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15 Nov, 2012

European Travel Commission Report Shows How Poor Economies are Impacting Travel


Brussels, 14 November 2012 – The European Travel Commission (ETC) has just published its third quarterly report on European Tourism in 2012 – Trends & Prospects. The report shows that people are still travelling but downtrading both in terms of expenditure and trips. There is much uncertainty ahead. The full report can be downloaded free by clicking here.

Foreword by Leslie Vella, Chairman, ETC Market Intelligence Group

Despite ongoing economic troubles, including a fall back into recession for the Eurozone, tourism within Europe has continued to grow with increased arrivals from several key origin markets. However, the rate of growth has slowed in recent months.

Intra-regional demand has grown as European travellers seek cost savings with shorter trips. And despite recent slowing, European destinations are also attracting more visitors from key long-haul origin markets.

With data now available for much of the peak summer season it is likely that these trends are reflective of demand for the year as a whole.

European carriers report continued growth in air demand, with strongest performance evident for flights within the continent. Longer-haul demand is exhibiting signs of slowing in response to a sputtering global economy.

Average occupancy rates of European hotels show a small decline for the year to date and notably in Southern European destinations. Yet, there are clear continued gains in some smaller Eastern European countries.

Hotels have been able to raise rates but these gains remain subdued, especially in the face of other cost increases, and operators remain under pressure. Data suggest a rise in demand for less expensive options including a shorter length of stay on tourism trips and a rise in non-hotel demand. While growth in arrivals continues, the contribution to revenue in the tourism industry remains under pressure.

The near term outlook faces continued headwinds and Tourism Economics expects growth in European tourism to be both modest and uneven in the coming year as the Eurozone fends off a financial crisis and works toward policies that balance the objectives of fiscal order and economic growth.

Nonetheless, the recent growth of both regional and long haul markets, even in this challenging economic climate, portray the resilience of the European travel industry once again.

Executive Summary

  • European travel proves resilient in the face of the weak and uncertain global economic environment, with growth in visits reported for most destinations including from both long-haul and European markets.
  • However, growth has slowed as the year has progressed indicated by air transport and accommodation data as well as available arrivals data. Passenger load factors have reached a plateau while hotel occupancy for Europe as a whole has fallen slightly.
  • This is partly explained by cost-saving behaviours to face the uncertain economic environment, with an increase in intra-regional as well as domestic tourism demand. Hotel demand also appears to be weaker than total tourism demand indicating a rise in demand for other forms of accommodation.
  • Among European airlines, long-haul air traffic demand has shown the greatest slowdown while intra-European demand remains stout.
  • The strongest growth in European tourism demand is concentrated in smaller, emerging Eastern destinations which tend to involve lower costs than some of the more developed Western destination markets.
  • Prices, and therefore revenue and profits, remain under pressure. Hotel average daily rates (ADR) in most markets are still lower than pre-recession peaks, especially once wider inflation is taken into account.
  • The economic outlook remains uncertain although the near-term risk of Eurozone break-up appears to have faded. The longer-run outlook remains uncertain and risks of further, deeper recessions in the future remain.
  • Tour MIS data on arrivals from key source markets echo the trends seen in the industry data. Intra-European travel is benefitting from a shift away from more expensive, long-haul travel. Japanese arrivals continue to rebound following last year’s natural and nuclear disasters in Japan.