WTTC forecasts subdued growth for 2010
Wednesday 17, March 2010
Travel and Tourism is one of the world's most important sectors and employers and has been one of the leading growth sectors since the World Travel & Tourism Council (WTTC) first started measuring Travel & Tourism's economic impact 20 years ago.
"But, as was the case with other sectors, it was hit hard by the credit and housing market collapses last year that triggered the deepest recession since the Great Depression," said Jean-Claude Baumgarten, WTTC's President & CEO, launching the Council's annual research results at ITB Berlin today.
World GDP fell by 2.1% in real terms, with developed economies - a major source of demand for Travel & Tourism - the most severely affected. Households curtailed leisure travel plans, substituting lower-cost short-haul and domestic travel for more expensive long-haul trips, and corporations reduced business travel budgets.
"Within the Travel & Tourism sector itself, investment plans were shelved or delayed," Baumgarten said, "even in some previously dynamic, expanding destinations. Finally, the A(H1N1) influenza pandemic instilled a fear of travel in many markets, at least until the less virulent nature of the disease was recognised, and government immunisation programmes got underway."
As a result - and despite the resilience of some, notably Asian, emerging economies - activity and employment contracted across the sector. Global Travel & Tourism Economy GDP declined by 4.8% in 2009 and this caused the loss of almost 5 million jobs - or 5.6 million since 2008. All regions experienced significant contractions in visitor arrivals, spending and Travel & Tourism Economy GDP, and Travel & Tourism investment declined by over 12%. Only residents' spending on domestic trips increased, and that was by a mere 0.7% in real terms.
235 million employed in Travel & Tourism worldwide, despite the downturn
Nevertheless, even in such a depressed year for activity as 2009, Travel & Tourism still employed over 235 million people across the world - 8.2% of all employment - and generated 9.4% of world GDP.
The global economy has now moved into a recovery phase, although the pick-up in developed economies is expected to be gradual as households, corporations and governments all battle to rebuild their balance sheets.
"Despite recent encouraging short-term indicators of tourism activity, the recovery in world Travel & Tourism is expected to be muted," Baumgarten warned, "with both firms and households examining travel plans carefully and continuing to limit expenditure. Spending in real terms is expected to increase by a mere 1% - while business travel spending will again decline, by nearly 2%.
The recovery should gain momentum through 2010 and 2011
Given current credit conditions and delays in restarting large projects, Travel & Tourism Investment is also expected to decrease for the second consecutive year, by 1.7%. Thus, Travel & Tourism Economy GDP is forecast to grow by just 0.5% in 2010 overall. But stronger second-half momentum will continue into 2011 to boost growth next year to 3.2%.
In the longer run, Travel & Tourism will sustain its leading role in driving global growth, creating jobs and alleviating poverty. Emerging economies, in particular, are expected to be engines of growth, boosting international travel - with China alone set to provide almost 95 million visitors for other destinations by 2020 - and also generating an increasingly vibrant domestic travel sector.
"But developed economies will continue to dominate global Travel & Tourism for the foreseeable future," Baumgarten noted. While many are mature markets reaching a ceiling in terms of propensity to travel, a growing preference for, and priority focus on, leisure is expected to provide clients for new destinations once consumers fully regain confidence.
"The popularity of short breaks - both domestic and international - will continue to increase. And innovation by the Travel & Tourism industry will create new products and markets," he said.
Overall, the Travel & Tourism Economy is forecast to grow by 4.4% per annum in real terms between 2010 and 2020, supporting over 300 million jobs by 2020 - ie 9.2% of all jobs and 9.6% of global GDP. This confirms that Travel & Tourism will continue to grow in importance as one of the world's highest-priority sectors and employers.
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