The global downturn will lead the travel and tourism industry to shrink in 2009, reveals Euromonitor International today at World Travel Market’s inaugural WTM Vision Conference. The Forecast Restatement – Travel and Tourism in a Crisis report gives the latest predictions for recessionary impact on the industry. The report, exclusively revealed at WTM Vision Conference…
Forecast says travel under pressure as all sectors predicted to shrink
The global downturn will lead the travel and tourism industry to shrink in 2009, reveals Euromonitor International today at World Travel Market’s inaugural WTM Vision Conference.
The Forecast Restatement – Travel and Tourism in a Crisis report gives the latest predictions for recessionary impact on the industry.
The report, exclusively revealed at WTM Vision Conference this morning, also explores the correlation between global GDP and the worldwide tourism industry.
The worldwide travel and tourism industry was expected to grow by more than 4% in 2009, however the latest forecasts show the industry will in fact shrink with hotels and air travel particularly suffering.
Hotels were forecast to grow by 4.8% in 2009 but are now expected to shrink by -3.6%. Air travel was originally forecast to grow by 5.3% but will now decrease by -2.3%.
Travel and tourism arrivals, departures, hotel and air value sales are now predicted to contract by -1.1, -0.9, -3.6 and -2.3 respectively in 2009.
The latest forecast for 2010 reveal worldwide travel and tourism will return to growth, though the growth is way down on pre-recession forecasts.
Arrivals are now predicted to grow by 2.2% in 2010, compared to the June 2008 forecast of 5.9%. Departures are forecast to grow by 1.8% compared to the previous forecast of 5.4%. Hotels are predicted to grow by nearly one percent compared to the previously forecasted 5.2%, while air travel is forecast to grow by 1% compared to the June 2008 predict of 5.2%
The new forecasts from Euromonitor International demonstrate the correlation between GDP and the travel and tourism industry. According to the UNWTO, when global economic growth exceeds 4%, tourism arrivals growth tends to be higher, however, when GDP falls below 2% tourism growth tends to be lower. With the global economy contracting in 2009, the impact on the travel and tourism industry is severe.
The International Monetary Fund has revised its 2009 global GDP forecast from 3.9% to -1.3%, slipping into the red.
The other notable trend with negative global GDP is the increase in domestic holidays, as holidaymakers look to maximise savings. Domestic holidays equate to trading down for some consumers however some tourism sectors will benefit.
In the accommodation sector, trading down takes the form of luxury hotels losing out to cheaper alternatives such as budget and mid priced hotels as well as alternatives such as camping and self catering.
In transportation, consumers trade down to low priced options such as low cost carriers, or switch to rail as seen in Europe or buses and coaches in the case of Latin America.
Companies best positioned to benefit from this economic downturn are those with an array of low cost options and a diversified brand portfolio.
Euromonitor International expects Western Europe’s tentative recovery to begin in 2010, whereas North America is due to take longer to experience positive growth with 2011 earmarked for the rebound.
Euromonitor International Global Travel & Tourism Research Manager Carline Bremner said: “The general industry consensus is that 2009 will be tough for travel and tourism with falling consumer demand. Overall, most regions are contracting especially North America and Latin America whereas the Middle East, Africa and Eastern Europe are faring slightly better.”
“However, the downturn is likely to be followed by a slight recovery in 2010. Euromonitor expects 2% growth driven by constrained demand and incentives from the trade and governments to boost overall tourism flows. Aside from being impacted by the slowdown in arrivals, hotels value sales growth will register slower rates particularly in 2009 as consumers continue to trade down to less expensive budget hotel options.”
World Travel Market Chairman Fiona Jeffery said: “The Euromonitor International Forecast Restatement – Travel and Tourism in Crisis shows the true impact the recession is having on the industry.”
“This high level data and analysis of the current climate is just the sort of information senior industry leaders need to plan the future of their businesses and the sector as a whole. The delivery of such rich and valuable data and analysis to the travel industry is the key reason behind the launch of WTM Vision.”
More information:
* WTM
* Euromonitor
