China SPECIAL SARS ANALYSIS IMPACT ON TRAVEL & TOURISM. The 2003 Travel & Tourism Economic Research

Transcription

1 China SPECIAL SARS ANALYSIS IMPACT ON TRAVEL & TOURISM The 2003 Travel & Tourism Economic Research

2 CHAIRMAN: Sir Ian Prosser Six Continents PLC VICE CHAIRMEN: Donald Carty, American Airlines Jean-Marc Espalioux of Management Board & CEO Accor S.A. André Jordan Lusotur S.A. Jonathan S.Linen Vice American Express Company Vincent A.Wolfington Carey International,Inc. EXECUTIVE COMMITTEE: Peter Armstrong Rocky Mountaineer Railtours Stephen Bollenbach Hilton Hotels Corporation Club Méditerranée Sebastián Escarrer Vice Sol Meliá Edouard Ettedgui Managing Director Mandarin Oriental Hotel Group Maurice Flanagan Group Managing Director Emirates Bernard D.Frelat Rail Europe Group,Inc. Michael Frenzel TUI A.G David House Group,Global Network and Establishment Services American Express Company Richard R.Kelley Outrigger Enterprises,Inc Geoffrey J.W.Kent Abercrombie & Kent J.W.Marriott,Jr. Marriott International,Inc David Michels Hilton Group Curtis Nelson and CEO Carlson Consumer Group P.R.S.Oberoi The Oberoi Group Henry Silverman Cendant Corporation Jonathan Tisch Loews Hotels Brett Tollman Vice The Travel Corporation GLOBAL MEMBERS: Akbar Al Baker CEO Qatar Airways Giovanni Angelini CEO & Managing Director Shangri-La Hotels & Resorts David Babai Gullivers Travel Associates Phil Bakes FAR&WIDE Travel Corporation Ted Balestreri Cannery Row Company Henrik Bartl Head of Specialized Property Finance Aareal Bank AG Gordon Bethune of the Board & CEO Continental Airlines Paul Blackney Worldspan Richard Brown Eurostar Group Regis Bulot Relais & Chateaux Marilyn Carlson Nelson Carlson Companies,Inc Alun Cathcart Deputy Avis Europe Plc U.Gary Charlwood Founder, Uniglobe Travel (International) Inc. Jennie Chua & COO Raffles International Ltd. David Clifton Managing Director,Europe & Asia Interval International Glen Davidson Senior VP,Worldwide Travel Insurance & Related Services American International Group Inc. Dinesh Dhamija ebookers plc Lloyd Dorfman & Travelex plc Rod Eddington British Airways plc Manuel Fernando Espírito Santo Group Espirito Santo Sam Galeotos Galileo International Laurence Geller Strategic Hotel Capital Maurice H.Greenberg American International Group, Inc. Philip Haan Executive VP International, Sales & Information Services Northwest Airlines Anthony Harris Hilton International Richard Helfer Raffles International Ltd. James Hensley Allied Europe James Hogan and Gulf Air Stephen Holmes, Hospitality Division Cendant Corporation Raimund Hosch Messe Berlin GmbH Dieter Huckestein,Hotel Operations, Owned & Managed Hilton Hotels Corporation Xabier de Irala Iberia Clive Jacobs Holiday Autos Group Nuno Trigoso Jordão. Sonae Turismo Gestao Servicos Sol Kerzner Kerzner International Ltd. Nigel Knowles Managing Partner DLA Craig Koch The Hertz Corporation Krishna Kumar Managing Director The Taj Group of Hotels Hans Lerch Kuoni Travel Holding Ltd. Paolo Mantegazza Globus & Cosmos Inc Manuel Martin Partner CyberDodo Productions Ltd. Paul McManus The Leading Hotels of the World David Mongeau Vice CIBC World Markets Alan Mulally Boeing Commercial Airplanes John M Noel Travel Guard International Tom Nutley Reed Travel Exhibitions Alan Parker Managing Director Whitbread Hotel Company Jean Gabriel Pérès Mövenpick Hotels & Resorts Dionísio Pestana Group Pestana Stefan Pichler Thomas Cook AG Fernando Pinto Officer TAP - Air Portugal David Radcliffe Hogg Robinson Jay Rasulo Walt Disney Parks & Resorts Bonnie Reitz Senior VP,Marketing & Sales Continental Airlines Kurt Ritter Rezidor SAS Hospitality Peter Rogers Diners Club International Carl Ruderman Universal Media Bruno Schöpfer CEO & Managing Director Mövenpick Group Robert Selander MasterCard International Per Setterberg CEO Global Refund Holdings A.B. Eric Speck Executive Vice Group,Travel Marketing & Distribution Sabre Holdings Corporation Barry Sternlicht Starwood Hotels & Resorts Worldwide,Inc Ron Stringfellow Executive Southern Sun Group Lalit Suri & Managing Director Bharat Hotels Ltd. Ian Swain Swain Travel Services Inc Kathleen Taylor,Worldwide Business Operations Four Seasons Hotels and Resorts José Antonio Tazón Amadeus Global Travel Distribution Jeffrey Toffler Coventry Partners Mustafa Türkmen CEO & Managing Director Enternasyonal Tourism Investments,Inc.Yapi Kredi Bank of Turkey Patrice Vinet Partner Accenture Trevor de Vries Deputy Managing Director Mondial Assistance S.A. Jurgen Weber Lufthansa German Airlines Peter Yesawich Managing Partner Yesawich,Pepperdine,Brown & Russel HONORARY MEMBERS: Lord Marshall of Knightsbridge British Airways plc Sir Frank Moore,AO Taylor Byrne Tourism Group Frank Olson of the Board The Hertz Corporation Gérard Pélisson Co-,Supervisory Board Accor S.A. Tommaso Zanzotto TZ Associates Ltd. CHAIRMAN EMERITUS: James D.Robinson III General Partner RRE Ventures IMMEDIATE PAST CHAIRMEN: Harvey Golub Retired American Express Co. PRESIDENT: Jean-Claude Baumgarten Correct as at 14 February WORLD TRAVEL & TOURISM COUNCIL 1-2 QUEEN VICTORIA TERRACE.SOVEREIGN COURT.LONDON E1W 3HA.UNITED KINGDOM TEL:+44 (0) or + 44 (0) FAX:+44 (0) or + 44 (0) enquiries@wttc.org

3 THE WORLD TRAVEL & TOURISM COUNCIL (WTTC) IS THE BUSINESS LEADERS FORUM FOR TRAVEL & TOURISM, WORKING WITH GOVERNMENTS TO RAISE AWARENESS OF THE IMPORTANCE OF THE WORLD S LARGEST GENERATOR OF WEALTH AND JOBS. With the s of more than one hundred of the world s leading companies in membership, WTTChas aunique mandate and overviewon allmatters related to success intravel& Tourism. This extraordinary 2003 report for China is the latest special analysis of the Tourism Satellite Accounting research that Oxford Economic Forecasting (OEF) has prepared for WTTC. The first, prepared in 2002, provided a much-needed analysis to quantify the impact of the tragic events of September 11, Just recently in March 2003, OEF also produced a special analysis to gauge the impact of a prolonged war in Iraq on the 2003 estimates. Finally, this special analysis attempts to quantify the economic impact of SARS on Travel & Tourism in China, Hong Kong, Singapore and Vietnam. This 2003 special research updates the current and near term estimates for China s Travel & Tourism, based on a clearly defined set of assumptions on the duration of the SARS outbreak and the likely regeneration of Travel & Tourism over time. The message from this special SARS report is extraordinary. In 2003, China s Travel & Tourism Industry is expected to lose 24.5 per cent of its GDP and 2,802,210 jobs, while the broader Travel & Tourism Economy is expected to lose 15.7 per cent of its GDP and 6,798,120 jobs. Looking abroad, the forecast for Travel & Tourism Visitor Exports is expected to be especially sobering with 55.2 per cent real loss in This WTTC research quantifies and documents the impact of SARS on Travel & Tourism for China, the first step towards addressing the post-sars policy agenda that must follow to restart Travel & Tourism. We hope that by raising awareness of SARS on Travel & Tourism in China, this report will act as a catalyst, encouraging industry and government to continue to work together to rebuild the conditions necessary to get the industry back on its feet and achieve it s true promise. The SARS Assumptions The "duration" of full blown SARS impact is estimated to be 6 months in China, 4 months in Hong Kong and Singapore and 3 months in Vietnam all beginning in March Visitor Exports are reduced 80% for the various duration periods. After the duration period, Visitor Exports are reduced as follows: 60% first following month, 40% second following month and 25% thereafter until end of Domestic Travel & Tourism spending is assumed to be reduced 25% for the duration period. Capital Investment is assumed to be reduced 10% for the duration. Jean-Claude Baumgarten, World Travel & Tourism Council Sir Ian Prosser, World Travel & Tourism Council, Six Continents Hotels & Resorts PLC

4 SARS ECONOMIC IMPACT IN 2003, CHINA'S TRAVEL & TOURISM IS EXPECTED TO LOSE BILLION (US$20.4 BILLION) OF ECONOMIC ACTIVITY (TOTAL DEMAND) AS A RESULTS OF SARS. THE INDUSTRY'S DIRECT LOSS INCLUDES: 2,802,210 jobs 63.3 billion (US$7.6 billion) of Gross Domestic Product (GDP). HOWEVER, SINCE TRAVEL & TOURISM TOUCHES ALL SECTORS OF THE ECONOMY, ITS REAL IMPACT IS EVEN GREATER. CHINA'S TRAVEL &TOURISM ECONOMY IS EXPECTED TO SUFFER A SARS RELATED LOSS, DIRECTLY AND INDIRECTLY, OF: 6,798, jobs billion (US$20.4 billion) of Gross Domestic Product (GDP). billion (US$7.8 billion) of Exports, services & merchandise. billion (US$3.7 billion) of Capital Investment. billion (US$8.9 billion) of Personal and Business Travel & Tourism by residents and resident companies.

5 Travel & Tourism Demand 1990 Constant US$ bn TRAVEL & TOURISM DEMAND The 2003 WTTC/OEF TSA for China estimated that Travel & Tourism demand in 2003 would generate real term growth(loss) of 10.0 per cent over 2002 results. In contrast, this extraordinary SARS analysis forecasts a real term growth(loss) of -3.4 per cent. The difference, per cent real loss for China Travel & Tourism, is the negative impact associated with SARS. In nominal terms, this SARS impact is expected to total billion or US$-20.4 billion in 2003 alone. The area in red on the chart indicates the SARS related loss. 2005E Travel & Tourism Visitor Exports 1990 Constant US$ bn TRAVEL & TOURISM EXPORTS Visitor exports is expected to be the hardest hit component of Travel & Tourism demand during the SARS outbreak. The 2003 WTTC/OEF TSA forecast for China's visitor export growth in 2003 was 5.2 per cent over 2002 results. This SARS analysis has restated China's visitor export growth at per cent, a decrease of per cent or billion (US$-7.8 billion) visà-vis the original 2003 forecast. SARS related losses are indicated in red on the chart. 2005E Travel & Tourism Industry GDP 1990 Constant US$ bn TRAVEL & TOURISM GROSS DOMESTIC PRODUCT A proper analysis of the SARS related impact must also isolate the likely change to Travel & Tourism Industry GDP, since some elements of T&T Demand such as government expenditures and capital investment are not expected to be significantly impacted. For China, Travel & Tourism Industry GDP is expected to decrease in the SARS analysis by per cent (-63.2 billion or US$- 7.6 billion) vis-à-vis the original 2003 forecast. SARS related losses are indicated in red on the chart. 2005E , , , , , , ,000.0 Travel & Tourism Economy Empl. '000 of Jobs TRAVEL & TOURISM EMPLOYMENT Finally, Travel & Tourism economy employment, in its broadest sense, is the most comprehensive and personal gauge of SARS losses on our industry. In 2003, Travel & Tourism economy employment in China was expected to total 54,356,300 jobs under our original 2003 TSA forecast Under this SARS analysis the total jobs forecast is now pegged at 47,558,190. The difference, - 6,798,120 lost jobs, is the negative employment impact in China associated with SARS. These losses are indicated in red on the chart E

6 SARS ANALYSIS SUMMARY TABLE BASED ON INFORMATION CURRENTLY AVAILABLE AND ASSUMPTIONS MADE AS INDICATED ON THE DURATION OF THE SARS OUTBREAK, WE EXPECT THE 2003 IMPACT ON TRAVEL & TOURISM IN CHINA TO TOTAL: Original TSA Real Growth Estimate SARS Analysis Real Growth Estimate Total SARS Impact Real Growth Gain(Loss) Total SARS Impact bn Total SARS Impact US$ bn Personal Travel & Tourism 9.1% -5.0% -14.0% Business Travel 1.4% -3.9% -5.3% Government Expenditures 10.1% 10.1% 0.0% Capital Investment 10.5% 3.2% -7.2% Visitor Exports 5.2% -50.0% -55.2% Other Exports 20.2% 20.2% 0.0% Travel & Tourism Demand 10.0% -3.4% -13.4% T&T Industry GDP 6.0% -18.6% -24.5% T&T Economy GDP 8.7% -7.0% -15.7% T&T Industry Employment ' % -20.4% -19.9% -2, ,802.2 T&T Economy Employment ' % -10.4% -12.8% -6, ,798.1 THIS ANALYSIS AND RECENT HISTORY HAS SHOWN THAT THE TRAVEL & TOURISM INDUSTRY IS PARTICULARLY VULNERABLE TO SEVERE BUSINESS DOWNTURNS DURING PERIODS OF TERRORISM, POLITICAL UNCERTAINTY, MILITARY CONFLICT AND HEALTH- RELATED CRISIS. WTTC CALLS ON GOVERNMENT LEADERS AROUND THE WORLD TO RECOGNIZE THE SEVERE ECONOMIC AND EMPLOYMENT IMPACT EXPERIENCED BY TRAVEL & TOURISM AND IMPLEMENT, WHEN NECESSARY AND APPROPRIATE, STRATEGIC POLICY MEASURES TO MITIGATE THE LONG-TERM CONSEQUENCES ON THE INDUSTRY AND NATIONAL ECONOMIES.

7 WTTC would like to express its sincere appreciation to the entire research and economics team associated with this 2003 Tourism Satellite Accounting Research Oxford Economic Forecasting Adrian Cooper, Managing Director Alan Wilson, Director of Consulting Services Erik Britton, Director of Consulting Services Simon Knapp, Senior Economist Keith Edmonds, Senior Economist The OEF Macroeconomic Forecasting and Technical Teams World Travel & Tourism Council Richard Miller, Vice, Research and Economics

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