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July 26, 2010

UN Study Confirms Int’l Tourism Recovery

By Pardhasaradhi Gonuguntla

Madrid, Spain – Reported by Elite Traveler, the Private Jet Lifestyle Magazine

International tourist arrivals grew by 7% in the first four months of 2010 according to the latest issue of the UNWTO World Tourism Barometer. This growth confirms the recovery trend beginning in the last quarter of 2009 and comes despite the challenging conditions of recent months. While April’s results were affected by the week-long closure of European airspace, globally the pace of recovery is faster than initially expected, driven largely by emerging markets. For the full year 2010, UNWTO forecasts international tourist arrivals to grow by 3% to 4%.

2010 – January-April results
International tourist arrivals increased by 7% in the first four months of 2010. The 3% increase registered in April marks the seventh month of growth in international tourist arrivals after 14 consecutive months of negative results. Still, growth slowed down slightly in April as a consequence of the closure of European airspace for a week due to the ash-cloud following the eruption of a volcano in Iceland. Although only around 30 countries have reported May data, the vast majority is positive, clearly pointing to a continuation of the current pace of growth.

Growth however varied between world regions in the first four months of this year. The Middle East is at +33%, although compared to the very depressed same months of 2009. Asia and the Pacific (+12%) also shows strong growth for the period, continuing the rebound that began in the second half of 2009. Africa (+7%) is at the global trend and the Americas (+6%) just below, while Europe (+0.3%) reports the poorest result. Northern Europe, the only subregion in the world still far from recovery, was additionally affected by the closure of European airspace last April.

The overall positive trend during the first four months of 2010 is reflected in the rise of the UNWTO Tourism Confidence Index. 50% of the Experts participating in the UNWTO Panel of Tourism evaluate the period January-April as “better” or “much better”. This compares to 34% for the period September-December 2009 and is the best rating since January-April 2008 – before the onset of the global economic crisis.

Other industry indicators such as air transport, which grew 6% in the first four months of 2010 according to the International Air Transport Association (IATA), confirm the resilience of the tourism sector and the fact that recovery is underway. Data from the accommodation sector also reflects improved performance, with occupancy and average room rates on the rise again.

International tourist arrivals from January to April 2010 totalled over 258 million. This clear improvement has to be compared with the negative results of 2009, the worst period of the crisis, totalling 242 million arrivals. The current volume is still 2% short of the record year 2008, with 264 million arrivals in the same four months.

2010 results will continue to benefit from the gradually improving economic situation, as well as from a number of high profile events including the Winter Olympics in Vancouver, the FIFA Football World Cup in South Africa, the World Exposition in Shanghai and the Commonwealth Games in India. Unfortunately, tourism has also suffered the effects of a series of natural disasters, including earthquakes in Haiti, Chile, Southern California and Guatemala and severe flooding in a number of destinations including Machu Picchu (Peru) and parts of Europe.

Positive outlook for the remainder of the year, but challenges remain
UNWTO maintains its January forecast for international tourist arrivals in 2010 at +3% to +4%. Current growth rates suggest that end-year results are likely to be closer to 4%, and may even exceed it. Much depends on the results of the upcoming summer high season in the northern hemisphere, particularly in Europe.

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As the peak tourism season for the world’s leading regions in the northern hemisphere starts, short-term prospects are promising. The UNWTO Confidence Index for May-August 2010 is even higher than the one for January-April 2010.

Nevertheless challenges remain and the sector still has a long way to go to make up lost ground. Increasing unemployment continues to be a major cause of concern and, as anticipated by UNWTO, it is now clear that public deficits represent a clear challenge. This is particularly relevant for advanced economies and could affect leading outbound markets. The phasing-out of stimulus measures, combined with austerity measures and the rise in taxation introduced by many governments, have become main factors to be considered. The tourism sector itself may be confronted with increased taxes given the expected rise in UK departure tax (November 2010) and Germany’s intention to introduce a new air tax as part of its budget-cutting plans. UNWTO cautions against the potential adverse effects of one-sided decisions on taxation which might harm the tourism sector.

“These factors constitute an important downside risk to a recovering industry”, said UNWTO Secretary-General, Taleb Rifai. “This is the time to support the tourism sector. At a time when many countries are witnessing public deficit constraints and low domestic consumption levels, tourism can provide much needed jobs, as well as export and tax revenues. UNWTO welcomes examples of countries like China, which has identified tourism as a strategic pillar of its economy going forward” he added.

On the consumer side, trends such as late booking, increasing use of the internet to look and book, travelling closer and for shorter periods of time and demanding value for money, seem to have been accentuated during and post crisis. This evolving marketplace will inevitably require changes in the business models of the industry and the tourism supply. “It’s illusionary to assume that we can go back to ‘business as usual'”, said Taleb Rifai. “We need to know consumers better, master technology and integrate it more and more into the management of destinations and companies. We also need to invest more in product innovation and human resources, particularly training for green jobs and make a clear commitment to sustainability”, he concluded.

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