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Increasing Confidence in 2010 Recovery for Tourism Sector

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The UNWTO has said it believes the conditions of the tourism market are starting to indicate stronger prospects for a recovery in 2010. These include macroeconomic upward revisions from the IMF together with preliminary international tourism figures until August this year. This suggests some moderation in the declining results of the first half of this year.

 In addition, the UNWTO Panel of Experts Confidence Index reflects stronger confidence in market conditions. International arrivals declined by 4% in July this year, a relative improvement when compared to decreases of 10% in May and 7% in June. Many destinations show a similar pattern of a gradual change for the better, particularly in Asia, Europe and the Middle East.

The negative trend in international tourism that emerged during the second half of 2008 intensified in 2009 under the impact of the rapid deterioration of the world economy, combined in various destinations with the effects of Swine Flu (H1N1) outbreak this spring. Based on preliminary results from about 140 destination countries, international tourist arrivals worldwide are estimated to have declined by 7% in the period January to July 2009, compared to the same period last year.

In absolute terms, the number of international tourist arrivals worldwide reached 500 million in the first seven months of 2009, down from 540 million in the same period of 2008. Arrivals in 2009 are currently between the levels of 2007 and 2006. The first seven months of the year generally account for roughly 57% of the total annual number.

Though much uncertainty persists, there are signs indicating that the turning point may also have been reached in the tourism sector. Data for July show a relative improvement and for countries that already reported data for August, these two high season months have not in general been as depressed as the first six months of the year. Other industry indicators from air transport and accommodation sectors corroborate this upward trend.

“As the latest economic data and prospects indicate that the world economy may be starting to emerge from its most severe recession of the post second world war period, in tourism too there are signs that confidence is returning and that demand is improving for both business and leisure travel” said UNWTO Secretary-General a.i. Taleb Rifai.

With the exception of Africa, all regions recorded a decrease in arrivals for the first seven months of 2009:

- Europe (-8%) is still enduring the impact of recession in the majority of its source markets but the encouraging improvement in data for the peak month of July (-4% as compared to -11% in May and -7% in June) shows that demand might be picking up in the world's most visited region.

- Results have also improved in Asia and the Pacific (-6%) where some destinations such as the Republic of Korea or Malaysia, are bucking the overall negative trend with significant increases. It is even very likely that Asia has returned to positive growth in August, as many destinations already reported data for this month showing significant improvement.

- In the Americas (-7%) though there was also a lower decline rate in July this has not been as significant as in Europe due to the fact that some destinations have been impacted by Swine Flu (H1N1) outbreak.

- Although the decline in the Middle East is significant (-13%), this is the only region, apart from Africa, which has posted positive results in June and July this year. Arrivals are still well above the 2007 level as the current decline follows two very strong growth years. Also in the Middle East various destinations bucked the overall trend and report noteworthy growth rates, i.e. Bahrain, Jordan, Lebanon or Syria.

- The positive results in Africa (+4%) reflect the strength of North African destinations around the Mediterranean and the positive results of destinations such as Kenya, South Africa or Swaziland.

Outlook

The economic conditions, combined with the uncertainties brought about H1N1, are expected to continue impacting tourism demand – at least in the short term. As decline rates are anticipated to ease during the remainder of 2009, international tourism is forecast to decrease within a range of -6% and -4% this year. And though many subregions might return to growth in the last months of 2009, this will not be enough to compensate for the losses felt so far. Growth for the full year is projected to be negative in all regions, except for Africa.

These results reflect international tourist arrivals only, for which comprehensive data is currently available. Domestic markets, highly important for many destinations and actively stimulated by numerous governments during the crisis, are expected to have done comparatively better. Still, this will not compensate for the losses in international markets. As in previous crises, tourism earnings are expected to suffer somewhat more than arrivals as consumers tend to trade down, stay closer to home and travel for shorter periods of time.

“Long- term prospects remain positive if the sector is able to address its challenges in a coordinated and effective manner,” said Secretary-General a.i. Taleb Rifai. “Today, world leaders are working together in ways that would have been unimaginable at any time in the past, to coordinate and collaborate on economy, climate response and the development agenda. The tourism sector should do the same on the road to recovery and towards a more sustainable industry.”

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