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Strong Recovery of Travel and Tourism expected in 2010

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“Our challenge is to see through the pressures of today and prepare for a different world,” said Rolf Freitag, President & CEO of IPK International in his summing up at the close of IPK’s annual World Travel Monitor Forum held on 6-7 November in San Giuliano Terme near Pisa, Italy. “But predicting the timing of the end of the current global economic crisis and the start of the recovery remains an even bigger challenge,” he added, “although we have every confidence in tourism’s longer-term resilience.”

After four years of sustained strong growth, which continued through the month of May 2008, outbound travel demand slowed considerably from June, with growth slipping into negative figures from September in some regions. As a result, the consensus of the more than 60 tourism experts from some 30 countries around the world gathered in Pisa was that the growth in demand for international tourism – expressed in total outbound trip volume – will struggle to reach 3% this year.

The financial crisis and the recession have clearly reached the international travel markets. Many airlines and tour operators have meanwhile reduced capacity for 2009. The majority of the experts gathered in Pisa believe that demand for international travel will be down by about 1% in 2009. But they also think that the crisis will not last longer than 12 to 18 months.

Some parts of the world may start to see the beginning of a revival in 2009, the Forum agreed, but, given the lack of clarity regarding the main drivers of the crisis and its impact on disposable incomes – not to mention continuing uncertainties over the price of oil, currency fluctuations, etc – the recovery of tourism demand may prove rather more elusive. This explains the view of the majority of the Pisa participants that the world will only see a strong recovery of travel and tourism in 2010, accelerating to new records in 2011 and 2012.

These were some of the key messages to come out of the two days of intensive discussions between world tourism experts at the 16th edition of what has become more commonly known as the Pisa Forum. As usual, it was organised by IPK International, founders and producers of the World Travel Monitor, and sponsored by ITB Berlin.

Based on trends over the first eight months of 2008 from the region’s leading outbound travel source markets, Europe recorded a growth of 3% in both number of trips and foreign overnight volume. But the overall monthly average fell from +6% in January to April to just +1% in May to August, reflecting the impact of the credit crunch, high oil prices and the financial crisis on demand.

The leading European outbound markets in terms of growth were Russia (+15%) and Finland (+9%), with Norway and Spain coming a distant third in the overall ranking (each up 3%). The only market in Europe to suffer an outbound decline, meanwhile, was France (-4%).

Although the trend appears to have reversed since the end of the summer, European corporate travel – including trips for meetings and conferences – grew by twice the rate of holiday travel (+8% compared with +4% for holidays) from January through August, while other types of leisure trips, include visits to friends and relations, declined by 5%.

Outbound travel from other leading and emerging markets has shown similar trends in 2008 to those in Europe – in particular, a shift to short-haul from long-haul travel, a reduction in secondary trips, and a modest decline in low-cost/no-frills air travel in favour of trips by different means of surface transport.

With the exception of travel to Mexico (+5.6% through the month of July), US outbound air travel was at best flat in the first five months of 2008, but it fell by more than 4% to Europe and nearly 5% to Canada. Thanks in no small part to the low US dollar – in the first eight months of 2008, at least – Canadian outbound travel, on the other hand, was buoyant (+13%).

Travel from Latin American markets has been strong so far this year, especially from Brazil and Argentina, although growth is expected to slow in the last few months of the year, especially given the depreciation of the Brazilian real.

In Asia, in contrast – one of the world’s strongest outbound travel growth regions in 2007 – there have been some disappointing performances, exacerbated by the reduced airline capacity on many routes, the tightened security surrounding the summer Olympics in Beijing (which made visas more difficult to obtain) and by the increased price of travel and cost of living. IPK International expects the region to record around 3% growth in outbound trips for the year as a whole – half the rate recorded in 2007 – with no growth or declines from Japan, South Korea and Taiwan.

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