EUROPEAN TOURISM IN 2009: Quarterly Report (Q2/2009) A quarterly insights report produced for the Market Intelligence Groupof theEuropean Travel Commission (ETC) Copyright © 2009 European Travel Commission European Tourism in 2009: Trends & Prospects (Q2/2009) 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 publication Email:info@etc-corporate.org This report was compiled and edited by:The Travel Business Partnership Cover: The port of Nauvo (Nagu) in the Turku archipelago, western Finland Foreword Aswe enter the second half of 2009,there is growing optimism at theemergence of so-called 'green shoots', but there is a risk that this optimism will Air passenger demand continues to fall, but the double-digit declines seen inthe first quarter have slowed to 7-8%.The lodging sector has also seen thefalloff slow, with year-to-date declines in occupancy rates moderating over the Travel to European destinations in 2009 has been well below last year's levels.Of the 19 countries for which 3-5 months of arrivals and/or overnight data isavailable, only Serbia has posted growth (and that is only for arrivals, with Responses to Eurostat surveys suggest that industry sentiment among thehospitality and transport sectors is turning less negative.But travel agencies The shift towards shorter-haul travel and a weaker euro should bring somestability to the intra-European market. However, sterling remains weak vis-à-visthe euro, stunting UK outbound travel.Tourism Economics expects inboundtravel to Europe to decline by more than 5% in 2009.The World TourismOrganization is even more pessimistic, forecasting a drop of between 5% and These forecasts were made before the recent spread of the H1N1 influenzavirus.The impact of the pandemic is still difficult to predict but, if it intensifies,the effect on travel and tourism demand could be very severe.However, evenif it remains relatively benign, leisure travel will continue to be constrained byjob losses and weak consumer confidence generated by the economic crisis. Business travel, meanwhile, is forecast to remain weak for the rest of the year,in line with the tightening of corporate travel budgets. Rob FranklinExecutive Director Economic Trends and Implications As we enter the second half of 2009, there is remarkable optimism at theemergenceof so-called'green shoots',promising the beginnings of aneconomic recovery.But there is a risk – in two senses – that this optimism will 'Green shoots' are •At the corporate level, the optimism is based on an awareness that themassive de-stocking exercise that drove down industrial production andexports is coming to an end.Commodity and stock market prices haverecovered to levels that are not far out of line with those prevailing beforetheir surge in 2007-08.But it would be wrong to exaggerate the scope for •Whatever the outcome for the corporate sector over the next few months,the outlook for consumers remains bleak.Employment is expected tocontinueto fall,so unemployment will rise and earnings will beconstrained.Governments–still intent on restoring financial and Thesecaveats apply particularly strongly to Europe.OxfordEconomicsexpects GDP in the eurozone to fall by 4.6% in 2009, with industrial production Beware the law of However, it is important to be aware of the different ways in which individualcountries in Europe are being affected by the crisis, and of the likely effects on In contrast, the USA is now expected to emerge from the downturn relativelyquickly and relatively strongly.The huge contraction in industrial production in The prospects for commodities producers, including Canada, South Africa,Australia, New Zealand and many countries in South America, look good –especially since demand from major emerging markets like China and India isset to remain strong, as the graph on the previous page suggests.Something Trends in Tourism to/within Europe Overall performance in arrivals The decline in tourism in Europe associated with the economic downturn hasbeen every bit as bad as had been feared.Overall arrivals in the region in thefirst four months of 2009 fell by an estimated 10% over the same period lastyear,according to data gathered by the World Tourism Organization The decline has proved asdramatic as earlier feared Ona month-by-month basis,the declines were 7%in January,13%inFebruary, 18% in March (due to the switch of Easter from March to April this Unusually, the four-month decline in international arrivals was spread relativelyevenly across all the sub-regions of Europe, according to UNWTO's preliminaryresults.In Northern Europe (-9%), only Iceland, with a dramatically cheaper In Western Europe (-10%), only France (-13%) and Austria (-3%) departed