Q3/2009 EUROPEAN TOURISM IN 2009: Quarterly Report (Q3/2009) A quarterly insights report produced for the Market Intelligence Groupof theEuropean Travel Commission (ETC)byTourism Economics (an Oxford Economics Company)andThe Travel Business Partnership Copyright © 2009 European Travel Commission European Tourism in 2009: Trends & Prospects (Q3/2009) All rights reserved. The contents of this report may be quoted, provided thesource is given accurately and clearly. Distribution or reproduction in full ispermitted for own or internal use only. While we encourage distribution via The designations employed and the presentation of material in this publicationdo not imply the expression of any opinions whatsoever on the part of the ISBN No: 978-92-990050-8-8 This report was compiled and edited by:The Travel Business Partnership Cover: The Cliffs of Moher, County Clare, IrelandCourtesy of Fáilte Ireland Foreword Leslie VellaChairman Rob FranklinExecutive Director Economic Trends and Implications Better than expected,but with caveats There have been a number of significant upside surprises on the growth frontin the past month – in particular the positive figures for Q2 GDP in Germanyand France.The improving trend in industry has for the most part beenmaintained, and parts of the service sector are picking up in response to the Over the last few months, however, upward revisions to short-term growthforecasts have been much larger in emerging countries than in the majorindustrialised economies.This caution in terms of the latter group reflects The risks to consumer spending have been highlighted by further steep rises inunemployment in the USA and Japan and outright falls in consumer credit intheUSA and UK.Theoutlook for investment also remains poor.The The abundance of spare capacity, financial sector weakness and the need forconsumers and businesses to reduce debt all point to a recovery that will bebumpy and slower than from 'normal recessions'.And although the likelihoodofa strong'V-shaped'recovery has certainly risen,Oxford Economics Europe's Q2 GDP resultswere much improved … Eurozone GDP fell by just 0.1% in Q2, which was a better result than expectedandan encouraging indication that a stabilisation in economic activity isunderway.This has led Oxford Economics to revise upwards its growth The first hard data for Q3 broadly confirms the improvement in the economicoutlook, at least for the largest countries.In Germany, the pick-up in ordersaccelerated significantly in July, as the already strong demand from Asia was Positive signals were also evident in key survey indicators.The service sectorindex showed a more marked improvement than the manufacturing one, forexample, led by a significant improvement in new business.This appears to The pace of the recovery in the months ahead nevertheless remains uncertain,particularly in respect of consumer spending – so important to the travel andtourismsector.Amajor risk area is trends in the labour market.Theunemployment rate in the eurozone climbed to 9.5% in July and is forecast toreach 10.2% at the end of the year and to stay well above 10% through 2010.Insome countries unemployment has been kept in check by fixed-term … but unemployment islikely to be a drag … Thisrise in unemployment is expected to have a significant bearing onconsumption, which is forecast to contract by 0.8% this year and to increase by countries over the next year is unlikely to be smooth. As an example, the year-on-yeargrowth rate in both Korean retail sales volumes and equipment The rest of the region is likely to be affected by the fact that Chinese domesticdemand growth will not be maintained at the hectic pace seen in Q2, when the Meanwhile, growth in Japan is thought to have continued at a decent pace intoQ3, given the further increase in industrial output and exports.As a resultGDP is forecast to fall by 5.4% this year (less than earlier predicted), with 2010 Trends in Tourism to/within Europe Third-quarter arrivals and overnights The worst performing Less than one third of European countries have filed their arrivals for Auguston TourMIS, or reported them to the World Tourism Organzation (UNWTO).And there is no clear growth trend among those that have.But UNWTO'sestimated 4% decline in arrivals for July would seem to confirm that thenegative trend has started to ease, although it is clearly too early to be sure of In the three months from May to July, according to UNWTO's count, arrivalswere down 11%, 7.5% and 4%.Not surprisingly, these averages mask quitelarge differences across each of the sub-regions, as well as from one destinationto another. With regard to the overall trend in the first seven months, however,no sub-region in Europe was spared: Central/Eastern Europe turned in the In Northern Europe, Iceland and Sweden were the only countries to reportincreases to UNWTO for the period (in arrivals for Iceland and overnightvolume for Sweden), but in each