European Tourism in 2013: Trends & Prospects (Q1/2013) · EUROPEAN TOURISM in 2014: TRENDS & PROSPECTS Quarterly Report (Q1/2014) ... In 2014, US is expected to generate the lion’s

European Tourism in 2013: Trends & Prospects (Q1/2013) 1

EUROPEAN TOURISM in 2014: TRENDS & PROSPECTS

Quarterly Report (Q1/2014)

A quarterly insights report produced for the Market Intelligence Group

of the European Travel Commission (ETC)

by Tourism Economics (an Oxford Economics Company)

Brussels, May 2014

ETC Market Intelligence Report

Copyright © 2014 European Travel Commission

European Tourism in 2014: Trends & Prospects (Q1/2014)

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: [email protected]

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: Old Town, Tallinn Estonia. Photo © Shutterstock / Oleksiy Mark

http://www.etc-corporate.org/

http://www.tourmis.info/index_e.html

http://www.etc-corporate.org/

mailto:[email protected]


© European Travel Commission, May 2014

Foreword

Strong tourism growth continues into 2014

Early results for the first months of 2014 provide

optimism for another strong year for European tourism.

Although not representative of full year results, bullish

growth in international tourist arrivals during the first

quarter is directionally significant, and is often an early

indicator of growth throughout the year (top figure).

The picture is reinforced by industry performance

indicators. Air passenger traffic steadily points upwards,

with RPK1 (+6%) outpacing the relatively weak growth in

the same period of last year. The pick-up in air travel

demand is mirrored by growth in capacity, with available

seats moving up by 4% (middle figure). Positive signals

also come from the accommodation sector, where

growth in occupancy and average daily rates are leading

to improved revenues per available room.

Encouraging signs from the intra-regional market

In 2014, growth opportunities come from the weighty

intra-European market. As the crisis' legacy fades and

confidence improves, European outbound travel

strengthens further, while becoming more balanced

across source markets. According to a European

Commission’s survey2, 8 in 10 EU citizens plan to go on

holiday in 2014, with the vast majority planning to travel

domestically or within the EU (bottom figure).

Economic indicators suggest a strong performance of

Germany and the UK as outbound markets, with private

consumption boosted by sustained economic growth

and, in Germany, by stable consumer prices. Early

indicators also point to persistent growth of travel from

France, but rising consumer confidence remains

vulnerable to fragile economic conditions. Underlying

fundamentals of outbound travel also remain strong for

Russia, although trends may abruptly change depending

on the evolution of the Ukraine crisis.

While Italian consumer sentiment is positive this may

not turn into actual consumption, due to a persistently

weak domestic economy. In the Netherlands, despite a

mild economic recovery, shrinking private consumption

remains a drag for outbound travel. Cost-conscious

travellers can be expected to give preference to last

minute deals and short trips.

1 RPK: Revenue Passenger Kilometres.

2 European Commission (2014), preferences of Europeans towards tourism, Flash Eurobarometer 392.

International Touris Arrivals to Europe

% change year ago

Source: UNWTO.

0%

2%

4%

6%

8%

10%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2010 2011 2012 2013

Quarterly average Annual average

Travel and tourism indicators - Europe

YTD, % change year ago

Sources: * IATA; ** STR.

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

Air travel* Air capacity* Hotel occupancy** Average dailyrates**

2013 2014

Preferences of Europeans towards tourism, 2014

% of total respondents

Source: European Commission, Flash Eurobarometer 2014.

0%

20%

40%

60%

80%

100%

EU-28 DE UK NL FR IT RUS

Going on holiday Long stay (4+ days) Short stay (< 4 days)

2 European Tourism in 2014: Trends & Prospects (Q1/2014)


Long-haul markets to lead growth3

Forward momentum for European tourism comes from North America. Arrivals from this mature region

grew by more than 10% in 2013, compared to a 14% increase in travel from long-haul markets overall.

In 2014, US is expected to generate the lion’s share of long-haul inbound, as consumer optimism, led by

buoyant domestic demand and strong export, bodes for another year of solid growth. Accelerated

economic growth in Canada and Mexico may also contribute to appreciable growth from the region.

From Asia, the best prospects come, again, from China, with virtually all destinations reporting stunning

growth rates in line with past years’ performance. In Japan, the positive effect of the recently approved

economic stimuli is expected to be more than offset by the consumption tax hike. Combined with

currency appreciation, no tangible increase in outbound from this market is expected for the current

year.

The picture from other long-haul markets is mixed. Economic growth in developing economies is

expected to pick up only modestly. Brazil economy is expected to remain in low gear, with outbound

travel further dragged down by the FIFA World Cup event. On the other end, improvement in the UAE

economy, along with faster recovery in the real estate and construction sectors, are leading to a rise in

travel momentum in 2014, with European city trips, luxury travel and beach holidays selling best.

Championing growth for Destination Europe

European tourism is experiencing an encouraging momentum. International tourist arrivals point to

sustained growth for the fifth year in a row, which reflects Europe’s far-from-exhausted tourism potential.

The mix of highly attractive tourism offers, short distances, high tolerance and stable political climate

give Europe an unparalleled advantage in the world tourism race. Yet, Europe’s leading position is not

unassailable, and the European tourism sector should take advantage of good economic times to invest

in a sustainable future.

Potential demand for destinations in Europe is high, especially in distant markets. The intra-European

market is largely a mature one, and shows less promising growth figures than several non-European

regions. Long-haul markets can play a strategic role to sustain relative growth and diversify risk, but this

requires coordinated actions to promote and market Europe overseas. “In long-haul markets, Europe as

a whole lacks a clear image as tourism destination” said Peter de Wilde, President of ETC. “The lack of

a coordinated marketing strategy” he continued “undermines the effectiveness of marketing efforts of

other actors, as they bring a scattered, disjointed message to potential visitors. Championing tourism

growth from long-haul markets requires a coordinated branding programme that truly reflects Europe’s

core values and strengths”.

Embracing a joint vision for tourism growth is a strategic decision, whose impact goes beyond the

tourism sector and impacts on Europe’s overall economic development. This encouraging

momentum calls for bold actions, to strengthen European tourism competitiveness and set

Europe on a durable path of growth.

Valeria Croce, ETC Executive Unit

ETC Market Intelligence Group

3 Outbound travel forecasts from US, Canada, China and Brazil are available on the ETC Executive Dashboard:

http://etc-dashboard.org/dashboard/market?3.. The service is available to ETC members only.

http://etc-dashboard.org/dashboard/market?3


© European Travel Commission May 2014

2014 Tourism Performance Summary

International tourism arrivals and nights in Europe are set to grow for the fifth consecutive year

in 2014, against a backdrop of generally improving economic growth in key source markets.

Recent trends and encouraging signs from macroeconomic data provide optimism for a strong

performance of the tourism sector in Europe.

Tourism performance data available for 2014 to date point to continued growth in travel to the

region. Data are only available for a maximum of three months of 2014 and are therefore not

fully indicative of the pace of growth for 2014 as a whole, but are directionally significant.

The majority of the countries that have reported data thus far for 2014 indicate continued

growth in international arrivals and overnights, supporting the expectations of growth for the

year as a whole.

Travel to Iceland has continued to grow rapidly, by 35.3% in the year to March, and further

perpetuating the upward trend of the past few years. Iceland arrivals in 2013 were almost

70% higher than in 2010, and over 60% higher than previous peak levels achieved in 2008.

This recent growth can be partly attributed to the price competitiveness gain from currency

depreciation in 2008/09, although Oxford Economics’ modelling would suggest that this effect

on growth should now be fading. Some further benefits can be ascribed to the increased effort

to focus marketing campaigns on the off-peak season as well as the increased exposure as a

popular television and film location.

Spain and Hungary have also enjoyed handsome growth in both foreign arrivals and foreign

overnights, in excess of 10% on average in January and February. However, it should be

noted that these months only account for about one tenth of annual tourist arrivals for these

countries, consistent with the seasonal pattern for Europe as a whole.

Croatia is the only destination to report a fall in both foreign arrivals and overnights during the

first three months of the year. However, this fall is related to the timing of Easter as travel to

Croatia is highly seasonal and correlated with major holidays. The early timing of Easter in

2013 ensured strong growth in March, with a subsequent fall in arrivals in April of that year. A

reversal of this trend is evident in 2014 with a later Easter and there was a notable fall in data

for March. A return to growth is expected later in the year, with notable growth expected in

April, and the expectation is for growth for 2014 as a whole. However, arrivals from some non-

Schengen countries, such as Russia, may remain subdued following Croatia’s EU entry.

-10

-5

0

5

10

15

20

Icela

nd

Serb

ia

Hungary

Spain

Esto

nia

Slo

venia

UK

Malta

Pola

nd

Mo

nte

ne

gro

Germ

any

Bulg

aria

Sw

itze

rla

nd

Cypru

s

Austr

ia

Cro

atia

Foreign visits to select destinations2014, year-to-date*, % change year ago

Source : TourMIS *date varies (Jan-Mar) by destination

35.3

>

-10

-5

0

5

10

15

20

Sp

ain

De

nm

ark

Port

ugal

Sw

ed

en

Hu

ng

ary

Se

rbia

Malta

Esto

nia

Germ

an

y

Slo

ve

nia

Pola

nd

No

rwa

y

Mo

nte

ne

gro

Fin

lan

d

Sw

itzerland

Au

str

ia

Cro

atia

Mo

na

co

Foreign visitor nights in select destinations2014, year-to-date*, % change year ago


-10

.6>

-17

.4>



Some falls in the average length of stay are suggested in this data for early 2014 and

notably in the winter sport destinations of Austria and Switzerland which measure notable

travel volumes in these months. Austria was particularly weak due to poor weather

conditions which clearly affected inbound travel during this period. For these two

countries international arrivals grew while overnights fell and may be indicative of some

continued caution by European holidaymakers, supported by analysis of source market

trends.

However, with only limited data available for up to three months of the year it is not likely

that these trends will be representative of growth rates for 2014 as a whole at the country

level. For example, travel to Iceland in the period January to March typically represents

less than 15% of the volume for the year, while the peak summer months (June to

August) have historically accounted for over half of demand. Nevertheless, this provides

an important guide to the direction of demand for the region in 2014.

Country % ytd to month % ytd to month

Austria 0.6 Jan-Jan -3.6 Jan-Jan

Bulgaria 3.8 Jan-Feb n.a n.a

Croatia -0.5 Jan-Mar -10.6 Jan-Mar

Cyprus 1.5 Jan-Feb n.a n.a

Denmark n.a n.a 11.2 Jan-Feb

Estonia 11.3 Jan-Feb 6.2 Jan-Feb

Finland n.a n.a 2.0 Jan-Jan

Germany 4.3 Jan-Jan 5.5 Jan-Jan

Hungary 11.8 Jan-Feb 10.2 Jan-Feb

Iceland 35.3 Jan-Mar n.a n.a

Malta 6.7 Jan-Feb 7.3 Jan-Feb

Montenegro 5.3 Jan-Feb 2.1 Jan-Feb

Norway n.a n.a 2.7 Jan-Feb

Poland 6.2 Jan-Jan 3.2 Jan-Jan

Portugal n.a n.a 10.3 Jan-Jan

Serbia 15.1 Jan-Feb 7.6 Jan-Feb

Slovenia 10.6 Jan-Jan 4.3 Jan-Jan

Spain 11.8 Jan-Feb 11.5 Jan-Feb

Sweden n.a n.a 10.3 Jan-Feb

Switzerland 3.1 Jan-Feb -0.2 Jan-Feb

UK 8.9 Jan-Feb n.a n.a

Source: TourMIS, http://www.tourmis.info; available data as of 15.04.14

Measures used for nights and arrivals vary by country

See TourMIS for further data including absolute values.

Tourist Arrivals and Nights

2014 Performance, Year to Date

International Arrivals International Nights



2013 Tourism Performance Summary

The majority of countries have now reported full year data for 2013, with only a few still to

report the final months of the year, confirming that 2013 was a year of solid growth for

international travel across Europe. It is estimated that European arrivals grew by 5.3% in

2013 as a whole while overnights rose 4.4%; acceleration from the pace of growth

recorded in 2012. This also includes reported growth in travel to France of over 5% (not

reported through TourMIS). A revision to full year growth for Denmark is expected in future

updates due to anticipated 2012 data revisions.

Only Cyprus and Norway reported a fall in international arrivals or overnights in 2013. The

decline in arrivals to Cyprus reflects the continued decline in economic growth with many

international visitors still deterred from travelling to this destination.

The strongest performance was observed in Iceland with the second consecutive year of

over 20% growth in 2013. It is notable that growth was strongest outside of the three peak

summer months following a change in focus of marketing campaigns to the off-peak

season. The summer season accounted for less than 50% of arrivals in Iceland for the first

time in the thirteen years for which monthly data are readily available. Other strong

performers include Greece, Latvia and Serbia also recording double digit growth.

Larger markets such as Germany and Spain recorded more modest growth, but given the

volume of visitors travelling to these destinations they make an overwhelming contribution

to wider European average and are more indicative of the overall trend in demand growth.

Country % ytd to month % ytd to month

Austria 2.7 Jan-Dec 1.9 Jan-Dec

Bulgaria 3.7 Jan-Dec 6.6 Jan-Oct

Croatia 6.3 Jan-Dec 4.8 Jan-Dec

Cyprus -2.4 Jan-Dec -5.7 Jan-Sep

Czech Rep 2.2 Jan-Dec 1.2 Jan-Dec

Denmark n.a n.a 4.8 Jan-Dec

Estonia 3.6 Jan-Dec 2.3 Jan-Dec

Finland n.a n.a 1.1 Jan-Dec

Germany 3.8 Jan-Dec 4.6 Jan-Dec

Greece 15.2 Jan-Sep n.a n.a

Hungary 5.1 Jan-Dec 4.6 Jan-Dec

Iceland 20.7 Jan-Dec n.a n.a

Ireland Rep 7.2 Jan-Dec n.a n.a

Italy 2.7 Jan-Dec n.a n.a

Latvia 14.3 Jan-Sep 9.5 Jan-Sep

Lithuania 9.0 Jan-Dec 8.4 Jan-Dec

Malta 9.6 Jan-Dec 8.7 Jan-Dec

Montenegro 4.6 Jan-Nov 3.2 Jan-Nov

Netherlands 3.8 Jan-Dec 3.8 Jan-Dec

Norway n.a n.a -0.1 Jan-Dec

Poland 5.3 Jan-Dec 5.0 Jan-Dec

Portugal n.a n.a 8.0 Jan-Dec

Romania 3.5 Jan-Sep 5.3 Jan-Sep

Serbia 13.8 Jan-Dec 10.7 Jan-Dec

Slovakia 9.3 Jan-Dec 5.8 Jan-Dec

Slovenia 4.4 Jan-Dec 2.8 Jan-Dec

Spain 5.6 Jan-Dec 5.6 Jan-Dec

Sweden n.a n.a 3.4 Jan-Dec

Switzerland n.a n.a 3.5 Jan-Dec

UK 6.0 Jan-Dec n.a n.a

Source: TourMIS, http://www.tourmis.info; available data as of 15.04.14

Measures used for nights and arrivals vary by country

See TourMIS for further data including absolute values.

Tourist Arrivals and Nights

2013 Performance, Year to Date

International Arrivals International Nights



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

with 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 2015data/estimate/forecast *** d d e f f d d e f f

World 5.2% 4.0% 4.6% 4.4% 5.0% 4.5% 3.9% 4.8% 4.8% 5.4%

Americas 3.6% 4.3% 3.1% 4.0% 4.6% 3.5% 5.8% 4.0% 4.4% 4.9%

North America 2.9% 4.5% 3.6% 3.6% 4.4% 0.4% 5.2% 3.9% 4.4% 5.0%

Caribbean 2.2% 1.1% 1.7% 3.3% 4.0% -5.0% -0.1% 3.5% 4.4% 5.0%

Central & South America 6.9% 5.6% 2.4% 5.3% 5.6% 17.8% 9.2% 4.5% 4.5% 4.7%

Europe 7.3% 3.7% 5.3% 3.7% 4.3% 4.1% 4.2% 4.0% 3.6% 4.2%

EU 6.8% 2.9% 4.6% 3.2% 3.5% 1.7% 1.3% 2.2% 3.3% 3.9%

Non-EU 9.4% 6.7% 8.1% 5.6% 7.0% 12.7% 13.8% 9.4% 4.7% 5.0%

Northern 11.1% 4.5% 3.5% 2.9% 3.4% 4.4% 3.8% 4.0% 3.9% 3.6%

Western 4.5% 2.9% 3.6% 2.2% 3.1% 3.9% 2.2% 2.9% 4.2% 4.0%

Southern/Mediterranean 7.4% 1.7% 6.4% 4.9% 4.4% 1.0% -1.2% 1.2% 1.1% 2.2%

Central/Eastern 9.6% 7.4% 7.1% 3.5% 5.3% 5.9% 8.2% 6.3% 4.1% 5.7%

- Central & Baltic 6.9% 4.6% 4.7% 3.1% 4.7% -4.1% 2.2% 0.2% 1.7% 5.9%

Asia & the Pacific 6.3% 7.0% 6.3% 5.8% 6.9% 7.3% 7.0% 7.4% 6.2% 6.7%

North East 3.8% 6.0% 3.5% 6.6% 7.3% 7.7% 8.4% 7.9% 6.4% 6.5%

South East 10.2% 9.3% 10.9% 5.2% 7.0% 5.2% 5.5% 8.2% 5.6% 6.9%

South 12.2% 5.5% 5.8% 6.2% 4.4% 11.0% -1.4% -0.4% 8.5% 9.6%

Oceania 2.7% 2.4% 4.8% 2.6% 3.2% 7.1% 4.9% 5.5% 3.7% 5.8%

Africa -7.7% 8.0% -0.7% 3.7% 4.1% 4.1% 7.0% 0.3% 3.4% 4.7%

Mid East 2.2% -9.8% -0.3% 6.8% 7.6% -0.3% -12.2% 2.5% 7.7% 9.0%

* 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**



Recent Industry Performance

Tourism continues to thrive into 2014…

International air transport continues to grow in 2014, outpacing growth in 2013

Long haul travel growth is stronger than last year and likely to be unaffected by

temporary ‘blip’ in March data caused by airline strikes and a later timing of

Easter

Hotel occupancy and room rates have increased across most World regions,

with the exception of a sharp decline in ADR in the Asia / Pacific region

European year-to-date performance has been strong, but initial impact of

Ukraine-Crimea-Russia in Eastern Europe is evident

Air Transport

Air passenger demand continued to climb in early 2014 as

measured by growth in revenue passenger kilometres (RPK),

and outpaced growth in the same period a year earlier

according to IATA.

Total air passenger traffic grew 6.4% on average in January-

February 2014, almost double the growth reported in the

same period a year earlier of 3.7% and higher than the full

year performance for 2013 of 5.4%. Some slower growth is

evident in February data and particularly for North America

with some possible flight disruption due to the particularly

cold winter.

Acceleration in growth is evident within Europe. Having

lagged growth in other regions in the previous two years,

European air passenger year-to-date growth of 6.4%matches

the World averagethis year. Economic recovery positively

impact on Europeans’ travel habits, as reflected in air travel

statistics.

0

5

10

15

20

Africa Asia/Pacific Europe LatinAmerica

Mid.East N.America World

Nov-2013

Dec-2013

Jan-2014

Feb-2014

% 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 LatinAmerica

Mid.East N.America World

0

5

10

15

202012

2013

2014 ytd

% year, RPK

Source: IATA

Annual international air passenger growth



This pick up in Euroepan air transport demand is confirmed by the Association of European

Airlines (AEA) data which shows average RPK growth of 4.7% in the first two months of 2014,

up from just 1.2% growth in the same months a year earlier and 2.6% growth reported for

2013 as a whole. This pick up in demand is mirrored by growth in seat capacity, as available

seat kilometres (ASK) rose by 3.7% in the first two months of the year. Further to this,

available weekly data show that ASK rose 3% in the first 16 weeks of 2014, a period which

included any disruption from Easter and strikes. This growth is faster than growth in the

previous two years during this same period (1% growth in 2013, and 2% growth in 2012).

Load factors have remained at high levels of capacity utilisation.

Weekly data from the AEA for the month of March shows a slowdown in recent airline

passenger growth including intra-European travel and long haul travel to the Americas due

to two factors. Firstly, strike action taken by Luthansa pilots and France ATC hampered

supply with a notable drop in available capacity for that period. Secondly, the later timing of

Easter in 2014 caused some distortion in short-term growth comparison. This slowdown is

not an indication of an underlying slower demand trend and we expect a rebound in full April

data with continued growth across the remainder of the year.

-4

-2

0

2

4

6

8

10

12

201

2Q

1

201

2Q

2

201

2Q

3

201

2Q

4

201

3Q

1

201

3Q

2

201

3Q

3

201

3Q

4

201

4Q

1

201

4Q

2

RPK, 4 week moving average, % change year ago


Source: AEA

European airline passenger traffic: Americas

Europe-AmericasTotal European Airlines

-2

0

2

4

6

8

10

12

14

201

2Q

1

201

2Q

2

201

2Q

3

201

2Q

4

201

3Q

1

201

3Q

2

201

3Q

3

201

3Q

4

201

4Q

1

201

4Q

2

RPK, 4 week moving average, % change year ago


Source: AEA

European airline passenger traffic: Asia

Europe-Asia

Total European Airlines

-5

0

5

10

Q1 Q2 Q3 Q4

ASK, 4 week moving average, % change year ago

Source: AEA

European airlines capacity

20132014

2012

60

65

70

75

80

85

90

Q1 Q2 Q3 Q4

Weekly load factor, %

Source: AEA

European airlines passenger load factor

2012

2013

2014



Accommodation Accommodation sector trends are consistent with the airline data for early 2014

indicating that the year began with a continuation of recent growth. Indeed, hotel

demand and occupancy grew in the first quarter of 2014 across all regions according to

STR Global data. However, despite growing occupancy rates in Asia/Pacific a sharp

decline in room rates was reported across a number of the key markets within the region

in US$ terms. This is at least partly related to recent currency movements and changes

are less drastic in local currency terms and should not be interpreted as a large loss of

confidence within the region

Europe and the Americas both enjoyed close to 3% growth in hotel occupancy in the first

quarter of 2014. As demand for hotel rooms remains strong, hoteliers in these regions

are emboldened to push up room rates with revenue per available room (RevPAR)

exceeding 5% growth across these regions. This is a notable performance in Europe and

follows a fall in ADR for 2013 as a whole. However, adjusted for inflation, ADR in the

region remains below prior peak levels

The performance across Europe at a sub-regional and country level is somewhat more

varied. Hotel occupancy rates enjoyed positive growth across most sub-regions, with

Northern and Southern Europe enjoying the strongest growth. Northern European growth

is a continuation of the improvement throughout 2013 and some higher confidence is

helping ADR growth.

Eastern European occupancy was slightly lower than in 2013 for the quarter as a whole,

with particular weakness in March, and notably in data for Russia. This coincides with the

heightened tensions in Ukraine-Crimea-Russia a deterrent to some potential international

visitors. At the same time there was no clear benefit evident in the available data to the

industry from Sochi hosting the Winter Olympics in February and it may in fact have

deterred some travel as has been observed at other mega-events.

Lower ADR in Southern Europe follows some improvement in recent years but should not

be indicative of lower rates throughout 2014, especially given the low importance of Q1 for

the primarily summer destinations in Southern Europe. Country specific trends also point

to continued growth later in the year.

Asia/Pacific Americas Europe MiddleEast/Africa

-6

-4

-2

0

2

4

6

8 Occ ADR* RevPAR*

Global Hotel Performance, Jan-Mar 2014

% change year ago

Source: STR Global * ADR and RevPAR denominated in US$ except for Europe



Key Source Market Performance

Early indications of strong growth and a good year for European

travel

Intra-European travel demand has continued to grow in early 2014 and

particularly from some of the major ‘traditional’ Western markets in line with

a stronger economic backdrop

Travel from Russia also remains strong in available data but there are clear

risks from political tensions

Travel from long-haul markets also continued to rise but may be slower

than in previous years for some markets, while there is some heightened

uncertainty surrounding future growth from emerging markets.

Trends discussed in this section are for up to the first three months of the year, although

actual coverage varies by destination. For many countries relate to just January, or

January and February. Total European arrivals in Q1 represent around 17% of full year

demand and therefore are not indicative of full year performance.

Further detailed monthly data for origin and destination, including absolute values, can be

obtained from TourMIS, http://tourmis.info.

Key intra-European markets Early indications from year-to-date data for 2014 suggests that travel from Germany

continues to grow, following on from the trend of 2013, with a majority of destinations

reporting growth in arrivals and overnights. Recent economic data suggest a pick-up in

German growth, with consumer expenditure growth (including tourism spending) set to

accelerate in 2014 according to Oxford Economics’ latest forecast which should prompt

some pick up in outbound travel.

However, a number of destinations continue to report a slowdown in visitor arrivals from

Germany with declines of more than 30%, albeit at relatively small destinations, with

limited winter tourism offerings. As such, some pick-up later in the year and particularly

during the summer months is likely. However, travel to Croatia is a weak spot despite

entry to the EU and Schengen zone.

-20

-15

-10

-5

0

5

10

15

20

Monte

negro

Spain

Serb

ia

Bulg

aria

Slo

venia

Icela

nd

Pola

nd

Hungary

Austr

ia

Sw

itzerland

Esto

nia

Cro

atia

Malta

Cypru

s

Visits from Germany to select destinations

2014, year-to-date*, % change year ago


< -

50.0

< -

30.7

< -

34.9

-20

-15

-10

-5

0

5

10

15

20

Sw

eden

Spain

De

nm

ark

Slo

venia

Norw

ay

Serb

ia

Po

land

Port

ugal

Monte

negro

Hungary

Luxem

bo

urg

Esto

nia

Austr

ia

Sw

itzerland

Fin

lan

d

Monaco

Cro

atia

Malta

German visitor nights in select destinations



< -

34.3

< -

29.8

< -

30.8



-20

-15

-10

-5

0

5

10

15

20

Mo

nte

ne

gro

Icela

nd

Ma

lta

Sp

ain

Cro

atia

Germ

any

Se

rbia

Po

lan

d

Esto

nia

Sw

itze

rla

nd

Au

str

ia

Bu

lgaria

Hu

ng

ary

Slo

ve

nia

Cyp

rus

Visits from Netherlands to select destinations



43.4

>

25.4

>

21.5

>

<-3

0.6

<-6

4.2

-20

-15

-10

-5

0

5

10

15

20

Monaco

Malta

Luxem

bourg

Denm

ark

Monte

negro

Esto

nia

Pola

nd

Serb

ia

Spain

Fin

land

Germ

any

Port

ugal

Sw

eden

Sw

itzerland

Cro

atia

Norw

ay

Austr

ia

Slo

venia

Hungary

Netherlands nights in select destinations



52.0

>

-20

-15

-10

-5

0

5

10

15

20

Monte

negro

Slo

venia

De

nm

ark

Spain

Sw

itzerland

Serb

ia

Luxem

bo

urg

Hungary

Germ

any

Malta

Po

land

Sw

eden

Fin

land

Norw

ay

Au

str

ia

Monaco

Esto

nia

Cro

atia

French visitor nights in select destinations



<-2

5.1

139

.5>

62.1

>

Outbound growth from the Netherlands has remained weak in early 2014 following

an estimated fall in 2013. All but 5 of the reporting destinations have reported a

decline in Dutch visitors early in this year. The 3 fastest growing destinations

account for only 0.3% of total outbound travel from the Netherlands and are not

representative of performance. Growth of just 3.2% in travel to Spain is perhaps a

better barometer of performance as since 8.5% of all outbound visitors go to

Spain. As a border state, Germany is a larger destination which saw a fall in visits

and nights in January; a further indicator of weak travel demand from this market.

International travel by French residents in the year-to-date for 2014 is thus far

encouraging. Larger markets including Spain and Germany have reported strong

growth in the early parts of the year. These markets combined account for more

than a quarter of outbound travel from France, and therefore the early indications

point towards another year of outbound travel growth from France despite only

modest improvements in economic and consumer spending trends.

Smaller markets in terms of share of total outbound travel from France have

reported strong growth in arrivals and overnights exceeding 30% and more

moderate growth rates are expected later in the year. Similar to the German

trends, travel to Croatia has been notably weak in early 2014.

-20

-15

-10

-5

0

5

10

15

20

Monte

negro

Slo

venia

Icela

nd

Serb

ia

Spain

Ma

lta

Sw

itzerland

Cypru

s

Hu

ng

ary

Germ

any

Pola

nd

Austr

ia

Bulg

aria

Esto

nia

Cro

atia

Visits from France to select destinations



81.2

>

37.8

>

36.7

>

<-2

0.7



-20

-15

-10

-5

0

5

10

15

20

Cyp

rus

Slo

ve

nia

Icela

nd

Au

str

ia

Hu

ng

ary

Monte

negro

Sp

ain

Sw

itze

rla

nd

Germ

any

Cro

atia

Bu

lgaria

Esto

nia

Ma

lta

Se

rbia

Po

lan

d

Visits from Italy to select destinations



65.4

>

21.0

>

Data for early 2014, suggests that outbound travel from Italy grew strongly with the

notable larger destinations of Spain and Germany reporting arrivals growth of 10.2%

and 6.6% respectively, with similar growth in overnights. This bodes well for growth in

travel from Italy for the year ahead while a majority of countries report growth in arrivals

and overnights from Italy in early 2014. Tourism demand should be supported by

recently announced economic reforms including tax reductions to stimulate demand.

However, credit conditions remain tight, and with continued high unemployment and

little wage growth we remain cautious about the outlook for growth in outbound travel.

Some of the larger UK destination markets such as Spain and Germany have reported

robust growth in arrivals and overnights from the UK in the first few months of the year.

However, a large proportion of destinations, albeit smaller in volume terms, report

lower travel from the UK. With an improved economic backdrop it is expected that UK

outbound travel growth will improve during the summer months which carry a greater

weighting of the full year performance.

However, as UK travel demand improves some recovery in long-haul demand is to be

expected. Indeed, UK data shows stronger growth in recent months for travel from the

UK to destinations such as North America than to Europe. This may be exacerbated as

lower air passenger duty (APD) rates come into effect for some destinations.

-20

-15

-10

-5

0

5

10

15

20

De

nm

ark

Luxe

mb

ourg

Slo

ve

nia

Hu

ng

ary

Mo

nte

ne

gro

Sw

ed

en

No

rwa

y

Sp

ain

Sw

itze

rla

nd

Au

str

ia

Fin

lan

d

Germ

an

y

Po

rtug

al

Ma

lta

Cro

atia

Esto

nia

Po

land

Mo

na

co

Se

rbia

Italian visitor nights in select destinations



66.2

>

<-2

1.7

<-3

3.1

39.3

>

-30

-20

-10

0

10

20

30

Icela

nd

Spain

Serb

ia

Malta

Germ

any

Sw

itze

rla

nd

Austr

ia

Pola

nd

Cypru

s

Monte

negro

Hungary

Slo

venia

Bulg

aria

Esto

nia

Cro

atia

Visits from UK to select destinations



45.9

>

-30

-20

-10

0

10

20

30

Spa

in

Norw

ay

Germ

any

Port

ugal

Sw

eden

Sw

itzerland

Denm

ark

Serb

ia

Monaco

Malta

Luxem

bo

urg

Austr

ia

Hungary

Pola

nd

Fin

land

Slo

venia

Esto

nia

Cro

atia

Monte

negro

British visitor nights in select destinations



<-3

2.4



Growth in travel from Russia to the rest of Europe remains strong according to data for

the first few months of 2014. Indeed, all but two of the reporting countries have recorded

growth in visitor arrivals from Russia, with four destinations reporting growth of 30% and

above. This is a continuation of the trend observed in recent years, which has seen a

surge in Russian outbound travel and an increase in its importance to European

destinations. Eastern Europe continues to be the main destination for travel from Russia,

though Western Europe has also gained share in recent years.

Croatian arrivals and overnights are notably weak in this data to March due to the

comparison to the earlier Easter in 2013. We expect to see this balance out to some

extent in subsequent months with a more positive outturn over the remainder of the year.

However, arrivals from Russia also fell in the second half of 2013 following the country’s

entry to the EU and the Schengen Area and a strong rebound is not expected in the

near-term.

There were moves to ease travel from Russia into Schengen countries to recognise its

increasing importance as an origin market. This would likely have stimulated additional

travel demand. However, tensions arising from recent events in Russia and Ukraine will

likely result in, at best, a delay in any such changes.

-30

-20

-10

0

10

20

30

40

50

Malta

Hungary

Icela

nd

Serb

ia

Esto

nia

Slo

ve

nia

Germ

any

Cypru

s

Sp

ain

Pola

nd

Austr

ia

Bulg

aria

Sw

itzerland

Cro

atia

Monte

negro

Visits from Russia to select destinations



72.3

>

-30

-20

-10

0

10

20

30

40

50

Malta

Hungary

Se

rbia

Luxem

bourg

Spain

Germ

any

Po

land

Esto

nia

Monte

negro

Denm

ark

Slo

ve

nia

Austr

ia

Sw

itzerland

Fin

land

Sw

ed

en

Norw

ay

Monaco

Cro

atia

Russian visitor nights in select destinations


Source : TourMIS *date varies (Jan-Mar) by destination<

-31.4

109

.0 >



Non-European markets Initial data for the beginning of 2014 indicate that travel to Europe from the US was

positive in most reporting destinations. The stronger growth reported tends to be in

smaller destinations – for example, US visitor arrivals account for only 1.1% of total

arrivals in Cyprus in 2013 and 1.4% in Malta.

The slowest arrivals growth recorded was in Germany, which saw US arrivals growth

of only 0.7% however overnights growth of 4.3% suggests an increase in the average

length of stay, but may also point to some stronger growth later in the year.

Economic growth in the US is strengthening according to the latest data and we

anticipate acceleration in GDP in 2014 as a whole. This will include acceleration in

consumer spending on the back of jobs and wage growth. There is ample scope for

accelerated growth over the remainder of the year and particularly in terms of long haul

travel which is an encouraging sign for European tourism.

Travel from Japan to Europe has been promising thus far with 8 of the 14 reporting

countries recording positive growth. This is despite further depreciation of the yen,

which will have positive impacts on domestic tourism in Japan, but negative impacts on

outbound travel, especially for long-haul trips. With this in mind, risks remain to the

outlook for the rest of the year.

-20

-10

0

10

20

30

40

Cyp

rus

Ma

lta

Icela

nd

Esto

nia

Mo

nte

ne

gro

Hungary

Au

str

ia

Sp

ain

Slo

venia

Bu

lgaria

Po

land

Se

rbia

Sw

itze

rla

nd

Cro

atia

Germ

an

y

Visits from US to select destinations



227.8

>

91.8

>

48.1

>

-20

-10

0

10

20

30

40M

alta

Fin

lan

d

No

rwa

y

Slo

ve

nia

Esto

nia

Sp

ain

De

nm

ark

Sw

ed

en

Hu

ng

ary

Luxe

mb

ourg

Cro

atia

Au

str

ia

Germ

an

y

Sw

itze

rla

nd

Po

rtug

al

Mo

nte

ne

gro

Po

land

Se

rbia

Mo

na

co

US visitor nights in select destinations



89.9

>

<-4

1.7

-30

-20

-10

0

10

20

30

40

Mo

nte

ne

gro

Esto

nia

Spain

Bu

lgaria

Icela

nd

Slo

ve

nia

Po

land

Germ

any

Au

str

ia

Se

rbia

Hu

ng

ary

Sw

itze

rla

nd

Cro

atia

Cyp

rus

Visits from Japan to select destinations



215.0

>

91.2

>

44.0

>

<-8

4.0

-30

-20

-10

0

10

20

30

40

Mo

nte

ne

gro

Esto

nia

Spain

Po

rtug

al

Lu

xe

mb

ourg

De

nm

ark

Slo

venia

Germ

an

y

Po

land

Hu

ng

ary

Austr

ia

Fin

lan

d

Sw

itze

rla

nd

Cro

atia

Sw

eden

Se

rbia

No

rwa

y

Mo

na

co

Japanese visitor nights in select destinations



294.3

>

78.9

>

<-3

6.4

<-3

3.5



Outbound travel from China has been exceptional in the early stages of 2014 for both

visitor arrivals and visitor nights, a continuation of recent trends. Indeed, all but one country

have reported positive growth, with some destinations reporting growth rates in excess of

50%. It is still too early to derive any firm conclusions about the full year performance,

however economic growth in China remains stable, while increasing numbers of

households able to afford travel should ensure continued expansion in outbound travel.

Recent growth in travel from India remains somewhat varied. In some markets,

exceptional growth was reported particularly in Spain and Bulgaria in terms of arrivals,

and Sweden and Finland in terms of the number of nights. Nine out of twelve

destinations reporting travel from India indicate growth in either arrivals or overnights.

Indian arrivals still represent a relatively small proportion of total European arrivals and

some volatility is expected. Overall, we anticipate strong growth in visitor arrivals from

India across Europe as a whole.

-10

0

10

20

30

40

50

Au

str

ia

Hu

ng

ary

Icela

nd

Esto

nia

Slo

ve

nia

Se

rbia

Po

land

Bu

lgaria

Sp

ain

Sw

itze

rla

nd

Cro

atia

Germ

an

y

Cyp

rus

Visits from China to select destinations



96.2

>

52.3

>

50.5

>

-30

-20

-10

0

10

20

30

40

50

Sp

ain

Bu

lgaria

Hu

ng

ary

Au

str

ia

Sw

itze

rla

nd

Germ

an

y

Pola

nd

Cro

atia

Visits from India to select destinations



68.1

>

52.8

>

-30

-20

-10

0

10

20

30

40

50

Sw

ed

en

Fin

lan

d

Germ

an

y

Hu

ng

ary

Cro

atia

Sp

ain

De

nm

ark

Sw

itze

rla

nd

Au

str

ia

Po

lan

d

Mo

na

co

Indian visitor nights in select destinations



54.1

>

<-7

6.4

-10

0

10

20

30

40

50

Au

str

ia

Fin

lan

d

No

rwa

y

De

nm

ark

Hu

ng

ary

Se

rbia

Sw

ed

en

Esto

nia

Sw

itze

rla

nd

Cro

atia

Luxe

mb

ourg

Sp

ain

Germ

an

y

Slo

ve

nia

Pola

nd

Mo

na

co

Chinese visitor nights in select destinations


Source : TourMIS *date varies (Jan-Mar) by destination6

5.4

>

52.1

>



Data relating to travel from Canada to Europe in the first few months of the year indicate

further growth, but mixed performance supports a view that growth could slow from the

rapid pace in 2013. Similar to India, Canadian arrivals to Europe represent a small share of

total foreign visitors to Europe and therefore some volatility should be expected. This is

especially true for Iceland and Sweden, both of which have reported triple digit growth in

visitor arrivals and visitor nights respectively. Overall, growth in visitor arrivals and nights

from Canada is expected to be positive for the rest of the year.

-30

-20

-10

0

10

20

30

Icela

nd

Au

str

ia

Cro

atia

Sp

ain

Bu

lgaria

Cyp

rus

Po

land

Sw

itze

rla

nd

Mo

nte

ne

gro

Slo

ve

nia

Se

rbia

Germ

any

Hu

ng

ary

Visits from Canada to select destinations



145

.0 >

-30

-20

-10

0

10

20

30

Sw

ed

en

Au

str

ia

De

nm

ark

Po

land

Po

rtug

al

Hu

ng

ary

Se

rbia

Norw

ay

Sw

itze

rla

nd

Germ

an

y

Fin

lan

d

Slo

ve

nia

Sp

ain

Cro

atia

Monaco

Mo

nte

ne

gro

Canadian visitor nights in select destinations



158.4

>

<-5

8.6

<-5

4.4



Origin Market Share Analysis

United States

0

10

20

30

40

50

60

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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%

2004

2005

2006

2007

2008

2009

2010

201

1

2012

2013

2014

2015

2016

2017

2018

2019

Europe's share of US marketNorthern Europe

Western Europe

Southern Europe


% of long haul* market



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. 2014 values are

preliminary estimates based on the first few months of information and are not final reported data.

Methodology note:

Data in these charts and tables relate to reported arrivals

in all destinations as a comparable measure of outbound

travel for calculation of market share.

Hence, US outbound shown here is larger than reported

departures in national statistics as long-haul trips often

involve travel to multiple destinations. For example US

data reporting shows 11.4mn departures to Europe while

the sum of European arrivals from the US was 22.7mn;

each US trip to Europe involved a visit to two destinations

on average.

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

Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008

Total outbound travel (000s) 82,038 - 4.9% 26.7% - 7.8% -

of which:

Long haul (000s) 50,783 61.9% 5.9% 33.2% 65.1% 11.3% 60.0%

Short haul (000s) 31,255 38.1% 3.0% 16.2% 34.9% 2.5% 40.0%

Travel to Europe***

Europe (000s) 22,157 27.0% 5.4% 30.2% 27.7% 12.0% 26.0%

Northern Europe (000s) 5,067 6.2% 6.7% 38.4% 6.7% 6.6% 6.2%

Western Europe (000s) 8,680 10.6% 4.2% 22.9% 10.3% 15.2% 9.9%

Southern Europe (000s) 5,489 6.7% 4.4% 24.1% 6.6% 10.8% 6.5%

Central/Eastern Europe (000s) 2,920 3.6% 8.3% 48.9% 4.2% 15.0% 3.3%

US Market Share Summary

2013 Growth (2013-18) Growth (2008-13)

* Levels are in 000s unless otherwise specified

*** Shares are expressed as a % of total outbound travel

** Shows cumulative change over the relevant time period indicated



Canada




Norway, Sweden, UK









Slovakia, Ukraine

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Europe's share of Canadian market Northern Europe

Western Europe

Southern Europe





0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Canada long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 11,187 31.6% 3.4% 18.4% 31.2% 14.3% 33.2%

Short haul (000s) 24,214 68.4% 3.8% 20.5% 68.8% 22.7% 66.8%

Travel to Europe***

Europe (000s) 4,449 12.6% 2.7% 14.0% 12.0% 12.6% 13.4%


Western Europe (000s) 1,686 4.8% 0.8% 3.9% 4.1% 12.5% 5.1%


Central/Eastern Europe (000s) 305 0.9% 5.8% 32.4% 1.0% 31.2% 0.8%



Canada Market Share Summary

2013 Growth (2013-18) Growth (2008-13)




Mexico




Norway, Sweden, UK









Slovakia, Ukraine

0.0

0.5

1.0

1.5

2.0

2.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mexico long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

5%

10%

15%

20%

25%

30%

35%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Mexican marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 2,173 12.8% 7.4% 42.6% 13.8% 20.6% 11.4%

Short haul (000s) 14,774 87.2% 5.5% 30.8% 86.2% 5.9% 88.6%

Travel to Europe***

Europe (000s) 1,210 7.1% 4.7% 25.9% 6.8% 33.6% 5.7%

Northern Europe (000s) 115 0.7% 8.8% 52.6% 0.8% 70.6% 0.4%

Western Europe (000s) 568 3.4% 4.9% 27.0% 3.2% 23.8% 2.9%

Southern Europe (000s) 417 2.5% 1.8% 9.5% 2.0% 36.8% 1.9%



Mexico Market Share Summary

2013 Growth (2013-18) Growth (2008-13)





Argentina




Norway, Sweden, UK









Slovakia, Ukraine

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Argentina long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside South America


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Argentinean market

Northern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 2,342 30.3% 7.9% 46.4% 33.4% 88.6% 27.1%

Short haul (000s) 5,389 69.7% 4.8% 26.6% 66.6% 61.0% 72.9%

Travel to Europe***

Europe (000s) 880 11.4% 10.1% 61.6% 13.9% 85.5% 10.3%


Western Europe (000s) 46 0.6% 12.2% 78.0% 0.8% 80.6% 0.6%




Argentina Market Share Summary

2013 Growth (2013-18) Growth (2008-13)





Brazil




Norway, Sweden, UK









Slovakia, Ukraine

0

1

2

3

4

5

6

7

8

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Brazil long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

5%

10%

15%

20%

25%

30%

35%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Brazilian marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 7,102 73.8% 4.5% 24.4% 73.9% 100.9% 66.1%

Short haul (000s) 2,522 26.2% 4.3% 23.7% 26.1% 39.4% 33.9%

Travel to Europe***

Europe (000s) 3,833 39.8% 0.6% 2.9% 33.0% 82.5% 39.3%


Western Europe (000s) 1,864 19.4% 0.0% -0.1% 15.6% 98.1% 17.6%

Southern Europe (000s) 1,405 14.6% -2.0% -9.6% 10.6% 70.3% 15.4%



Brazil Market Share Summary

2013 Growth (2013-18) Growth (2008-13)





India




Norway, Sweden, UK









Slovakia, Ukraine

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

India long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside South Asia


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Indian marketNorthern Europe

Western Europe

Southern Europe



*Long haul defined as tourist arrivals to destinations outside South Asia


Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 9,680 94.4% 9.1% 54.4% 94.8% 27.5% 95.3%

Short haul (000s) 570 5.6% 7.6% 44.0% 5.2% 51.0% 4.7%

Travel to Europe***

Europe (000s) 1,575 15.4% 8.7% 51.8% 15.2% 11.9% 17.7%

Northern Europe (000s) 361 3.5% 3.7% 19.6% 2.7% -5.6% 4.8%

Western Europe (000s) 590 5.8% 9.2% 55.2% 5.8% 10.8% 6.7%




India Market Share Summary


2013 Growth (2013-18) Growth (2008-13)




China




Norway, Sweden, UK









Slovakia, Ukraine

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

China long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside Northeast Asia


0%

5%

10%

15%

20%

25%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Chinese marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 24,037 41.0% 6.9% 39.8% 42.9% 159.1% 34.4%

Short haul (000s) 34,617 59.0% 5.2% 29.1% 57.1% 95.4% 65.6%

Travel to Europe***

Europe (000s) 7,458 12.7% 8.4% 49.5% 14.2% 119.5% 12.6%


Western Europe (000s) 3,949 6.7% 8.1% 47.5% 7.4% 153.2% 5.8%



China Market Share Summary

2013 Growth (2013-18) Growth (2008-13)






Japan




Norway, Sweden, UK









Slovakia, Ukraine

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Japan long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Japanese marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 14,433 62.1% 3.8% 20.3% 59.8% 17.7% 60.1%

Short haul (000s) 8,815 37.9% 5.8% 32.5% 40.2% 8.4% 39.9%

Travel to Europe***

Europe (000s) 4,624 19.9% 3.7% 19.9% 19.1% 15.3% 19.7%


Western Europe (000s) 2,326 10.0% 3.0% 16.0% 9.3% 16.5% 9.8%


Central/Eastern Europe (000s) 579 2.5% 6.8% 39.2% 2.8% -1.0% 2.9%

Japan Market Share Summary

2013 Growth (2013-18) Growth (2008-13)






United Arab Emirates




Norway, Sweden, UK









Slovakia, Ukraine

0.0

0.5

1.0

1.5

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

UAE long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside the Middle East


0%

5%

10%

15%

20%

25%

30%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Emirati marketNorthern Europe

Western Europe

Southern Europe



*Long haul defined as tourist arrivals to destinations outside the Middle East


Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008

Total outbound travel (000s) 2,421 - 3.7% 19.9% - -20.2% -

of which:

Long haul (000s) 1,291 53.3% 2.0% 10.4% 49.1% 27.2% 33.5%

Short haul (000s) 1,130 46.7% 5.5% 30.6% 50.9% -44.0% 66.5%

Travel to Europe***

Europe (000s) 760 31.4% 0.7% 3.4% 27.1% 42.2% 17.6%


Western Europe (000s) 341 14.1% -1.8% -8.7% 10.7% 77.8% 6.3%



United Arab Emirates Market Share Summary

2013 Growth (2013-18) Growth (2008-13)






Russia

Travel from Russia to Europe has enjoyed

exceptional growth in recent years in line with

economic developments. The growing

importance of Russia as an origin market has

been widely recognised and there was a large

potential upside factor to the outlook from

some easier visa conditions on Russian

travellers to Schengen zone countries.

Previous analysis by Oxford Economics

shows that there is a clear positive impact

from visa facilitation measures.

Due to ongoing tensions in Ukraine the

likelihood of this benefit has been delayed at

best.




Norway, Sweden, UK









Slovakia, Ukraine

0

5

10

15

20

25

30

35

40

45

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Russia outbound travel Rest of World


Southern Europe

Western Europe

Northern Europe

Million

*Outbound travel defined as tourist arrivals to all destinations


0%

10%

20%

30%

40%

50%

60%

70%

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

Europe's share of Russian marketNorthern Europe

Western Europe

Southern Europe


% of outbound* market

*Outbound market defined as tourist arrivals to all destinations


Level* ShareAnnual

average

Cumulative

growth**

Share

2018

Cumulative

growth**

Share

2008


of which:

Long haul (000s) 8,261 19.7% 7.7% 44.9% 22.4% 65.6% 20.6%

Short haul (000s) 33,582 80.3% 4.4% 23.8% 77.6% 74.5% 79.4%

Travel to Europe***

Europe (000s) 33,582 80.3% 4.4% 23.8% 77.6% 74.5% 79.4%


Western Europe (000s) 2,410 5.8% 4.0% 21.9% 5.5% 98.3% 5.0%




Russia Market Share Summary


2013 Growth (2013-18) Growth (2008-13)




Economic outlook summary: key source markets

Assessing recent tourism data and industry performance is a useful way of directly monitoring the key trends

for travel demand across Europe. This can be complemented by looking at key trends and relationships in

macroeconomic performance in Europe’s key source markets which can provide further useful insight into

likely tourism developments throughout the year.

The linkages between macro and tourism performance can be very informative. For example, strong GDP or

consumer spending growth is an indication of rising prosperity with people more likely to avail of international

travel. It is also an indication of rising business activity and therefore stronger business travel. Movements in

exchange rates against the euro can be equally important as it can influence choice of destination.

Eurozone GDP growth is forecast to accelerate in 2014 across all key markets, likely to result in

some higher leisure and business travel, with Germany expected to outperform the rest

Two diverging trends stand out within major Eurozone countries:

o Germany and France show the most signs of optimism for the year ahead with rising GDP

and consumer expenditure, falling unemployment and modest growth in inflation;

o Italy and Netherlands trends are the opposite – falling consumer spending, albeit more stable

than in 2013, but unemployment to rise, and unlikely that these markets will be a key source

of European travel growth this year, indeed stagnant growth from these markets is possible.

The UK is forecast to have a stellar year in terms of economic growth. The recovery is now well and

truly underway, GDP growth is forecast to accelerate to 3.0%, supported by a modest pickup in

consumer spending growth. The stronger exchange rate in 2014 may have a positive impact on

outbound travel to Europe throughout the year.

Russian growth is to slow in 2014, and Oxford Economics latest outlook is for a recession during the

year. This is linked to the large devaluation and risks related to capital flight in emerging markets,

while a falling oil price will also affect government revenue and spending.

Chinese growth is also expected to slow in 2014, although it remains the strongest growing source

markets in terms of GDP. Consumer expenditure remains equally strong with only a moderate

weakening of the exchange rate. China remains a small source market for Europe however strong

travel growth from China still makes a modest contribution to overall growth.

GDP

Consumer

expenditure

Unemploy-

ment **

Exchange

rate*** Inflation GDP

Consumer

expenditure

Unemploy-

ment **

Exchange

rate*** Inflation

UK 1.7% 2.2% -0.5% -4.5% 2.6% UK 3.0% 2.4% -1.0% 3.2% 1.6%

France 0.3% 0.4% 0.5% 0.0% 0.9% France 0.7% 0.9% -0.2% 0.0% 0.9%

Germany 0.5% 1.0% 0.0% 0.0% 1.5% Germany 1.8% 1.1% -0.1% 0.0% 1.3%

Netherlands -0.8% -2.1% 1.8% 0.0% 2.5% Netherlands 0.7% -0.3% 0.7% 0.0% 1.0%

Italy -1.8% -2.6% 1.6% 0.0% 1.2% Italy 0.5% -0.2% 0.8% 0.0% 0.7%

Russia 1.4% 4.7% 0.0% -5.3% 6.8% Russia 0.6% 1.1% 0.4% -10.7% 6.0%

US 1.9% 2.0% -0.7% -3.4% 1.5% US 2.9% 2.7% -0.8% -0.6% 1.7%

Canada 2.0% 2.2% -0.2% -6.2% 1.0% Canada 2.3% 2.2% -0.1% -10.1% 1.4%

Brazil 2.3% 2.3% -0.1% -12.5% 6.2% Brazil 1.6% 2.1% 0.0% -9.0% 6.2%

China 7.7% 8.5% 0.0% -1.4% 2.6% China 7.2% 8.4% 0.0% 0.3% 2.5%

Japan 1.5% 1.9% -0.3% -20.8% 0.4% Japan 1.3% 0.3% -0.3% -8.6% 2.1%

India 4.6% 3.1% 0.0% -11.8% 10.9% India 4.7% 3.5% 0.0% -3.7% 6.9%

* unless otherwise specified

** percentage point change

Note: Colour coding relates to each individual column and highlights the strongest performing countries shaded as dark green (e.g. China fastest growing GDP), and weakest

performaing countries as dark red (e.g. falling consumer expenditure in Netherlands and France).

Summary of economic outlook: 2013% growth y-y*

Macroeconomic indicators

Summary of economic outlook: 2014% growth y-y*

Macroeconomic indicators

*** exchange rates measured against the euro. A positive change indicates stronger local currency against the euro and therefore a positive impact on outbound tourism demand. A

negative change indicates weaker local currency against the euro and therefore a negative impact on outbound tourism demand.



Global Economy: Global deflation – a genuine risk?

The notable decline in inflation in the Eurozone, US

and UK since mid-2013 has led to suggestions that a

period of widespread price deflation across the major

economies is a risk. Adding to these concerns has

been the trajectory of producer prices – already

declining in the Eurozone and China and showing very

subdued growth elsewhere.

Our global GDP forecasts do not, in isolation, point to a

worldwide deflation risk. We expect growth at 2.8% this

year and 3.2% next, little changed from last month.

But the starting point for this growth matters,

specifically the gap between actual and potential output

last year. Even with reasonable growth, an initially large

output gap would imply downward pressure on inflation

over the next two years.

Unfortunately, the size of the output gap is very

uncertain. There is a wide range of estimates for the

major economies, especially Japan. Part of the problem

is that it is hard to know how much potential output was

(or was not) permanently lost during the global financial

crisis and recession.

Assuming substantial permanent losses, output gaps

might be relatively modest now, but a more optimistic

view of the supply side of the economy would suggest

output gaps could be quite large – and arguably this fits

better with the recent evidence from inflation.

Overall, while we see a genuine risk of deflation in the

Eurozone (with around a 15% probability) we are more

upbeat about the other major economies, where growth

in the broad money supply and nominal GDP do not

seem to be signalling deflation risks.

But the difficulty of measuring ‘slack’ in the economy for

us underlines the case for central banks to err on the

side of caution when setting monetary policy, and either

not tightening too soon or easing further. This month

we have built in a further ECB rate cut to our Eurozone

forecast. In Japan, we have revised down growth for

2014-15 with recent data strengthening the case for

additional monetary easing this year.

-10

-8

-6

-4

-2

0

2

4 OEIMF WEOOECD OutlookNational sourceLinear extrapolation from 2007

G4: Output gaps% of GDP, 2013

Source : Oxford Economics/Haver Analytics

Japan US UK Eurozone

-10

-5

0

5

10

15

2006 2008 2010 2012 2014

World: Producer prices% year


China

US (core)

Eurozone

Japan



2012 2013 2014 2015 2016 2017Real GDP

North America

United States 2.8 1.9 2.9 3.5 3.3 3.0 Canada 1.7 2.0 2.3 2.7 2.8 2.8

Europe

Eurozone -0.6 -0.4 1.0 1.4 1.5 1.6 Germany 0.9 0.5 1.8 1.8 1.5 1.6 France 0.0 0.3 0.7 1.1 1.3 1.3 Italy -2.4 -1.8 0.5 1.3 1.3 1.3 UK 0.3 1.7 3.0 2.5 2.6 2.6 EU27 -0.3 0.1 1.5 1.8 1.9 1.9

Asia

Japan 1.4 1.5 1.3 1.3 1.1 1.5 China 7.7 7.7 7.2 6.8 7.1 7.1 India 4.8 4.6 4.7 4.9 6.1 6.6

G7 1.6 1.3 2.2 2.6 2.4 2.3 World 2.4 2.2 2.8 3.2 3.3 3.3 World 2005 PPPs 3.1 3.0 3.4 3.8 4.0 4.1 World trade 2.4 2.6 4.5 5.8 5.9 5.7Inflation (CPI)

North America

United States 2.1 1.5 1.7 2.0 2.1 2.1 Canada 1.5 1.0 1.4 1.9 2.0 2.0

Europe

Eurozone 2.5 1.3 0.8 1.5 1.8 1.7 Germany 2.0 1.5 1.3 2.3 2.9 2.5 France 2.0 0.9 0.9 1.3 1.6 1.6 Italy 3.0 1.2 0.7 1.2 1.3 1.3 UK 2.8 2.6 1.6 1.8 1.7 1.9 EU27 2.6 1.5 0.9 1.6 1.8 1.8 Asia

Japan 0.0 0.4 2.1 1.3 1.6 0.9 Emerging Asia, excl Japan 4.8 5.0 5.3 5.2 4.7 4.4 China 2.6 2.6 2.5 2.5 2.8 3.0 India 9.3 10.9 6.9 6.7 6.5 6.3

World 3.6 3.3 2.3 2.4 2.4 2.2Exchange Rates

US$ Effective 73.52 76.03 78.94 81.50 81.87 81.89 $/€ 1.29 1.33 1.34 1.28 1.25 1.23 ¥/$ 79.81 97.56 106.19 112.50 113.13 111.03Commodity Prices

Brent Oil ($/bl) 111.7 108.7 104.0 103.0 105.8 109.2

Summary of International Forecasts



Eurozone Economy

The Eurozone recovery gathered pace in the first quarter, with the composite

Purchasing Managers’ Index (PMI) reaching a 32-month high in February followed by a

similar reading in March. Forward-looking indicators suggest the Eurozone may have

reached its speed limit for 2014, but annual growth of 1% will restore most of the ground

lost during two years of modest recession. Improving labour markets will allow

consumer spending to pick up from 2015, driving GDP growth to 1.5% in the medium

term.

The degree of momentum varies across countries though, and not along familiar

“peripheral/core” lines. “Core” countries that have done least to improve competitiveness

(such as France, the Netherlands and Belgium) are likely to experience only sluggish

growth as exports rebound only modestly. In contrast, countries that have enacted more

ambitious reforms are benefiting more as world trade picks up – in particular Portugal,

Ireland and Spain.

Nevertheless, a number of familiar constraints on growth remain. The emergency phase

of fiscal consolidation is completed, but consolidation efforts will remain a drag for some

time. This is not only the case in the peripheral economies, but also in a number of core

members where debt stocks are 100% of GDP or more, and deficits are close to targets

agreed with the EC. In addition the Eurozone banking system remains badly

fragmented. This will undermine funding for investment in several peripheral economies

into the medium term.

We are increasingly concerned about the risk of deflation in the Eurozone, as CPI

inflation slowed to 0.5% in March. Deflation should be avoided, but like the pick-up in

exports this partly hinges on a weaker euro. To underpin inflation expectations and

reduce the risk of deflation we think the ECB needs to signal more aggressively that it

will support growth. We expect a further cut in official interest rates, as well as efforts to

push banks to lend to SMEs in the upturn.

-9

-6

-3

0

3

6

9

1992 1995 1998 2001 2004 2007 2010 2013

% year

Consumer pricesAverage earnings

Source: Oxford Economics

Forecast

Eurozone: Inflation

Producer prices



UK Economy

A strong run of data over the past few weeks has led us to raise our forecast for 2014

GDP growth to 3%, from 2.6% last month. Services output has grown at an annualised

pace of just over 4% for the past few months, while retail sales have been rising at their

fastest pace since 2008 on a three-monthly basis. PMI surveys have also continued to

report strong growth in activity across manufacturing, construction and services at rates

which, albeit a little short of recent peaks, are still well above historical averages.

Although the consumer remains a key part of the pick-up, benefiting from an end to the

squeeze on real wages, there are signs of more balanced growth. Following substantial

revisions, the national accounts now show net trade contributing 1 percentage point to

GDP growth in Q4 2013, with exports rebounding strongly after a disappointing Q3.

Business and residential investment both accelerated significantly to show annual growth

of 9% and 10% respectively in Q4.

The Chancellor presented his latest Budget on 19 March. The Office for Budget

Responsibility’s (OBR) forecasts were only marginally stronger than before and the

revisions were not sufficient to allow for any net giveaway. As such, it appears unlikely

that the Budget will have a significant impact on the outlook.

However, the Chancellor did announce radical reform of the pension and savings

systems. From 2015 pensioners will have much greater flexibility over the use of their

defined contribution pension pots and will no longer be compelled to purchase an

annuity. The amount that can be saved in ISAs will increase substantially to £15,000

from July and the whole sum may now be held in cash. The impact of these changes is

likely to be felt only gradually, but the greater flexibility could make pension saving more

attractive, while the ability of pensioners to withdraw bigger chunks of their pension pots

could have implications for the housing market and other asset classes.

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

Consumer

spending

Investment Govt.

consumption

Inventories Net trade

UK: Contributions to GDP growth, Q4 2013%pts

Source : Haver Analytics



US Economy

The final reading for 2013Q4 real GDP growth was in line with our expectations at

2.6% with a very encouraging growth mix. Final sales posted a solid 2.7% advance

while inventories were not a major factor underpinning for growth for the first time in

four quarters.

Cold and snowy conditions in the first quarter of the year have weighed on economic

activity, and will most likely imply a real GDP growth reading around 1.5% in Q1.

However, recent data have been tilted to the upside and indicate a resilient economy

that should rebound in the spring.

Nonfarm payrolls rose a solid 192,000 in March, and the two prior months were

revised up a combined 37,000. With the worst of the winter past us, we expect monthly

payroll gains to average around 190,000 in 2014 with the unemployment rate

gradually declining to under 6.5% by year-end.

Improving employment trends, rising wages, and resilient confidence should translate

into a solid consumer spending rebound in Q2, with growth at 2.7% for the year.

While extreme weather weighed on housing activity in early 2014, the sector had hit a

soft patch towards the end of 2013. We expect stronger fundamentals to support a

rebound in housing through the rest of the year, with the contribution of residential

investment to growth close to 0.2 percentage points.

On the policy front, less fiscal restraint and more policy certainty should be conducive

to private sector activity. However, we do not expect much bipartisan policymaking

ahead of the mid-term elections.

Solid economic data means the Fed will pursue tapering through the fall, but ongoing

slack in labour markets and subdued inflation indicate a rate hike in Q3 2015 with

qualitative forward guidance as the main policy instrument.

The global outlook should improve in the coming months, but international downside

risks exist. We now expect GDP growth at 2.9% in 2014, in line with last month.

Growth should pick up to 3.5% next year.



Japanese Economy

GDP is likely to have grown strongly in Q1, helped by ‘last minute’ demand related

to the rise in the consumption tax on 1 April. Despite a decline in February,

industrial output was over 3% higher in January and February combined than in

Q4, and retail sales were 1.7% higher.

Activity brought forward to Q1 by the tax rise means activity taken away from Q2

and potentially Q3, however, and attention is increasingly turning to how big this

‘payback’ effect will be.

Some forward-looking indicators have deteriorated. Consumer confidence has

slumped over recent months to its lowest level since December 2011, while the

forecast balance of the key Tankan business survey suggested declining

confidence about the near-term outlook.

Meanwhile, export volumes stagnated in January and February compared with Q4.

However, surveys do suggest some pick-up in regional demand and we also expect

export growth to be supported going forward by solid growth in the US, Japan’s

largest market.

Another cause for optimism is the strength of core machinery orders, which

suggests an upswing in business investment. Higher exports and investment

should help offset the likely weakness in consumer spending following the

consumption tax rise. Overall, however, we have edged our GDP forecasts down

this month for 2014 and 2015, to 1.3%.

Downside risks to growth have also risen, so that further monetary stimulus now

makes even more sense. Without it, there is a risk that weak growth in mid-2014

could see the ‘Abenomics’ programme unravel: the government is already

pondering delaying the second consumption tax rise planned for 2015, which could

reignite concerns about fiscal risks, and weak growth would also further dim hopes

for meaningful structural reform.

70

75

80

85

90

95

100

105

110

115

120

2003 2005 2007 2009 2011 2013

Industrial output

3-month average

Japan: Industrial outputIndex, 2010=100




80

85

90

95

100

105

110

Jan 13 Mar 13 May 13 Jul 13 Sep 13 Nov 13 Jan 14 Mar 14

Index (Dec 31, 2012)

China

Source: Haver Analytics

BRICs: Exchange rates v US$

Brazil

Russia

India

-9

-6

-3

0

3

6

9

12

15

18

21

1996 1999 2002 2005 2008 2011 2014 2017

% year

GDP

Industrial production

Source: Oxford Economics / CEIC

F'cast

India: GDP and industrial production

Emerging Market Economies

Russia’s annexation of Crimea incurred sanctions by the

West, but as these are aimed at individuals they will have

little effect on the economy. Capital outflows have continued,

however, and the rouble is now 8% lower than at the start of

the year. The impact of the lower exchange rate on inflation

will be offset by a weaker outlook for growth, and continued

tight monetary policy will drag investment down. Lower

confidence and continued capital flight mean we now expect

GDP growth of just 0.6% this year, with a technical recession

in Q2 and Q3. But downside risks are substantial, especially

if sanctions are extended to limit corporate access to capital

markets, or to target Russia’s main source of external

revenues by coordinating an increase in the oil supply to

lower the world oil price.

Chinese exports in March were over 6% lower than a year

earlier, reinforcing the subdued picture of the first two months

of 2014. The March PMIs were also slightly lower, although

new export orders rose for the first time in four months. With

domestic indicators such as retail sales also showing slower

growth, we have eased our forecast for this year to 7.2%

(from 7.3% last month). Next week’s Q1 GDP data will give a

better idea of how sharp the slowdown could be. A mini-

support package of fiscal policies may help boost confidence,

but did not appear to contain new policies.

The RMB is now over 2% lower against the US$ than at the

start of the year, following signs of a policy shift towards

greater liberalisation. This means the exchange rate is likely

to move closer to fair value over the medium term, so we

have slowed the exchange rate appreciation in our forecast.

Indian GDP growth has been under 5% for the past seven

quarters and manufacturing output has fallen on a monthly

basis for the past two months. Most hopes for a recovery are

now pinned on a change of government. Judging by recent

record high share prices, financial markets are expecting the

probable winner – Modi’s opposition BJP – to improve

business conditions. But he would most likely still have to

form a coalition, facing the same political and structural

barriers as the current Congress-led government. We do not

think there will be a marked improvement in investment,

therefore – a key requirement for boosting growth – and

expect GDP to increase just 4.7% this year, rising slightly to

4.9% in 2015.



Brazil has seen some signs of an improving economy, with the

March manufacturing PMI rising for the fourth successive

month on stronger output and employment. But new export

orders have continued to fall, and exports in Q1 were 2.5%

down quarter on quarter. Inflation has risen again, breaching

the 6% central bank threshold in March for the first time in six

months. This raises the possibility of a further rate hike in May,

although the authorities had hinted at last month’s meeting that

the monetary tightening cycle was now at an end.

Our forecast is unchanged from last month, at 1.6% GDP

growth this year. Inconsistent policy choices continue to limit

prospects for growth and raise questions about public debt

sustainability, and resulted in a sovereign rating downgrade by

S&P at the end of last month to just one notch above junk

status.

Meanwhile, Mexican inflation is moderating, and at just 3.8% is

below the 4% threshold. But a slow start to the year as

consumer spending remains subdued (partly due to the impact

of recent tax increases) means we have nudged our 2014 GDP

growth forecast down to 3.4% from 3.5%. We expect a

recovery in the US to underpin stronger manufacturing activity

as the year progresses, however.

Elsewhere in emerging markets, financial conditions have

continued to stabilise, with most currencies and stock markets

making gradual gains. The Asian trade hub has yet to pick up

decisively, although the March PMIs – largely in positive

territory if slightly lower than the previous month – reported

some encouraging signs of rising new export orders.

South African exports are likely to be hit by power blackouts

and a strike in the platinum sector that has lasted for more than

two months. Domestic demand is forecast to remain soft this

year, given the mix of stubbornly high inflation, mass

unemployment, poor labour market relations, slowing credit

expansion, dismal consumer sentiment and increasing interest

rates. We continue to expect GDP growth of just 2.4% in 2014.

-9

-6

-3

0

3

6

9

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

% year


Latin America: Monthly GDP

3 month moving average

Mexico

Brazil

-50

-40

-30

-20

-10

0

10

20

30

40

50

60

1997 1999 2001 2003 2005 2007 2009 2011 2013

% year (3 month moving average)

Korea


East Asia: Exports

Taiwan

China

-20

-10

0

10

20

30

40

Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14

Percent balance

Low-income

Source: Oxford Economics/Haver Analytics

South Africa: Consumer confidence

High-income

Total



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



ETC Member Organisations

Austria Austrian National Tourist Office (ANTO)

Belgium Flanders: Visit Flanders

Wallonia: Tourist Office for Wallonia-Brussels

Bulgaria Ministry of Economy and Energy

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



European Tourism in 2013: Trends & Prospects (Q1/2013) · EUROPEAN TOURISM in 2014: TRENDS & PROSPECTS Quarterly Report (Q1/2014) ... In 2014, US is expected to generate the lion’s

Documents