Europe: Europe Tourism Profile

Europe Tourism Profile

Travel & Tourism is set for a milestone year as the industry’s direct contribution to the world economy is expected to pass $2 trillion in GDP and 100 million jobs.

David Scowsill launches Economic Impact Research at London Stock Exchange

According to research by the World Travel & Tourism Council (WTTC), the world Travel & Tourism industry will grow by 2.8% in 2012, marginally faster than the world rate of economic increase, predicted to be 2.5%.

This rate of increase means that Travel & Tourism industry is expected to directly contribute $2 trillion to the world economy and sustain some 100.3 million jobs.

When the wider economic impacts of the industry are taken into account, Travel & Tourism is estimate to contribute some $6.5 trillion to the world economy and generate 260 million jobs – or 1 in 12 of amount jobs on the planet.

In 2011, Travel & Tourism’s total economic contribution, taking account of its direct, indirect and induced impacts, was US$6.3 trillion in GDP, 255 million jobs, US$743 billion in investment and US$1.2 trillion in exports. This contribution represented 9% of GDP, 1 in 12 jobs, 5% of investment and 5% of exports.
David Scowsill, President & CEO of WTTC, said: “In 2012, when international travellers are expected to surpass one billion for the first time, the industry will pass two other largest milestones: a direct contribution of $2 trillion to the world economy and 100 million jobs. But these numbers are dwarfed by the total estimate contribution of our industry – $6.5 trillion to the world economy and 260 million jobs.”

Over the medium-term, the prospects of the industry are even extra positive with average annual increase expected to be 4% through to 2022 by which time Travel & Tourism will employ 328 million people – or 1 in 10 of amount jobs on the planet.

David Scowsill continued: “It is clear that the Travel & Tourism industry is going to be a significant driver of world increase and employment for the next decade. Our industry is responsible for creating jobs, pulling people out of poverty, and broadening horizons. It is one of the world’s great industries”.
Other selected highlights from the research show:

• South & Northeast Asia will be the fastest-growing regions in 2012, growing by 6.7%, driven by countries such as India and China where rising incomes will generate an increase in domestic tourism spend and a sharp upturn in capital investment, and recovery in Japan
• After an extremely challenging 2011 when civil unrest and violence had a dramatic impact on request for Egypt, Tunisia and Libya, North Africa is showing signs of recovery in 2012 with Travel & Tourism direct GDP increase estimate at 3.6%. Morocco (8.3%) will be the star performer of this region as negative perceptions of security continue to affect tourism in Egypt and Tunisia
• In the Middle East, where civil unrest and violence in some countries continues, increase will be extra subdued (3%), although there are stark differences at country level. Qatar will grow fastest at 13.2% while Syria will likely see another dramatic fall, estimated at 20.5%, as the political situation worsens, increasing concerns over security. It is worth noting that 14% of amount international arrivals in the Middle East in 2010 were for Syria, the second most significant destination in the region after Saudi Arabia
• The mature economies of North America and Europe will continue to struggle in 2012. North America, which is saw a slight upturn in the USA’s economic situation at the end of 2011, should see increase of only 1.3% in Travel & Tourism direct GDP over the year
• The prospects for Travel & Tourism increase in Europe in 2012 are precarious. Current forecasts suggest a 0.3% increase in Travel & Tourism direct GDP for the region in general, but this will be propped up by newer economies such as Poland and, of course, Russia. A decline of 0.3% is expected across the European Union. Consumer spending is set to tighten as austerity measures kick in, and there continues to be considerable uncertainty around the next of the Eurozone and peripheral economies of Greece, Spain, Italy and Portugal. 

Recent indicators of European travel have been encouraging. The pace of increase is slowing but nearly amount destinations have posted increase and the region is on track to fully recover to prior peaks in 2011. International visits are on track to expand 5.6% for the year.

Travel in Europe continues to move toward full recovery even as increase is slowing
Aviation passenger request has expanded 8% through September and capacity has nearly kept pace, improving accessibility and controlling prices. Hotel performance has as well been solid. Occupancy rates through August have jumped 3.7% while rates have as well increased 3.2%.
The recovery has been broad based. The Baltics and other destinations in Eastern Europe are enjoying a surge in visits. Occupancy rate data support this observation with 10.4% increase in Eastern Europe through August. Southern Europe is as well performing well, led by Spain, Cyprus, and Malta. Occupancy rates are 5.2% higher this year in Southern Europe. 

Aviation and hotel results indicate a broad rebound
Nevertheless, European travel faces multiple external risks which are addressed in this statement. Most significantly, the Eurozone debt crisis has from now on to be contained. Financial market contagion could drive the European economy back into recession. In addition, risks to the US and emerging market economies present a near term outlook with extra downside than upside. 

The recovery now faces a renewed economic slowdown with notable downside risks.
As a result, the baseline Tourism Economics estimate for Europe includes a marked slowdown of increase in 2012. Visits to amount of Europe are expected to expand 2.3% in 2012. Two points of clarification are necessary to this projection. First, the core Eurozone countries are most exposed to the downturn and will likely post lower increase than the rest of the region. Second, the downside alternative scenarios to this outlook appear to be as probable as the baseline estimate.

•  Signs of economic weakness have led us to revise down our world economic increase estimate to 2.8% in 2011 and 3.1% in 2012 (at market exchange rates).
•  And risks to this estimate are skewed to the downside, coming from three different fronts: i) an escalation of the Eurozone debt crisis including financial contagion, ii) the possibility that the US falls back into recession, and iii) a hard landing in the emerging economies and China in particular. Each of these three scenarios could be sufficient to tip the world back into recession.
•  On the whole, the travel recovery is continuing. Nevertheless, the rate of expansion is slowing with few exceptions.
•  European airlines have experience robust request increase through September. With only one exception, weekly increase rates have been above 6% and have averaged a rate of nearly 8% over this period. And seat capacity has nearly kept pace with request, producing stable load factors.
•  Through August, room request has grown nearly 4% and been especially strong in Eastern and Southern Europe, with occupancy rates up 7.3% and 5.2%, respectively. Although occupancy increase has been relatively weak in Western Europe (2.4% YTD), room rates have performed well above average, growing 4.8%.
•  By the end of 2011, we expect international visits to Europe to have surpassed records set in 2008.
•  Nevertheless, the economic landscape presents a challenging environment for travel. We expect European inbound travel to slow markedly, to 2.3% in 2012 from 5.6% in 2011. The core Eurozone countries are most exposed to the downturn and are projected to experience marginal increase in 2012.