In 2005 international tourism sustained the
sharp upturn that began in 2004 in spite of the various tragic events it
had to contend. According to preliminary results presented by the
United Nations specialized agency, the World Tourism Organization (UNWTO)
the number of international tourist arrivals recorded worldwide grew by 5.
5% and exceeded 800 million for the first time ever.

Although 2005 was certainly a tumultuous year, international tourism has
fared amazingly well. Despite various terrorist attacks and natural
disasters, such as the aftermath of the Indian Ocean tsunami and an
extraordinarily long and strong hurricane season, the recovery, which
started in 2004, continued firmly through 2005. Even though the disruptions
experienced definitely left traces locally in the short-term, they did not
substantially alter the global or regional traffic flows. Based on detailed
results for a large number of destinations included in the January issue of
the UNWTO World Tourism Barometer the number of international tourist
arrivals in 2005 is estimated at 808 million, up from 766 million in 2004.
This corresponds not only to an increase of 5.5%, but also means a
consolidation of the bumper growth achieved in 2004 (+10%). Although growth
was more moderate, it still almost 1.5 percentage points above the
long-term average annual growth rate of 4.1%.

UNWTO Secretary-General, Francesco Frangialli commented “The tourism
sector has gained substantially in resilience over the past years. In spite
of the turbulent environment we live in nowadays, destinations worldwide
added some 100 million international arrivals between 2002 and 2005.”

Results by region

Africa led the way in 2005, with growth estimated at 10%. Growth was
stronger in Sub-Saharan Africa (+13%) with particularly remarkable results
for Kenya (+26% between January and October compared with the same period
of the previous year) following an already buoyant 2004, and Mozambique
(+37% Jan-Sep). South Africa (+11% Jan-Aug) as well as the island
destinations of Seychelles (+7%) and Mauritius (+6%), all improved on their
2004 results. In North Africa growth continued, but at a more moderate pace,
with Tunisia recording an increase of 8% between January and November and
Morocco 5% for the full year.

Growth in Asia and the Pacific averaged 7%, following the exceptional
post-SARS rebound in 2004 (+27%). North-East Asia (+10%) emerged as the
most dynamic subregion with the strongest performers being Taiwan (pr. of
China) (+15% Jan-Oct), China (+13% Jan-Nov) and Japan (+9% Jan-Nov). In
South-East Asia (+4%), Oceania (+4%) and South Asia (+4%), results overall
were more modest and above all rather mixed. Cambodia (+35% Jan-Nov), Lao
PDR (+27% Jan-Sep), Vietnam (+18%), the Philippines (+14% Jan-Oct) and
India (+13%) nevertheless managed to report remarkable growth. Among the
countries affected by the December 2004 tsunami tragedy, the Maldives
reported a 39% decrease up to November although the rate of decline has
eased in the last months. Arrivals to Indonesia were down by nearly 9%, as
the country suffered also from the October Bali bombing. Sri Lanka reported
only a slight 0.4% drop, although this result may in part be attributed to
the large number of Sri Lankan expatriates who visited the country in the
aftermath of the tsunami and to the flow of aid workers. As for Thailand,
although overall data up to June shows a 6% decline, arrivals at the
Bangkok airport registered 4% growth in the period through October.

In the Americas, growth reached 6% with North America (+4%) and the
Caribbean (+5%) slightly below the regional average. Of the major
destinations, the United States continued the recovery started in 2004 (+8%
Jan-Sep), while Mexico (+8% Jan-Nov) and Cuba (+13% Jan-Nov) still showed
above-average increases, even after having suffered the impact of last
year’s devastating hurricanes. Destinations in Central America (+14%) and
South America (+13%), on the other hand, can look back on a very positive
year. The strongest growth was reported by Venezuela (+23%) and Colombia
(+22%), while Argentina, Brazil, Chile, Paraguay, Peru, Costa Rica, El
Salvador, Guatemala, Honduras and Nicaragua all recorded, or were on their
way to record, growth rates of between 10 -20%.

Following the very strong performance over the past couple of years, the
Middle East seems to have entered a more moderate phase of growth, with the
increase for 2005 estimated at 7%. Egypt (+6%), Dubai (United Arab
Emirates) (+7% Jan-Sep) and Jordan (+5%) are all close to the regional
average, while Bahrain (+11% Jan-Sep), Saudi Arabia (+21% Jan-Jun) and
Palestine (+45% Jan-Sep, albeit from a small base) are on their way to
exceeding it. Available data, however, is rather limited and the picture
could certainly still change.

Europe recorded relatively modest growth of 4%, which is still one
percentage point above the long-term trend of the region. This result can
be considered very encouraging given the rather weak economy in some of its
major intra-regional source markets. Moreover, due to Europe’s already very
large base of over 400 million arrivals, in absolute terms it recorded the
largest increase corresponding to some 18 million arrivals. Growth was
strongest in Northern Europe (+7%), boosted by the United Kingdom (+10%
Jan-Nov), which was seemingly not notably affected by the London bomb
attacks. International tourist arrivals in Southern and Mediterranean
Europe increased by 6%. Turkey was the star performer in this subregion
with an increase of 20%, adding 3.4 million arrivals and passing the
20-million mark. Furthermore, Spain (+6%), Croatia (+7% Jan-Nov), Israel
(+26% Jan-Oct) and Serbia and Montenegro (+27% Jan-Oct) also recorded
respectable results. Western Europe and Central and Eastern Europe grew by
2% and 4% respectively. In Central and Eastern Europe, the Baltic states,
Latvia (+20%), Lithuania (+15% Jan-Sep) and Estonia (+7% Jan-Nov) stood out,
while, in Western Europe, the best results came from Germany (+6% Jan-Nov)
and Switzerland (+6% Jan-Nov).

Prospects for 2006

For 2006 the current pattern of gradually slowing growth is expected to
continue. In cooperation with the Fundación Premio Arce of the Universidad
Politécnica de Madrid a short-term forecast has been elaborated according
to which international tourist arrivals worldwide are expected to grow
between 4 - 5% in 2006. Growth is projected to be around one percentage
point lower than in 2005 but still somewhat above the forecast long-term
annual growth rate of 4.1%. This outlook is supported by the continued good
shape of the world economy in most parts of the world and the improved
prospects for the eurozone economies, in particular its most important
source market Germany.

Three major uncertainties remain for 2006. First, it is likely that
terrorism will continue to be present. However, experience shows that its
impact lately has been rather limited and short-lived. Travellers overall
have assumed the risk and have been undeterred by external threats.
Secondly, rising energy prices, inflation and interest rates might finally
change the economic scenario. This has not been much of a problem until now,
as the price hike has mostly been an expression of the strong economic
growth and the corresponding demand for energy. Should this situation
continue and affect economic growth in Asia, the tourism industry could
start feeling the impact.

Finally, the further spread of avian flu could be a serious threat for the
tourism sector. Avian flu has been present in the world for several years
now and it is currently limited to birds and isolated cases of people
living in very close contact with infected animals. As yet no transmission
of the virus between humans has been detected and it is hard to say whether,
when and where such a mutation will occur. For the moment there is no
reason to change travel plans as long as recommendations issued by national
and local health and veterinary authorities are respected.

“Panic is always a bad advisor”, says Mr. Frangialli. “What we can do is
to monitor the situation closely and prepare for it, should it happen. In
spite of the current uncertainties I am confident that world tourism and
all its stakeholders will weather the storm   if it does come   in the best
way possible.”
——-