6 • No. 1 • January 2008
Exchange rates Currency movements in 2007 were marked by the continuing depreciation of the US dollar against the majority of currencies, with the US dollar exchanging at 0.69 euro in December 2007, down from 0.76 euro a year earlier. Major reference currencies touched some historical values: 1 euro ≈1.5 US$, 1 C$ ≈ 1 US$ , 1 £ ≈ 2 US$.
Based on the yearly average, the US dollar lost 9% against the euro, from 0.80 euro in 2006 to 0.73 euro in 2007 (or from 1 euro to US$ 1.26 to 1.37). Since Cyprus and Malta joined the eurozone at the start of the year, the euro is now shared by 15 European countries. Apart from currencies that are pegged to the US dollar – such as those of various Caribbean, Central American and Middle East destinations – the Mexican peso, the Indonesian rupiah and the Hong Kong dollar generally stayed close to the US dollar. The upward pattern of the euro was followed closely by a variety of European currencies, such as the pound sterling, the Norwegian krone, the Danish krone, the Swedish krona, the Croatian kuna and the Israeli shekel. Various currencies shifted in relation to the US dollar and the euro, with the dollar losing but euro gaining, most notably the Canadian dollar (US$ -6%, euro +3%), the Russian rouble (US$ -6%, euro +3%), the Chinese yuan (US$ -5%, euro +4%) and the Swiss franc (US$ -4%, euro +4%). Furthermore, in this category we can also count the Fiji dollar, the Malaysian ringgit, the Singapore dollar, the Korean won, the Moroccan dirham, the Tunisian dinar, the Peruvian sol and the Chilean peso. In all these cases, the US dollar lost 2-7%, while the euro gained 2-7%. A number of currencies showed even greater strength, with both the US dollar and the euro weakening against them. The US dollar lost 9% or more against the Latin American currencies – Colombian peso (-12%) and Brazilian real (-11%) –, the following European currencies – the Hungarian forint (-13%), Polish zloty (-11%), Czech koruna (-10%) and Turkish lira (-10%) – and various Asian currencies, such as the Thai baht (-15%), the New Zealand dollar (-12%), the Philippine peso (-10%), the Australian dollar (-10%) and the Indian rupee (-9%). In these cases, the euro lost as well, but by some 9% less.
At the other side of the spectrum are a number of currencies against which both euro and US dollar strengthened in 2007, such as the Sri Lanka rupee (+6%), the Jamaican dollar (+5%), the South African rand (+4%), the Argentine peso (+2%), and the Guatemalan quetzal, the Japanese yen, the Taiwanese dollar, the Vietnamese dong and the Pakistan rupee (all +1%). The euro appreciated by 10-16% in these cases.
Exchange rate of US dollar and euro to selected currencies
currenciesto whichboth US$and euroweakened
currencies butto which to whichUS$ euroweakened strengthened
currenciesto whichboth US$and eurostrengthened
Source: compiled by UNWTO based on data from De Nederlandse Bank (DNB)/European Central Bank (ECB) and the Bank of Canada
-20 -15 -10 -5 0 5 10 15 20
Thai bahtHungarian forintColombian peso
New-Zealand dollarPolish zloty
Brazilian realPhilippine peso
Czech korunaAustralian dollar
Turkish liraIndian rupee
Norwegian kroneDanish krone
Swedish kronaEuro
Croat ian kunaPound sterling
Israeli new shekelFiji dollar
Moroccan dirhamMalaysian ringgit
Russian roubleCanadian dollarSingapore dollar
Chinese yuan renminbiPeruvian new sol
Swiss francTunisian dinar
Korean wonChilean peso
Indonesian rupiahUS dollar
Mexican peso Hong Kong dollar
Pakistan rupeeVietnamese dong
Guatemalan quetzalTaiwan dollarJapanese yen
Argent ine pesoSouth African rand
Jamaican dollarSri Lanka rupee
% variation average 2007 / average 2006
variation of US$ to currency variation of euro to currency
42
Volume 6 • No. 1 • January 2008
Exchange rate fluctuations in themselves are not expected to influence overall tourism volumes, but might influence destination choice. Destinations with a currencies against which a source market’s currency depreciates, become comparatively more expensive, while in the case of an appreciations of the source market’s currency, they become more competitive. So a weak dollar will benefit the USA as a destination, but make destinations with stronger currencies less attractive for tourists with US dollars in their pockets. Of course, it is always necessary to
monitor the specific combination of destination and source market. For instance, the Brazilian real strengthened vis a vis most currencies and the Argentinean peso weakened, so this will benefit flows from Brazil to Argentina, but not the reverse. By the same token, New Zealand and Australia have become more expensive for most North-East Asian source markets, while travel in the opposite direction out of New Zealand and Australia to North-East Asia has become more attractive.
Exchange ratesCurrency units per US dollar Currency units per euroAverage 06/05 07/06 2006 2007 year ago S.-D.07 Average 06/05 07/06 2006 2007 year ago S.-D.07
Moroccan dirham 8.79 8.19 -0.7 -6.9 8.44 8.10 7.78 -7.8 -3.9 11.04 11.22 0.2 1.6 11.15 11.26 11.34 1.7 0.8Tunisian dinar 1.33 1.28 2.6 -3.9 1.30 1.27 1.23 -5.5 -3.1 1.67 1.75 3.6 4.9 1.72 1.76 1.79 4.2 1.6South African rand 6.79 7.05 6.8 3.7 7.05 7.12 6.84 -2.9 -3.9 8.53 9.66 7.7 13.2 9.31 9.89 9.96 7.0 0.7Source: compiled by UNWTO based on data from De Nederlandse Bank (DNB)/European Central Bank (ECB) and the Bank of Canada
43
Volume 6 • No. 1 • January 2008
Exchange rate Canadian dollar
Source: De Nederlandse Bank
0.800.901.001.101.201.301.401.501.601.701.80
2002 2003 2004 2005 2006 2007 2008 2009
per US dollarper euro
Exchange rate British pound
Source: De Nederlandse Bank
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
2002 2003 2004 2005 2006 2007 2008 2009
per US dollarper euro
Exchange rate Japanese yen (100)
Source: De Nederlandse Bank
100
110
120
130
140
150
160
170
180
2002 2003 2004 2005 2006 2007 2008 2009
per US dollarper euro
Exchange rate Chinese yuan renminbi
Source: De Nederlandse Bank
6.00
7.00
8.00
9.00
10.00
11.00
12.00
2002 2003 2004 2005 2006 2007 2008 2009
per US dollarper euro
For a complete overview of UNWTO publications and electronic products, please download the latest version of our catalogue at www.unwto.org/pub. The new 56-page 2008 catalogue includes all the publications and electronic products that are currently available from UNWTO. Additional information on new titles is provided through our electronically distributed newsletter. If you would like to receive this information newsletter, please register at: www.unwto.org/infoshop under Mailing list.
UNWTO World Tourism BarometerThe UNWTO World Tourism Barometer offers a uniqueoverview of short-term international tourism trends, updatedthree times a year. It is developed by UNWTO with the aim toprovide all those directly or indirectly involved in tourism withadequate up-to-date statistics and analysis in a timelyfashion. Each issue contains three regular sections: anoverview of short-term tourism trends including data oninternational tourist arrivals, tourism receipts and expenditurefor over 100 countries worldwide and data on air transport onmajor routes; a retrospective and prospective evaluation ofcurrent tourism performance by the members of the UNWTOPanel of Tourism Experts; and selected economic data relevantfor tourism. The UNWTO World Tourism Barometer ispublished in January, June and October.
Available in English, French and Spanish in print and PDF version
Tourism Market Trends, 2006 EditionTourism Market Trends is UNWTO’s regular series of reportswith a comprehensive and timely analysis of internationaltourism trends in the world and the various regions,subregions and countries. The series examines short- andmedium-term tourism development and analyzes statisticalinformation on a set of indicators including internationaltourist arrivals, international tourism receipts, arrivals byregion of origin, purpose of visit and means of transport,volume of trips abroad, international tourism expenditure, etc.The full series consists of one volume providing an overviewof the tourism trends in the world, World Overview & TourismTopics, and five volumes highlighting the regional andsubregional trends presenting for each country a digest ofstatistical data as well as a qualitative evaluation of the pastyear with respect to tourism products, access, markets,marketing and promotion, tourism policy, etc.
Available in:World Overview & Tourism Topics: English, French and SpanishAfrica: English and French Americas: English and SpanishAsia: English Europe: English and FrenchMiddle East: English
The Impact of Rising Oil Prices onInternational TourismOil prices reached historic levels in 2005 and forecastsunderline this upward trend. In view of this, questions havebeen raised about the current and future effects of very highoil prices on international tourism and on one of its majorcomponents, air transport. The purpose of this study is toanalyze the observed or possible impact of the recent rise inoil prices on international tourism. Therefore, the studyfocuses in particular on: Statistical analysis of oil priceincreases in nominal and real terms; Comparisons with earlieroil shocks in 1974, 1979 and 1990; Analysis of the short-termeffect of rising oil prices since 2002; Evaluation of the impacton air transport; Analysis of medium-term scenarios, byregion, in terms of positive, negative, or neutral impact andThe development of proposals and recommendations.
Available in English, French and Spanish
Structures and Budgets of National TourismOrganizations, 2004 – 2005Structures and Budgets of National Tourism Organizations(NTOs) is a benchmarking reference tool on inbound tourismpromotion. The report compiles and analyses updated andcomparable information on the budgets that NTOs allocatefor the promotion of inbound tourism as well as theirstructure, functions and forms of operation in order toillustrate different forms of NTO organization and possibleaction in the area of inbound tourism promotion. The first partof the report is focused on the NTOs structure andfunctioning, including a benchmarking analysis. The secondpart presents an overall view of NTO budgets for around 50countries, including data on overall and promotional budgets,funding sources, budget allocation by source markets,products and promotional instruments, among other areas.
Available in English, French, Spanish and Russian
The World Tourism Organization is a specialized agency of the United
Nations and the leading international organization in the field of tourism. It
serves as a global forum for tourism policy issues and a practical source of
tourism know-how. Its membership includes 157 countries and territories and
more than 300 Affiliate Members representing local governments, tourism
associations and private sector companies including airlines, hotel groups and
tour operators.
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Handbook on Tourism Market Segmentation –Maximising Market Effectiveness
Market segmentation is crucial for National Tourism Organizations(NTO) and Destination Marketing Organizations (DMO) in makingsure that their resources are used in the most effective way. This newUNWTO/ETC manual, aimed ultimately at helping destinationsimproving their marketing effectiveness, is divided into four distinctsections. The first sets out the theory and rationale for segmentation.Other areas look at the current methods and practices, detailingsome of the main methodologies; at practical steps to introducing ordeveloping further segmentation-based marketing activities, andfinally at best practices in the area of tourism market segmentation,including the analyses of a number of case studies.
Available in English
City Tourism & Culture – The European Experience
City Tourism & Culture – The European Experience, is a newreport commissioned jointly by the World TourismOrganization (UNWTO) and European Travel Commission(ETC), which presents a new insight into the expansion ofEuropean cities as cultural tourism destinations. Besides,defining a conceptual framework for the analysis of citytourism with a cultural motivation, the study aims tocontribute to the marketing and product development of citytourism by throwing more light on the evolution of culturaltourism in Europe from ‘traditional’ to ‘innovative’.
Available in English, French, Spanish and Russian
Yearbook of Tourism Statistics,Data 2001 – 2005The 2007 edition of the Yearbook of Tourism Statisticsprovides for 206 countries and territories data on total arrivalsand overnight stays associated to inbound tourism withbreakdown by country of origin for the period 2001-2005.
The titles of the tables are in English only. Notes are given inEnglish, French and Spanish. Names of countries, regions andsub-regions as well as the classification included on the tablesare in English only. Countries are classified in accordance withEnglish alphabetical order.
Trilingual (English, French and Spanish)
Compendium of Tourism Statistics,Data 2001 – 2005The Compendium is designed to provide a condensed andquick-reference guide on the major tourism statisticalindicators in each country. The 2007 edition providesstatistical information on tourism in 208 countries andterritories around the world for the period 2001 – 2005. It isedited in English only, with countries classified according toEnglish alphabetical order. For easy reference in Arabic,French, German, Russian and Spanish, the text of the basicindicators and the basic references has been printed in aseparate pasteboard.
