“Global Tourism Quarterly” from DRI-WEFA.

12th Oct 2001

DRI-WEFA, Inc., a subsidiary of privately held Global Insight, Inc., has released its third quarter 2001 publication, “Global Tourism Quarterly.” The publication, available by subscription from the DRI-WEFA Global Tourism Navigator Service, provides in-depth analysis of the travel and tourism business sector worldwide.

The report focuses on each world region and indicates recovery from the initial shock will be quick over the coming few months and Americans should begin traveling en masse again before the end of the year. However, the “recovery” will still be below levels previously set in 2000 and the first half of 2001, as the U.S. and world economies continue to slow.

According to the report, that although the impact on travel and tourism worldwide has been significant, a careful review of travel patterns, comparable recoveries historically, and the economic outlook provide a picture that predicts a “V-shaped” recovery, with the majority of the losses recouped by the end of 2002.

The immediate impact of the terrorist attacks on the U.S. is predicted to be around $76.6 billion through 2002. The loss in 2001 will be equal to 10.5% of total travel spending last year. The majority of the declines will be within the U.S. domestic travel market with a total impact of $46.3 billion, or 9.6% of total domestic expenditures last year. International inbound travel, which yielded $103 billion last year, will sustain losses of $15.5 billion this year, or 15% of last year`s spending. About 80% of the impact will occur in the third and fourth quarters of this year. The remaining impact will be largely attributable to the resulting economic downturn and will primarily affect international origin markets.

The airline sector has been the hardest hit with capacity cuts of 20% and approximately 85% of companies anticipating continued cutbacks in travel spending averaging 35%. Barring September and October, this is mainly attributable to overall economic decline. The hospitality industry is expected to have a fourth quarter decline of 15% from last year.


According to Adam Sacks, principal of DRI-WEFA`s Travel & Tourism group, “We expect the impact on the domestic market to be softened by would-be international trips which are being substituted with domestic travel.” He continued, “Although marginal compared to that of the U.S., the impact globally will also be significant, but will vary region to region. The ongoing problem lies largely in the economic environment facing the world`s major travel source markets.”

There are two main considerations for an optimistic outlook as the global landscape of capacity cutbacks and layoffs is surveyed. The first is the historic resilience of the traveler. The traveler`s courage will soon return, and in less time than most analysts are now predicting. The second consideration is the economic tide, which is currently approaching its low point. The good news for the U.S. and the rest of the world is that the stage is being set for a strong economic recovery by mid-2002. A tourism recovery will follow with a six-month lag.

For these reasons, DRI-WEFA expects the following recovery trends over the coming 12 months:

—U. S. outbound travel remains depressed over the next four quarters, with marginal improvements, before coming back strongly in the fourth quarter of 2002.

—U. S. inbound travel begins to regain ground in the second quarter of 2002, with a recovery gaining momentum into 2003.

—Intra-European travel grows slightly in 2002, as the economy remains
lackluster. A pickup is set for 2003.

—The Caribbean will recover strongly in the fourth quarter of 2001 and first quarter of 2002, as reduced airfares and other incentives draw back the leisure traveler.

More details on the Global Tourism Study are available on the DRI-WEFA website at www.dri-wefa.com



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