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A quarterly insights report produced for the Market Intelligence Group of the European Travel Commission (ETC)

A quarterly insights report produced for the Market Intelligence Group of the European Travel Commission (ETC)
by Tourism Economics (an Oxford Economics Company)

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    European tourism 2013 European tourism 2013 Document Transcript

    • European Tourism in 2013: Trends & Prospects (Q1/2013) 1 European Tourism in 2013: Trends & Prospects Quarterly Report (Q4/2013) This page is a placeholder and is to be replaced in the PDF document for the cover provided by ETC.
    • EUROPEAN TOURISM in 2013: TRENDS & PROSPECTS Quarterly Report (Q4/2013) A quarterly insights report produced for the Market Intelligence Group of the European Travel Commission (ETC) by Tourism Economics (an Oxford Economics Company) Brussels, February 2014 ETC Market Intelligence Report
    • Copyright © 2014 European Travel Commission European Tourism in 2013: Trends & Prospects (Q4/2013) All rights reserved. The contents of this report may be quoted, provided the source is given accurately and clearly. Distribution or reproduction in full is permitted for own or internal use only. While we encourage distribution via publicly accessible websites, this should be done via a link to ETC's corporate website, www.etc-corporate.org, referring visitors to the Market Intelligence Section. The designations employed and the presentation of material in this publication do not imply the expression of any opinions whatsoever on the part of the Executive Unit of the European Travel Commission. Data sources: This report includes data from the TourMIS database / http://www.tourmis.info, STR Global, IATA, AEA and UNWTO. Economic analysis and forecasts are provided by Tourism Economics and are for interpretation by users according to their needs. Published and printed by the European Travel Commission Rue du Marché aux Herbes, 61, 1000 Brussels, Belgium Website: www.etc-corporate.org Email: info@visiteurope.com ISSN No: 2034-9297 This report was compiled and edited by: Tourism Economics (an Oxford Economics Company) on behalf of the ETC Market Intelligence Group Cover: Hohensalzburg in winter, Salzburger Land, Austria. Photo © Shutterstock / JLR Photography
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 1 © European Travel Commission, February 2014 Foreword European tourism full speed ahead Destinations in Europe can look back over the past year and celebrate the outstanding performance of their tourism sector. According to the latest UNWTO estimates, Europe hosted 563 million international visitors in 2013, 29 million more than in previous year. In relative terms, this means a robust growth of 5.4%, which is well above the most optimistic forecasts formulated at the beginning of 2013, which pointed to a maximum increase of 3%. Robust growth is reported by virtually all destinations. Among Europe largest destinations, Turkey (+10%), France (+8%) and Spain (+6%) are expected to have grown faster than the regional average, contributing to as much as one-third of growth in absolute terms. Germany (+4%) remains on a steady growth path and hits the 30 million mark in foreign visitors. In Italy (+3%) stagnation seems to be over, at least in terms of inbound travel. A remarkably high number of smaller destinations reports two-digit growth. Iceland is the best-in-class performer, with a 21% increase in foreign visits, followed by Latvia (+14%), Serbia (+13%), Greece (+12%), Slovakia and Malta (both +10%). Above average growth is reported also by Lithuania (+8%), Ireland (+7%), Croatia and Bulgaria (+6% each). Full recovery at hand for destination Europe With international tourist arrivals 14% higher than the pre-crisis peak level in 2007 (chart above), volumes are just some 4% below what it would have been had the crisis not happened (see chart in the middle). In 20 out of 35 countries in Europe (see chart at the bottom), international tourist arrivals are at least 10 percentage points above the pre-crisis peak level. This is the case also for destinations like Poland and Portugal, where the crisis hit earlier and for a longer period of time. Only five destinations in this sample still show values below the pre-crisis level, but show continuous improvement. Factors that contributed to tourism recovery include the resilience of demand, especially from the intra- European market, the far from exhausted appeal of Europe as a tourism destination in long-haul markets, as well as an aggressive price policy to attract cost- conscious travellers. This is reflected in a subdued level of International Tourism Receipts (chart above) and hotels average daily rates, which were still falling in 2013. This trend is likely to revert in 2014, supported by a strong demand for European tourism. International Tourist Arrivals to Europe (mn) 10 years annual average growth = 3% Average (crisis excluded) Source: UNWTO, ETC analysis *: estimate 0 100 200 300 400 500 600 700 2000 2002 2004 2006 2008 2010 2012 No-crisis scenario (k=3%) Actual data International Tourist Arrivals (Index, 2007 = 100) Destination Series 2008 2009 2010 2011 2012 2013* Iceland AA 105 117 115 134 157 189 Latvia AA 112 89 104 126 130 148 Lithuania AA 108 89 99 119 133 143 Estonia NA 101 94 110 129 131 135 Bulgaria AT 112 111 117 122 127 134 Serbia AA 93 93 98 110 116 131 Germany NA 103 100 111 117 126 130 Slovenia AA 112 104 107 116 123 128 Hungary AA 102 94 100 111 121 127 Malta AT 103 94 106 112 115 126 Croatia AA 101 100 98 107 113 120 Poland AA 92 88 94 101 113 120 Austria AA 106 103 106 111 116 119 Italy AA 97 96 102 111 114 115 Spain AA 99 89 98 108 109 115 Sweden NG 100 104 109 112 114 114 Cyprus AA 99 94 102 109 113 110 Portugal NG 98 87 88 97 102 110 Finland NA 103 92 94 103 109 109 Czech Republic AA 100 90 95 101 107 109 Romania AV 115 98 97 99 103 106 Belgium AA 102 97 102 106 108 106 Switzerland AG 102 98 102 101 101 105 Slovak Republic AA 104 77 79 87 91 100 Luxembourg AA 96 93 88 95 99 100 Greece AV 91 85 86 94 89 99 Denmark NA 94 89 93 97 98 97 United Kingdom AH 97 91 97 100 92 97 Norway NA 98 90 91 90 91 91 Ireland AT 96 85 77 81 81 87 France AA 97 89 91 103 105 - Netherlands AA 92 90 99 103 106 - Turkey AV 113 116 123 135 136 - Source: TourMIS International Tourism Indicators for Europe (index) 2007 = 100 Source: UNWTO, ETC analysis *: estimate 80 90 100 110 120 2008 2009 2010 2011 2012 2013* International Tourist Arivals International Tourism Receipts
    • 2 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Solid foundations for future growth Some of the positive factors underlying 2013 growth will persist into the next year. International tourist arrivals growth accelerated during the year, also due to the recovery of large outbound markets such as France and UK. This positive trend is expected to continue through 2014, as the euro area (+1.0%) is turning the corner from recession to recovery, according to the IMF 1 . The financial institution’s latest forecasts on economic output predict the end of recession eventually for Spain (+0.2%) and Italy (+0.7%). Forecasts also point to somewhat better prospects for France (+1.0%) and Germany (+1.4%). In the UK (+1.9%) growth will be sustained by easier credit conditions and increased confidence. Outside the EU, Russia is expected to further consolidate its significance as outbound travel market, despite the economic slowdown, as its rising middle-class becomes more acquainted and independent with travel. The US is expected to remain the powerhouse of long-haul tourism demand for Europe. Key indicators suggest economic growth accelerating into 2014, which will be reflected in improved demand for international tourism. Boosted by a rising currency, Chinese tourism is expected to match recent years’ performance, marked by remarkable growth in virtually every destination in Europe. Mega-events and the overall policy environment might instead lead to a softer growth of outbound travel from Brazil. Japan performance as outbound travel market remains hard to predict, as uncertainty on the quickening economic growth remains high. Outlook 2014 Overall, ETC expects international tourism to grow between 3% and 4% in 2014, in line with UNWTO and Tourism Economics projections. Once again, the economic performance of Europe’s internal market remains decisive to determine the regions’ performance, influencing both international and domestic travelling, the length of stay and the average holiday budget. A number of initiatives, among which Sochi Winter Olympics, the Great War Centennial festivities, or Germany’s UNESCO world heritage theme year, will contribute to keep attention for European destinations high. With an increasing number of destinations targeting luxury segments, such as travellers interested in golf, spa and wellness or wine and gourmet, tourism-generated revenues are also expected to ultimately grow in line with arrivals. “European tourism has a bright future ahead” said Eduardo Santander, ETC Executive Director during the Destination Europe 2020 conference, held in Brussels on the 12th February. “Today we celebrate the activities realized by ETC, with the support of the European Commission, to enhance the promotion of Europe in long-haul markets. All representatives of the tourism sector present here today are pleased with the stunning increase in international arrivals, but they are also concerned about the threats posed by rapidly growing competition”. “Competition is tough”, echoed Pedro Ortún, Director for Tourism of the European Commission, “but European destinations have by far all the means to stand out as the most attractive, diverse and unique destinations worldwide. In the EU, international arrivals grew by a solid 4.6% last year. With the joint effort of both the public and private sector, we can consolidate this growth path and secure Europe a long term position as world Number 1 destination”. ETC Executive Unit ETC Market Intelligence Group 1 Source: http://www.imf.org/external/pubs/ft/weo/2014/update/01.
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 3 © European Travel Commission February 2014 2013 Tourism Performance Summary Demand for European tourism in 2013 was stronger than was expected at the start of the year, helped by improvement in Eurozone economic activity and some improvement in intra-regional travel. Arrivals growth in all European destinations reporting through TourMIS averaged 4.6% for the year to date on a weighted average across all countries. Growth in overnights was slower than growth in arrivals, indicating some lingering softness in demand for travel to European destinations. 4.0% growth in overnights was reported on a weighted average basis, slower than arrivals. Of the 20 destinations reporting both arrivals and overnights 15 reported slower nights. Growth accelerated during the year and there has also been a striking improvement in demand from some origin markets. Arrivals grew 4.6% in latest year to date data on a weighted average basis, compared with just 3.1% growth during the first half of the year. This improved growth is expected to continue, with further acceleration in demand expected from some key origin markets and notably those in Western Europe. The large markets of UK and Spain saw clear improvement in arrivals throughout the year and are both reported to have grown 5% for the year to date. Arrivals now clearly exceed previous peak levels recorded in 2007 for both destinations. UK arrivals surpassed that level in 2012 but trends in that year were distorted by the London Olympics. 2013 data confirm the full recovery without the benefit of the major event. Greece experienced a year of strong growth, with arrivals now estimated to be almost 10% higher than in the previous peak in 2007. Further strong improvement in demand from Russia was evident, as well as recovery from more traditional Western European markets. Iceland and Serbia have also benefitted from Russian arrivals, making a significant contribution to notably strong arrivals growth in these countries. Travel to Italy has also improved as the year has progressed but still with only moderate growth reported. Cyprus still stands out towards the bottom of the growth table as the only destination reporting a fall in arrivals, particularly marked at the time of the financial crisis. Denmark and Norway also reported a fall in overnights for the year to date, albeit much more moderate than for Cyprus. -10 -5 0 5 10 15 20 Iceland Latvia Serbia Greece Slovakia Malta Lithuania IrelandRep Croatia Hungary Bulgaria Poland UK Spain Netherlands Montenegro Slovenia Romania Germany Estonia Austria CzechRep Italy Foreign visits to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination -10 -5 0 5 10 15 20 Serbia Latvia Malta Portugal Netherlands Bulgaria Lithuania Slovakia Romania Spain Hungary Poland Croatia Germany Montenegro Slovenia Switzerland Estonia Austria CzechRep Luxembourg Finland Sweden Norway Denmark Cyprus Foreign visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination
    • 4 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Travel demand growth is available for the full year for only two countries, with a majority of countries reporting data through November. Arrivals for the first 11 months of the year typically account for around 95% of annual arrivals, while arrivals through October account for almost 90% of annual travel demand. Country % ytd to month % ytd to month Austria 2.6 Jan-Oct 1.5 Jan-Oct Bulgaria 5.5 Jan-Nov 6.6 Jan-Oct Croatia 6.3 Jan-Dec 4.8 Jan-Dec Cyprus -2.5 Jan-Nov -5.7 Jan-Sep Czech Rep 1.5 Jan-Sep 1.1 Jan-Sep Denmark -0.8 Jan-Nov Estonia 3.3 Jan-Nov 2.2 Jan-Nov Finland 0.3 Jan-Oct Germany 3.7 Jan-Nov 4.5 Jan-Nov Greece 12.3 Jan-Jun Hungary 5.5 Jan-Nov 4.9 Jan-Nov Iceland 20.7 Jan-Dec Ireland Rep 7.1 Jan-Nov Italy 1.1 Jan-Sep Latvia 14.3 Jan-Sep 9.5 Jan-Sep Lithuania 7.1 Jan-Sep 6.3 Jan-Sep Luxembourg 1.0 Jan-Oct Malta 9.8 Jan-Nov 8.5 Jan-Nov Montenegro 4.6 Jan-Nov 3.2 Jan-Nov Netherlands 5.0 Jan-Oct 7.6 Jan-Oct Norway -0.1 Jan-Nov Poland 5.4 Jan-Oct 4.9 Jan-Oct Portugal 8.0 Jan-Oct Romania 3.5 Jan-Sep 5.3 Jan-Sep Serbia 12.8 Jan-Nov 10.0 Jan-Nov Slovakia 10.1 Jan-Sep 6.1 Jan-Sep Slovenia 4.3 Jan-Oct 3.2 Jan-Oct Spain 5.0 Jan-Nov 5.1 Jan-Nov Sweden 0.3 Jan-Oct Switzerland 3.2 Jan-Nov UK 5.0 Jan-Nov Source: TourMIS, http://www.tourmis.info; available data as of 21.01.14 Measures used for nights and arrivals vary by country See TourMIS for further data including absolute values. International Arrivals International Nights Tourist Arrivals and Nights 2013 Performance, Year to Date
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 5 © European Travel Commission February 2014 Global Tourism Forecast Summary Tourism Economics’ global travel forecasts are shown on an inbound and outbound basis in the following table. These are the results of the Tourism Decision Metrics (TDM) model, which is updated in detail three times per year. Forecasts are consistent to Oxford Economics’ macroeconomic outlook according to estimated relationships between tourism and the wider economy. Full origin-destination country detail is available online to subscribers. 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 data/estimate/forecast *** d d e f f d d e f f World 5.2% 4.1% 4.6% 4.7% 5.2% 4.5% 4.0% 5.0% 5.0% 5.5% Americas 3.6% 4.3% 2.8% 4.8% 4.9% 3.5% 5.8% 3.9% 5.5% 5.4% North America 2.9% 4.5% 3.4% 4.5% 4.8% 0.4% 5.2% 3.9% 5.4% 5.5% Caribbean 2.2% 1.1% 0.9% 3.7% 4.2% -5.0% -0.1% 3.2% 4.6% 7.1% Central & South America 6.9% 5.6% 1.9% 6.6% 5.6% 17.8% 9.2% 4.3% 5.9% 4.7% Europe 7.3% 3.8% 5.2% 3.9% 4.2% 4.1% 4.3% 4.0% 3.7% 4.1% EU 6.8% 3.0% 4.1% 3.4% 3.5% 1.7% 1.3% 1.9% 3.4% 3.8% Non-EU 9.4% 6.7% 9.2% 5.4% 6.6% 12.7% 13.9% 10.1% 4.6% 4.8% Northern 11.1% 4.5% 3.4% 3.1% 3.0% 4.4% 3.8% 3.8% 4.5% 4.0% Western 4.5% 3.0% 2.9% 2.5% 3.1% 3.9% 2.2% 2.0% 4.2% 3.8% Southern/Mediterranean 7.4% 1.7% 6.3% 5.2% 4.6% 1.0% -1.2% 1.3% 1.1% 2.1% Central/Eastern 9.6% 7.4% 7.6% 3.2% 4.8% 5.9% 8.2% 6.9% 4.0% 5.5% - Central & Baltic 6.9% 4.6% 4.4% 3.3% 4.8% -4.1% 2.2% 0.6% 1.4% 5.6% Asia & the Pacific 6.3% 7.0% 6.3% 6.5% 7.5% 7.3% 7.0% 7.7% 6.5% 7.1% North East 3.8% 6.0% 3.7% 6.5% 7.7% 7.7% 8.4% 8.0% 6.3% 6.9% South East 10.2% 9.3% 10.4% 7.0% 8.0% 5.2% 5.5% 8.4% 6.3% 7.3% South 12.2% 5.5% 5.1% 6.7% 4.4% 11.0% -1.4% 2.4% 12.2% 9.1% Oceania 2.7% 2.4% 4.6% 3.0% 4.0% 7.1% 4.9% 5.5% 4.3% 6.6% Africa -7.7% 8.0% -0.6% 3.8% 3.8% 4.1% 6.7% 1.0% 2.9% 4.0% Mid East 2.2% -9.3% 2.9% 6.3% 6.9% -0.3% -12.0% 4.8% 7.1% 8.5% * Inbound is based on the sum of the country overnight tourist arrivals and includes intra-regional flows ** Outbound is based on the sum of visits to all destinations Note: world inbound and outbound do not match exactly in historic data or forecast. This is due to visits to multiple destinations. For example, one outbound trip may be to more than one destination. Some sample error may also be evident in historic data. *** d - data reported by national statistical agencies are available for all years to 2012 e - 2013 estimated using all available year-to-date data, and forecasts for the rest of the year f - forecasts according to Tourism Economics' global economic and tourism forecast models EU = Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Greece, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sw eden, UK Non-EU Europe is all European countries (listed below ) outside EU Northern Europe = Denmark, Finland, Iceland, Ireland, Norw ay, Sw eden, UK Western Europe = Austria, Belgium, France, Germany, Luxembourg, Netherlands, Sw itzerland Southern/Mediterranean Europe = Albania, Bosnia-Herzogovina, Croatia, Cyprus, FYR Macedonia, Greece, Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, Turkey Central/Eastern Europe = Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan, Kyrgyzstan, Lativia, Lithuania, Poland, Romania, Russian Federation, Slovakia, Ukraine of w hich Central Europe & Baltic countries = Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia Inbound* TDM Visitor Growth Forecasts, % change Outbound**
    • 6 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Recent Industry Performance Tourism growth set to continue into 2014 Tourism demand continued to grow in 2013 for the fourth consecutive year Growth in industry indicators has improved as the year progressed, having decelerated in late 2012 Long-haul demand has remained an important factor in European industry performance, while short-haul demand is also improving Capacity improvements allow for further growth Hotel occupancy rates confirm growth, with some positive ADR improvement an indication of rising confidence in the industry Air Transport Air passenger demand picked up through the year to record the fourth consecutive year of growth in revenue passenger kilometres (RPK). 2013 growth was the slowest growth rate recorded out of these four years at 5.3% compared to averge growth of 7.1% in the prior 3 years. Growth improved during the summer from particularly slow performance at the start of the year. There is a slight downward trend in the latest months, slowing from the monthly peak rate in August. Growth in North American travel in particular has eased in recent months, having experienced slowest growth of all regions in 2013 to date. Further easing in Asia Pacific is also evident in recent months. European air passenger demand for 2013 to date is also slower than in previous years according to data from IATA at 3.7% compared to average growth of 6.7% in prior three years. However, improvement was clearly evident as the year progressed in monthly data with demand growth in the second half of the year at 4.4%. 0 5 10 15 20 Africa Asia/Pacific Europe Latin America Mid.East N.America World Aug-2013 Sep-2013 Oct-2013 Nov-2013 % year Source: IATA Monthly international air passenger growth -12 -9 -6 -3 0 3 6 9 12 15 18 2005 2006 2007 2008 2009 2010 2011 2012 2013 RPK = revenue passenger kms Source: IATA 3 month moving average Icelandic Ash Cloud Impact International air passenger traffic growth % year, RPK Africa Asia/Pacific Europe Latin America Mid.East N.America World 0 5 10 15 20 2011 2012 2013 ytd % year, RPK Source: IATA Annual international air passenger growth
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 7 © European Travel Commission February 2014 AEA data confirm that European airline demand continued to grow in 2013 with reported RPK growth of 2.6%, following average growth of 5.2% in the prior three years. Monthly data show that the pace of growth accelerated throughout the year from some particularly slow performance at the start of 2013, turning around the trend of deceleration in 2012. Initial weekly data for the start of 2014 show further improvement in RPK. Air seat capacity also rose throughout 2013, and is accelerating into 2014 as a clear point of difference from late 2012. Load factors also continue to edge up as capacity is being used efficiently on intra-regional travel. Air travel demand has remained fastest on long-haul routes throughout 2013, although short-haul demand has grown. This is part of a longer run trend as the share of European arrivals from long-haul markets has risen from 13% in 2003 to around 19% in 2013. Trans-Atlantic travel has remained particularly strong according to the AEA data, with a clear improvement in the second half of the year. Travel between Europe and Asia slowed towards the end of last year with some disruption from political unrest in the region. 60 65 70 75 80 85 90 Q1 Q2 Q3 Q4 Weekly load factor, % Source: AEA European airlines passenger load factor 2012 2013 2011 -5 0 5 10 15 20 25 30 Q1 Q2 Q3 Q4 ASK, 4 week moving average, % change year ago Source: AEA European airlines capacity 2013 2011 2012 -4 -2 0 2 4 6 8 10 12 14 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 RPK, 4 week moving average, % change year ago RPK = revenue passenger kms Source: AEA European airline passenger traffic: Americas Europe- Americas Total European Airlines -4 -2 0 2 4 6 8 10 12 14 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 RPK, 4 week moving average, % change year ago RPK = revenue passenger kms Source: AEA European airline passenger traffic: Asia Europe-Asia Total European Airlines
    • 8 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Accommodation Hotel demand confirms the growth trend indicated by airline data. Occupancy growth is reported for all regions except Asia/Pacific, and even here demand growth is believed to be offset by growing supply. Occupancy has improved as the year progressed to offset falls in the first half of the year. Improvement is notable in North-East Asia as some political tensions have eased. However, room rates have fallen further in the wider region reflecting uncertainty in several countries. Americas demand growth has moderated as 2013 occupancy growth of 1.5% is slower than 2% experienced in the first half of the year. ADR in the region has also moderated slightly, including some slightly slower growth in North America in the wake of some economic slowdown and political uncertainty, notably in fiscal policy. Strikingly, hotel occupancy growth in Europe of 2.4% was faster than in any other region in 2013, although ADR still fell 0.6% (denominated in euros). European room demand has been helped by the observed growth in long-haul demand but has also been supported by some shift to some more short-haul and domestic demand from European markets. This trend is likely to have started to reverse in late 2013 as occupancy has improved in the second half of the year and the fall in ADR has moderated in the region with growth in several countries. European ADR has been influenced by mega events with data reflecting an offset from particularly strong growth in UK and Poland in 2012 related to the Olympics and UEFA football tournament. These countries explain a large proportion of the ADR falls for Eastern and Northern Europe; falls of 4.0% and 3.5% were recorded respectively for these regions. However, ADR grew 3.6% in 2013 in Southern Europe and edged up 0.3% in Western Europe. Asia/Pacific Americas Europe Middle East/Africa -6 -4 -2 0 2 4 6 Occ ADR* RevPAR* Global Hotel Performance, Jan-Dec 2013 % change year ago Source: STR Global * ADR and RevPAR denominated in US$ except for Europe
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 9 © European Travel Commission February 2014 Hotel occupancy rose in most European destinations, with an average growth of 2.4% for the region. 22 out of the 25 countries covered by STR Global in their recent European Hotel Review report growth in occupancy; a clear improvement from the first half of the year when only 16 countries reported growth. Demand and occupancy remains strongest in some Eastern and Northern European countries, benefitting from arrivals from longer-haul markets as well as Russian arrivals. Southern European hotel demand and occupancy have also continued to rise, while the region has notably been able to increase ADR. Hotel occupancy growth includes domestic as well as international demand and some slower occupancy growth than arrivals can be explained by continued weak domestic demand. For example, Spanish occupancy growth is well below the reported 5% arrivals. Italy and France stand out as having notable divergences from arrivals data. Italian hotel demand was much stronger than arrivals trend while France was notably weaker. It should also be noted that as part of cost savings, tourists may still be seeking out lower cost, non-hotel options for lodging. -6 -4 -2 0 2 4 6 8 Europe Eastern Europe Northern Europe Southern Europe Western Europe Occ ADR (€) RevPAR (€) European hotel performance, Jan-Dec 2013 % change year ago Source: STR Global -5 0 5 10 Lithuania Slovakia Ireland Poland Italy Portugal Greece Switzerland UnitedKingdom Russia Romania Malta Hungary Spain CzechRepublic Netherlands Germany Belgium France Austria Estonia Turkey Finland Hotel occupancy rates Jan-Dec year to date, % change year ago Source: STR Global
    • 10 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 There is a reported positive trend in ADR for a majority of countries, but the trend is less positive than for occupancy. There is typically a lag between occupancy and ADR growth, but we would have expected some more positive ADR trends at this point in the cycle. Cost savings may also still be influencing the lower ADR performance than occupancy. -10 -5 0 5 10 15 20 25 30 Lithuania Ireland Estonia Malta Hungary Russia Greece Portugal Italy Spain Turkey Switzerland UnitedKingdom Slovakia CzechRepublic Belgium France Germany Romania Netherlands Austria Poland Finland Hotel revenue per available room (RevPAR) Jan-Dec year to date, local currency, % change year ago -10 -5 0 5 10 15 20 Lithuania Estonia Turkey Malta Hungary Ireland Russia Spain Greece Portugal Belgium France Italy CzechRepublic Switzerland Germany UnitedKingdom Netherlands Finland Romania Austria Slovakia Poland Hotel average daily rate (ADR) Jan-Dec year to date, local currency, % change year ago Source : STR Global % change year ago Occupancy ADR RevPAR Austria 0.2 -2.5 -2.3 Belgium 0.6 1.6 2.3 Czech Republic 1.8 1.0 2.7 Estonia 0.0 8.7 8.7 Finland -3.7 -1.1 -4.7 France 0.4 1.5 1.9 Germany 1.0 0.7 1.7 Greece 4.6 2.3 6.9 Hungary 2.9 4.9 7.9 Ireland 5.7 4.6 10.5 Italy 4.6 1.3 6.0 Lithuania 9.6 17.2 28.5 Malta 3.1 5.4 8.6 Netherlands 1.4 -1.0 0.4 Poland 5.5 -9.6 -4.7 Portugal 4.6 2.2 6.9 Romania 3.2 -2.3 0.8 Russia 3.5 3.3 6.9 Slovakia 6.8 -3.0 3.6 Spain 2.2 2.7 4.9 Switzerland 3.9 0.8 4.7 Turkey -2.1 7.0 4.8 United Kingdom 3.7 0.2 3.9 Source: STR Global Hotel Performance Year to Date, Jan-Dec 2013 ADR = Average Daily Rate, RevPAR = Revenue per Available Room, ADR and RevPAR in local currency
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 11 © European Travel Commission February 2014 Key Source Market Performance Growth improved throughout 2013 Intra-European demand has continued to grow throughout 2013, but performance remains mixed A majority of destinations reported growing travel demand from major European origin markets, although demand from some key European markets remains soft, with some shorter stays still being sought Long-haul demand remains robust and these markets continue to gain importance Trends discussed in this section are for data to October or November 2013 for most countries, although actual coverage varies by destination. Trends shown will not exactly match final 2013 growth but should be indicative of full year performance in most instances and reflects cross-country differences. Further detailed monthly data for origin and destination, including absolute values, can be obtained from TourMIS, http://tourmis.info. Key intra-European markets Travel from Germany to other European countries has continued to grow in 2013 with a majority of European destinations reporting arrivals growth. However, half of the 24 countries reporting overnights data from Germany still report that volumes fell during the year. And those countries reporting both metrics suggest that average length of stay has typically fallen. Only Cyprus and Estonia report an increase in average length of stay. This mixed performance is typified by travel to Spain and Italy, two large destinations comprising 25% of German outbound travel to Europe. Spanish arrivals from Germany rose 5.2%, while Italian arrivals fell 8.1%. The year is also notable for some rebound in demand for Greece as a destination. -20 -15 -10 -5 0 5 10 15 20 Iceland Greece Slovakia Netherlands Serbia Malta Montenegro Poland Spain Bulgaria UK Croatia Austria Slovenia Latvia Lithuania Romania Hungary CzechRep Italy Estonia Cyprus Visits from Germany to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination <-31.2 -20 -15 -10 -5 0 5 10 15 20 Portugal Netherlands Slovakia Malta Luxembourg Poland Croatia Serbia Montenegro Austria Spain Sweden Slovenia Switzerland Lithuania Denmark CzechRep Hungary Romania Latvia Finland Estonia Bulgaria Norway Cyprus German visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination <-29.1
    • 12 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 -20 -15 -10 -5 0 5 10 15 20 Greece UK Poland Iceland Malta Slovenia Italy Serbia Lithuania Spain Romania Croatia Slovakia Hungary Germany Montenegro Austria Bulgaria CzechRep Estonia Visits from Netherlands to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination 22.6> -20 -15 -10 -5 0 5 10 15 20 Poland Malta Romania Slovenia Slovakia Hungary Spain Sweden Germany Denmark Portugal Croatia Switzerland Austria CzechRep Luxembourg Finland Serbia Lithuania Estonia Norway Montenegro Bulgaria Cyprus Netherlands nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination <-38.4 <-21.6 -10 -5 0 5 10 15 20 Greece Iceland Montenegro Latvia Malta Croatia Slovenia Spain UK Serbia Netherlands Poland Hungary Germany Bulgaria Slovakia Romania Austria CzechRep Estonia Lithuania Italy Visits from France to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination -10 -5 0 5 10 15 20 Lithuania Latvia Montenegro Malta Spain Bulgaria Slovenia Croatia Netherlands Germany Poland Luxembourg Switzerland Hungary Serbia Denmark Austria Finland Norway CzechRep Sweden Romania Slovakia Estonia Cyprus French visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination <-17.2 Weaker data remain evident for Dutch tourism demand, although a majority of European destinations report increases in arrivals, including some large destinations such as Spain, Italy and UK. Travel to Greece has also performed particularly well, as a reversal of recent decline. But the trend in overnights is notably negative with just 7 out of 23 destinations countries reporting growth in arrivals. A majority of destinations still report falling length of stay, including some large destinations such as Spain and Austria. French tourism demand improved notably during the second half of 2013 with a majority of destinations reporting growth in arrivals and overnights. Data for the year to date show that this growth is an acceleration from in 2012. Two of the top three European destinations for French travellers are the UK and Spain which received increased volumes of tourists in 2013, and who stayed for longer in the case of Spain. However, the second most visited destination is Italy which experienced lower travel demand. Greece has also been able to welcome a significant number of additional French tourists during 2013. A small majority of destinations (9 out of 17) report increased length of stay for 2013. This is not an indication of a universal increase in demand and confidence but is an improvement from recent years consistent with moderate improvement in economic demand.
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 13 © European Travel Commission February 2014 -20 -15 -10 -5 0 5 10 15 20 Greece Iceland Malta UK Slovakia Bulgaria Netherlands Hungary Romania Croatia Germany Slovenia Poland Austria Latvia CzechRep Spain Lithuania Estonia Montenegro Serbia Visits from Italy to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination 24.2> Travel demand from Italy remains weaker than from some other European origin markets as a majority of destinations report lower arrivals and overnights than a year earlier. Some large destinations such as Greece and UK report growth, but this also appears to represent some rebound from particularly low levels. Growth in Italian hotel occupancy reported by STR Global implies some substitution by Italians towards domestic travel, as international arrivals are only reported to have edged up over the same period. Demand from the UK has been a notable bright spot for European tourism in 2013 with considerable improvement in travel to most countries from muted performance in previous years. However, even with robust growth in UK demand, departures to elsewhere in Europe in 2013 are estimated to have remained more than 10% lower than previous peak levels achieved in 2007. UK outbound demand is believed to be on an upward trend, consistent with the nascent economic recovery. In particular, the ongoing expected improvements in the labour market, along with some strengthening in sterling against the euro, will be important factors. -20 -15 -10 -5 0 5 10 15 20 Luxembourg Malta Denmark Romania Sweden Slovakia Netherlands Switzerland Germany Hungary Norway Croatia Poland Slovenia Austria Spain Portugal CzechRep Latvia Estonia Lithuania Finland Bulgaria Montenegro Serbia Cyprus Italian visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination 25.5> <-27.8 <-28.1 -20 -10 0 10 20 30 Iceland Montenegro Croatia Lithuania Hungary Slovakia Slovenia Serbia Germany Latvia Austria IrelandRep Spain CzechRep Poland Malta Netherlands Romania Italy Bulgaria Cyprus Greece Estonia Visits from UK to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination 44.9> <-21.2 -20 -10 0 10 20 30 Croatia Lithuania Montenegro Hungary Finland Bulgaria Portugal Denmark Slovenia Germany Latvia Switzerland Austria Luxembourg Spain Poland Slovakia Malta CzechRep Romania Serbia Netherlands Sweden Norway Cyprus Estonia British visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination <-22.8
    • 14 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Travel from Russia has continued to defy expectations of a slowdown with strong growth in arrivals and overnights reported for the majority of European destinations. Growth is reported for a wide range of destinations, including Eastern European countries (being geographically close destinations) as well as some Western and Southern markets including Spain. Travel to Croatia stands out as having experienced notable decline in visits from Russia, with over 20% fall in both arrivals and overnights, apparently related to Croatia’s entry to the EU. Notably the requirement for a Schengen visa has made it harder for Russians to visit Croatia. Arrivals from Russia have fallen sharply since the middle of the year. It may also be the case that other Balkan countries have benefitted from some displaced travel. This is expected to be a temporary effect as seen in the experience of previous EU enlargement. When previous countries joined the EU and Schengen zone, arrivals from Russia experienced a short-term fall, before resuming a growth path. -20 -10 0 10 20 30 40 50 Iceland Greece Serbia Latvia Slovakia Spain Cyprus Malta Montenegro Hungary Netherlands Italy Lithuania Estonia Bulgaria Romania Germany Slovenia CzechRep Austria Poland UK Croatia Visits from Russia to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination -20 -10 0 10 20 30 40 50 Spain Serbia Slovakia Hungary Latvia Netherlands Montenegro Portugal Germany Denmark Cyprus Estonia Lithuania Romania CzechRep Bulgaria Malta Austria Finland Norway Luxembourg Sweden Switzerland Poland Slovenia Croatia Russian visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 15 © European Travel Commission February 2014 Non-European markets Despite the growth in intra-European tourism in 2013, it remains clear that long-haul demand remained important during the year. This is confirmed by the airline data which also point to a continuation of this growth performance into 2014. Long-haul demand for travel to Europe will be supported by continued economic growth and further rises in tourism demand in developed markets. While there are clear economic risks in some emerging markets, the increasing spending power of the middle classes and continued ease of travel will ensure that tourism growth persists. US travel demand continued to grow to Europe as a whole in 2013, although a significant proportion of destinations reported a shorter length of stay; a likely indication of lower travel confidence. Average length of stay of American tourists in Europe has been remarkably stable over the past ten years. This followed a trend of shorter stays in the previous decade and a resumption of this preference for increasingly shorter stays cannot be ruled out. But given some economic uncertainty in the US over the past year it is estimated that this is just a short-run movement. Japanese outbound growth in general and to Europe in particular improved during the second half of 2013. Performance remained mixed by country, with a large proportion of countries still reporting lower arrivals and overnights than in 2012. But on average data imply growth to the region, with some large destinations receiving increasing numbers of visitors. Average growth is also faster than according to data for earlier in the year. A notable improvement is evident for data for Italy. -20 -15 -10 -5 0 5 10 15 20 25 30 Slovenia Greece Iceland Croatia Slovakia Latvia Hungary Italy Poland Lithuania Serbia Austria Malta CzechRep Bulgaria Montenegro Germany Romania UK Spain Netherlands Estonia Visits from US to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination 39.4> -20 -15 -10 -5 0 5 10 15 20 25 30 Latvia Croatia Lithuania Portugal Hungary Malta Poland Serbia Luxembourg Denmark Slovakia Slovenia Austria CzechRep Switzerland Germany Romania Cyprus Sweden Norway Netherlands Estonia Spain Finland Bulgaria Montenegro US visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination 34.0> -20 -10 0 10 20 30 Montenegro Italy Estonia Poland Iceland Netherlands Spain Romania Lithuania Croatia Austria Hungary Bulgaria Germany Serbia CzechRep Greece Slovakia UK Slovenia Visits from Japan to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination -20 -10 0 10 20 30 Cyprus Poland Bulgaria Estonia Finland Portugal Luxembourg Lithuania Spain Hungary Netherlands Germany Austria Croatia Romania Switzerland Slovakia CzechRep Denmark Montenegro Serbia Slovenia Sweden Norway Japanese visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination
    • 16 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 By contrast to the slower economic activity in China, outbound travel demand has continued to increase at a fast pace throughout 2013, helped by easier access to travel for a growing proportion of the population. The number of overnights spent by Chinese tourists also rose strongly with increases in average length of stay. The rise in the proportion of middle class tourists will make tourism more of a mass market activity and will reduce the average spending per Chinese visitor, but this effect is clearly not evident yet. Growth in European tourism demand from India also continued to rise on average in 2013, according to the limited data. Growth is more subdued than from China, and visitor volumes are also significantly lower in general. The largest exception to this is the UK, which receives almost double the number of Indian tourists than Chinese. UK and France are important destinations for Indian tourists, and receive approximately 40% of all Indian visitors to Europe. Growth in Indian travel to UK grew 10% in the year to November. However, overnights to Switzerland, the third most visited destination in Europe fell slightly during the year providing a note of caution. -10 0 10 20 30 40 50 Greece Spain Estonia Bulgaria Croatia Slovenia Iceland Germany Netherlands Serbia Austria CzechRep UK Poland Italy Romania Slovakia Lithuania Visits from China to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination -30 -20 -10 0 10 20 30 40 50 Slovakia Croatia Spain Bulgaria CzechRep UK Germany Netherlands Poland Austria Romania Visits from India to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination 57.4> -30 -20 -10 0 10 20 30 40 50 Spain Croatia Slovakia Sweden CzechRep Poland Finland Germany Netherlands Switzerland Austria Romania Indian visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination 68.3> -10 0 10 20 30 40 50 Cyprus Norway Estonia Denmark Slovenia Finland Croatia Switzerland Sweden Romania Austria Luxembourg Netherlands Poland Germany CzechRep Slovakia Spain Serbia Lithuania Chinese visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination130.1> 65.3>
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 17 © European Travel Commission February 2014 Canadian travel demand continues to follow a broadly similar pattern to US demand with growth reported by a majority of countries, including some of the larger more popular destinations. But there was a generally uneven performance and on average a fall in the length of stay for many countries. -30 -20 -10 0 10 20 30 Iceland Greece Serbia Croatia UK Italy Slovenia Bulgaria Montenegro Netherlands CzechRep Slovakia Germany Romania Austria Poland Spain Lithuania Visits from Canada to select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Jun-Dec) by destination <32.0 -30 -20 -10 0 10 20 30 Norway Serbia Croatia Portugal Denmark Netherlands Slovenia Sweden Germany Montenegro Spain Switzerland CzechRep Austria Romania Poland Slovakia Finland Cyprus Lithuania Canadian visitor nights in select destinations 2013, year-to-date*, % change year ago Source : TourMIS *date varies (Sep-Dec) by destination 38.1>
    • 18 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Origin Market Share Analysis United States Based on the Tourism Decision Metrics (TDM) model, the following charts and analysis show Europe’s evolving market position - in absolute and percentage terms - for selected source markets. 2013 values remain preliminary estimates and are not final reported data. 81.6 million tourists traveled from the US in 2013. Of these, 31.1 million traveled within North America, while 50.5 million (61.9%) traveled to long-haul destinations. US tourist arrivals to Europe in 2013 totaled 22.1 million, representing 43.7% of the US long-haul outbound market. US tourist arrivals to Northern Europe in 2013 totaled 5.0 million, representing 22.8% of US arrivals to Europe. US tourist arrivals to Western Europe in 2013 totaled 8.7 million, representing 39.2% of US arrivals to Europe. US tourist arrivals to Southern Europe in 2013 totaled 5.5 million, representing 24.8% of US arrivals to Europe. US tourist arrivals to Central/Eastern Europe in 2013 totaled 2.9 million, representing 13.2% of US arrivals to Europe. Northern Europe's share of the US market was 10.0% in 2013, a 3.8 percentage point decrease from 2003. Western Europe's share of the US market was 17.1% in 2013, a 1.4 percentage point decrease from 2003. Southern Europe's share of the US market was 12.0% in 2013, a 2.4 percentage point increase from 2003. Central/Eastern Europe's share of the US market was 7.9% in 2013, a 1.2 percentage point decrease from 2003. Long-haul outbound from the US is forecast to grow 6.4% per year on average to 2018 Arrivals to Northern Europe are expected to increase 40.8% through 2018, to 7.1 million. Northern Europe's share of the US market is forecast to rise to 10.3% in 2018 Arrivals to Western Europe are expected to increase 26.4% through 2018, to 10.9 million. Western Europe's share of the US market is forecast to fall to 15.9% in 2018 Arrivals to Southern Europe are expected to increase 27.7% through 2018, to 7.0 million. Southern Europe's share of the US market is forecast to fall to 11.3% in 2018 Arrivals to Central/Eastern Europe are expected to increase 53.6% through 2018, to 4.5 million. Central/Eastern Europe's share of the US market is forecast to rise to 8.8% in 2018 0 10 20 30 40 50 60 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 US long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of US market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics Note: this analysis is based on the Tourism Decision Metrics (TDM) model. The geographies of Europe are defined as: Northern Europe: Denmark, Finland, Iceland, Ireland, Norway, Sweden, UK Western Europe: Austria, Belgium, France, Germany, Luxembourg, Netherlands, Switzerland Southern/Mediterranean Europe: Albania, Bosnia- Herzogovina, Croatia, Cyprus, FYR Macedonia, Greece, Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, Turkey Central/Eastern Europe: Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia, Ukraine
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 19 © European Travel Commission February 2014 Canada 35.4 million tourists traveled from Canada in 2013. Of these, 24.2 million traveled within North America, while 11.2 million (31.6%) traveled to long-haul destinations. Canadian tourist arrivals to Europe in 2013 totaled 4.4 million, representing 39.8% of the Canadian long-haul outbound market. Canadian tourist arrivals to Northern Europe in 2013 totaled 1.1 million, representing 24.8% of Canadian arrivals to Europe. Canadian tourist arrivals to Western Europe in 2013 totaled 1.7 million, representing 37.9% of Canadian arrivals to Europe. Canadian tourist arrivals to Southern Europe in 2013 totaled 1.3 million, representing 30.3% of Canadian arrivals to Europe. Canadian tourist arrivals to Central/Eastern Europe in 2013 totaled 0.3 million, representing 6.9% of Canadian arrivals to Europe. Northern Europe's share of the Canadian market was 9.9% in 2013, a 3.6 percentage point decrease from 2003. Western Europe's share of the Canadian market was 15.1% in 2013, a 2.1 percentage point decrease from 2003. Southern Europe's share of the Canadian market was 13.4% in 2013, a 2.0 percentage point increase from 2003. Central/Eastern Europe's share of the Canadian market was 3.7% in 2013, a 0.7 percentage point decrease from 2003. Long-haul outbound from Canada is forecast to grow 3.6% per year on average to 2018. Arrivals to Northern Europe are expected to increase 26.2% through 2018, to 1.4 million. Northern Europe's share of the Canadian market is forecast to rise to 10.5% in 2018. Arrivals to Western Europe are expected to increase 4.5% through 2018, to 1.8 million. Western Europe's share of the Canadian market is forecast to fall to 13.3% in 2018. Arrivals to Southern Europe are expected to increase 11.2% through 2018, to 1.5 million. Southern Europe's share of the Canadian market is forecast to fall to 12.6% in 2018. Arrivals to Central/Eastern Europe are expected to increase 32.1% through 2018, to .04 million. Central/Eastern Europe's share of the Canadian market is forecast to rise to 4.0% in 2018. 0 2 4 6 8 10 12 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Canada long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Canadian market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics
    • 20 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Mexico 16.9 million tourists traveled from Mexico in 2013. Of these, 14.8 million traveled within North America, while 2.2 million (12.8%) traveled to long-haul destinations. Mexican tourist arrivals to Europe in 2013 totaled 1.2 million, representing 55.6% of the Mexican long-haul outbound market. Mexican tourist arrivals to Northern Europe in 2013 totaled 115,000, representing 9.6% of Mexican arrivals to Europe. Mexican tourist arrivals to Western Europe in 2013 totaled 565,000, representing 47.0% of Mexican arrivals to Europe. Mexican tourist arrivals to Southern Europe in 2013 totaled 412,000, representing 34.3% of Mexican arrivals to Europe. Mexican tourist arrivals to Central/Eastern Europe in 2013 totaled 109,000, representing 9.1% of Mexican arrivals to Europe. Northern Europe's share of the Mexican market was 5.3% in 2013, a 0.6 percentage point decrease from 2003. Western Europe's share of the Mexican market was 26.2% in 2013, a 8.5 percentage point increase from 2003 Southern Europe's share of the Mexican market was 20.1% in 2013, a 1.7 percentage point decrease from 2003 Central/Eastern Europe's share of the Mexican market was 7.4% in 2013, a 2.1 percentage point increase from 2003 Long-haul outbound from Mexico is forecast to grow 8.2% per year on average to 2018. Arrivals to Northern Europe are expected to increase 57.3% through 2018, to 181,000. Northern Europe's share of the Mexican market is forecast to rise to 5.7% in 2018. Arrivals to Western Europe are expected to increase 31.8% through 2018, to 744,000. Western Europe's share of the Mexican market is forecast to fall to 23.3% in 2018. Arrivals to Southern Europe are expected to increase 15.1% through 2018, to 474,000. Southern Europe's share of the Mexican market is forecast to fall to 15.7% in 2018. Arrivals to Central/Eastern Europe are expected to increase 61.5% through 2018, to 176,000. Central/Eastern Europe's share of the Mexican market is forecast to rise to 7.8% in 2018. 0.0 0.5 1.0 1.5 2.0 2.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Mexico long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics 0% 5% 10% 15% 20% 25% 30% 35% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Mexican market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside North America Source: Tourism Economics
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 21 © European Travel Commission February 2014 Argentina 7.7 million tourists traveled from Argentina in 2013. Of these, 5.4 million traveled within South America, while 2.3 million (30.3%) traveled to long-haul destinations. Argentinian tourist arrivals to Europe in 2013 totaled 0.9 million, representing 37.6% of the Argentinian long -haul outbound market. Argentinian tourist arrivals to Northern Europe in 2013 totaled 155,000, representing 17.7% of Argentinian arrivals to Europe. Argentinian tourist arrivals to Western Europe in 2013 totaled 46,000, representing 5.2% of Argentinian arrivals to Europe. Argentinian tourist arrivals to Southern Europe in 2013 totaled 593,000, representing 67.7% of Argentinian arrivals to Europe. Argentinian tourist arrivals to Central/Eastern Europe in 2013 totaled 83,000, representing 9.4% of Argentinian arrivals to Europe. Northern Europe's share of the Argentinian market was 6.6% in 2013, a 1.8 percentage point increase from 2003. Western Europe's share of the Argentinian market was 2.0% in 2013, a 1.1 percentage point decrease from 2003. Southern Europe's share of the Argentinian market was 27.2% in 2013, a 14.0 percentage point decrease from 2003. Central/Eastern Europe's share of the Argentinian market was 3.9% in 2013, a 2.7 percentage point decrease from 2003. Long-haul outbound from Argentina is forecast to grow 7.9% per year on average to 2018. Arrivals to Northern Europe are expected to increase 79.2% through 2018, to 277,000. Northern Europe's share of the Argentinian market is forecast to rise to 8.2% in 2018. Arrivals to Western Europe are expected to increase 73.5% through 2018, to 80,000. Western Europe's share of the Argentinian market is forecast to rise to 2.3% in 2018. Arrivals to Southern Europe are expected to increase 51.6% through 2018, to 899,000. Southern Europe's share of the Argentinian market is forecast to rise to 28.8% in 2018. Arrivals to Central/Eastern Europe are expected to increase 95.3% through 2018, to 162,000. Central/Eastern Europe's share of the Argentinian market is forecast to rise to 5.3% in 2018. 0.0 0.5 1.0 1.5 2.0 2.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Argentina long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside South America Source: Tourism Economics 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Argentinean market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside South America Source: Tourism Economics
    • 22 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Brazil 9.6 million tourists traveled from Brazil in 2013. Of these, 2.5 million traveled within South America, while 7.1 million (73.7%) traveled to long-haul destinations. Brazilian tourist arrivals to Europe in 2013 totaled 3.8 million, representing 53.9% of the Brazilian long-haul outbound market. Brazilian tourist arrivals to Northern Europe in 2013 totaled 301,000, representing 7.9% of Brazilian arrivals to Europe. Brazilian tourist arrivals to Western Europe in 2013 totaled 1,854,000, representing 48.6% of Brazilian arrivals to Europe. Brazilian tourist arrivals to Southern Europe in 2013 totaled 1,395,000, representing 36.6% of Brazilian arrivals to Europe. Brazilian tourist arrivals to Central/Eastern Europe in 2013 totaled 265,000, representing 6.9% of Brazilian arrivals to Europe. Northern Europe's share of the Brazilian market was 4.3% in 2013, a 1.2 percentage point decrease from 2003. Western Europe's share of the Brazilian market was 26.2% in 2013, a 2.6 percentage point increase from 2003. Southern Europe's share of the Brazilian market was 20.6% in 2013, a 5.3 percentage point decrease from 2003. Central/Eastern Europe's share of the Brazilian market was 5.4% in 2013, a 0.8 percentage point increase from 2003. Long-haul outbound from Brazil is forecast to grow 4.4% per year on average to 2018. Arrivals to Northern Europe are expected to increase 47.4% through 2018, to 443,000. Northern Europe's share of the Brazilian market is forecast to rise to 5.0% in 2018. Arrivals to Western Europe are expected to decrease - 0.5% through 2018, to 1,844,000. Western Europe's share of the Brazilian market is forecast to fall to 21.0% in 2018. Arrivals to Southern Europe are expected to decrease - 9.3% through 2018, to 1,265,000. Southern Europe's share of the Brazilian market is forecast to fall to 15.2% in 2018. Arrivals to Central/Eastern Europe are expected to increase 38.0% through 2018, to 365,000. Central/Eastern Europe's share of the Brazilian market is forecast to rise to 5.6% in 2018. 0 1 2 3 4 5 6 7 8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Brazil long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside South America Source: Tourism Economics 0% 5% 10% 15% 20% 25% 30% 35% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Brazilian market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside South America Source: Tourism Economics
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 23 © European Travel Commission February 2014 India 10.4 million tourists traveled from India in 2013. Of these, 0.5 million traveled within South Asia, while 9.9 million (94.8%) traveled to long-haul destinations. Indian tourist arrivals to Europe in 2013 totaled 1.6 million, representing 15.9% of the Indian long-haul outbound market. Indian tourist arrivals to Northern Europe in 2013 totaled 361,000, representing 23.0% of Indian arrivals to Europe. Indian tourist arrivals to Western Europe in 2013 totaled 588,000, representing 37.4% of Indian arrivals to Europe. Indian tourist arrivals to Southern Europe in 2013 totaled 299,000, representing 19.0% of Indian arrivals to Europe. Indian tourist arrivals to Central/Eastern Europe in 2013 totaled 324,000, representing 20.6% of Indian arrivals to Europe. Northern Europe's share of the Indian market was 3.6% in 2013, a 2.0 percentage point decrease from 2003. Western Europe's share of the Indian market was 5.9% in 2013, a 0.4 percentage point decrease from 2003. Southern Europe's share of the Indian market was 3.1% in 2013, a 1.3 percentage point increase from 2003. Central/Eastern Europe's share of the Indian market was 3.6% in 2013, a 2.8 percentage point decrease from 2003. Long-haul outbound from India is forecast to grow 10.4% per year on average to 2018. Arrivals to Northern Europe are expected to increase 27.1% through 2018, to 459,000. Northern Europe's share of the Indian market is forecast to fall to 2.8% in 2018. Arrivals to Western Europe are expected to increase 65.9% through 2018, to 976,000. Western Europe's share of the Indian market is forecast to rise to 6.0% in 2018. Arrivals to Southern Europe are expected to increase 48.9% through 2018, to 445,000. Southern Europe's share of the Indian market is forecast to fall to 2.8% in 2018. Arrivals to Central/Eastern Europe are expected to increase 110.6% through 2018, to 682,000. Central/Eastern Europe's share of the Indian market is forecast to rise to 4.6% in 2018. 0 2 4 6 8 10 12 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 India long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside South Asia Source: Tourism Economics 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Indian market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside South Asia Source: Tourism Economics
    • 24 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 China 58.9 million tourists traveled from China in 2013. Of these, 34.8 million traveled within Northeast Asia, while 24.0 million (40.9%) traveled to long-haul destinations. Chinese tourist arrivals to Europe in 2013 totaled 7.5 million, representing 31.0% of the Chinese long -haul outbound market. Chinese tourist arrivals to Northern Europe in 2013 totaled 513,000, representing 6.9% of Chinese arrivals to Europe. Chinese tourist arrivals to Western Europe in 2013 totaled 3,929,000, representing 52.6% of Chinese arrivals to Europe. Chinese tourist arrivals to Southern Europe in 2013 totaled 519,000, representing 6.9% of Chinese arrivals to Europe. Chinese tourist arrivals to Central/Eastern Europe in 2013 totaled 2,503,000, representing 33.5% of Chinese arrivals to Europe. Northern Europe's share of the Chinese market was 2.1% in 2013, a 0.8 percentage point decrease from 2003. Western Europe's share of the Chinese market was 16.3% in 2013, a 4.4 percentage point decrease from 2003. Southern Europe's share of the Chinese market was 2.2% in 2013, a 1.7 percentage point decrease from 2003. Central/Eastern Europe's share of the Chinese market was 12.8% in 2013, a 11.0 percentage point decrease from 2003. Long-haul outbound from China is forecast to grow 6.8% per year on average to 2018. Arrivals to Northern Europe are expected to increase 60.5% through 2018, to 824,000. Northern Europe's share of the Chinese market is forecast to rise to 2.5% in 2018. Arrivals to Western Europe are expected to increase 46.9% through 2018, to 5,773,000. Western Europe's share of the Chinese market is forecast to rise to 17.3% in 2018. Arrivals to Southern Europe are expected to increase 59.4% through 2018, to 827,000. Southern Europe's share of the Chinese market is forecast to rise to 2.5% in 2018. Arrivals to Central/Eastern Europe are expected to increase 46.4% through 2018, to 3,665,000. Central/Eastern Europe's share of the Chinese market is forecast to rise to 13.7% in 2018. 0 5 10 15 20 25 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 China long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside Northeast Asia Source: Tourism Economics 0% 5% 10% 15% 20% 25% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Chinese market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside Northeast Asia Source: Tourism Economics
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 25 © European Travel Commission February 2014 Japan 23.6 million tourists traveled from Japan in 2013. Of these, 8.9 million traveled within Northeast Asia, while 14.6 million (62.1%) traveled to long-haul destinations. Japanese tourist arrivals to Europe in 2013 totaled 4.7 million, representing 32.4% of the Japanese long-haul outbound market. Japanese tourist arrivals to Northern Europe in 2013 totaled 544,000, representing 11.5% of Japanese arrivals to Europe. Japanese tourist arrivals to Western Europe in 2013 totaled 2,388,000, representing 50.4% of Japanese arrivals to Europe. Japanese tourist arrivals to Southern Europe in 2013 totaled 1,210,000, representing 25.5% of Japanese arrivals to Europe. Japanese tourist arrivals to Central/Eastern Europe in 2013 totaled 598,000, representing 12.6% of Japanese arrivals to Europe. Northern Europe's share of the Japanese market was 3.7% in 2013, a 0.9 percentage point decrease from 2003. Western Europe's share of the Japanese market was 16.3% in 2013, a 1.1 percentage point decrease from 2003. Southern Europe's share of the Japanese market was 8.6% in 2013, a 1.1 percentage point decrease from 2003. Central/Eastern Europe's share of the Japanese market was 5.1% in 2013, a 0.6 percentage point decrease from 2003. Long-haul outbound from Japan is forecast to grow 4.7% per year on average to 2018. Arrivals to Northern Europe are expected to increase 19.5% through 2018, to 650,000. Northern Europe's share of the Japanese market is forecast to rise to 3.5% in 2018. Arrivals to Western Europe are expected to increase 20.6% through 2018, to 2,880,000. Western Europe's share of the Japanese market is forecast to rise to 15.6% in 2018. Arrivals to Southern Europe are expected to increase 26.0% through 2018, to 1,525,000. Southern Europe's share of the Japanese market is forecast to rise to 8.6% in 2018. Arrivals to Central/Eastern Europe are expected to increase 46.0% through 2018, to 874,000. Central/Eastern Europe's share of the Japanese market is forecast to rise to 5.9% in 2018. 0 2 4 6 8 10 12 14 16 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Japan long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside Northeast Asia Source: Tourism Economics 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Japanese market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside Northeast Asia Source: Tourism Economics
    • 26 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 United Arab Emirates 2.5 million tourists traveled from the UAE in 2013. Of these, 1.2 million traveled within the Middle East, while 1.3 million (51.7%) traveled to long-haul destinations. Emirati tourist arrivals to Europe in 2013 totaled 0.8 million, representing 58.6% of the Emirati long-haul outbound market. Emirati tourist arrivals to Northern Europe in 2013 totaled 257,000, representing 33.9% of Emirati arrivals to Europe. Emirati tourist arrivals to Western Europe in 2013 totaled 340,000, representing 44.8% of Emirati arrivals to Europe. Emirati tourist arrivals to Southern Europe in 2013 totaled 147,000, representing 19.3% of Emirati arrivals to Europe. Emirati tourist arrivals to Central/Eastern Europe in 2013 totaled 15,000, representing 1.9% of Emirati arrivals to Europe. Northern Europe's share of the Emirati market was 19.9% in 2013, a 11.5 percentage point decrease from 2003. Western Europe's share of the Emirati market was 26.3% in 2013, a 14.9 percentage point increase from 2003. Southern Europe's share of the Emirati market was 14.1% in 2013, a 2.6 percentage point increase from 2003. Central/Eastern Europe's share of the Emirati market was 2.1% in 2013, a 1.9 percentage point decrease from 2003. Long-haul outbound from the UAE is forecast to grow 1.8% per year on average to 2018. Arrivals to Northern Europe are expected to increase 1.8% through 2018, to 262,000. Northern Europe's share of the Emirati market is forecast to rise to 18.5% in 2018. Arrivals to Western Europe are expected to decrease -9.5% through 2018, to 308,000. Western Europe's share of the Emirati market is forecast to rise to 21.7% in 2018. Arrivals to Southern Europe are expected to increase 23.9% through 2018, to 182,000. Southern Europe's share of the Emirati market is forecast to rise to 15.7% in 2018. Arrivals to Central/Eastern Europe are expected to increase 71.4% through 2018, to 25,000. Central/Eastern Europe's share of the Emirati market is forecast to rise to 3.0% in 2018. 0.0 0.5 1.0 1.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 UAE long haul* outbound travel Rest of Long Haul Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Long haul defined as tourist arrivals to destinations outside the Middle East Source: Tourism Economics 0% 5% 10% 15% 20% 25% 30% 35% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Emirati market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of long haul* market *Long haul defined as tourist arrivals to destinations outside the Middle East Source: Tourism Economics
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 27 © European Travel Commission February 2014 Russia 42.2 million tourists traveled from Russia in 2013. Of these, 34.0 million (80.5%) traveled within Europe, while 8.2 million traveled to destinations outside Europe. Russian tourist arrivals to Northern Europe in 2013 totaled 1.7 million, representing 5.1% of Russian arrivals to Europe. Russian tourist arrivals to Western Europe in 2013 totaled 2.4 million, representing 7.0% of Russian arrivals to Europe. Russian tourist arrivals to Southern Europe in 2013 totaled 9.1 million, representing 26.7% of Russian arrivals to Europe. Russian tourist arrivals to Central/Eastern Europe in 2013 totaled 20.8 million, representing 61.2% of Russian arrivals to Europe. Northern Europe's share of the Russian market was 4.1% in 2013, a 0.5 percentage point increase from 2003. Western Europe's share of the Russian market was 5.7% in 2013, a 1.2 percentage point increase from 2003. Southern Europe's share of the Russian market was 22.4% in 2013, a 5.6 percentage point increase from 2003. Central/Eastern Europe's share of the Russian market was 54.6% in 2013, a 11.5 percentage point decrease from 2003. International outbound travel from Russia is forecast to grow 5.1% per year on average to 2018. Arrivals to Northern Europe are expected to increase 23.0% through 2018, to 2.1 million. Northern Europe's share of the Russian market is forecast to fall to 3.9% in 2018. Arrivals to Western Europe are expected to increase 21.8% through 2018, to 2.9 million. Western Europe's share of the Russian market is forecast to fall to 5.4% in 2018. Arrivals to Southern Europe are expected to increase 47.2% through 2018, to 13.4 million. Southern Europe's share of the Russian market is forecast to rise to 25.7% in 2018. Arrivals to Central/Eastern Europe are expected to increase 14.7% through 2018, to 23.9 million. Central/Eastern Europe's share of the Russian market is forecast to fall to 48.6% in 2018. 0 5 10 15 20 25 30 35 40 45 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Russia outbound travel Rest of World Central/Eastern Europe Southern Europe Western Europe Northern Europe Million *Outbound travel defined as tourist arrivals to all destinations Source: Tourism Economics 0% 10% 20% 30% 40% 50% 60% 70% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Europe's share of Russian market Northern Europe Western Europe Southern Europe Central/Eastern Europe % of outbound* market *Outbound market defined as tourist arrivals to all destinations Source: Tourism Economics
    • 28 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Global Economy: 2013 outlook is brighter than 2012 as risks recede Near-term US growth prospects have been damaged by the two-week government shutdown and dispute over raising the debt ceiling in the first half of October. We estimate that Q4 US GDP growth (on an annualised basis) will have been cut by up to 0.5% points. We now forecast economic growth of 1.6% for the US in 2013 and 2.9% next year. Although a deal has now been struck to end the shutdown and raise the debt ceiling, it is only temporary and risks related to the US fiscal situation could resurface next spring. The worst-case scenario could involve the US needing to make very sharp expenditure cuts, damaging the recovery. Aside from the recent events in the US, the broad pattern over recent months has been for generally encouraging growth indications from the major advanced economies, but disappointment from the emerging economies. US data releases before the government shutdown were mixed, but key survey indicators such as the ISM surveys were buoyant suggesting accelerating growth into 2014. Meanwhile, Japan and the UK have posted impressive growth performances in recent months resulting in significant upgrades to our growth forecasts for both countries. UK growth is now expected to reach 2.2% next year while Japan expands 1.9% this year and 1.6% next. Eurozone indicators have also continued to point to gradual improvement, although growth performance there remains patchy and significant challenges remain that will restrain growth to 1% in 2014. By contrast, the performance of key emerging markets has been disappointing and our GDP forecasts for China, India and Brazil have all been downgraded significantly. China is now seen growing 7.4% this year and 7.1% next (from 8.2% and 8.5% six months ago), India at 4.1% this year and 4.5% next (from 5.2% and 7.2%) and Brazil at 2.6% this year and 1.9% next (from 2.9% and 4.4%). Moreover, downside risks to growth remain in the emerging countries. In particular, some countries have been forced to raise interest rates to curb inflationary pressures caused by rapidly falling currencies, even though economic growth has been slowing. Recent Chinese data, however, has been more encouraging. 25 30 35 40 45 50 55 60 65 2005 2006 2007 2008 2009 2010 2011 2012 2013 G3: Manufacturing Purchasing Managers' Index Index Source : PMI/Markit Eurozone US Japan Values above 50 indicate expansion in activity; values below 50 indicate contraction -15 -10 -5 0 5 10 15 20 25 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 UK US Eurozone Japan World: Corporate holdings of broad money % year Source : Oxford Economics/Haver Analytics
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 29 © European Travel Commission February 2014 2012 2013 2014 2015 2016 2017 Real GDP North America United States 2.8 1.6 2.9 3.2 3.1 3.1 Canada 1.7 1.6 2.0 2.8 2.9 2.7 Europe Eurozone -0.6 -0.3 0.9 1.4 1.6 1.7 Germany 0.9 0.6 1.6 1.7 1.7 1.7 France 0.0 0.3 0.9 1.1 1.3 1.4 Italy -2.4 -1.9 0.1 1.2 1.5 1.4 UK 0.1 1.4 2.2 2.4 2.7 2.8 EU27 -0.3 -0.1 1.3 1.7 1.9 2.0 Asia Japan 2.0 1.9 1.6 1.3 0.8 1.1 China 7.7 7.4 7.1 7.3 7.5 7.4 India 5.1 4.1 4.5 5.9 6.3 6.6 G7 1.7 1.2 2.2 2.4 2.3 2.4 World 2.4 2.1 2.9 3.2 3.3 3.4 World 2005 PPPs 3.1 2.8 3.5 4.0 4.1 4.1 World trade 2.3 2.5 5.1 6.1 6.1 6.0 Inflation (CPI) North America United States 2.1 1.5 2.1 2.2 2.1 2.1 Canada 1.5 1.0 1.6 2.1 2.2 2.2 Europe Eurozone 2.5 1.5 1.5 1.4 1.4 1.5 Germany 2.0 1.6 1.7 1.7 1.7 1.7 France 2.0 1.0 1.5 1.4 1.6 1.6 Italy 3.0 1.5 1.7 1.2 1.2 1.3 UK 2.8 2.6 2.0 1.8 1.7 1.8 EU27 2.6 1.7 1.7 1.6 1.6 1.7 Asia Japan 0.0 0.3 2.0 1.3 1.4 0.7 Emerging Asia, excl Japan 4.8 5.0 5.3 5.2 4.7 4.4 China 2.6 2.5 2.9 2.9 3.0 3.0 India 9.3 10.7 9.0 8.1 7.3 6.6 World 3.6 3.3 2.5 2.3 2.2 2.0 Exchange Rates US$ Effective 73.48 75.96 79.18 83.09 83.76 83.44 $/€ 1.29 1.32 1.27 1.20 1.18 1.18 ¥/$ 79.81 96.83 103.00 112.50 113.13 111.03 Commodity Prices Brent Oil ($/bl) 111.7 107.8 102.6 105.0 107.8 111.5 Summary of International Forecasts
    • 30 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Eurozone Economy This year should see the Eurozone recovering to positive (albeit modest) growth after two years of contraction, but the pace of recovery is likely to be very different across the member states. Divergence is nothing new, but the divide is no longer a simple one between ‘core’ and ‘peripheral’ countries. While the outlook remains relatively positive for Germany, Ireland and, to a lesser extent, Spain, it is bleak for France, Belgium and Finland, mainly for structural reasons. External demand will play a key part in the forecast recovery in the Eurozone this year. Helped by stronger US growth, we expect strengthening exports – which are forecast to contribute 1.5 percentage points to growth this year, up from 0.5 percentage points in 2013. As the year progresses and the recovery becomes more entrenched, domestic demand should start to pick up too. However, two major hurdles, which will not be overcome this year, will prevent stronger domestic spending. First, while unemployment should stabilise this year, it will do so at a high level - forecast GDP growth below 1% leaves no room for net job creation. Second, businesses are likely to face continued tight credit conditions, constraining their ability to invest. One source of upside risk to domestic spending is on the government side. With much less pressure from financial markets and the European Commission, governments may allow some fiscal slippage. Eurozone monetary policy may markedly diverge from US policy over the course of 2014. While the Fed is preparing to reduce the level of monetary stimulus, the ECB could well ease monetary policy further especially given very low inflation. This was hinted at during the January ECB press conference although what form monetary easing could take is unclear. -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 2010 2011 2012 2013 2014 Eurozone: GDP growth % year Source : Oxford Economics/Haver Analytics Baseline Resumed government spending Forecast
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 31 © European Travel Commission February 2014 UK Economy While the latest set of national accounts left the most recent quarterly growth rates unchanged, there were some sizeable upward revisions to 2012 and early 2013. The growth rate for 2012 was revised up by 0.2 percentage points, while the annual growth rate for Q3 2013 was upgraded from 1.5% to 1.9%. We have long argued that the GDP data have understated the strength of the recovery, particularly in the period since mid- 2011, given its lack of consistency with a range of other sources, most notably the labour market data and business surveys. These revisions go some way to reducing the size of this discrepancy, although we would not be surprised to see further upward revisions to the history over subsequent releases. The monthly output data already published and the business survey results suggest that the economy is likely to have grown by around 0.8% in Q4 2013, a similar growth rate to the previous two quarters. The PMI surveys have remained very strong, implying a stronger outturn, while other surveys have offered encouragement that the recovery is starting to broaden out towards exports and business investment. However, recent consumer data have been patchier, with retail sales growth slowing and evidence that retailers were forced to discount heavily prior to Christmas to try and attract consumers. The labour market has continued to perform strongly and with unemployment now at 7.4% on the ILO measure, the MPC will soon have to decide on the future of ‘forward guidance’. Recent soundings from the MPC have given the impression that they would like to keep rates on hold for as long as possible, so we expect Bank Rate to remain at 0.5% throughout this year with the unemployment threshold likely to be lowered to 6.5%. However, given the strong momentum building behind the recovery we now expect the first rate hike to come in Q3 2015, rather than mid-2016. 25 30 35 40 45 50 55 60 65 2005 2006 2007 2008 2009 2010 2011 2012 2013 UK: Purchasing managers surveys % balance* Source : CIPS/Markit Construction activity Manufacturing activity Services business activity *value over 50 indicates rising activity
    • 32 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 -10 -8 -6 -4 -2 0 2 4 6 8 2003 2005 2007 2009 2011 2013 2015 2017 % quarter annualised Source: Oxford Economics US: GDP growth Forecast US Economy Real GDP growth was revised up to 4.1% annualized in the third quarter with final sales growing 2.5% and inventories providing a 1.7% boost. Some inventory decumulation is likely to have occurred in Q4, with additional drag from the government shutdown, but we nevertheless estimate growth will have remained relatively robust at 3.4%. Domestic activity data at the end of 2013 was relatively strong, implying more robust final sales and less inventory drag than initially estimated in Q4, with some of the latter pushed into Q1 2014 instead. A particularly bright spot among recent indicators has been consumer spending. December’s weak payrolls gains raise some questions about the durability of the stronger trend in consumption, but we still view the labour market as generally supportive for consumer spending – we forecast payrolls gains to average just under 200,000 per month in 2014. Improving real earnings along with stronger private sector confidence should continue to support spending. After 4.2% annualized consumption growth in Q4 we expect consumer spending to rise by over 3% in both 2014 and 2015. Meanwhile, the housing recovery should continue in 2014 with residential investment providing a reasonable 0.3 percentage point boost to the economy (down from 0.4 percentage points in 2013). On the policy front, the bipartisan budget deal struck at the end of 2013 will reduce the fiscal squeeze in 2014 as sequester spending cuts will be less than initially anticipated. We expect the deal will reduce the drag from fiscal policy by 0.3% of GDP in 2014. The Fed announced a first round of tapering at the end of last year. We expect tapering to take place throughout the year, and end in Q3 although the pace of tapering will be data-dependent. The first federal funds rate hike remains about six quarters away. Overall, we foresee real GDP growth of 1.9% in 2013 and 3.1% in 2014, the latter a modest upgrade stemming from stronger private sector momentum at the end of 2013.
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 33 © European Travel Commission February 2014 Japanese Economy The Japanese economy continues to expand at a solid pace, with indications of activity picking up ahead of the first planned consumption tax in April. Retail sales rose a steep 1.9% on the month in November and we expect ‘last minute’ demand to boost consumer spending and also housing activity through Q1 2014 – though there will be a payback later in the year. The external picture also seems to be brightening. November saw a strong rise in export volumes – including a marked pick-up in exports to China, which were relatively weak in most of 2013. The external sector should also benefit from the further weakening of the yen of around 5% since November of last year. Survey evidence such as the Tankan report suggests the economy will continue to expand in the near term, but concerns remain about the durability of the current upturn. In particular, the consumption tax rises in 2014-15 are likely to constrain consumer spending, especially in the face of sluggish wage growth. Labour market conditions are gradually improving, however, with some surveys now suggesting incipient labour shortages – ultimately this should translate into higher wages. Meanwhile inflation has continued to move into positive territory, reaching 1.6% in November, and the disappearance of deflationary conditions should encourage firms to be more open-handed in terms of wages and investment. Overall, we expect GDP to expand 1.8% this year and 1.4% in 2015. Key to this forecast, however, is further monetary easing (beyond that currently planned) and exchange rate weakness. Without this, there is a risk that the successes of ‘Abenomics’ so far could evaporate as the consumption tax rises start to bite. 25 30 35 40 45 50 55 60 2007 2008 2009 2010 2011 2012 2013 Japan: PMIs PMI index Source : Markit Services Manufacturing Values above 50 indicate expansion in activity; values below 50 indicate contraction
    • 34 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 0 20 40 60 80 100 120 140 160 180 200 2001 2003 2005 2007 2009 2011 2013 US$bn (seasonally adjusted) Source: Haver Analytics China: Trade Exports Imports -6 -3 0 3 6 9 12 15 18 1990 1994 1998 2002 2006 2010 2014 2018 % F'cast Source: Oxford Economics GDP Net exports Domestic demand China: Contributions to GDP 75 80 85 90 95 100 105 110 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Dec Jan India Indonesia Brazil Turkey Index (Dec 31, 2012 = 100) Source: Haver Analytics Emergers: Exchange rates v US$ appreciation Emerging Market Economies Jitters in China’s banking sector pushed short-term lending rates up at the end of last year, prompting the central bank to inject liquidity. We expect further banking stress this year, as the Fed begins to slow its pace of monetary stimulus, with contagion potentially spreading to other emerging markets. But a draft bill on changes to shadow banking and stronger financial regulation shows that the authorities are tackling these concerns. China’s domestic economy continues to expand fairly strongly, with steady growth in industrial production, retail sales and new orders. End-year trade statistics confirmed that demand for Chinese exports is improving modestly. We forecast GDP growth of 7.3% in 2014, slightly lower than the 7.6% estimated for 2013. If banking sector stresses can be contained, activity could be higher. There is a danger; however, that growth in China will slip back into the more comfortable mode of heavy industry and investment-led expansion into the western provinces without enough focus on developing the service sector and moving up the value- added chain. Although China’s exports picked up again in December, this has not yet provided a strong boost to the rest of Asia. Korean export growth increased from 2.9% on the year in Q3 to 4.8% in Q4, but in Taiwan the decline in exports deepened to 1.1% on the year in Q4. Demand for electronics remains fairly weak, and a cheaper Japanese yen is also eroding price competitiveness. Manufacturing PMIs for both countries for December were strong though, with Taiwan’s new order growth reaching a 35-month high. We expect a gentle improvement in activity in the much of the region. Thailand is a key exception, where continued political protests threaten to invalidate the general election in February. Even if the election takes place, political stalemate risks giving rise to a military coup. Domestic activity was already sluggish before the protests began in November; the most recent unrest will further delay any recovery. We have cut our 2014 GDP growth forecast to 3.4%, down from 4.1%, and now estimate GDP to have expanded by just 2.6% in 2013.
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 35 © European Travel Commission February 2014 Indonesia’s financial markets were among the world’s worst performers in 2013, with the currency and stock market each falling around 20% since May, even though the domestic economy is strong and we estimate that GDP grew 5.7% last year. A large current account deficit approaching 4% of GDP, high inflation and the need for economic reform make it vulnerable to capital flight. Rising exports should improve the current account and help stabilise the exchange rate, but without deep-seated reforms, growth will be limited to 5.4%. India’s currency has stabilised in recent weeks, but inflation is still high and the domestic economy has little momentum. The December PMIs indicated that although manufacturing production expanded, services output fell. Helped by a weaker rupee, we expect GDP growth to pick up a little in 2014 to 4.9%. But prolonged uncertainty over elections in May and tight monetary policy will limit the scope for further upside. Uncertainty in the run-up to Brazil’s October elections will continue to stifle investment growth and business confidence. There may be further political protests, and lack of scope for fiscal policy stimulus, on top of tight monetary policy, will undermine growth. Inflation reached 5.9% in December; a rise in regulated prices this year will keep it high despite tight monetary policy. We forecast GDP growth of just 1.7% in 2014. Industrial production in Mexico was up just 0.1% on the month in November, but the HSBC PMI for December rose to 52.6, the strongest improvement in business conditions since February. Rising manufacturing exports suggest better external demand, which should pave the way for an improved domestic economy. Recent political scandals in Turkey have raise questions about the stability of the government. But the economy continues to grow, in spite of the deterioration in financial conditions since mid-2013. The need for large amounts of external financing to cover the current account deficit, at a time when foreign investors are less willing to take risks, has pushed the currency lower against a background of higher inflation and more costly credit. We therefore expect only modest growth of 3.3% in GDP this year, with downside risks if the government faces more political pressure. -3 0 3 6 9 12 15 18 21 2000 2002 2004 2006 2008 2010 2012 2014 % year Source: India Ministry of Commerce & Industry India: Inflation Food components of WPI Total WPI CPI (industrial workers) -16 -12 -8 -4 0 4 8 12 1997 1999 2001 2003 2005 2007 2009 2011 2013 % year Brazil Source: Haver Analytics Latin America: Monthly GDP 3 month moving average Mexico Argentina Chile -25 -20 -15 -10 -5 0 5 10 15 20 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 % year GDP Industrial production Source: Oxford Economics F'cast Turkey: GDP and industrial production
    • 36 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014 Glossary of commonly used terms and abbreviations Airline industry indicators ASK Available Seat Kilometers. Indicator of airline supply, available seats x kilometers flown PLF Passenger Load Factor. Indicator of airline capacity. Equal to revenue passenger kilometers (RPK) / available seat kilometers (ASK) RPK Revenue Passenger Kilometers. Indicator of airline demand, paying passenger x kilometers flown Hotel industry indicators ADR Average Daily Rate. Indicator of hotel room pricing. Equal to hotel room revenue / rooms sold in a given period. Occ Occupancy Rate. Indicator of hotel performance. Equal to the number of hotel rooms sold / room supply. RevPAR Revenue per Available Room. Indicator of hotel performance. Equal to hotel room revenue / rooms available in a given period Central Banks BoE Bank of England; MPC Monetary Policy Committee of BoE BoJ Bank of Japan ECB European Central Bank Fed Federal Reserve (US) RBI Reserve Bank of India Economic indicators and terms Broad money: key indicator of money supply and liquidity including currency holdings as well as bank deposits that can easily be converted to cash CPI Consumer Price Index. Measure of price inflation for consumer goods GDP Gross Domestic Product. The value of goods and services produced in a given economy LCU Local Currency Unit. The national unit of currency of a given country, e.g. pound, euro, etc. PMI Purchasing Managers’ Index. Indicator of producers’ sentiment and the direction of the economy PPI Purchase Price Index. Measure of inflation of input prices to producers of goods and services PPP Purchasing Power Parity. An implicit exchange rate which equalises the price of identical goods and services in different countries so they can be expressed with a common price. QE Quantitive Easing. Expansionary monetary policy pursued by Central Banks involving asset purchases to reduce bond yields and increase liquidity in capital markets. G7 Group of seven industrialised countries comprising US, UK, France, Germany, Italy, Canada, Japan
    • European Tourism in 2013: Trends & Prospects (Q4/2013) 37 © European Travel Commission February 2014 ETC Member Organisations Austria Austrian National Tourist Office (ANTO) Belgium Flanders: Tourism Flanders Wallonia: Tourist Office for Wallonia-Brussels Bulgaria Bulgarian State Agency for Tourism Croatia Croatian National Tourist Board (CNTB) Cyprus Cyprus Tourism Organisation (CTO) Czech Republic CzechTourism Denmark VisitDenmark Estonia Estonian Tourist Board - Enterprise Estonia (ETB) Finland Finnish Tourist Board (MEK) Germany German National Tourist Board (GNTB) Greece Greek National Tourism Organisation (GNTO) Hungary Hungarian Tourism Plc. Iceland Icelandic Tourist Board Ireland Fáilte Ireland and Tourism Ireland Ltd. Italy ENIT – Agenzia Nazionale del Turismo Latvia Latvian Tourism Development Agency (TAVA) Lithuania Lithuanian State Department of Tourism Luxembourg Luxembourg National Tourist Office (ONT) Malta Malta Tourism Authority (MTA) Monaco Monaco Government Tourist and Convention Office (DTC) Montenegro National Tourism Organisation of Montenegro Norway Innovation Norway Poland Polish National Tourist Office (PNTO) Portugal Turismo de Portugal, I.P. Romania Ministry of Regional Development and Tourism San Marino State Office for Tourism Serbia National Tourism Organisation of Serbia (TOS) Slovakia Slovak Tourist Board Slovenia SPIRIT Slovenia Spain Turespaña - Instituto de Turismo de España Sweden VisitSweden Switzerland Switzerland Tourism (ST) Turkey Ministry of Culture and Tourism
    • 38 European Tourism in 2013: Trends & Prospects (Q4/2013) © European Travel Commission, February 2014