Tsunami Impact on Travel & Tourism is Significant but Limited
The World Travel & Tourism Council (WTTC) released its 2005 Travel & Tourism forecasts for 174 countries and the world and an assessment of the impact of the Indian Ocean Tsunami on the industry today at the 5th Global Travel & Tourism Summit in New Delhi, India.Releasing forecasts prepared on its behalf by Oxford Economic Forecasting, which follow the United Nations standard for Tourism Satellite Accounting, the WTTC reported that the record robust recovery started in 2004 should continue through 2005 at a healthy rate. WTTC also reported that the December 2004 tsunami, which struck some tourism destinations around the Indian Ocean, had a significant, but limited overall impact on the tourism economies.
Worldwide for 2005, WTTC is forecasting:
Demand: Encompassing all components of Travel & Tourism consumption, investment, government spending and exports is expected to grow 5.4% (real terms) and total $6.2 trillion in 2005. The ten-year annualized growth (2006-2015) forecast is 4.6% per annum illustrating the outlook for strong long-term growth.
Visitor Exports: The continued strength of the Pound and Euro against the US dollar, is expected to push Visitor Exports to nearly $820 billion in 2005 or real growth of 7.3%.
GDP: Travel & Tourism’s contribution to the world economy is illustrated by the direct industry impact of 3.8% of total GDP and the combined direct and indirect impact of the Travel & Tourism economy expected to total 10.6% in 2005.
Employment: The global Travel & Tourism industry is expected to produce 2.1 million new jobs in 2005 over it’s 2004 level to total 74.2 million jobs or 2.8% of total world employment. The broader perspective of the Travel & Tourism economy (direct and indirect) is expected to create more than 6.5 million new jobs for the world economy for a total of 221.6 million jobs dependent on Travel & Tourism or 8.3% of total employment.
WTTC President, Jean-Claude Baumgarten said, “We turned the corner in 2004 and it’s full steam ahead for Travel & Tourism in many countries and regions around the world. Much of the pent up demand from three previous years of terrorism, war and health concerns has been released in a record level of Travel & Tourism demand. Consumers and business travelers have voted their confidence in the economy by returning to holidays and business trips in massive numbers. We’ve haven’t seen such a rebound in Travel & Tourism growth for quite some time, it’s really quite exciting. For 2005 we expect the rebound to continue at a sustainable pace.”
Speaking about the impact of the tsunami on the industry, Mr. Baumgarten continued, “The tsunami was perhaps the most tragic humanitarian crisis of our lifetime. Fortunately we have seen a massive response from governments and industry to this tragedy. Although a number of Travel & Tourism destinations and businesses suffered significant loss, steps are well underway to restore these destinations and bring back the visitors. The key is to inform and educate potential visitors about what is open and available for business. The sooner visitors return to affected areas, the sooner these economies will recover. Each and everyone of us can do our part to rebuild and restore these economies by returning to our regular Travel & Tourism routines.”
At the press event, the WTTC released its 2005 Top Ten List of Travel & Tourism economies. For the second year in a row Montenegro has placed first as the fastest growing Travel & Tourism economy in the world. India and China placed second and third respectively illustrating the impact of the emerging middle-classes has on Travel & Tourism growth.
Travel & Tourism Demand, 2006-2015
(% Annualized Real Growth)
1 Montenegro 9.9
2 China 9.2
3 India 8.6
4 Reunion 8.3
5 Croatia 7.8
6 Sudan 7.7
7 Vietnam 7.7
8 Laos 7.6
9 Czech Republic 7.5
10 Guadeloupe 7.2
WTTC also released its special assessment of the December 2004 Tsunami on three Indian Ocean economies: Maldives, Sri Lanka and Thailand. In each case, the analyses showed significant declines in visitor exports, while increases were reported in government expenditures and capital investment for marketing, promotion, recovery and rebuilding efforts to assist the industry.
* In The Maldives, Visitor Exports are expected to fall 29.9% from pre-Tsunami growth forecasts for 2005, while Government Expenditures and Capital Investment are expected to increase 6.6% and 14.6% respectively. The bottom-line impact for The Maldives is a loss of 30.4% or US$55 million in industry contribution to 2005 GDP and 10,440 jobs.
* In Sri Lanka, Visitor Exports are expected to fall 21.4% from pre-Tsunami growth forecasts for 2005, while Government Expenditures and Capital Investment are expected to increase 13.1% and 12.8% respectively. The bottom-line impact for Sri Lanka is a loss of 14.1% or US$201 million in industry contribution to 2005 GDP and 66,840 jobs.
* In Thailand, Visitor Exports are expected to fall 22.8% from pre-Tsunami growth forecasts for 2005, while Government Expenditures and Capital Investment are expected to increase 5.1% and 4.7% respectively. The bottom-line impact for Thailand is a loss of 16.7% or US$1.2 billion in industry contribution to 2005 GDP and 94,780 jobs.
Richard Miller, Executive Vice President of WTTC said, “The total impact of the Dec tsunami on 2005 Travel & Tourism is expected to approach US$ 3 billion and cost more than one quarter millions jobs. In most cases the jobs will be recovered as soon as traffic begins to return to the affected areas, but in the meantime the economies will continue to suffer. Although the impact of the tsunami has been significant, it is generally limited for Travel & Tourism to a short list of specific destinations.”
The WTTC report shows that the impact of 9/11 in the United States was 37.5 times larger in monetary terms than the tsunami and 2.8 times larger in terms of impact on employment. The impact of SARS in Hong Kong equals 40% of the tsunami monetarily and 10% in terms of impact on employment. The Bali bombing in 2002 equals 20% of the tsunami impact monetarily and was 1.8 times larger in terms of impact on employment.
WTTC has posted its 2005 research on its website www.wttc.org for immediate access.