Tourism in spotlight as demand weakens

The economic downturn, extreme market volatility and a decline in both consumer and business confidence are expected to continue taking their toll on demand for tourism, a leading organisation has warned.

The downturn is forecast to last at least in the short to medium term, warned the United Nations World Travel Organisation.

The UNWTO’s World Tourism Barometer predicts:

• Many businesses are expected to retrench, and any such retrenchment will be quickly felt in consumer markets.
• Given the current stress on many companies’ balance sheets, business travel is also expected to be more adversely impacted than the leisure segment.
• Unlike previous crisis such as with 9/11 and SARS, the current downturn does not impact on the desire to travel. The major concern is about whether one can afford to travel or want to spend on it given the uncertain economic situation.

“So far international tourism has resisted the downturn better than other economic sectors such as construction and real estate or car manufacturing,” the report released at World Travel Market in London states. 

It points out that traffic to closer destinations, including domestic travel, is expected to be favoured compared to long-haul travel.

Segments such as visiting friends and relatives, repeat visitors, as well as special interest and independent travellers are expected to be more resilient.

The decline in average length of stay as well as on expenditure is projected to be more pronounced than in the overall volume.

Destinations offering value for money and with favourable exchange rates have an advantage as price becomes a key issue.

Companies “will and should” concentrate on containment of cost in order to keep their competitive edge.

“More than ever it is necessary to closely work together in the tourism value chain, between public and private sector, and destinations with trade,” the UNWTO says.
 
The barometer confirms the rapid slowdown of international tourism growth since the summer, reflecting the impact of rising oil prices at the start of the year and the deterioration of the economic situation as well as of consumer confidence in recent months.

Overall growth for this year is still projected at around two per cent, building on the strong results of the first five months.

For the first eight months of 2008, growth averaged 3.7% compared with the same period in 2007. Growth in Europe stagnated over the northern hemisphere summer months. 

by Phil Davies