Prospects for international tourism Project LINK UN DESA Expert Group Meeting on the World Economy, NYC, USA 2-22 October 29 John G.C. Kester Manager Tourism Trends and Marketing Strategies Programme jkester@unwto.org
The World Tourism Organization (UNWTO) - a specialized agency of the United Nations (UN) 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. - plays a central and decisive role in promoting the development of responsible, sustainable and universally accessible tourism, paying particular attention to the interests of developing countries. - encourages the implementation of the Global Code of Ethics for Tourism, with a view to ensuring that member countries, tourist destinations and businesses maximize the positive economic, social and cultural effects of tourism and fully reap its benefits, while minimizing its negative social and environmental impacts. - intergovernmental organization with membership includes 161 countries and territories and more than 4 Affiliate Members representing the private sector, educational institutions, tourism associations and local tourism authorities. - committed to the United Nations Millennium Development Goals, geared toward reducing poverty and fostering sustainable development.
Tourism: concepts, forms and indicators Tourism comprises the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes Forms and indicators: same-day visitors and tourists (staying overnight at least one night) international and domestic inbound (destination) and outbound (origin) several indicators possible: arrivals, trips, nights, receipts, expenditure UNWTO 2 key indicators: ITA, ITR all purposes except paid work in the destination Source: Methodology UNWTO and United Nations, Recommendations on Tourism Statistics International tourist arrivals by purpose, 28 Business and professional 15% VFR, Other 27% Not specified 7% Leisure, recreation and holidays 51%
Why Tourism? => Tourism is economic activity with substantial impact Employment Diversification of economy / Tax revenues Earning foreign currency / balancing Balance of Payments (inbound tourism=export / outbound=import, 3% of worldwide service exports) Development of weak regions / Regeneration of regions in decay Redistribution of wealth between countries and within countries Multiplier effect > impact in several other sectors Preservation of culture
Tourism as Generator of prosperity Tourism as % of Gross Domestic Product (GDP) Advanced Diversified Economies 2-12 % of GDP Small Island Economies and Developing Economies up till 4% of GDP
Tourism vs. other export categories 3 Tourism: 25 3% of export of services 6% of exports of goods and services 15 1 Tourism (BOP Travel & Passenger transport) Fuels Chemicals Automotive products Food 5 19 9 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 US$ billon 2
Source: Korea Tourism Organization (KTO), www.etourkorea.comjk5
Slide 8 jk5 www.etourkorea.com/jsp/eng/about/research/research3.jsp jkester, 11/29/26
Results 29
Results 29 International Tourist Arrivals 88 million -4.2% International Tourism Receipts US$ 852 billion (euro 611 bn) -5.7% (real terms) www.unwto.org/facts
International Tourism International tourist arrivals and receipts and market share (%) International Tourist Arrivals (ITA), 29* 88 million Americas ITA: 141 million (16%) ITR: US$ 165 billion (19%) International Tourism Receipts (ITR), 29* US$ 852 billion Europe ITA: 46 million (52%) ITR: US$ 413 billion (49%) Middle East ITA: 53 million (6%) Africa ITR: US$ 41 bn (5%) ITA: 46 million (5%) ITR: US$ 29 billion (3%) Asia and the Pacific ITA: 181 million (21%) ITR: US$ 24 billion (24%)
Source: World Tourism Organization (UNWTO) International Tourist Arrivals -2 3-2 -6 Middle East -3 1 Subsaharan Africa -1 4 North Africa -4 3 South America 1 Central America -5 1 Caribbean 3 North America -3 South Asia 1 Oceania 3 South-East Asia 28 North-East Asia -6 Central/Eastern Eu. Southern/Mediter. Eu. 2 18 16 14 12 1 8 6 4 2-2 -4-6 -8-1 -12 Western Europe Northern Europe change (%) 29: mixed picture by subregion 19 29* 6 5 3 1-3 -2-5 -7-1
International tourism volume and receipts: growth in receipts close to growth in arrivals Worldwide Inbound Tourism, 1995-29 1 9 8 7 International Tourist Arrivals (million) - from 533 million in 1995 to 88 million in 29 - average growth of 3.7% a year 6 5 International Tourism Receipts (US$ billion) - from US$ 45 billion in 1995 to 852 billion in 29 4 3 2 International Tourism Receipts (euro/ecu billion) - from euro 31 billion in 1995 to 611 billion in 29 1 1995 2 25 29*
International Tourism Arrivals and Receipts, World growth in receipts close to growth in arrivals 11 1 Asian financial and economic crisis: expenditure grew slower 9 8 6 5 4 3 2 1-1 -2-3 -4 International tourist arrivals -5 Receipts 29: -5.7% International tourism receipts (local currencies, constant prices) -6 */ 8 ' 9 / 7 ' 8 / 6 ' 7 / 5 ' 6 / 4 ' 5 / 3 ' 4 / 2 ' 3 / 1 ' 2 / ' 1 /9 9 ' /9 8 '9 9 /9 7 '9 8 /9 6 '9 7 /9 5 '9 6 /9 4 '9 5 /9 3 '9 4 /9 2 '9 3 /9 1 '9 2 /9 '9 1 /8 9-7 '9 % change over previous year 7 11S, SARS, economic downturn: receipts more affected
International tourism % change over previous year Emerging destinations tend to grow faster and maintained differential in 29 18 17 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1-1 -2-3 -4-5 -6-7 Advanced economies Emerging economies AAG 1995-28 AAG 1995-28 '96/'95 '97/'96 '98/'97 '99/'98 '/'99 '1/' '2/'1 '3/'2 '4/'3 '5/'4 '6/'5 '7/'6 '8/'7 '9/'8
To all corners of the world million 55 International tourist arrivals by country of destination 5 45 4 35 3 25 2 advanced economies emerging economies 15 1 5 198 1985 199 Source: World Tourism Organization 1995 2 25 29
To all corners of the world share (%) 1 International tourist arrivals by country of destination 9 advanced economies emerging economies 8 7 6 5 4 3 2 1 198 1985 199 Source: World Tourism Organization 1995 2 25 29
Most arrivals within own region 1, International tourist arrivals by country of destination 9 To emerging economies from same region To emerging economies from other region To advanced economies from same region To advanced economies from other region 8 million 7 6 5 4 3 2 1 198 1985 Source: World Tourism Organization 199 1995 2 25 29
Resilience business long-haul air transport traditional carriers first/business high end hotels premium shoulder season organised leisure, holidays short-haul VFR domestic transport over surface low cost carriers economy class mid range hotels non-hotel accommodation value for money high season independent
Source: IATA Premium traffic monitor
Response
Crisis: time for change, time of chances immediate needs and threats to address structural underlying weaknesses made visible rapid response to changing market conditions keeping up capacity compensating for failing source market keeping industry afloat maintain employment support recovery eliminate obstacles step up promotion and hard-sell sustainability issues energy dependence climate change adaptation and mitigation competitiveness, human resources, cost structure, occupancy need for regeneration, innovation, product development, diversification and market differentiation increase of effectiveness of marketing cooperation and coordination
Results 21
UNWTO World Tourism Barometer Objective: monitoring short-term evolution of worldwide tourism Frequency: full issue 3 times a year (January, June, October) and two Interim Updates Permanent elements: Short term tourism data In focus UNWTO Panel of Tourism Experts Economic data relevant for tourism www.unwto.org/facts
The heartbeat of international tourism Monthly evolution of worldwide international tourist arrivals 3 % change over same month previous year 25 2 15 1 5-5 -1-15 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 2728*29 21 Source: World Tourism Organization
International Tourist Arrivals, monthly evolution World (% change) 15 1 5-5 -1-15 28 Source: World Tourism Organization (UNWTO) 29 21*
International Tourist Arrivals, monthly evolution Advanced economies & Emerging economies (% change) 15 1 5-5 -1 Advanced economies -15 Emerging economies 3 per. media móvil -2 28 Source: World Tourism Organization (UNWTO) 29 21*
International Tourist Arrivals 2 (% change over same period of the previous year) 16 29 H1 14 13 15 29 H2 1 21* January - August 5 5 8 4 2 6 2 17 13 9 9 5 2 1 9 7 5 3 6 5 1-5 -1-1 -3-3 -8-7 -9-15 -8-5 -6-8 -6-2 -2-3 -6-9 -9-6 -14-16 Source: World Tourism Organization (UNWTO) st Mi dd le fr i c na a ra ah bs Su Ea a a Af r th No u th So r ic ca Am e ri Am al n tr e ri ca an be Ce Ca e ri Am rth r ib ca ia As No u th Oc ea n ia So -E as ta sia sia u th So No rth -E as ta r. E it e ed /M e rn So u th s te Ea a l/ n tr Ce u. e ro p Eu rn rn s te We No r th e rn Eu Eu ro p ro p e e -2
Is it just a dead cat bounce or a real new up-trend?
International Tourist Arrivals, monthly evolution World 12 (million) 27 11 28 1 29 9 21* 8 8 months / year 7 21: 643 mn 6 29: 61 mn / 88 mn 5 28: 641 mn / 919 mn first 8 mnths 69% in regular year 4 jan feb mar apr may jun Source: World Tourism Organization (UNWTO) jul aug sep oct nov dec
First half of 21 compared to first half of record year 28 International Tourist Arrivals (% change over same period of the previous year) 3 24 25 2 15 1 1 5 8 7 6 4 2 1-1 -5 st le dd a ra ah bs Mi na Af fr i c Ea a a r ic ca No rth Su So u th Am e ri Am al n tr Ce e ri ca an be r ib Ca er i Am rth No So u th As ca ia n ia ea Oc ta So uth -E as ta as -E r th Source: World Tourism Organization (UNWTO) sia s ia u. r. E it e ed /M e rn u th a l/ n tr Ce So Ea es s te te r rn ne Eu u ro r op e pe e ro p Eu W e rn rth No -1-2 -8-1 -15 No -1-3
Short-term outlook
Tourism outlook tag cloud Moderate inflation Product development Evaluation of effectiveness Cooperation Costumer service Asian rebound Niches e-tourism Continuing uncertainty Wait-and-see Unemployment Stimulus measures Cash-flow limitations Sustainability Increasing confidence Segmentation Large events Focus on experience Innovation Internet 2. Air transport liberalisation Aging Tight credit Reduced capacity Fragile growth Low interest rates Market research Climate change Wellness Exchange rates Influenza A(H1N1) Bankruptcies Green economy China Regeneration Energy prices Trading-down public-private partnership (PPP) Social unrest End of recession Pent-up demand Taxes and incentives
Ups and downs Asian financial crisis % change over same month previous year Monthly evolution of international tourist arrivals, world 32 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2-2 -4-6 -8-1 -12-14 -16 1991991 199219931994 199519961997 199819992 212223 242526 2728*29 21 Source: World Tourism Organization
Tourism, economy and external shocks World, Growth of Real GDP & International Tourist Arrivals ITA +7% a year between 24 and 27 12 Real GDP Tourist Arrivals 1 % change over previous year 8 IMF (oct. 21) 29: -.6% 21: +4.8% 211-215: +4% 6 4 2-2 -4 Echo of second oil crisis / Falklands and Israel-Lebanon conflicts Gulf War / disintegration of Yugoslavia Asian Financial Crisis Kosovo 11S Iraq, SARS -6 1975 198 Y = -1.9 + 1.8 X 1985 199 1995 2 25 21
Emerging economies much stronger than advanced ones 16 IMF (Oct. 21) 29: -3.2% 21: +2.7% 211-215: +2% Real GDP Tourist Arrivals 14 % change over previous year 12 1 8 6 4 2 18 12 1 8 6 4 2-2 -4-4 -6-6 2 25 21 IMF (Oct. 21) 29: +2.5% 21: +7.1% 211-215: +6% Real GDP Tourist Arrivals 14-2 1995 Emerging economies, Growth of Real GDP & International Tourist Arrivals 16 % change over previous year 18 Advanced economies, Growth of Real GDP & International Tourist Arrivals 1995 2 25 21
'Virtually nobody' saw crisis coming Robert Rubin, former Clinton-era Treasury Secretary
Economic projections have been revised downwards repeatedly IMF projections, worldwide economic growth 29 (ppp weighted): World Economic Outlook, October 28 3.% Update, November 28 2.2% Update, January 29.5% Meeting of the Ministers and Central Bank Governors, March 13 14, 29-1.% to -.5% World Economic Outlook, April 29 1.3% World Economic Outlook. October 29 1.1% Update, January 21.8%
UNWTO Panel of Tourism Experts: regaining confidence UNWTO Panel of Tourism Experts 6% 54% 48% 5% 4% 32% 3% 2% 1% % 21% 17% 12% 7% % [] Much worse [5] Worse [1] Equal [15] Better Evaluation 29 Prospects 21 Source: World Tourism Organization (UNWTO) 2% 7% [2] Much better
UNWTO Panel of Tourism Experts: regaining confidence UNWTO Panel of Tourism Experts 175 Better 15 144 15 125 119 144 14 14 143 136 137 132 98 Equal 1 Worse 131 71 72 75 Prospects (before) 5 Evaluation (after) 25 23 24 25 Source: World Tourism Organization (UNWTO) 26 27 28 29 21
World Much better Better Equal Worse Much worse 175 15 125 1 75 Prospects 5 Evaluation 25 T1T2T3T1T2T3T1T2T3T1T2T3T1T2T3T1T2T3T1T2T3T1T2T3 '3 '4 '5 '6 '7 '8 '9 '1 Source: World Tourism Organization (UNWTO)
UNWTO tourism business-cycle clock UNWTO tourism business-cycle clock Prospects coming 4 months 15 Upswing Boom May 23 125 October 21 1 75 Recession 5 25 5 Downswing 75 1 Evaluation past 4 months 125 15 175
Forecast 21 Forecast 21: 3% to 4% 12 1.1 1 7.9 8 5.3 change (%) 6 4 5.6 6.4 2.8 2.1 2. -2-1.5-4 -4.3-6 2 21 Source: World Tourism Organization (UNWTO) 22 23 24 25 26 27 28 29* 21*
International Tourism 29 full year forecast 29 Forecast 21 World -4% 3% to 4% Europe -6% 1% to 3% Asia and the Pacific -2% 5% to 7% Americas -5% 2% to 4% Africa +5% 4% to 7% Middle East -6% 5% to 9% Source: World Tourism Organization (UNWTO)
Downside risks Unemployment is the key challenge. The jobs crisis is not over yet, particularly in major advanced economies and many valuable human resources are still at risk; Economic growth in major source markets, specially in Europe and the USA, is still fragile; Stimulus measures are likely to be phased out due to increasing public deficits while a number of advanced economies may see increases in taxation, putting extra pressure on household and company budgets; Oil prices remain volatile; Although the overall impact of the influenza A(H1N1) virus was milder until now than anticipated, experience from previous pandemics shows that the situation could once again become challenging; Security threats and the potential of increased related hassle and costs for travellers are still a challenge; Revenues and yields are expected to recover at a slower pace than travel volumes.
KAL's cartoon, The Economist, 29 Oct 29
Upside opportunities Business and consumer confidence has picked up; A slump is generally followed by a rebound due to pent-up demand and destinations are expected to actively leverage this opportunity; There is scope for a revival among source markets which were hard hit in 29 such as the Russian Federation or the UK; The momentum of the spirit of cooperation and partnership bred by the crisis is expected to be maintained by stakeholders; The flexibility shown by the tourism sector in dealing with rapid shifts in demand and volatile market conditions has made it stronger; Interest rates and inflation remain at historically low levels and are expected to rise only moderately in the short term; Major international events will take place in South Africa (FIFA World Cup), Canada (Winter Olympics) and China (Shanghai Expo), creating potential extra travel demand; Crises provide an opportunity to address underlying structural weaknesses and implement strategies fostering sustainable development and the transformation to the Green Economy.
Where to find information prepared by UNWTO? www.unwto.org => Facts & Figures publications electronic: => UNWTO elibrary hardcopy: => UNWTO Infoshop => depositary libraries www.unwto.org/pub Affiliate Membership: www.unwto.org/edsco/index.php
Thank you very much for your attention! World Tourism Organization (UNWTO) www.unwto.org John Kester Market Trends and Competitiveness Section