The global tourism and travel industry is set to contract in 2009, according to a new report by Euromonitor International entitled “The Forecast Restatement – Travel and Tourism in a Crisis” launched at the World Travel Market Vision conference last week.
“The general industry consensus is that 2009 will be tough for travel and tourism with falling consumer demand. Overall, most regions are contracting especially North America and Latin America, whereas the Middle East, Africa and Eastern Europe are faring slightly better,” said Caroline Bremner, Research Manager, Euromonitor International, Global Travel and Tourism .
“However, the downturn is likely to be followed by a slight recovery in 2010. Euromonitor expects two per cent growth driven by constrained demand and incentives from trade and governments to boost overall tourism flows. Apart from being impacted by the slowdown in arrivals, hotels value sales growth will register slower rates in 2009 as consumers continue to trade on less expensive budget hotel options,” said Bremner.
Travel and tourism arrivals, departures, hotel and air value sales are now predicted to contract by -1.1, -0.9, -3.6 and -2.3 respectively in 2009. The latest forecast for 2010 reveal worldwide travel and tourism will return to growth, though the growth is way down on pre-recession forecasts. Arrivals are now predicted to grow by 2.2 per cent in 2010, compared to the June 2008 forecast of 5.9 per cent. Departures are forecast to grow by 1.8 per cent compared to the previous forecast of 5.4 per cent. Hotels are predicted to grow by nearly one percent compared to the previously forecasted 5.2 per cent, while air travel is forecast to grow by one per cent compared to the June 2008 predict of 5.2 per cent
The new forecasts from Euromonitor International demonstrate the correlation between GDP and the travel and tourism industry. According to the UNWTO, when global economic growth exceeds four per cent, tourism arrivals growth tends to be higher, however, when GDP falls below two per cent tourism growth tends to be lower. With the global economy contracting in 2009, the impact on the travel and tourism industry is severe. The International Monetary Fund has revised its 2009 global GDP forecast from 3.9 per cent to -1.3 per cent, slipping into the red.
The other notable trend with negative global GDP is the increase in domestic holidays, as holidaymakers look to maximise savings. Domestic holidays equate to trading down for some consumers however some tourism sectors will benefit. In the accommodation sector, trading down takes the form of luxury hotels losing out to cheaper alternatives such as budget and mid-priced hotels as well as alternatives such as camping and self catering. In transportation, consumers trade down to low priced options such as Low Cost Carriers, or switch to rail as seen in Europe or buses and coaches in the case of Latin America. Companies best positioned to benefit from this economic downturn are those with an array of low cost options and a diversified brand portfolio. Euromonitor International expects Western Europe’s tentative recovery to begin in 2010, whereas North America is due to take longer to experience positive growth with 2011 earmarked for the rebound.
Image by flissphil under Creative Commons.
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