EUROPEAN TOURISM in 2012: Quarterly Report (Q1/2012) A quarterly insights report produced for the Market Intelligence Groupof theEuropean Travel Commission (ETC) European Tourism in 2012: Trends & Prospects (Q1/2012) All rights reserved.The contents of this report may be quoted, provided the sourceis given accurately and clearly.Distribution or reproduction in full is permitted forown or internal use only.While we encourage distribution via publicly accessible The designations employed and the presentation of material in this publication do Data sources: This report includes data from the TourMIS database /http://www.tourmis.info, STR Global, IATA, AEA and UNWTO. Economic analysis and forecasts are provided by Tourism Economics and ISSN No: 2034-9297 This report was compiled and edited by:Tourism Economics (an Oxford Economics Company) Photo: Waterside, Ghent, Belgium (c)www.milo-profi.be Foreword Leslie VellaChairman Executive Summary European travel has exhibited resiliency inthe early part of 2012. Most reportingdestinations have experienced growth in Air travel has also been encouraging, withEuropean airline passenger growthexceeding 5% through mid-April. However, there are signs of mixedperformance and slowing throughoutEurope. While Central and Eastern Source : TourMIS*date varies (Jan-Mar) by destination Overall, a slowdown is evident in hoteloccupancy rates in most European sub- The global economy is being restrainedby a mix of government austerity,household deleveraging, corporatecaution, and high commodity prices.Meanwhile, data on economic activityindicate that the Eurozone is in mildrecession and concerns are mounting Although only two months of data areavailable for 2012, relative strength isevident in major European sourcemarkets - implying greater internalisationof travel in the region. Russia remains a 2012 Tourism Performance Summary Signals of a travel plateau emerged as 2011 came to a close. However, earlydata for 2012 show that parts of the region have continued to grow. Arrivals andnightsdata show Eastern and Central Europe are performing well.LargeWestern European destinations, including Germany, the UK, Austria, and Spain Source : TourMIS*date varies (Jan-Mar) by destination Source : TourMIS*date varies (Jan-Mar) by destination Global Economy: Are global growth divergences set to widen? .Growth trends have become increasingly divergentamong the major economies over recent months. Inthe US, GDP is growing at an annualised rate of 2-3%and the latest monthly indicators including the Institute The pick-up in US growth in recent months is alsobenefiting those economies that have strong trade andfinancial links with the US. These include the Asian By contrast, the picture in the Eurozone remains bleak.Despite lower financial stress, monthly indicators forQ1 have shown no signs of a firmer trend in output. And the acute weakness of the economies of the‘peripheral’ countries such as Spain, Portugal andItaly, which will be exacerbated by the sharp fiscal Among the emergers, recent rises in oil prices are alsolikely to create some divergence of performance A further concern also exists in the form of howdependent even the current patchy growth trends in There are already some signs the positive effect ofEuropean Central Bank (ECB) actions on financialmarkets in the ‘periphery’ may be wearing off. Morebroadly, global stocks and leading indicators have Recent Industry Performance Signs of resiliency in 2012 Despite concerns about the global economy and signs of a slowdown atthe end of 2011, air travel continues to expand. Increases in European air capacity show confidence among carriers and Although slowing, hotel demand in Europe has remained positive in theearly part of 2012 with Central and Eastern Europe exhibiting notable Air Transport Globalair passenger traffic has remained strongsince our last report with demand exceeding 5% inDecemberand January,then surging 9.3%inFebruary.This growth has been strongest in the Ata global level,the results reflect the overalleconomiccycle with a strong rebound in 2010, InEurope,however,the trend is somewhat different.Revenue passengerkilometers (RPK) increased 5% in 2010 and then accelerated to 10% growth in2011.Strength has continued into the first two months of the year when Weekly data from the Association of European Airlines (AEA) tells a similar,more detailed, story. Growth has remained robust with weekly RPK averaging5.5% over the 15 weeks to early April. Cross-border air travel has been steady Load factors also strengthened as 2011 came to a close and 2012 results haveexceeded prior year load factors in every week of the year. Not surprisingly,airlines are slowly adding more seat capacity as the year progresses. Thisresult is beneficial to the tourism market on two fronts as it provides both Accommodation The global hotel sector is continuing to expand into 2012. According to STRGlobal, ev