European Tourism in 2017: Trends & Prospects (Q3/2017

)

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TOURISM 2016
TRENDS & PROSPECTS

APRIL 2016
European Tourism in 2017: Trends & Prospects (Q3/2017)

EUROPEAN TOURISM IN 2017:
TRENDS & PROSPECTS

Quarterly Report (Q3/2017)

A quarterly insights report produced for the Market Intelligence Group
of the European Travel Commission (ETC)
by Tourism Economics (an Oxford Economics Company)

Brussels, November 2017
ETC Market Intelligence Report

1
European Tourism in 2017: Trends & Prospects (Q3/2017)

Copyright © 2017 European Travel Commission

European Tourism in 2017: Trends & Prospects (Q3/2017)

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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.

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Website: www.etc-corporate.org
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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

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2
European Tourism in 2017: Trends & Prospects (Q3/2017)

TABLE OF CONTENTS
Foreword ............................................................................................................. 4
1. Tourism Performance Summary 2017 ............................................................ 7
2. Global Tourism Forecast Summary .............................................................. 10
3. Recent Industry Performance ....................................................................... 11
3.1 Air Transport .......................................................................................... 11

3.2 Accommodation ..................................................................................... 14

4. Special Feature ............................................................................................. 16
5. Key Source Market Performance .................................................................. 19
5.1 Key Intra-European Markets .................................................................. 19

5.2 Non-European Markets .......................................................................... 23

6. Origin Market Share Analysis........................................................................ 27
6.1 United States.......................................................................................... 28

6.2 Canada................................................................................................... 29

6.3 Mexico .................................................................................................... 30

6.4 Argentina ................................................................................................ 31

6.5 Brazil ...................................................................................................... 32

6.6 India ....................................................................................................... 33

6.7 China ...................................................................................................... 34

6.8 Japan ..................................................................................................... 35

6.9 Australia ................................................................................................. 36

6.10 United Arab Emirates ........................................................................... 37

6.11 Russia .................................................................................................. 38

7. Economic Outlook ......................................................................................... 39
7.1 Overview ................................................................................................ 39

7.2 Eurozone ................................................................................................ 41

7.3 United Kingdom...................................................................................... 42

7.4 United States.......................................................................................... 43

7.5 Japan ..................................................................................................... 44

7.6 Emerging Markets .................................................................................. 45

8. Appendix 1 .................................................................................................... 49
9. Appendix 2 .................................................................................................... 51

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European Tourism in 2017: Trends & Prospects (Q3/2017)

FOREWORD
EUROPEAN TOURISM DEMAND ON AN UPWARD TRAJECTORY

Tourism to Europe continued to grow over the summer months this year.
International tourist arrivals are estimated to have grown +8% in the first eight
months of 20171. Despite geopolitical tensions and terror attacks since 2015, the
region continues to prove resilient. The surge in tourism during the third quarter
of the year mirrored the economic growth in Europe’s major source markets.

One in two reporting destinations experienced an increase in international tourist
arrivals in excess of 10%, with destinations previously affected by safety
concerns recovering. Turkey (+26%) saw a skyrocketing rebound helped by the
surge in Russian arrivals, based on data to August. Iceland (+30%), saw fastest
growth despite lingering concerns about accommodation capacity and
infrastructure constraints. Southern/Mediterranean destinations, Slovenia,
Serbia (both +19%), Malta (+17%) and Cyprus (+15%) enjoyed a hike in the
number of sun-seekers. Spain (+10%) also saw a robust performance despite
political tensions in Catalonia and the August terror attacks. For Spain, growth of
this magnitude is significant given its size as a tourism destination (75mn
international tourist arrivals in 2016 based on UNWTO data).

Data to June for Belgium (+12%) indicates a strong recovery, while Ireland (+3%)
saw only modest growth in arrivals mainly due to the falls registered from the
British market since the Brexit vote.
Foreign visits to selected destinations 2017
(year-to-date, % change year ago)

Source: TourMIS

1
UNWTO World Tourism Barometer. Volume 15, October 2017

4
European Tourism in 2017: Trends & Prospects (Q3/2017)

BUMPY RIDE FOR MAJOR EUROPEAN AIRLINES

In Europe, Revenue Passenger Kilometres (RPKs) grew by 8.7% in the first
eight months of the year alongside positive indicators in airline capacity
(+6.6%). Growth is mostly strong between Europe and Asia helped by new
capacity on European routes while a strong dollar continues to boost growth
between Europe and the Americas. Despite positive indicators, the impact on
capacity of Monarch Airline’s collapse, Air Berlin’s insolvency and Ryanair’s
extensive cancellations will not be apparent until the end of the year.

SOLID GROWTH IN EUROPE SUPPORTED BY LARGE INTRA-EUROPEAN
SOURCE MARKETS

Key intra-European source markets (UK, France, and Germany) continue to
drive growth in arrivals in many destinations across Europe. A weaker pound
following the Brexit vote, and the consequent surge in travel costs, have largely
failed to deter UK travellers to travel internationally. 24 out of 32 reporting
destinations posted growth in arrivals from the UK so far in 2017. In Germany,
economic growth is projected to remain solid as low unemployment levels and
higher government spending together will boost private consumption.

Russian travel flows to Europe have revived as the economy rebounds from a
deep recession. Improving economic conditions are expected to increase
private consumption and business investment. All but two reporting
destinations are rebounding after years of decline. Turkey saw the greatest
increase in Russian tourist arrivals, in excess of +800%, after the Russian
government lifted bans on charter flights to Turkey. The long-term outlook for
this market remains positive with growth expected at 10% by 2020.

Russian visits to selected destinations 2017
(year-to-date, % change year ago)

Source: TourMIS

5
European Tourism in 2017: Trends & Prospects (Q3/2017)

Chinese outbound travel continues to boost visitor arrivals across all European
destinations with all but two countries reporting double-digit percentage
increases. Tourism demand from this market has been aided by encouraging
economic conditions and the unprecedented expansion of its middle-class. So
far in 2017, Chinese arrivals to Europe are estimated to have grown 17%
compared to the same period last year. Indian travel demand to Europe also
delivered a solid performance with an increase estimated at +14% in 2017.
Positive consumer confidence and private consumption are expected to boost
travel demand, increasing the importance of India as a source market. The US,
Europe’s largest long-haul source market, has significantly contributed to
arrivals growth across the region in 2017. US arrivals to Europe have increased
14% so far in 2017 with 30 out of 33 reporting destinations reporting growth.
Iceland greatly benefited from US visitors, up 48% based on data to August.

PROSPECTS FOR EUROPEAN TOURISM DEMAND REMAIN BUOYANT

Europe continues to be the leading destination in international tourist arrivals
worldwide. International visitors continue to grow rapidly and current
performance could be representative of regional growth for the reminder of the
year. “In the long-term, European destinations are encouraged to focus on
raising awareness of Europe through cooperative marketing activities based on
pan-European transnational thematic products and experiences. These shall be
inspiring and tailored to different markets and traveller segments.” said
Eduardo Santander, Executive Director of the European Travel Commission.

Jennifer Iduh (ETC Executive Unit)
with the contribution of the ETC Market Intelligence Group

6
European Tourism in 2017: Trends & Prospects (Q3/2017)

1. TOURISM PERFORMANCE
SUMMARY 2017
European tourism growth for 2017 to date has exceeded prior expectations
across a range of destinations. Some recovery from the dip in performance in
2016 was anticipated, and notably in destinations which were affected by safety
concerns. Rebound in 2017 has been especially clear in these countries, but
travel to other destinations has also remained strong. Economic growth in
major source markets, including European source markets, has improved
driving some faster travel demand.

32 Continued growth for European tourism is evident in data for the majority of
reporting countries. All but one reporting county has posted year-to-date results
The number of for the first six months of the year, with the majority reporting data to August.
European destinations Croatia, Cyprus, and Monaco report data through September. 33 countries
reporting growth in 2017 to have so far submitted year-to-date data for 2017 of which 32 reported growth in
date arrivals or overnights.

34 destinations have Foreign visits and overnights to select destinations Arrivals
reported on tourism 2017 year-to-date*, % change year ago Nights
performance in 2017
20
Iceland, 29.9% (A)
Turkey, 26.4% (A)
15 Norway, -1.5% (N)

10

5

0
Finland

Romania
Iceland
Turkey
Slovenia

Montenegro
Malta

Cyprus
Netherlands

Latvia

Belgium

Poland
Czech Rep

Hungary
Slovakia

Switzerland

Sweden

Estonia
Bulgaria

Germany

Italy

Ireland Rep
Serbia

Croatia

Monaco

Norway
Lithuania
Portugal

Spain

UK

Luxembourg

Denmark
Greece

Austria

-5

-10

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

Turkey has enjoyed the strongest turnaround in total arrivals: up 26.4% in 2017
based on data to August following a cumulative decline of 30.6% in prior years.
Political tensions and safety concerns were contributory factors. Notably, some
major tensions between Turkey and Russia resulted in a very marked decline in
arrivals from the large Russian market. Political tensions have normalised
during 2017 with a boom in the number of Russian arrivals to Turkey in the
summer months. This boom is largely responsible for total arrivals growth since
travel from most other source markets has continued to fall over the same
period. A sustained period of political stability and no terrorism activity will be
required before recovery can truly begin.

Spain and Portugal have also continued to grow as destinations in 2017 with
arrivals up by more than 10% in the year to date. This follows a year of notable
growth in 2016 when these destinations seemingly benefitted from some
displaced travel from Turkey. Continued growth to these large European

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European Tourism in 2017: Trends & Prospects (Q3/2017)

destinations highlights the fact that current performance is not just a rebound
from a softer 2016. Demand continues to grow from key source markets,
including intra-European demand. Spain has remained an attractive destination
and has increased market share, but initial reports suggest that the political
tensions in Catalonia are beginning to deter some visitors in late 2017.
Catalonia accounts for almost one-fifth of all foreign visits to Spain.

However, Spain and Portugal also highlight a trend of faster growth in arrivals
than in overnights as some shorter trips are now being taken. Current growth
may be fuelled by a greater number of short trips being taken each year. This
may include short business trips as economic growth has become more broad-
based; and a growing number of short leisure trips (including weekend travel) in
addition to main annual vacations.

Arrivals to Iceland have continued to grow impressively by 29.9% in the first
eight months of the year compared to the same period last year. Although this
rate of growth has moderated compared to 55.7% earlier in the year based on
data for the first four months of 2017, Iceland remains the top performing
European growth destination so far this year, and has been since 2012. Growth
has averaged over 25% per annum over the past five years and was 40% in
2016 alone. A slowdown is still expected in the medium term as
accommodation capacity and other tourism infrastructure constraints will begin
to bite, without any new investment.

A number of other countries have also grown in excess of 10% in 2017 to date
following robust performance in 2016, including Slovenia, Serbia, Montenegro,
Malta and Cyprus. These destinations all enjoyed strong growth in arrivals and
overnights following momentum built in 2016 and early 2017. These
destinations typically have a high dependency on peak summer demand, but
this recent experience shows that they can thrive outside this period and
reduce seasonality. Growth has been broad-based in terms of source market
mix.

Finland has enjoyed strong growth from a range of source markets, but there
have been especially large increases in Chinese and Indian arrivals based on
data to August relative to the comparable period in 2016. A similarly large influx
in Chinese visitors was also reported in Estonia (arrivals growth from India is
not reported) and both destinations may be benefiting from an increase in tours
from long-haul markets.

Growth to the UK was also notable at 9% based on data for the first half of the
year compared to 2016. This influx will have been aided by the relative
affordability of the UK as a destination following the fall in the value of the
pound as a result of the announcement of Brexit. By contrast, travel growth to
Ireland was slower than it has been in recent years and may be due to some
substitution effect as travellers opt for the relatively cheaper United Kingdom.

Terrorism attacks in London earlier in the year have not apparently deterred
any large numbers of potential visitors to Europe. France and Belgium also
grew as destinations. Travel to these destinations from European source
markets recovered while some long-haul, especially emerging, markets
remained subdued.

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European Tourism in 2017: Trends & Prospects (Q3/2017)

Tourism Performance, 2017 Year-to-Date
International Arrivals International Nights
Country % ytd to m onth % ytd to m onth
Austria 4.6 Jan-Aug 2.6 Jan-Aug
Belgium 12.3 Jan-Jun 8.4 Jan-Jun
Bulgaria 7.9 Jan-Aug
Croatia 13.7 Jan-Sep 11.6 Jan-Sep
Cyprus 14.7 Jan-Sep 3.5 Jan-Jun
Czech Rep 9.0 Jan-Mar 7.4 Jan-Mar
Denmark 0.4 Jan-Aug
Estonia 5.0 Jan-Aug 3.5 Jan-Aug
Finland 14.5 Jan-Aug 15.2 Jan-Aug
Germany 5.3 Jan-Aug 3.4 Jan-Aug
Greece 6.6 Jan-Jun 4.9 Jan-Jun
Hungary 6.6 Jan-Aug 8.7 Jan-Aug
Iceland 29.9 Jan-Aug
Ireland Rep 2.5 Jan-Aug
Italy 2.0 Jan-Jun 3.9 Jan-Jun
Latvia 12.8 Jan-Jun 11.1 Jan-Jun
Lithuania 5.3 Jan-Jun 5.1 Jan-Jun
Luxembourg 5.0 Jan-Aug
Malta 16.6 Jan-Aug 10.4 Jan-Aug
Monaco 3.5 Jan-Sep
Montenegro 11.4 Jan-Aug 18.4 Jan-Aug
Netherlands 13.9 Jan-Jul 12.5 Jan-Jul
Norw ay -1.5 Jan-Aug
Poland 9.8 Jan-Jul 9.4 Jan-Jul
Portugal 12.8 Jan-Jul 10.2 Jan-Jul
Romania 12.3 Jan-Aug
Serbia 18.8 Jan-Aug 16.8 Jan-Aug
Slovakia 8.5 Jan-Jul 7.1 Jan-Jul
Slovenia 19.1 Jan-Jul 16.9 Jan-Jul
Spain 9.9 Jan-Aug 1.5 Jan-Aug
Sw eden 6.6 Jan-Aug
Sw itzerland 6.7 Jan-Aug 5.4 Jan-Aug
Turkey 26.4 Jan-Aug
UK 9.0 Jan-Jun
Source: TourMIS, http://w w w .tourmis.info; available data as of 19.10.2017
Measures used for nights and arrivals vary by country
See TourMIS for further data including absolute values

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European Tourism in 2017: Trends & Prospects (Q3/2017)

2. 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.

TDM Visitor Growth Forecasts, % change
Inbound* Outbound**
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
data/estimate/forecast *** d d e f f d d e f f
World 4.3% 4.4% 3.7% 6.1% 4.2% 3.1% 3.9% 3.9% 5.8% 4.1%

Americas 8.6% 6.0% 3.7% 3.5% 3.6% 7.4% 5.2% 4.2% 5.2% 2.6%
North America 9.7% 5.5% 2.4% 2.9% 2.8% 8.3% 4.5% 3.5% 5.2% 2.8%
Caribbean 5.3% 8.1% 4.9% 1.7% 5.7% 9.5% 15.8% 9.0% 10.5% 3.0%
Central & South America 6.9% 6.4% 6.8% 6.1% 4.8% 4.1% 7.0% 6.5% 4.9% 2.0%

Europe 2.0% 4.6% 1.9% 7.5% 3.6% -0.4% 2.3% 3.3% 6.1% 4.2%
ETC+4 4.4% 4.9% 2.1% 7.8% 3.6% 2.2% 4.2% 4.2% 4.8% 4.5%
EU 4.4% 5.3% 4.6% 6.9% 3.5% 1.9% 3.9% 4.6% 4.9% 4.5%
Non-EU -5.8% 2.1% -8.3% 10.0% 4.0% -7.9% -3.7% -2.0% 11.4% 2.8%

Northern 5.1% 6.3% 6.8% 6.5% 3.8% 5.0% 7.6% 6.1% 2.9% 2.5%
Western 2.1% 3.4% -0.7% 6.1% 3.3% -1.3% 0.0% 2.4% 4.8% 5.5%
Southern/Mediterranean 7.1% 4.9% 1.2% 10.2% 3.9% 6.0% 8.6% 4.6% 6.2% 4.4%
Central/Eastern -7.5% 5.4% 3.5% 5.7% 3.2% -5.2% -3.1% 1.1% 12.6% 3.8%
- Central & Baltic 2.0% 8.2% 8.1% 6.2% 3.4% 5.2% 6.8% 6.6% 7.9% 4.8%

Asia & the Pacific 5.3% 5.4% 8.5% 5.1% 5.2% 6.6% 7.2% 5.8% 5.5% 5.0%
North East 7.3% 4.3% 8.6% 3.1% 4.7% 8.3% 8.4% 5.9% 6.5% 5.1%
South East 2.9% 7.8% 8.1% 6.3% 6.5% 3.1% 5.0% 7.9% 2.9% 5.6%
South 9.9% 1.4% 10.2% 11.6% 4.6% 14.0% 9.4% 8.9% 6.6% 4.3%
Oceania 6.1% 7.2% 9.0% 6.2% 3.5% 3.9% 3.7% 6.2% 6.1% 5.1%

Africa 2.8% -4.9% 0.3% 8.3% 7.2% 3.9% 1.5% 6.4% 3.9% 4.1%

Mid East 10.6% 2.2% 2.9% 4.7% 5.0% 10.0% 0.7% -5.4% 9.0% 5.0%
* 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
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and Switzerland;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece,
Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia, and Ukraine.
Central & Baltic Europe is Bulgaria, Czech Repub lic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania,
and Slovakia;
ETC+4 is all ETC members plus France, the Netherlands, Sweden, and the United Kingdom
Source: Tourism Economics
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European Tourism in 2017: Trends & Prospects (Q3/2017)

3. RECENT INDUSTRY PERFORMANCE
INDUSTRY PERFORMANCE REMAINS STRONG

 Passenger growth in 2017 has improved from the solid performance seen in 2016.

 Asian travel to Europe has been recovering following some safety concerns.

 The collapse of Monarch Airlines and scheduling problems at Ryanair will weigh on
supply and may constrain capacity for future growth.

 Hotel occupancy has continued to rise in early 2017 in most European countries and
across all European regions. Hoteliers have raised ADR in most destinations in
response to the high occupancy and confidence.

3.1 AIR TRANSPORT

Global air transport, measured in Revenue Passenger Kilometres (RPKs), grew
7.9% by 7.9% this year to date compared to the same period in 2016. This is
comfortably above the average annual growth rate of the past 10 years of
The rate of World RPK
5.2%. This higher demand was helped by broad-based growth in global
growth in 2017 to date
economic conditions while the degree of stimulus to demand from lower
airfares has eased.
YTD growth based on data
to August
Annual International Air Passenger Growth 2015
% year, RPK
2016
12
2017
10

8

6

4

2

0
Africa Asia/Pacific Europe Latin Mid. East N. America World
America

Source: IATA

Year-to-date RPK growth was strongest in Asia/Pacific based on data to
August as air passenger demand to, from, and within the region grew by
10.2%. Growth has continued at a rapid pace throughout the year, despite
some slowdown from the spike in January associated with the Chinese New
Year. 2017 will be the fastest growth year of the past decade, exceeding even
the post-recession rebound in 2010 if current growth is maintained throughout
the remainder of the year. New capacity, including on European routes, will

11
European Tourism in 2017: Trends & Prospects (Q3/2017)

continue to facilitate Asian growth, with large capacity growth evident for Indian
and Chinese airlines.

Monthly International Air Passenger Growth May-17
% year, RPK
Jun-17
14
Jul-17
12
Aug-17
10

8

6

4

2

0
Africa Asia/Pacific Europe Latin Mid. East N. America World
America

Source: IATA

The Middle East is now among the slowest growing regions in terms of RPK
growth in 2017, second only to North America for the year to date. This follows
some notably high growth in recent years. The Trump Administration’s ban on
personal electronic devices (PEDs) and proposed travel bans may be having
an impact on traffic.

The ongoing blockade of Qatar by a number neighbouring countries, including
four out of the five other GCC countries (only Kuwait has maintained the status
quo) since June has also had a clear impact on RPK growth. The blockade has
resulted in significant restrictions on Qatar’s (and its flag carrier Qatar Airways’)
use of airspace.

International Air Passenger Traffic Growth Total
% year, RPK
20 3mth mav

15

10

5

0

-5

-10

-15
août-07
janv.-08

mars-12
août-12
juin-08
nov.-08
avr.-09
sept.-09
févr.-10
juil.-10
déc.-10
mai-11
oct.-11

janv.-13

mars-17
août-17
juin-13
nov.-13
avr.-14
sept.-14
févr.-15
juil.-15
déc.-15
mai-16
oct.-16

Source: IATA

In Africa RPKs grew by 7.4% in 2017 based on data to August, but with some
slowing in recent months. It follows a recovery in the trend on the key markets
to and from Europe. Nevertheless, conditions in the region’s two largest

12
European Tourism in 2017: Trends & Prospects (Q3/2017)

economies are diverging: business confidence in Nigeria has risen since late
2016 while political uncertainty remains heightened in South Africa.

In Latin America year-to-date RPK growth was 7.5%. Fragilities in Argentina,
Brazil and Venezuela continue to offset demand growth elsewhere in the region
and air demand is likely to remain sluggish (year-to-date RPK growth to
September is currently running below the long run average) throughout 2017.

North American traffic grew by 4.5% in the first eight months of the year: a
modest improvement from growth earlier in the year. This was most evident in
August and reflects a combination of the robust economic backdrop as well as
the strength of the US dollar which continues to support outbound passenger
demand.

In Europe, RPK growth was 8.7% in the first eight months of 2017. This follows
a marked pick-up in growth in the second half of 2016. The collapse of
Monarch Airlines in September and scheduling difficulties within Ryanair
(leading to the cancellations of a high volume of flights) may weigh on growth.
However, data beyond these events are not yet available. Ongoing high-profile
attacks throughout Europe may lead to further disruption and displacement
within the region.

Aviation capacity within Europe has continued to rise throughout 2017 at
88.5% comparable rates to in prior years. However, the collapse of UK airline Monarch
Airlines, the cancellations of a number of Ryanair flights within Europe, along
Peak of European airline
with some additional disruption due to Air Berlin’s closure, may induce some
passenger load factor in
impact on capacity towards the end of the year or until such times as affected
2017 to date
routes are restored.
Based on data to August
European Airlines Capacity
ASK, monthly average, % change year ago
9
8
7
6
5
4
3
2
1 2015 2016 2017
0
-1
Q1 Q2 Q3 Q4
Source: IATA

Airline load factors are higher in 2017 than in previous years having eased
throughout 2016. Load factors have peaked at 88.5% so far in 2017 – an all-
time high value for European airlines. The collapse of Monarch and Air Berlin
plus the problems at Ryanair and any reduction in capacity may give a short-
term boost to load factors. But in the longer-run this may constrain travel
growth.

13
European Tourism in 2017: Trends & Prospects (Q3/2017)

European Airlines Passenger Load Factor 2015
Monthly load factor, %
90 2016
88 2017
86
84
82
80
78
76
74
72
70
Q1 Q2 Q3 Q4
Source: IATA

3.2 ACCOMMODATION

Global accommodation performance has improved in 2017 based on data to
September. Revenue per available room (RevPAR) was higher than in the
same period last year in all regions except the Middle East/Africa.

Global Hotel Performance Occ
Jan-Sep year-to-date, % change year ago
ADR (€)
5
RevPAR (€)
4

2.6% 3
2
Occupancy growth across 1
Europe in 2017 0
-1
Based on data to September
-2
-3
-4
Asia/Pacific Americas Europe Middle East/Africa

Source: STR

In Asia/Pacific higher occupancy was enough to more than offset lower
average daily rates (ADR), and RevPAR was 1.7% higher during the period
compared to last year. This overall result was driven largely by performance in
Central and South Asia as well as in Australia and Oceania. Performance in
North Eastern Asia was flat over the period, related to ongoing tensions on the
Korean peninsula. Chinese travel to Korea is notably down in 2017 to date.
Destinations beyond the immediate region appear to be benefitting from some
displaced travel.

Europe was the top performing region as a whole. Although occupancy growth
has slowed to 2.6% compared to 3.4% earlier in the year, European hotels

14
European Tourism in 2017: Trends & Prospects (Q3/2017)

have also been able to raise ADR (leading to RevPAR growth of 4.3%). This is
a clear indicator of hotel and travel demand within the region as well as high
confidence within the industry. Occupancy performance lags the international
arrivals growth due to some offsetting growth in supply and a further drag from
domestic demand in some countries.

European Hotel Performance Occ
Jan-Sep year-to-date, % change year ago
ADR (€)
18
16 RevPAR (€)
14
12
10
8
6
4
2
0
-2
-4
Europe Eastern Northern Southern Western
Europe Europe Europe Europe
Source: STR

Although all sub-regions in Europe reported rising occupancy rates, Northern
Europe was the only region to see a fall in ADR and subsequently also in
RevPAR denominated in euros. This weighed on Europe’s performance as a
whole. Hotel performance in the UK had a large impact on the Northern
European performance with ADR down in euro terms compared to the
comparable period in 2016. But in local currency terms UK ADR rose due to
continued movements in the exchange rate.

15
European Tourism in 2017: Trends & Prospects (Q3/2017)

4. SPECIAL FEATURE
AIR TRANSPORT DISRUPTION IN 2017
European air passenger traffic and capacity continued to grow strongly
throughout most of 2017 to date. Load factors have risen, and reached record
rates, as demand has outpaced the increased capacity growth.

However, capacity was disrupted late in the year due to Monarch Airline’s
European air capacity has
collapse, Air Berlin’s insolvency and Ryanair’s extensive cancellations. There is
been hit by airline collapses
only limited remaining spare capacity for passengers to find alternative flights.
and flight cancellations
Capacity constraints will impact on volumes in the near term and act as a drag
in growth.

European air travel in late 2017 will slow relative to the rates seen earlier in the
year and some slower growth may persist into 2018. An increase in load factors
on the remaining flights may also push up pricing with a further impact on
Air passenger volumes will demand growth.
slow in late 2017 and into
Longer-run impacts are dependent on the response from other airlines. For
2018, while prices may rise
example, the impact of Air Berlin’s insolvency already appears to be minimal.
Increased Lufthansa capacity has absorbed most of the lost flights, including a
partial takeover.

Impacts from the Ryanair cancellations will be more extensive and widespread,
although only a small proportion of flight volumes will be affected across
Europe. 34 Ryanair routes have been cancelled altogether but a bigger impact
on capacity is from a reduction in frequencies on a number of other routes.
Ryanair flight cancellations
Under 2% of Ryanair capacity is affected, comprising a small proportion of
will have a widespread, but
European capacity. Not all of the capacity reduction will impact on travel
small impact
volumes as there will likely be some displaced travel to flights at different times
of the day. Some small, but not insignificant, impacts will be seen.

Ryanair share of international air travel by country
% passengers on routes by country, 2016
35%
30% Cancelled Ryanair share
25% Unaffected Ryanair share
20%
15%
10%
5%
0%
Slovakia

Poland

Italy

Romania

Sweden

Bulgaria

Norway
Germany

France
Spain

Portugal

Greece

United Kingdom

Source: Tourism Economics

These impacts are shared across a number of European countries. Ryanair
accounts for around on-fifth of international passenger flows for the affected
countries. But cancelled flights only account for a small proportion of travel:

16
European Tourism in 2017: Trends & Prospects (Q3/2017)

less than half of a percent of passengers for these countries were carried on
the cancelled routes in 2016.
Bulgaria will be hardest hit
by the Ryanair cancellations, The largest impact will be evident in Bulgaria, where almost one-fifth of Ryanair
but only 2% passengers will capacity has been cancelled. However, Ryanair only accounted for around one-
be affected tenth of air capacity on routes to the country in 2016 and around 2% of
passengers on routes to Bulgaria will be affected by the closures. A noticeable
slowdown in arrivals will be evident. This will be marked on some of the larger
Ryanair routes to Bulgaria, including to Italy and Germany.

Larger travel impacts will arise from Monarch Airline’s collapse, particularly for
UK travel. The airline carried passengers between the UK and 15 other
Monarch Airline’s collapse
countries (plus Gibraltar) in 2016, and accounted for 6% of all air travel
will hit UK travel to some
between these countries. Capacity on these routes will be heavily affected with
European destinations
likely growth impacts for UK travel.
harder
Over 10% of UK air travel to Portugal, Cyprus and Spain has been carried by
Monarch in recent years and will see significant capacity constraints in the near
term. Travel between the UK and Gibraltar is even more heavily affected as
almost 40% of passengers were carried by the airline.

Monarch share of UK air travel
% passengers on routes between UK and other countries, 2016
14%
Gibraltar: 39%
12%
10%
8%
6%
4%
2%
0%
Egypt

Switzerland
Gibraltar

Cyprus

Turkey

Croatia

Italy

Morocco

France

Finland

Germany
Austria

Greece
Portugal

Spain

Israel

Source: Tourism Economics

The impact of these flight cancellations in 2017 will be moderate given the
Usual seasonality in travel timing after the peak summer season. Only 20% of annual travel on these
flows means the impacts will routes typically occurs in Q4. Seasonality varies by route and is notable for
be smaller than if travel to Switzerland and Germany: just 10% of Monarch travel between the UK
cancellations occurred in the and these countries was typically in Q4. However, for Portugal and Israel,
peak summer months around a quarter of annual travel from the UK on Monarch was typically in the
final quarter. Cancellation impacts will be larger for these routes.

In total, UK outbound travel will be around 1% lower in 2017 than previously
expected. This has been estimated in a simple scenario with the assumption
that Q4 air travel from the UK is reduced in line with the capacity cut and usual
load factors on affected routes. Impacts may linger into 2018, but this is highly
dependent on any capacity added by other airlines.
Largest impact on UK
arrivals volumes will be in The largest impact, by volume, will be for Spain which will receive around
Spain 370,000 fewer UK arrivals than would otherwise be the case. This is equivalent

17
European Tourism in 2017: Trends & Prospects (Q3/2017)

to 2% of UK travel to Spain and will involve a large slowdown in travel in late
2017.

Portugal and Israel will see Portugal and Israel will experience the largest growth impacts, with UK arrivals
large impacts on arrivals down almost 6% for 2017 as a whole. Large falls in arrivals are expected for
growth from the large UK the final quarter of the year. For Portugal in particular, this will offset the bulk of
market the growth in UK arrivals seen in data for the year-to date.

Estimated impact of Monarch Airlines closure on UK outbound 2017
% difference visits: counterfactual vs impact
0%

-2%

-4%

-6%

Finland

Switzerland
Cyprus

Turkey

Italy

Croatia

France

Germany
Austria
Israel

Greece
Portugal

Spain

Difference visits: counterfactual vs impact (000s)
0
-100
-200
-300
-400

Finland

Switzerland
Italy

Cyprus

Turkey

Germany
Croatia
Spain

Portugal

Israel

France

Greece

Austria

Source: Tourism Economics

Air capacity disruption will have some significant, and widespread, impacts on
European passenger flows in late 2017. However, the European aviation sector
typically responds rapidly to capacity shocks. Higher load factors and prices on
routes are usually followed by increased capacity on major routes. Impacts are
not expected to linger significantly into 2018, with capacity restored for the
summer months.

18
European Tourism in 2017: Trends & Prospects (Q3/2017)

5. KEY SOURCE MARKET
PERFORMANCE
GROWTH CONTINUES INTO 2017

 European travel demand continues to grow across the majority of destinations and
from a range of source markets.

 Intra-European travel remains crucial for future growth.

 Recent spate of high-profile terror attacks in Europe a near-term concern.

Trends discussed in this section in some cases relate to the first nine months of the year although
actual coverage varies by destination. For the majority of countries August will be the latest available
data point. Further detailed monthly data for origin and destination, including absolute values, can be
obtained from TourMIS, http://tourmis.info.

5.1 KEY INTRA-EUROPEAN MARKETS

Many European destinations experienced strong growth in travel from
Germany. Cyprus enjoyed the most significant arrivals growth (57.3% based on
data to September) as well as notable overnights growth (40.9% based on data
to June). This follows a very marginal fall in overnights from Germany in 2016.

25 Some countries have not fared as favourably, with some traditionally large
destinations reporting declines in German arrivals, with the UK and Italy chief
out of 32 destinations amongst them, albeit based on some limited data in the case of the UK. Travel
reported arrivals growth from to Turkey has fallen by a further 7.9% in 2017 to date; a significant drop given
Germany pointing to that Germany is its largest source market.
continued intra-regional
growth in 2017 German visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago Nights
30
25
Cyprus, 57.3% (A) & 40.9% (N)
20 Slovenia, 30.5% (A)
Italy, -10.2% (A)
15
10
5
0
Romania

Finland

Slovakia

Estonia
Latvia

Switzerland

Czech Rep

Italy
Slovenia

Iceland

Belgium

Hungary

Bulgaria
Cyprus

Montenegro
Serbia
Malta

Netherlands

Croatia

Poland

Monaco

Sweden
Spain

Lithuania

Norway
Turkey

UK
Greece

Portugal

Austria

Luxembourg

Denmark

-5
-10

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

Some less traditional destinations have enjoyed some sizeable growth from the
Netherlands so far in 2017. Lithuania has enjoyed 33.7% growth in arrivals,
and, more notably, 75.5% growth in overnights based on data to June

19
European Tourism in 2017: Trends & Prospects (Q3/2017)

facilitated by new air routes to Kaunas. However, growth has moderated from
earlier in the year. Slovenia also welcomed a significant rise in the number of
Dutch visitors it received, with 35.8% and 35.3% more arrivals and overnights
respectively.

Dutch visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago Nights
40
Slovenia, 75.5% (N)
30 Turkey, -17.1% (A)

20

10

0
Finland

Latvia

Czech Rep
Romania

Belgium

Hungary

Slovakia

Estonia
Slovenia
Iceland

Bulgaria

Sweden
Lithuania

Cyprus
Malta

Serbia

Montenegro

Croatia

Poland

Monaco

Switzerland

Germany
Spain

Norway

Italy

Turkey
UK
Greece

Austria

Portugal
Denmark

Luxembourg
-10

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

Any lingering disruption from terrorist attacks is not affecting France as a
source market as travel behaviour appears to have normalised. Malta, Iceland,
and Latvia have seen the largest increases in French arrivals in growth terms
so far in 2017. The vast majority of destinations report growth from France,
including an increase in Turkey. Strikingly, Cyprus reports a decline in French
arrivals in the latest data for 2017 to date having experienced arrivals growth in
excess of 50% based on early 2017 data. Conversely, Switzerland, which had
reported a decline in both French arrivals and overnights earlier in the year, is
now reporting some arrivals growth, albeit marginal.

French visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago
Nights
20

15 Malta, 24.1% (A) & 25.4% (N)
Cyprus, -12.2% (A)

10

5

0
Slovakia
Switzerland
Malta

Latvia

Estonia
Romania

Czech Rep

Finland
Iceland

Montenegro
Slovenia

Bulgaria

Belgium

Hungary

Sweden
Netherlands

Poland
Germany
Italy

Turkey
Monaco

Norway
Cyprus
Lithuania

Serbia
Croatia
UK

Denmark

Luxembourg

Spain
Greece

Austria

Portugal

-5

-10
Source: TourMIS *date varies (Jan-Sep) by destination

Iceland remains the top growth destination for Italian travellers according to
2017 data to August, albeit based on some relatively small volumes. Growth
from Italy to Iceland has also moderated compared to earlier in the year (from

20
European Tourism in 2017: Trends & Prospects (Q3/2017)

158.4% in the first four months of 2017). Turkey, the UK, and Slovakia find
themselves at the other end of the spectrum. Arrivals from Italy to Turkey have
fallen by 12.7% so far this year, and compound some large falls in previous
years. Arrivals to the UK from Italy have fallen by 9% based on the limited data
available to March, but given the weak pound, peak summer months may yield
some growth.

Italian visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago
Nights
20
Iceland, 31.9% (A)
Bulgaria, 20.2% (A)
15 Montenegro, -12.9% (N)
Slovakia, -14.1% (A)
10 Turkey, -12.7% (A)

5

0
Finland

Netherlands

Slovenia
Sweden

Romania

Latvia

Switzerland

Slovakia
Iceland
Bulgaria
Malta
Belgium
Czech Rep

Montenegro

Cyprus
Lithuania

Poland

Hungary
Germany
Croatia
Estonia

Turkey
Serbia

Monaco

Austria
Portugal

Spain

Denmark

Greece

Luxembourg

UK
-5

-10
Source: TourMIS *date varies (Jan-Sep) by destination

24 out of 32 reporting destinations have reported some form of growth from the
UK so far in 2017. Nine destinations have enjoyed both arrivals and overnights
growth in excess of 10%, and two in excess of 20%. Growth from the UK has
24 largely continued despite a weaker pound which has made international travel
more expensive for the British traveller. Growth has been more evident for less
out of 32 destinations
traditional destinations and may involve some bargain hunting by British
reported some form of
travellers. Travel to some more established summer destinations, such as
growth from the UK –
Spain and Portugal, has continued but at a slower rate than in recent years.
positive given the weakness
of the pound. Bulgaria has been the top growth destination from the UK so far in 2017 with
arrivals up 26.7% based on data to August compared to the same period in
2016. Croatia closely followed with both arrivals and overnights from the UK
significantly higher based on data to September compared to a year ago
(26.1% and 25.4% respectively). The growing number of flights between UK
cities and a number of Croatian destinations has played a major role in this
growth.

Some mixed data also exist: Montenegro, Spain, and Greece, to name a few,
have all reported growth in arrivals from the UK alongside simultaneous
declines in overnights. This suggests travellers from the UK are curtailing their
trips abroad in order to offset the added expense brought about by the weaker
pound.

On the downside, Ireland has reported a 7.1% fall in number of UK arrivals it
received between January and August compared to a year ago. But this is a
modest improvement on the 8.3% decline reported earlier in the year. Given
that UK arrivals account for roughly half of all arrivals to Ireland, this is a
significant blow to Ireland’s tourism economy in absolute terms.

21
European Tourism in 2017: Trends & Prospects (Q3/2017)

The collapse of Monarch Airlines in September and the ongoing cancellations
of flights by Ryanair may cause some disruption to UK outbound towards the
end of the year, but the final scale of this disruption is currently uncertain.

UK visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago Nights
30
25
20
15
10
5
0
Finland

Romania

Sweden

Switzerland
Bulgaria
Croatia

Poland

Estonia
Montenegro
Italy

Slovenia

Slovakia
Cyprus

Latvia
Lithuania
Czech Rep
Netherlands

Hungary

Germany
Serbia

Iceland

Malta
Belgium

Norway
Ireland Rep
Turkey
Austria

Monaco
Luxembourg

Spain

Portugal

Denmark
-5
-10

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

out of 33 destinations
reported growth in arrivals or Outbound travel from Russia has improved in line with the recovery of the
overnights from Russia. rouble against the euro in the first half of the year. Year-to-date data shows that
a majority of reporting destinations (all but one of 33) have enjoyed a rebound
from the lower Russian demand of the past few years.

The most notable rate of Russian growth was just shy of 900% as reported by
Turkey. This growth followed some mild improvement in the latter part of 2016
after Russia lifted travel restrictions on its citizens visiting Turkey. Notable
efforts have been made to restore relations between the two countries including
this year’s ‘Turkey Festival’ hosted in Moscow in June. Bulgaria, and to a lesser
extent Montenegro, reported some small falls in Russian arrivals this year.
These were among the minority of growth destinations for Russian travel in
2016 and may have benefitted from some displaced travellers who are now
returning to Turkey.

Russian visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago Nights
50

40 Turkey, 891.6% (A)
Iceland, 93.6% (A)
30

20

10

0
Belgium

Hungary

Latvia
Romania
Finland
Turkey

Czech Rep

Slovakia
Netherlands
Iceland

Malta
Slovenia

Poland

Germany
Italy
Estonia

Serbia

Switzerland
Croatia
Sweden
Monaco
Spain

Norway
Lithuania

Cyprus
Montenegro
Bulgaria
Austria

UK

Greece
Portugal

Denmark

Luxembourg

-10

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

22
European Tourism in 2017: Trends & Prospects (Q3/2017)

5.2 NON-EUROPEAN MARKETS

30 out of 33 reporting destinations enjoyed growth from the US in 2017 to date.
Iceland remains the fastest growing destination for US travellers – up 92.2%
30 based on data to August. Growth of this magnitude is very significant since
out of 33 destinations arrivals from the US account for around 20% of all arrivals to Iceland.
reported some form of Expansion continues to be aided by Iceland’s role as a hub for transatlantic
growth from the United travel as both Europeans and North Americans have been increasingly
States breaking up transatlantic trips with some nights in Iceland. This pace of growth
is well ahead of the increase in transatlantic travel as Iceland is gaining share
of this market and will continue to be supported by further planned growth in
scheduled flights.

US arrivals growth across much of Europe has been significant so far in 2017,
thanks in part to the still strong US dollar, despite some softening. 22
destinations reported double-digit growth in either arrivals, overnights, or both.
Only Greece, Monaco, and Turkey have not seen their number of US arrivals
grow so far in 2017. In Greece and Monaco declines were marginal, but more
significant in the case of Turkey (-28.5%) which has continued to see lower
arrivals from the US due to a combination of political unrest and recurrent terror
attacks. The recent suspension of visa services between these countries will
only exacerbate these declines.

US visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago Nights
40
35
Iceland, 47.8% (A)
30
Montenegro, 41.1% (A)
25 Turkey, -28.5% (A)
20
15
10
5
0
Belgium

Romania

Latvia
Sweden

Finland
Iceland
Montenegro

Cyprus
Croatia

Malta

Serbia

Slovenia
Norway

Netherlands
Lithuania

Italy

Czech Rep
Switzerland
Hungary
Bulgaria

Germany

Slovakia
Poland

Estonia

Monaco
Turkey
UK

Austria
Portugal

Spain

Denmark

Luxembourg

Greece

-5
-10

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

Arrivals growth from Japan has been notable in a number of reporting
destinations so far in 2017 with growth in 26 out of 30, and double-digit growth
in 14 of these, albeit from a low base in many cases. Growth to the UK from
Japan was especially sizeable at 41%, thanks in part to some strengthening of
the yen aiding affordability for Japanese travellers. Currency improvement was
notable following the Brexit referendum and more recently amid geopolitical
tensions. Equally strong arrivals growth was also reported by Portugal (39.8%),
and it may be benefitting due to its perceived open travel policies from
countries outside the Schengen Area.

In addition some robust growth in travel to traditionally expensive destinations
such as Switzerland, Finland, and Luxembourg can be viewed as an indication
that price pressures are becoming less of a constraint on Japanese travellers.

23
European Tourism in 2017: Trends & Prospects (Q3/2017)

Japanese visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago
Nights
40
35
30 United Kingdom, 41% (A)
25
20
15
10
5
0

Switzerland

Finland

Slovakia
Belgium
Romania
Hungary

Estonia
Iceland

Bulgaria

Latvia
Czech Rep
Montenegro

Croatia

Serbia

Poland
Germany

Netherlands
Slovenia

Italy

Monaco
Sweden
Spain

Lithuania

Norway

Turkey
UK
Portugal

Austria
Luxembourg

Denmark
-5
-10

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

China has been a source of strong arrivals growth for many European
destinations so far in 2017, with some form of growth reported across the
board. This growth has been abetted by ever-increasing transport links
between China and Europe and the ease of travel within Europe thanks to the
Schengen visa. The strength of the Chinese economy and its burgeoning
middle-class have also provided a sturdy platform for outbound tourism growth.

Serbia was the top growth destination in both arrivals and overnights (173.7%
and 110% respectively) with Montenegro not far behind. Strong growth was
also reported by a number of other countries in close proximity to one another
(Poland, Czech Republic, and Slovakia) and these countries may be benefitting
from Chinese travellers touring the area as part of a single trip.

Chinese visits and overnights to select destinations Arrivals
2016 year-to-date*, % change year ago Nights
100

80 Serbia, 173.7% (A) & 110% (N)
Montenegro, 104.5% (N)
60

40

20

0
Poland
Czech Rep
Slovakia

Estonia
Bulgaria

Hungary
Finland

Romania

Switzerland
Cyprus

Turkey

Norway
Latvia

Italy

Belgium
Serbia
Montenegro

Croatia

Slovenia

Iceland
Lithuania

Spain

UK

Netherlands

Sweden
Monaco
Germany
Portugal

Austria

Luxembourg

Denmark

-20

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

Croatia was the most popular Indian growth destination in arrivals terms
according to data to September, up 66.5% (and nights up 60.4%). Latvia
reported faster overnights growth (75% according to data to June), although
arrivals growth was slightly slower at 46.4%. Hungary and several other Central
European countries, such as Slovakia, Austria, and the Czech Republic also

24
European Tourism in 2017: Trends & Prospects (Q3/2017)

enjoyed significant growth and these may be benefitting jointly as part of multi-
destination trips. The UK also saw a large increase and this may be due at
least in part the weaker pound. More generally, growth from India has been
aided by a strong economic backdrop in India, evident in robust GDP growth, a
positive consumer spending outlook, and a rising number of middle-income
households. Over time the country will become increasingly more important as
a source market for European destinations.

Indian visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago
Nights
50

40 Latvia, 75% (N)
Montenegro, -33.5% (A) & -58% (N)
30

20

10

0
Latvia

Hungary
Slovakia

Finland

Switzerland
Croatia

Italy

Netherlands

Czech Rep
Sweden
Germany

Romania
Belgium
Bulgaria
Poland
Monaco

Turkey
Montenegro
UK

Austria
Spain

Denmark
-10

-20

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

Many destinations have reported arrivals and overnights growth from Canada
so far in 2017. Travel to Latvia was particularly rapid with arrivals up 319% and
overnights 197%, albeit from low volumes. This was also true to a lesser extent
in Lithuania and these two countries may be jointly benefitting from multi-
destination trips. Cyprus has also enjoyed some very positive arrivals growth
(78.6) according to data to September. Travel to Iceland also remains
particularly strong (38.3%), aided by the increase in hub traffic on transatlantic
flights. Falls reported by Finland offset the extraordinary growth in January
2016 when it hosted the Ice Hockey World Junior Championships and is not a
cause for concern; growth has resumed in more recent months. Canadians
have also continued to avoid Turkey as a destination, while Greece has also
seen further falls in arrivals, possibly due to trips to both destinations.

25
European Tourism in 2017: Trends & Prospects (Q3/2017)

Canadian visits and overnights to select destinations Arrivals
2017 year-to-date*, % change year ago
Nights
50
Latvia, 319.4% (A) & 196.5% (N)
40
Cyprus, 78.6% (A)
Turkey, -28.5% (A)
30

20

10

0
Latvia

Slovakia
Cyprus
Lithuania

Belgium
Slovenia

Croatia

Sweden
Switzerland

Romania
Iceland

Montenegro
Italy
Netherlands

Hungary
Germany

Czech Rep
Finland
Bulgaria

Poland
Turkey
Serbia
UK

Austria
Portugal

Spain

Denmark

Greece
Monaco
-10

-20

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

26
European Tourism in 2017: Trends & Prospects (Q3/2017)

6. ORIGIN MARKET SHARE ANALYSIS
METHODOLOGY

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. 2015 values are, in most cases, year-to-date estimates based on the latest available
data and are not final reported numbers.

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.

For example, US outbound figures featured in the analysis are larger than reported departures
in national statistics as long haul trips often involve travel to multiple destinations. In 2014 US
data reporting shows 11.9m departures to Europe while the sum of European arrivals from the
US was 23.4m. Thus each US trip to Europe involved a visit to two destinations on average.

The geographies of Europe are defined as follows:

Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;

Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and
Switzerland;

Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR
Macedonia, Greece, Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;

Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary,
Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia,
and Ukraine.

27
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.1 UNITED STATES

US Market Share Summary
2016 Growth (2016-21) Growth (2011-16)
Annual Cumulative Cumulative
Level Share** Share 2021** Share 2011**
average growth* growth*
Total outbound travel (000s) 104,290 - 5.2% 28.7% - 34.4% -
Long haul (000s) 61,757 59.2% 5.8% 32.8% 61.1% 30.2% 61.1%
Short haul (000s) 42,533 40.8% 4.2% 22.6% 38.9% 41.1% 38.9%

Travel to Europe (000s) 26,804 25.7% 5.5% 30.5% 26.1% 30.3% 26.5%
Northern Europe (000s) 7,013 6.7% 5.1% 28.0% 6.7% 42.2% 6.4%
Western Europe (000s) 9,329 8.9% 4.0% 21.6% 8.5% 19.0% 10.1%
Southern Europe (000s) 6,960 6.7% 7.0% 40.4% 7.3% 29.4% 6.9%
Central/Eastern Europe (000s) 3,501 3.4% 6.9% 39.3% 3.6% 44.3% 3.1%
*Shows cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

US Long Haul* Outbound Travel
Visits, 000s
80.000 Rest of Long Haul
Central/Eastern Europe
70.000 Southern Europe
Western Europe
60.000 Northern Europe
50.000
40.000
30.000
20.000
10.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside North America

Source: Tourism Economics

Europe's Share of US Market Northern Europe
% share of long haul* market Western Europe
18% Southern Europe
Central/Eastern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

28
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.2 CANADA

Canada Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 33,933 - 3.2% 16.9% - 0.6% -
Long haul (000s) 12,873 37.9% 3.6% 19.2% 38.7% 18.9% 32.1%
Short haul (000s) 21,060 62.1% 2.9% 15.5% 61.3% -8.0% 67.9%

Travel to Europe (000s) 5,024 14.8% 2.3% 11.9% 14.2% 21.6% 12.3%
Northern Europe (000s) 1,247 3.7% 4.0% 21.8% 3.8% 23.8% 3.0%
Western Europe (000s) 1,628 4.8% 3.0% 16.0% 4.8% 6.1% 4.5%
Southern Europe (000s) 1,855 5.5% 1.0% 4.9% 4.9% 37.5% 4.0%
Central/Eastern Europe (000s) 294 0.9% -1.7% -8.2% 0.7% 21.9% 0.7%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Canada Long Haul* Outbound Travel
Visits, 000s
16.000 Rest of Long Haul Central/Eastern Europe
14.000 Southern Europe Western Europe
Northern Europe
12.000
10.000
8.000
6.000
4.000
2.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside North America

Source: Tourism Economics

Europe's Share of Canadian Market
% share of long haul* market Northern Europe
20% Western Europe
Southern Europe
18% Central/Eastern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

29
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.3 MEXICO

Mexico Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 21,769 - 1.0% 5.1% - 37.7% -
Long haul (000s) 2,797 12.8% 5.2% 29.1% 15.8% 34.4% 13.2%
Short haul (000s) 18,972 87.2% 0.3% 1.5% 84.2% 38.2% 86.8%

Travel to Europe (000s) 1,419 6.5% 4.0% 21.7% 7.5% 20.0% 7.5%
Northern Europe (000s) 111 0.5% 6.0% 33.8% 0.7% 35.3% 0.5%
Western Europe (000s) 611 2.8% 5.2% 29.1% 3.4% -1.2% 3.9%
Southern Europe (000s) 539 2.5% 2.7% 14.3% 2.7% 38.7% 2.5%
Central/Eastern Europe (000s) 158 0.7% 1.8% 9.3% 0.8% 68.5% 0.6%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Mexico Long Haul* Outbound Travel
Visits, 000s
3.500
Rest of Long Haul
3.000 Central/Eastern Europe
Southern Europe
2.500 Western Europe
Northern Europe
2.000

1.500

1.000

500

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside North America

Source: Tourism Economics

Europe's Share of Mexican Market
% share of long haul* market Northern Europe
Western Europe
35% Southern Europe
Central/Eastern Europe
30%

25%

20%

15%

10%

5%

0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

30
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.4 ARGENTINA

Argentina Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 11,831 - 0.4% 2.2% - 71.5% -
Long haul (000s) 3,203 27.1% -0.4% -1.9% 26.0% 66.8% 27.8%
Short haul (000s) 8,629 72.9% 0.7% 3.6% 74.0% 73.4% 72.2%

Travel to Europe (000s) 1,304 11.0% -2.6% -12.3% 9.5% 99.3% 9.5%
Northern Europe (000s) 148 1.3% -0.8% -3.9% 1.2% 93.9% 1.1%
Western Europe (000s) 64 0.5% 1.4% 7.4% 0.6% 71.2% 0.5%
Southern Europe (000s) 981 8.3% -3.9% -18.1% 6.7% 109.6% 6.8%
Central/Eastern Europe (000s) 111 0.9% 3.2% 16.8% 1.1% 53.0% 1.1%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Argentina Long Haul* Outbound Travel
Visits, 000s
4.000
Rest of Long Haul
3.500 Central/Eastern Europe
3.000 Southern Europe
Western Europe
2.500
Northern Europe
2.000
1.500
1.000
500
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside South America

Source: Tourism Economics

Europe's Share of Argentinian Market
% share of long haul* market Northern Europe
Western Europe
40% Southern Europe
35% Central/Eastern Europe

30%
25%
20%
15%
10%
5%
0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

31
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.5 BRAZIL

Brazil Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 8,583 - 5.4% 30.0% - 4.2% -
Long haul (000s) 6,244 72.8% 4.7% 26.0% 70.5% 9.6% 69.1%
Short haul (000s) 2,339 27.2% 7.1% 40.9% 29.5% -8.1% 30.9%

Travel to Europe (000s) 3,303 38.5% 3.0% 15.8% 34.3% 6.0% 37.8%
Northern Europe (000s) 200 2.3% 10.8% 67.0% 3.0% -27.5% 3.3%
Western Europe (000s) 1,240 14.5% 5.7% 32.1% 14.7% -10.0% 16.7%
Southern Europe (000s) 1,570 18.3% -1.5% -7.3% 13.0% 31.2% 14.5%
Central/Eastern Europe (000s) 292 3.4% 6.3% 35.6% 3.6% 9.5% 3.2%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Brazil Long Haul* Outbound Travel
Visits, 000s
9.000 Rest of Long Haul
8.000 Central/Eastern Europe
7.000 Southern Europe
Western Europe
6.000
Northern Europe
5.000
4.000
3.000
2.000
1.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside South America

Source: Tourism Economics

Europe's Share of Brazilian Market
% share of long haul* market Northern Europe
Western Europe
35% Southern Europe
Central/Eastern Europe
30%

25%

20%

15%

10%

5%

0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

32
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.6 INDIA

India Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 16,670 - 6.2% 35.0% - 51.0% -
Long haul (000s) 16,031 96.2% 6.2% 35.0% 96.2% 52.8% 95.0%
Short haul (000s) 639 3.8% 6.3% 35.6% 3.8% 16.5% 5.0%

Travel to Europe (000s) 2,330 14.0% 5.2% 29.1% 13.4% 38.6% 15.2%
Northern Europe (000s) 452 2.7% 5.0% 27.5% 2.6% 19.7% 3.4%
Western Europe (000s) 809 4.9% 5.9% 33.0% 4.8% 31.5% 5.6%
Southern Europe (000s) 269 1.6% 6.9% 39.9% 1.7% 6.0% 2.3%
Central/Eastern Europe (000s) 799 4.8% 4.1% 22.4% 4.3% 84.3% 3.9%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

India Long Haul* Outbound Travel
Visits, 000s
20.000
Rest of Long Haul Central/Eastern Europe
18.000
Southern Europe Western Europe
16.000
Northern Europe
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside South Asia

Source: Tourism Economics

Europe's Share of Indian Market
% share of long haul* market Northern Europe
Western Europe
8% Southern Europe
7% Central/Eastern Europe

6%
5%
4%
3%
2%
1%
0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

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European Tourism in 2017: Trends & Prospects (Q3/2017)

6.7 CHINA

China Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 86,347 - 6.1% 34.4% - 113.5% -
Long haul (000s) 40,305 46.7% 7.8% 45.6% 50.6% 180.4% 35.5%
Short haul (000s) 46,042 53.3% 4.5% 24.6% 49.4% 76.6% 64.5%

Travel to Europe (000s) 10,562 12.2% 8.5% 50.2% 13.7% 106.9% 12.6%
Northern Europe (000s) 863 1.0% 9.5% 57.1% 1.2% 122.4% 1.0%
Western Europe (000s) 5,106 5.9% 8.9% 53.0% 6.7% 104.3% 6.2%
Southern Europe (000s) 651 0.8% 7.6% 43.9% 0.8% 80.7% 0.9%
Central/Eastern Europe (000s) 3,941 4.6% 7.9% 46.0% 5.0% 112.3% 4.6%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

China Long Haul* Outbound Travel
Visits, 000s
50.000
Rest of Long Haul
45.000
Central/Eastern Europe
40.000
35.000 Southern Europe
30.000 Western Europe
25.000 Northern Europe
20.000
15.000
10.000
5.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside Northeast Asia

Source: Tourism Economics

Europe's Share of Chinese Market
% share of long haul* market Northern Europe
Western Europe
25% Southern Europe
Central/Eastern Europe
20%

15%

10%

5%

0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

34
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.8 JAPAN

Japan Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 21,954 - 5.0% 27.7% - 0.9% -
Long haul (000s) 14,159 64.5% 5.3% 29.4% 65.3% 12.8% 57.7%
Short haul (000s) 7,796 35.5% 4.5% 24.8% 34.7% -15.3% 42.3%

Travel to Europe (000s) 4,178 19.0% 5.3% 29.7% 19.3% 1.7% 18.9%
Northern Europe (000s) 572 2.6% 2.1% 10.8% 2.3% 12.5% 2.3%
Western Europe (000s) 1,765 8.0% 6.7% 38.1% 8.7% -10.3% 9.0%
Southern Europe (000s) 1,212 5.5% 5.6% 31.5% 5.7% 10.6% 5.0%
Central/Eastern Europe (000s) 629 2.9% 3.7% 19.8% 2.7% 17.7% 2.5%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Japan Long Haul* Outbound Travel
Visits, 000s Rest of Long Haul Central/Eastern Europe
18.000 Southern Europe Western Europe
16.000 Northern Europe
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside Northeast Asia

Source: Tourism Economics

Europe's Share of Japanese Market Northern Europe
% share of long haul* market Western Europe
18% Southern Europe
Central/Eastern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

35
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.9 AUSTRALIA

Australia Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 15,991 - 5.1% 28.4% - 13.3% -
Long haul (000s) 15,251 95.4% 5.2% 28.6% 95.6% 11.6% 96.8%
Short haul (000s) 740 4.6% 4.2% 23.1% 4.4% 61.7% 3.2%

Travel to Europe (000s) 4,949 30.9% 5.0% 27.5% 30.7% 7.1% 32.7%
Northern Europe (000s) 1,346 8.4% 6.5% 37.1% 9.0% 2.1% 9.3%
Western Europe (000s) 1,659 10.4% 1.7% 8.9% 8.8% -2.6% 12.1%
Southern Europe (000s) 1,490 9.3% 6.9% 39.4% 10.1% 18.7% 8.9%
Central/Eastern Europe (000s) 455 2.8% 5.0% 27.8% 2.8% 32.3% 2.4%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Australia Long Haul* Outbound Travel
Visits, 000s
18.000 Rest of Long Haul Central/Eastern Europe
16.000 Southern Europe Western Europe
14.000 Northern Europe
12.000
10.000
8.000
6.000
4.000
2.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside Oceania

Source: Tourism Economics

Europe's Share of Australian Market Northern Europe
% share of long haul* market Western Europe
Southern Europe
14% Central/Eastern Europe
12%

10%

8%

6%

4%

2%

0%
2006 2008 2010 2012 2014 2016 2018 2020

*Long haul defined as tourist arrivals to destinations outside Oceania

Source: Tourism Economics

36
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.10 UNITED ARAB EMIRATES

United Arab Emirates Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 3,157 - 6.5% 36.7% - 9.2% -
Long haul (000s) 1,652 52.3% 2.5% 13.2% 43.3% 42.6% 40.1%
Short haul (000s) 1,505 47.7% 10.2% 62.6% 56.7% -13.1% 59.9%

Travel to Europe (000s) 992 31.4% 1.5% 7.7% 24.7% 49.7% 22.9%
Northern Europe (000s) 367 11.6% -1.1% -5.5% 8.0% 52.6% 8.3%
Western Europe (000s) 375 11.9% 2.6% 13.7% 9.9% 32.0% 9.8%
Southern Europe (000s) 192 6.1% 4.1% 22.5% 5.5% 75.8% 3.8%
Central/Eastern Europe (000s) 58 1.8% 0.7% 3.5% 1.4% 101.2% 1.0%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

UAE Long Haul* Outbound Travel
Visits, 000s
2.000 Rest of Long Haul
1.800 Central/Eastern Europe
1.600 Southern Europe
Western Europe
1.400
Northern Europe
1.200
1.000
800
600
400
200
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to destinations outside Middle East

Source: Tourism Economics

Europe's Share of Emirati Market
% share of long haul* market Northern Europe
Western Europe
30% Southern Europe
Central/Eastern Europe
25%

20%

15%

10%

5%

0%
2006 2008 2010 2012 2014 2016 2018 2020

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

Source: Tourism Economics

37
European Tourism in 2017: Trends & Prospects (Q3/2017)

6.11 RUSSIA

Russia Market Share Summary
2016 Grow th (2016-21) Grow th (2011-16)
Annual Cum ulative Cum ulative
Level Share** Share 2021** Share 2011**
average grow th* grow th*
Total outbound travel (000s) 19,532 - 9.9% 60.3% - -36.6% -
Long haul (000s) 4,915 25.2% 5.4% 30.1% 20.4% -19.5% 19.8%
Short haul (000s) 14,617 74.8% 11.3% 70.5% 79.6% -40.8% 80.2%

Travel to Europe (000s) 14,617 74.8% 11.3% 70.5% 79.6% -40.8% 80.2%
Northern Europe (000s) 1,092 5.6% 8.5% 50.5% 5.3% -32.9% 5.3%
Western Europe (000s) 1,324 6.8% 5.4% 30.2% 5.5% -20.3% 5.4%
Southern Europe (000s) 4,594 23.5% 17.7% 125.6% 33.1% -31.0% 21.6%
Central/Eastern Europe (000s) 7,606 38.9% 8.0% 47.1% 35.7% -48.4% 47.9%
*Show s cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Source: Tourism Economics

Russia Long Haul* Outbound Travel
Visits, 000s
45.000 Rest of World
40.000 Central/Eastern Europe
Southern Europe
35.000
Western Europe
30.000 Northern Europe
25.000
20.000
15.000
10.000
5.000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
*Long haul defined as tourist arrivals to all destinations

Source: Tourism Economics

Europe's Share of Russian Market
% share of long haul* market Northern Europe
Western Europe
70% Southern Europe
Central/Eastern Europe
60%

50%

40%

30%

20%

10%

0%
2006 2008 2010 2012 2014 2016 2018 2020

*Long haul defined as tourist arrivals to all destinations

Source: Tourism Economics

38
European Tourism in 2017: Trends & Prospects (Q3/2017)

7. ECONOMIC OUTLOOK
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 travel abroad. 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. For example, if the euro appreciated (gained value)
against the US dollar, the Eurozone would become a more expensive destination and
therefore potentially less attractive for US visitors. Conversely, depreciation of the euro against
the US dollar would make the Eurozone a relatively cheaper destination and therefore more
attractive to US travellers.

7.1 OVERVIEW

STEADY RECOVERY SHOWS NO SIGNS OF SLOWING

We expect the solid and broad-based world recovery to continue, and still see a
slight pick-up in global GDP growth from 2.9% this year to 3.0% in 2018,
unchanged from a month ago. This points to the most sustained period of
robust global growth since the initial recovery from the financial crisis.

Purchasing managers’ surveys suggest that growth in advanced economies
strengthened further through the summer. By contrast, the available data
suggest that industrial production in some of the advanced economies
weakened last quarter, and world trade went through a soft patch in early
summer.

39
European Tourism in 2017: Trends & Prospects (Q3/2017)

But US industrial output will have been dampened by the recent hurricanes,
while the Eurozone figures are often volatile in the summer months. And the
limited trade data for the latter part of Q3 point to a reacceleration in trade
growth. On balance, we expect the solid pace of global growth in H1 to be
maintained in H2.

The broad-based global economic strength has coincided with a slightly more
hawkish tone from some central banks. We now see the Fed raising US
interest rates in December – in addition to the two hikes already pencilled in for
2018 – reflecting its apparent desire for a slightly faster pace of normalisation in
order to avoid potentially more aggressive rate hikes later in the cycle.
Meanwhile, the Bank of England has opted to raise interest rates at its
November meeting.

While the Fed’s stance and Eurozone political developments have led the euro
to weaken against the US dollar, we think further sustained falls in the euro are
unlikely in an environment where the Eurozone continues to record well-above-
trend growth and underlying inflation pressures is gradually building.

Q2’s strong performance in many emerging markets (EMs) was probably
sustained in Q3. Despite EM assets recently coming under pressure, we still
expect them to be resilient to Fed tightening, supported by firmer commodity
prices, still-attractive carry and, more importantly, a widening growth differential
over advanced economies.

Summary of economic outlook, % change year ago*
2016 2017
Consumer Unemploy- Exchange Consumer Unemploy- Exchange
Country GDP Inflation GDP Inflation
expenditure ment * rate*** expenditure ment ** rate***

UK 1.8% 2.9% -0.1% -11.2% 0.6% 1.5% 1.5% 0.1% -6.7% 2.7%
France 1.1% 2.1% -0.3% 0.0% 0.2% 1.8% 1.2% -0.5% 0.0% 1.0%
Germany 1.9% 1.9% -0.3% 0.0% 0.5% 2.1% 2.0% -0.4% 0.0% 1.8%
Netherlands 2.1% 1.5% -1.3% 0.0% 0.3% 3.1% 2.0% -1.3% 0.0% 1.3%
Italy 1.1% 1.5% -0.3% 0.0% -0.1% 1.5% 1.4% -0.4% 0.0% 1.4%
Russia -0.2% -4.5% 0.0% -8.9% 7.0% 2.1% 4.0% -0.3% 12.1% 3.9%
US 1.5% 2.7% -0.4% 0.3% 1.3% 2.1% 2.6% -0.4% -2.5% 2.1%
Canada 1.5% 2.3% 0.1% -3.3% 1.4% 3.0% 3.5% -0.5% -0.4% 1.6%
Brazil -3.6% -4.3% 3.0% -4.2% 8.7% 0.8% 0.5% 1.3% 7.1% 3.4%
China 6.7% 7.9% 0.0% -5.1% 2.0% 6.8% 7.7% -0.1% -4.1% 1.6%
Japan 1.0% 0.4% -0.3% 11.6% -0.1% 1.7% 1.5% -0.3% -5.5% 0.4%
India 7.9% 9.2% 0.2% -4.3% 4.9% 6.5% 7.0% 0.1% 0.5% 3.3%
Source: Tourism Economics
* Unless otherw ise specified
** Percentage point change
*** 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 w eaker local currency against the euro and therefore a negative impact on outbound tourism
demand.

40
European Tourism in 2017: Trends & Prospects (Q3/2017)

7.2 EUROZONE

While survey data from the Eurozone continue to point to robust growth
momentum in Q3, some hard data suggest there may be downside risks. For
now, though, there is little evidence that the strong euro is yet affecting the
industrial and the external sectors, but it will cause inflation to fall significantly in
early-2018. As a result, we still expect the ECB to unveil plans this month to
reduce monthly QE purchases from January next year.

The Eurozone economy probably reached its peak velocity in Q2, when GDP
rose 0.6%. Surveys continue to suggest strong growth in the second half of the
year. Following a jump in September, the average composite PMI for Q3 was
only slightly below the peak in Q2, whereas the EC Economic Sentiment
Indicator was actually higher than in Q2.

Neither survey shows any evidence that the appreciation of the euro is having
an adverse effect on the industrial sector, with industrial production having
rebounded strongly in August in many Eurozone economies following a soft
patch in earlier months. That said, both industrial output and retail sales data
suggest softer growth in Q3 than suggested by the strong surveys.

The ECB is expected to announce its next policy change this month. Although
inflation will likely fall to 1% or lower early in 2018, this dip will only be transitory
so we still expect QE purchases to be reduced to €40bn a month from January.
However, the change will be accompanied by dovish rhetoric and only a slow
pace of normalisation thereafter.

Our GDP growth forecasts for 2017 and 2018 are unchanged from last month
at 2.2% and 1.9% respectively, implying a sustained period of above potential
GDP growth.

Euro area GDP indicator
% q/q
2

1

0

-1
GDP % q/q
GDP Indicator
-2

-3

-4
2000 2003 2006 2009 2012 2015

Source: Oxford Economics/Haver Analytics

41
European Tourism in 2017: Trends & Prospects (Q3/2017)

7.3 UNITED KINGDOM

Revisions to historical data and a soft outturn for services output in July mean
that we have lowered our forecast for 2017 GDP growth to 1.5% from 1.7% last
month. And with high inflation continuing to weigh on consumer spending,
businesses wary of investing in a climate of Brexit-related uncertainty and the
government continuing with its programme of fiscal austerity, we expect growth
to remain sluggish at around 1.5% in 2018.

The latest national accounts saw the ONS re-base the data to 2015 prices and
introduce a raft of methodological changes, particularly for the sectoral
accounts. Improvements to the measurement of dividend income from self-
employment have boosted growth in household incomes over recent years,
suggesting the financial position of households is less parlous than previously
thought. But in contrast, the story of large corporate surpluses has been
revised away.

By taking a more conciliatory approach, particularly in terms of the size of the
‘divorce bill’, Theresa May’s Florence speech appears to have helped to
unblock the impasse in the Brexit talks. There is much work still to do, but we
still see successful deals on separation and transition, followed by a free-trade
agreement, as the most likely outcome.

Though the case for a rate hike was, in our view, very weak, the MPC’s
decision to increase Bank Rate to 0.5% at the November meeting was
expected. The rhetoric in September’s minutes and in subsequent speeches
had been unusually strong and the MPC had set the bar for a hike very low,
suggesting that even a continuation of the recent sluggish pace of growth
would not be enough to stop it from moving.

UK: Consumer spending & income
% year
8
Real disposable income Forecast
6

4

2

0

-2

-4
Consumer spending
-6
2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics

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European Tourism in 2017: Trends & Prospects (Q3/2017)

7.4 UNITED STATES

It may be difficult to get an accurate read on the pace of the US economy in the
third quarter given hurricane disruptions. However, looking through data
volatility, we think underlying economic momentum remains steady at around
2% growth. The odds of a fiscal stimulus package for next year have risen in
recent weeks, but passage will not be a ‘slam dunk’. The Fed has lowered the
bar for future rate hikes, and led us to pull forward our expectation for the next
increase in rates to December, while maintaining two rate hikes in 2018.

While the 33,000 drop in nonfarm payrolls in September was a shocker,
disruptions from hurricanes Harvey and Irma will prove transitory. The more
encouraging (albeit also overstated) news came from firmer wage growth, at
2.9% y/y; a lower unemployment rate, at 4.2%; and a rising labor force
participation rate, to 63.1%.

Manufacturing and non-manufacturing PMI indices surged in September, but
while these indicate rebounding business investment activity and ongoing
consumer spending momentum, we caution that supply chain disruptions
artificially boosted the readings, and higher input costs may curb activity in the
future.

While inflation remains well below the Fed's 2% target, the FOMC has
effectively lowered the bar for future rate hikes after a smooth start to its
balance sheet normalization process in October. We foresee somewhat firmer
inflation by year end, boosted by transitory forces, supporting a December rate
hike. We expect (at least) two 25 basis points increases in the federal funds
rate in 2018.

Policy momentum picked up with the release of the Republicans’ Tax
Framework. The odds of a modest fiscal package have increased, but we
believe the potential package will be highly regressive and much smaller than
what is currently being discussed.

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European Tourism in 2017: Trends & Prospects (Q3/2017)

7.5 JAPAN

Monthly indicators suggest momentum in exports is strong and business
surveys point to healthy investment over the coming quarters. We still look for
export growth to moderate as we head into 2018 as Chinese import demand
cools. However, given the solid outlook for employment and a boost from public
spending, we expect domestic demand to become an increasing driver of
growth. We forecast GDP to grow by 1.7% this year and 1.6% in 2018. But the
economy still faces several headwinds. Aside from the external risks, wage
growth is sluggish, which could stall the recovery in household spending.

According to the latest Tankan survey business sentiment improved across the
board in Q3 and the recovery in corporate profits is feeding through to higher
capital spending intentions. Intensifying shortages of labour are also
underpinning software investment among SMEs. Indeed, significantly higher
investment by SMEs is a tail risk to our already positive outlook for investment
over the next 18 months.

Recent data suggest that momentum in exports has picked up. Goods export
volumes grew nearly 9% year-on-year in July-August combined, up from
around 6% in Q2. The manufacturing PMI index also edged slightly higher to
52.9 in September, with both domestic and export orders rising.

Japan: Inflation measures
% year
4 Inflation
Inflation ex energy F'cast
3
2% target
2

1

0

-1

-2

-3
2005 2007 2009 2011 2013 2015 2017 2019
Source: Haver Analytics / Oxford Economics

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European Tourism in 2017: Trends & Prospects (Q3/2017)

7.6 EMERGING MARKETS

CHINA ON TRACK FOR SLIGHTLY SLOWER H2

Overall growth momentum continued to ease in August on weaker exports and
investment. Given global demand trends, we think China’s export growth
probably peaked mid-year in real terms, and is likely to moderate in the coming
months.

Meanwhile, we forecast domestic demand momentum to cool in the coming six
months, as the impact of the move to a less accommodative monetary policy
takes hold. Indeed, momentum in housing market activity slowed in August,
despite ongoing resilience in the smaller cities. Our 2017 growth forecast
remains unchanged at 6.8%.

China: Key cyclical indicators
% yoy, real Value added industry
18
Retail sales
16 Fixed asset investment
14
12
10
8
6
4
2
0
2014 2015 2016 2017
Source: Oxford Economics, CEIC Data

As highlighted at the Party Congress, stability remains the key policy objective.
While China can comfortably meet its growth target of “at least 6.5%” this year
we expect a somewhat lower GDP growth target for next year; a focus on
curbing financial risks and leverage in parts of the financial system but further
solid credit growth; and gradual financial sector reform. We also predict
additional reform of state-owned enterprises (SOEs), in part encouraged by a
push to reduce pollution. However, the nature and pace of SOE reform will
remain driven by other objectives, such as creating (inter)national champions.

MONETARY POLICY IN INDIA “ON HOLD” FOR NOW
As expected, the RBI kept policy rates unchanged at its October monetary
policy meeting and going forward we expect a prolonged period of inaction from
the central bank. With CPI inflation likely to rise back above 5% in H1 2018
(influenced by higher food prices, upward pressure on housing inflation due to
public salary revisions, and base effects turning unfavourable), we think the
possibility of further monetary easing is low.

Though industrial growth remains weak (+1.2% y/y in July after -0.2% in June)
and private investment is expected to stay sluggish this year, this is largely due
to structural reasons such as stressed balance sheets, which are outside the
purview of monetary policy. Moreover, other components of domestic demand

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European Tourism in 2017: Trends & Prospects (Q3/2017)

– private and government consumption, and infrastructure spending – are
improving.

India: Monetary conditions
%
14
CPI inflation
F'cast
12

10

8

6

4 Repo rate

2

0
2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics

SOUTH AMERICA’S ECONOMY GOES UP A GEAR

Recent economic data confirm our view that the business cycles in the large
South American economies have bottomed out and are on course for healthy
acceleration in the coming quarters.

In Argentina, economic activity expanded by 0.7% m/m in July, taking year-on-
year growth to 4.5%, significantly above consensus and our own expectations
(3.5%).

In Brazil, the unemployment rate fell to 12.6% in August, six months earlier
than we had expected it to do so. This, together with low inflation and interest
rates, has helped to start a recovery in consumer spending and GDP. In Chile,
economic activity grew by 1.8% q/q in the rolling quarter to August (2% y/y),
leading us to revise up our 2017 GDP growth forecast to 1.7% (from 1.3%
previously). The recent pace of growth has not been seen since 2013, before
the commodity “super-cycle” boom faded (which left most Latin American
economies in vulnerable positions).

In Colombia, economic activity is still far from reaching cruising speed, but the
worst part of the country’s macroeconomic adjustment after a severe terms-of-
trade shock is now over.

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European Tourism in 2017: Trends & Prospects (Q3/2017)

Latin America: Monthly Activity Indicators
% y/y, 3-m moving average

8 Colombia Mexico Brazil Argentina Chile
6
4
2
0
-2
-4
-6
-8
Feb/12 Jan/13 Dec/13 Nov/14 Oct/15 Sep/16 Aug/17
Source : Oxford Economics/Haver Analytics

TURKEY GROWTH REVISED UP, BUT CLOUDS GATHER
GDP grew by 5.1% y/y in Q2, extending the momentum from the (revised)
5.2% growth achieved in Q1 and keeping Turkey among the fastest-growing
ofthe major emerging market economies. And the monthly indicators suggest
that momentum continued into Q3, leading us to raise our growth forecast for
2017 to 5% from 4% previously. But the expiry of the stimulus programmes and
the using up of the credit guarantee fund will lead to a drop-off in growth in Q4,
and a slowdown to 3.5% in 2018.

Turkey: Headline and core inflation
% change, y/y
14
Headline Core
12

10

8

6

4 Official target

2

0
2010 2011 2012 2013 2014 2015 2016 2017
Source : Oxford Economics/Haver Analytics

Meanwhile, monetary policy will remain tight this year. We think the rise in
inflation to 11.2% in September will prove temporary, but more worrying is a
rise in core inflation to a 13-year high. Disinflation will now likely proceed at a
slower pace than previously hoped, with inflation falling to 8.5% by end-2018
(up from our earlier forecast of 8.3%), and remaining structurally high and
sticky.

CEE LIFTED BY IMPROVED OUTLOOK FOR EUROZONE
Momentum remains strong in the CEE, as the region is benefitting from both an
improved outlook for the Eurozone economy and strong domestic demand. As

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European Tourism in 2017: Trends & Prospects (Q3/2017)

such we continue to see 2017 growth at somewhat above-consensus 4.3% in
Poland, 4.6% in the Czech Republic and 3.7% in Hungary.

The Czech Republic is increasingly showing signs of overheating, with nominal
wage growth reaching 7.6% y/y in Q2, the CPI at 2.7% in September (above
the 2% target, with core CPI also overshooting the target, at 2.6%), and
unemployment at the lowest level in Europe, at only 2.9%. In view of the latest
data releases, we have pushed forward our forecast for the next rate hike (of
25bp) from Q1 2018 to November this year.

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European Tourism in 2017: Trends & Prospects (Q3/2017)

8. APPENDIX 1
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;

3mth mav – Three month moving average.

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;

OBR – Office for Budget Responsibility;

PBoC – People’s Bank of China.

Economic indicators and terms

BP – Basis Point. A unit equal to one hundredth of a percentage point;

Broad money – Key indicator of money supply and liquidity including currency holdings as
well as bank deposits that can easily be converted to cash;

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European Tourism in 2017: Trends & Prospects (Q3/2017)

CPI – Consumer Price Index. Measure of price inflation for consumer goods;

FDI – Foreign Direct Investment. Investment form one country into another, usually by
companies rather than governments;

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 – Quantitative 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 the United States, the United
Kingdom, France, Germany, Italy, Canada, and Japan.

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European Tourism in 2017: Trends & Prospects (Q3/2017)

9. APPENDIX 2
ETC MEMBER ORGANISATIONS

Austria – Austrian National Tourist Office (ANTO)
Belgium: Flanders – Tourism Flanders
Wallonia – Wallonie-Belgique Tourisme (WBT)
Bulgaria – Bulgarian Ministry of Tourism
Croatia – Croatian National Tourist Board (CNTB)
Cyprus – Cyprus Tourism Organisation (CTO)
Czech Republic – CzechTourism
Denmark – VisitDenmark
Estonia – Estonian Tourist Board - Enterprise Estonia
Finland – Visit Finland – Finpro Ry
Germany – German National Tourist Board (GNTB)
Greece – Greek National Tourism Organisation (GNTO)
Hungary – Hungarian Tourism Ltd.
Iceland – Icelandic Tourist Board
Ireland – Fáilte Ireland and Tourism Ireland Ltd.
Italy – Italian Government Tourist Board
Latvia – Latvian Tourism Development Agency (TAVA)
Lithuania – Lithuanian State Department of Tourism
Luxembourg – Luxembourg for Tourism (LFT)
Malta – Malta Tourism Authority (MTA)
Monaco – Monaco Government Tourist and Convention Office
Montenegro – National Tourism Organisation of Montenegro
Norway – Innovation Norway
Poland – Polish Tourist Organisation (PTO)
Portugal – Turismo de Portugal, I.P.
Romania – Romanian Ministry of Tourism
San Marino – State Office for Tourism
Serbia – National Tourism Organisation of Serbia (NTOS)
Slovakia – Ministry of Transport and Construction of the Slovak Republic
Slovenia – Slovenian Tourist Board
Spain – Turespaña - Instituto de Turismo de España
Switzerland – Switzerland Tourism
Turkey – Ministry of Culture and Tourism

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