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THE NEW REALITY FOR TRAVEL & TOURISM? UFI IBRAHIM CHIEF OPERATING OFFICER WORLD TRAVEL & TOURISM COUNCIL Rising per capita incomes are a key driver of international tourism… World: Overseas trips and per capita incomes 0.16 2000 US$ 000s 6.5 0.14 6.0 Number of trips Real GDP per capita 5.5 0.12 0.10 0.08 Trips per heads 5.0 4.5 0.06 4.0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Source: Oxford Economics Air passenger declines waning International air passenger traffic growth % year, RPK 15 12 9 3mth mav 6 3 0 -3 -6 -9 RPK = revenue passenger kms -12 Jan-05 Jan-06 Source: IATA Jan-07 Jan-08 Jan-09 Total Demand Personal T&T Business Travel Capital Investment Visitor Exports -8 -6 -4 -2 0 Ten Year 2009 2008 2 4 6 World: Travel & Tourism Economy GDP growth % year 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 Jan 2009 forecast -2.0 -3.0 -4.0 1999 2001 2003 Source: Oxford Economics 2005 2007 2009 2011 2013 Intl Visitor Flows -Yr to date: UNWTO World: -7.4% Europe: -8.4% Asia Pacific: -6.5% Americas: -6.7% Africa: +4.4% Middle East: -13.4% WHEN AND WHERE WILL RECOVERY & GROWTH COME FROM IN SHORT/MED TERM? • IMF states France and Germany already on path of recovery? Returned to growth. • Emerging economies are even stronger. China and India. While still below developed countries in ten years’ time… World: GDP per capita US$ 2000 prices at Purchasing Power Parities 50,000 US Eurozone 45,000 Brazil Russia 40,000 India China 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1990 2000 Source : Oxford Economics/Haver Analytics 2009 2020 … Growth of BRICs’ per capita incomes are catching up rapidly… BRICs: GDP per capita US$ 2000 prices at Purchasing Power Parities 25,000 Brazil Russia India China 20,000 15,000 10,000 5,000 0 1990 2000 Source : Oxford Economics/Haver Analytics 2009 2020 …resulting in surge in Chinese trips abroad… Chinese outbound tourism market Tourist mn 125 100 US$ bn 125 Outbound Chinese tourists (LHS) Travel spend (RHS) 100 75 75 50 50 25 25 0 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Oxford Economics 2020 …with similar trends likely across the other BRICs BRICs: Residents' trips abroad Millions 120 100 Brazil Russia India 80 China 60 40 20 0 2000 Source : Oxford Economics 2009 2020 Take note of India... • 10.7 million outbound trips in 2008 annual growth of 12% per annum since 1998 • 40% business, 20% VFR, 20% leisure • US$1.7bn spending in 1998; US$9.6bn in 2008 – nearly six fold increase • Total trip volume doubled in 5 years A world full of regulation... • Tax, tax and more tax • Environmental Legislation local, national, regional or international? Or all the above? Value-trotters... “globally aware, environmentally-conscious, technologically-savvy, timepoor individuals who are spoiled by a wide range of choice and consider themselves good world citizens.” University of Maryland Programme on international policy attitudes World Public Opinion Survey(2009): 19 nations 18,578 people 73% want higher priority for climate change 77% Britons want greater government intervention 44% of US Citizens want climate change to be a major preoccupation of the Obama administration Findings taken from Maryland University Programme on International Policy Attitudes, World Public Opinion Survey In China - 94% supported the need for government to keep climate change on the front burner. And in India, 59% of the public wanted their government to make climate change a top priority. Findings taken from Maryland University Programme on International Policy Attitudes, World Public Opinion Survey ‘Take it for granted?’ The Tipping Point The International Ecotourism Society states that ecotourism is growing at three times the rate of traditional vacationing, increasing annually up to 30% Risk Free? What could be the impact of a real H1N1 pandemic? The swine flu epidemic so far Affected: Americas, esp. Mexico Asia, fear of SARS repeat and government stern response Swine flu epidemic so far Reported cases ('000s) Reported deaths 400 4000 Deaths (RHS) 350 300 250 3500 3000 2500 Cases (LHS) 200 150 2000 1500 100 1000 50 500 0 28- 12- 26923Apr- May- May- Jun- Jun09 09 09 09 09 0 7Jul09 Source : WHO updates, last data 13 Sep 21Jul09 4181Aug- Aug- Sep09 09 09 Globally visitor exports fall 60% vs base forecast (US$620bn) The epidemic also hits domestic tourism, causing losses to the industry beyond the fall in foreign visitors “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change” Charles Darwin