European Tourism in 2018: APRIL 2016

European Tourism in 2018: Trends & Prospects (Q2/2018)
EUROPEAN TOURISM IN
2018
TRENDS & PROSPECTS
APRIL 2016
EUROPEAN TOURISM IN 2018:

TRENDS & PROSPECTS
Quarterly Report (Q2/2018)
A quarterly insights report produced for the Market Intelligence Group

of the European Travel Commission (ETC)
by Tourism Economics (an Oxford Economics Company)
Brussels, July 2018

ETC Market Intelligence Report
1
Copyright © 2018 European Travel Commission
All rights reserved. The contents of this report may be quoted, provided the source is given accurately
and clearly. Distribution or reproduction in full is permitted for own or internal use only. While we
encourage distribution via publicly accessible websites, this should be done via a link to ETC's
corporate website, www.etc-corporate.org, referring visitors to the Research/Trends Watch section.
The designations employed and the presentation of material in this publication do not imply the
expression of any opinions whatsoever on the part of the Executive Unit of the European Travel
Commission.
Data sources: This report includes data from the TourMIS database (http://www.tourmis.info), STR,
IATA, AEA, and UNWTO.
Economic analysis and forecasts are provided by Tourism Economics and are for interpretation by
users according to their needs.
Published and printed by the European Travel Commission

Rue du Marché aux Herbes, 61, 1000 Brussels, Belgium
Website: www.etc-corporate.org
Email: info@visiteurope.com
ISSN No: 2034-9297
This report was compiled and edited by:

Tourism Economics (an Oxford Economics Company)
on behalf of the ETC Market Intelligence Group
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Szechenyi Chain Bridge, St.Stephen's Basilica, Hungarian Parliament and Matthias Church at sunrise
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2
TABLE OF CONTENTS
Foreword ............................................................................................................. 4
1. Tourism Performance Summary 2018 ............................................................ 7
2. Global Tourism Forecast Summary .............................................................. 10
3. Recent Industry Performance ....................................................................... 11
3.1 Air Transport .......................................................................................... 11
3.2 Accommodation ..................................................................................... 14
4. Special Feature: South Korean Outbound Travel in 2018 ............................ 16

5. Key Source Market Performance .................................................................. 20
5.1 Key Intra-European Markets .................................................................. 20
5.2 Non-European Markets .......................................................................... 26
6. Origin Market Share Analysis........................................................................ 30

6.1 United States.......................................................................................... 31
6.2 Canada ................................................................................................... 32
6.3 Mexico .................................................................................................... 33
6.4 Argentina ................................................................................................ 34
6.5 Brazil ...................................................................................................... 35
6.6 India ....................................................................................................... 36
6.7 China ...................................................................................................... 37
6.8 Japan ..................................................................................................... 38
6.9 Australia ................................................................................................. 39
6.10 United Arab Emirates ........................................................................... 40
6.11 Russia .................................................................................................. 41
7. Economic Outlook ......................................................................................... 42

7.1 Overview ................................................................................................ 42
7.2 Eurozone ................................................................................................ 44
7.3 United Kingdom...................................................................................... 45
7.4 United States.......................................................................................... 46
7.5 Japan ..................................................................................................... 47
7.6 Emerging Markets .................................................................................. 48
8. Appendix 1 .................................................................................................... 52
9. Appendix 2 .................................................................................................... 54
3
FOREWORD
EUROPEAN TOURISM MAINTAINS ITS MOMENTUM TOWARDS THE
SUMMER PEAK SEASON
European tourism demand remains robust, continuing the trends observed

earlier in the year. Despite a projected slowdown in the global economy,
destinations in Europe saw solid growth that paved the way for an encouraging
summer season. Year-to-date results have been mainly driven by strong intra-
European and long-haul travel demand, increased air connections and
destinations’ efforts to ensure year-round tourism growth.
Sustained growth has been recorded by all (33) reporting destinations, out of
which one third saw growth in excess of 10%. Turkey (+33%) is enjoying a
strong recovery – following a bleak 2016 and 2017 – as perceptions of risk
weaken and the transcontinental destination opens to new markets and
diversifies its offering.
A mix of Balkan and island destinations also saw substantial increases from a
wide range of source markets during the off-peak seasons. Croatia was up
+27% trailed by Montenegro (+22%), the latter also benefitted from increased
air routes connected to some of Europe’s largest source markets. Arrivals
growth in Malta (+18%) and Cyprus (+15%) appears to be fuelled also by the
surge in cruise passengers.
Foreign visits to select destinations

2018 year-to-date*, % change year ago
Source: TourMIS *date varies (Jan-May) by destination
Iceland (+6%) grew at a more moderate pace compared to recent years,

easing concerns about capacity and infrastructure constraints. Traditional
hotspots such as Spain (+2%) and Portugal (+4%) reported a moderate
increase. Both destinations saw declines from some of their largest European
source markets (e.g., Germany and the UK). Eastwards, Bulgaria (+12%) also
saw standout growth due to favourable perception of affordability.
4
RECENT INDUSTRY INDICATORS SUGGEST ANOTHER POSITIVE YEAR

SUSTAINING TRAVEL DEMAND
Global travel demand continues to edge up even as airlines face increased fuel
prices that may lead to higher fares. Air traffic growth across the Atlantic is
expected to remain steady helped by a strong economic growth in the US
despite volatile exchange rates rendering travel to parts of Europe less
affordable. Year-to-date European RPK is up 6.6% behind that of Asia/Pacific
(9.5%) which has been aided by increased air connectivity, and Latin America
(7.0%).
Annual International Air Passenger Growth 2016

% year, RPK
2017
12
2018
10
0
Africa Asia/Pacific Europe Latin Mid. East N. America World
America
Source: IATA
The accommodation sector in Europe also saw growth across all indicators.
Occupancy rates were up 1.3%, suggesting that hotels appear more confident
in raising prices without fear of deterring demand. Nominal growth in ADR
(0.2%), however, resulted in a 1.5% RevPAR increase.
LARGE INTRA-EUROPEAN AND LONG-HAUL SOURCE MARKETS

CONTINUE TO UNDERPIN THE REGION’S ARRIVALS GROWTH
Several destinations continue to benefit from strong travel demand from

Europe’s largest source markets – Germany, France, and the UK. Mainly island
and Eastern Mediterranean destinations – Croatia, Malta, Cyprus, and Greece
– saw the largest increases in German arrivals ahead of the summer peak
season. New direct flights have been the catalyst for dramatic German arrivals
growth in Montenegro (+63%). In France, setbacks may await as further flight
delays and cancellations are anticipated in June due to further air-traffic
controllers strikes. Travel from the UK continues to grow supported by better
exchange rates despite uncertainties about the outcome of Brexit negotiations.
5
European Tourism Demand by Origin

% change year
14
Total arrivals in ETC+4
12 From European markets
From long-haul markets
10
0
2011 2012 2013 2014 2015 2016 2017 2018
Source: Tourism Economics
Grounds for optimism about demand from long-haul source markets remains.
In the light of the 2018 EU-China tourism year, Chinese arrivals to Europe are
strong. Destinations that benefitted the most from an increase in Chinese
tourist flows are OBOR participants such as Serbia (+137%), up from a
relatively small volume, and Turkey (+98%). Serbia seems to be benefitting
from its visa waiver programme for Chinese citizens while Turkey’s share of
Chinese travellers is expected to be boosted by improved perceptions of
security and the declaration of 2018 as the “Turkey-China Tourism Year”.
Growth from this market is expected to trend around +9% in 2018 with 15 new
flights between China and Europe scheduled to start operations from May
2018. In the US, economic growth is projected to remain robust supporting
increased wages and private consumption. In this light, and despite an
environment of increased protectionism, travel flows from this market will
continue to support European tourism growth with visitor numbers forecast to
increase by 7.8% in 2018.
ENHANCING DIALOGUE TO STIMULATE TOURISM GROWTH AND

SOCIAL AND ECONOMIC DEVELOPMENT
European tourism continued the growth trend seen at the beginning of the year,
and travel demand to the region is showing no signs of slowing down. Despite
increased competition from fast-emerging destinations in Asia/Pacific, the
region enjoyed a +7% increase in international tourist arrivals during the first
four months of the year. Economic growth is projected to continue into 2018 for
most source markets which will fuel further travel demand. ETC’s forecast for
2018 remains positive with international tourist arrivals anticipated to increase
at a more moderate pace by around 4.9%. “In an ever-changing environment,
ETC encourages European destinations to work collaboratively with tourism
stakeholders and policy makers to develop strategic actions through innovative
practices that allow for more sustainable, and inclusive economic growth’’ said
Eduardo Santander, Executive Director ETC.
Jennifer Iduh (ETC Executive Unit)

with the contribution of the ETC Market Intelligence Group
6
1. TOURISM PERFORMANCE
SUMMARY 2018
Although Europe has started to feel the pinch from the slowing global economy
through weaker exports, tourism growth has continued into the second quarter
of 2018; all 33 reporting destinations indicated growth in either arrivals or
overnights.
For now, the economic growth in Europe remains strong enough to support
continued intra-European demand. But the effects of slower global economic
are more apparent in growth trends from long-haul source markets with a
33 higher than usual number of destinations reporting declines from long-haul
markets. However, on the whole, long-haul growth to Europe is still fairly fast-
The number of paced.
European destinations
reporting growth in 2018 to Foreign visits and overnights to select destinations Arrivals
date 2018 year-to-date*, % change year ago Nights
35
33 destinations have
reported on tourism 30
performance in 2018 25
20
15
10
5
0
Belgium
Malta
Turkey
Montenegro
Norway
Poland
Austria
Portugal
Denmark
Croatia
Cyprus
Serbia
Lithuania
Slovakia
Germany
Hungary
Italy
Slovenia
Netherlands
Czech Rep.
Sweden
Ireland Rep
Spain
Iceland
Latvia
Greece
Monaco
Switzerland
Bulgaria
Finland
Romania
Luxembourg
Estonia
Turkey’s recovery maintains its momentum (although it has slowed very slightly
compared to data from earlier in the year) with arrivals 32.5% higher in the first
four months of 2018 compared to the same period of 2017. Unlike its Russian-
centric recovery in 2017, growth so far this year has come from a wide-range of
source markets which will protect Turkey from the volatility of both its
relationship with Russia and its economy. In absolute terms, arrivals from most
markets remain well below prior peak levels, but, based on this year-to-date
data, Turkey should recover much of the ground lost in recent years. However,
presidential and parliamentary elections in late June may result in rallies and
demonstrations around the country, and some governments, including Britain’s,
have issued travel warnings to citizens. This has the potential to stall Turkey’s
recovery.
Growth to Montenegro has slowed slightly compared to earlier in the year, but
nonetheless remains much faster than in other similar destinations; arrivals
were 22.1% higher based on data to April compared to the same period a year
7
ago. This growth has been supported by a steady stream of new flights linking
Montenegro to some of Europe’s largest source markets.
Cyprus and Malta have also reported some significant arrivals and overnights.
Some of this growth has seemingly been driven by an increase in cruise traffic.
But similarly, strong growth in both arrivals and overnights suggests that this is
not the full story. Both destinations are likely benefitting from concerted efforts
to broaden the shoulders of the tourism season. Both have reported sizeable
growth from a range of source markets, including many large and more mature
European source markets. In addition, Malta may be enjoying some additional
benefit via its capital city of Valletta being a designated European Capital of
Culture for 2018.
The pace of growth in Croatia is second only to that in Turkey in the current
reporting, although data are still only available for the first three months of the
year. Much effort has been expended (and rewarded) in the pursuit of attracting
guests out of the summer season via digital campaigns, marketing, and PR
activities, and as a result both arrivals and overnights grew in excess of 25% in
the first quarter of 2018, and from a very broad range of markets.
A further eight European destinations have reported arrivals or overnights

growth (or both) in excess of 10% according to latest available data for 2018.
However, for many destinations, growth of this magnitude is not unprecedented
and merely represents a continuation of trend from previous years. Serbia, for
example, has reported double-digit arrivals growth for no less than the last five
years. Various cultural and entertainment programs in Novi Sad have boosted
its profile as a year-round city destination. Such programs will continue up to
and beyond Novi Sad’s tenure as European Youth Capital in 2019 and
European Capital of Culture in 2021.
2018 data indicate significantly slower tourism growth compared to prior years
for a selection of countries. Year-to-date arrivals growth to Spain and Portugal
based on data to April was significantly slower than average annual growth
since 2012 of 7.3% and 10.8% respectively. Declines were reported from a
number of large European source markets including Germany and the UK. In
absolute terms these falls are significant given the short-haul share of travel
demand for these destinations. By contrast, Turkey has enjoyed a massive
influx in both German and British visitors. This mirrors the situation in previous
years when travel to Spain and Portugal was thriving at the expense of Turkey
due to safety and security concerns.
Opposition to mass/over-tourism in Spain has been gathering steam and

protests have been promised during the summer months at tourism hotspots.
This, as well as some other smaller scale protests, may be deterring travel to
some regions of Spain. Year-to-date declines in international tourist arrivals are
notable in both Cataluña – where a significant amount of negative publicity has
been focussed – and Canarias, down 2.1% and 2.0% respectively according to
data to May. These two regions take the largest and second largest shares of
arrivals to Spain respectively, and thus declines in these regions are significant.
Growth the Balearic Islands was flat; however, other regions of Spain may be
benefitting with travel to the rest of Spain up over 5% including some significant
8
growth to Madrid and Valencia which has so far offset declines in Cataluña and
Canarias.
Travel to Iceland is also finally slowing, albeit still rising at a robust growth rate
of 5.6%. Capacity constraints may be starting to affect performance. This
change of pace also shows that past growth is not always the best guide to
future performance.
Tourism Performance, 2018 Year-to-Date

International Arrivals International Nights
Country % ytd to m onth % ytd to m onth
Austria 5.0 Jan-Apr 4.6 Jan-Apr
Belgium 8.4 Jan-Feb 7.3 Jan-Feb
Bulgaria 11.5 Jan-Apr
Croatia 26.9 Jan-Mar 29.4 Jan-Mar
Cyprus 14.5 Jan-May 21.0 Jan-Apr
Czech Rep. 10.6 Jan-Mar 7.9 Jan-Mar
Denmark 2.7 Jan-Apr
Estonia 2.8 Jan-Apr 5.1 Jan-Apr
Finland 7.9 Jan-Mar 6.6 Jan-Apr
Germany 5.1 Jan-Mar 5.9 Jan-Mar
Greece 12.8 Jan-Mar
Hungary 3.1 Jan-Apr 3.3 Jan-Apr
Iceland 5.6 Jan-May
Ireland Rep 7.3 Jan-Apr
Italy 0.0 Jan-Mar 1.3 Jan-Mar
Latvia 15.3 Jan-Mar 14.3 Jan-Mar
Lithuania 7.7 Jan-Mar
Luxembourg 1.4 Jan-Apr
Malta 18.1 Jan-Apr 17.9 Jan-Apr
Monaco -1.3 Jan-Apr 3.9 Jan-Apr
Montenegro 22.1 Jan-Apr 16.7 Jan-Apr
Netherlands 11.0 Jan-Feb 10.6 Jan-Feb
Norw ay 8.0 Jan-Apr
Poland 9.6 Jan-Apr 11.9 Jan-Apr
Portugal 3.6 Jan-Apr 1.0 Jan-Apr
Romania 6.7 Jan-Apr
Serbia 11.1 Jan-Apr 11.9 Jan-Apr
Slovakia 6.4 Jan-Mar 7.0 Jan-Mar
Slovenia 13.6 Jan-Apr 16.6 Jan-Apr
Spain 2.3 Jan-Apr -0.3 Jan-Apr
Sw eden 8.8 Jan-Apr
Sw itzerland 1.8 Jan-Apr 2.1 Jan-Apr
Turkey 32.5 Jan-Apr
Source: TourMIS, http://w w w .tourmis.info; available data as of 18.5.2018
Measures used for nights and arrivals vary by country
See TourMIS for further data including absolute values
9
2. GLOBAL TOURISM FORECAST

SUMMARY
Tourism Economics’ global travel forecasts are shown on an inbound and outbound basis in the
following table. These are the results of the Tourism Decision Metrics (TDM) model, which is updated
in detail three times per year. Forecasts are consistent with Oxford Economics’ macroeconomic
outlook according to estimated relationships between tourism and the wider economy. Full origin-
destination country detail is available online to subscribers.
GTS Visitor Growth Forecasts, % change
Inbound* Outbound**
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
data/estimate/forecast *** d e f f f d e f f f
World 3.9% 6.8% 5.2% 3.9% 3.9% 4.2% 6.4% 5.3% 4.1% 3.9%
Americas 3.9% 4.6% 4.3% 4.2% 4.1% 4.2% 6.5% 4.7% 3.4% 3.1%
North America 2.7% 4.6% 3.8% 3.5% 3.7% 3.3% 6.3% 4.8% 3.3% 3.0%
Caribbean 4.9% 2.0% 1.8% 5.3% 4.8% 9.5% 13.2% 2.2% 4.4% 4.3%
Central & South America 7.0% 6.2% 7.3% 5.6% 5.1% 6.9% 6.4% 4.6% 3.6% 3.5%
Europe 2.3% 8.2% 4.9% 2.8% 2.8% 3.7% 6.9% 5.4% 3.6% 3.4%
ETC+4 2.3% 8.7% 4.9% 2.5% 2.6% 4.5% 5.9% 5.3% 3.5% 3.2%
EU 4.8% 7.6% 4.6% 2.4% 2.5% 4.8% 5.9% 5.3% 3.4% 3.1%
Non-EU -7.2% 10.4% 6.2% 4.4% 4.2% -1.1% 11.2% 5.7% 4.6% 4.4%
Northern 6.5% 4.8% 3.6% 2.9% 2.5% 5.6% 3.6% 3.4% 3.1% 3.5%
Western -0.1% 7.9% 3.9% 1.8% 1.9% 2.5% 5.8% 5.5% 3.6% 3.0%
Southern/Mediterranean 1.1% 10.9% 6.0% 3.1% 3.2% 4.1% 8.1% 7.8% 4.0% 3.7%
Central/Eastern 4.6% 5.9% 5.0% 3.1% 3.7% 4.2% 12.7% 5.9% 3.9% 3.4%
- Central & Baltic 8.1% 8.5% 5.0% 1.8% 2.6% 9.2% 9.2% 4.9% 2.8% 2.4%
Asia & the Pacific 8.4% 6.0% 5.6% 5.1% 4.9% 6.7% 5.9% 5.4% 5.3% 5.4%
North East 8.6% 3.7% 4.2% 4.8% 4.8% 5.5% 6.5% 5.5% 5.5% 5.3%
South East 7.7% 7.9% 6.7% 5.2% 5.2% 9.9% 3.8% 5.6% 5.4% 5.7%
South 10.3% 14.1% 10.8% 7.5% 4.4% 9.3% 8.1% 4.8% 5.0% 6.3%
Oceania 9.0% 5.7% 5.0% 4.2% 4.6% 6.2% 5.5% 4.7% 3.3% 4.3%
Africa -0.4% 10.2% 9.2% 6.7% 5.6% 5.3% 3.7% 7.2% 4.9% 4.9%
Mid East 3.5% 0.7% 5.0% 6.0% 6.0% -5.7% 5.4% 5.3% 4.3% 3.5%
* Inbound is based on the sum of the country overnight tourist arrivals and includes intra-regional flows
** Outbound is based on the sum of visits to all destinations
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and Switzerland;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece, Italy, Malta, Montenegro, Portugal,
Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Poland,
Romania, Russian Federation, Slovakia, and Ukraine.
Central & Baltic Europe is Bulgaria, Czech Repub lic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, and Slovakia;
ETC+4 is all ETC members plus France, the Netherlands, Sweden, and the United Kingdom
10
3. RECENT INDUSTRY PERFORMANCE

2018 INDUSTRY PERFORMANCE IS ENCOURAGING SO FAR
 Data to April continue to suggest that 2018 is set to be another year of above trend
RPK growth – despite some slowdown from 2017.
 Hotel performance data for the year to May also suggest a more modest expansion is
underway in 2018 with some slowing growth in key destinations.
3.1 AIR TRANSPORT
Global air transport, measured in Revenue Passenger Kilometres (RPK), grew

by 7.0% this year to date compared to the same period in 2017, based on data
for the first four months of the year. This is now stronger than growth in 2016
but still not as strong as in 2017.
This would indicate that 2018 could be another year of above trend growth but
7.0% there are some concerns. Fuel costs are considerably higher than they were a
year ago and these are likely to be passed on, while labour cost pressures are
The rate of World RPK increasing in some countries. Furthermore, PMI surveys indicate that the pace
growth in 2018 to date of global growth has eased in recent months. That said, the economic
background remains broadly supportive of RPK growth.
YTD growth based on data
to April Annual International Air Passenger Growth 2016
% year, RPK
2017
12
2018
10
0
America
Source: IATA
Asia/Pacific continued to boast the strongest rate of RPK growth based on data
to April with air passenger demand to, from, and within the region 9.5% higher
compared to the same period a year ago. Growth has been supported by
strong regional economic and connectivity expansion connectivity, and this has
also benefitted other regions. For example, China’s fourth largest carrier is
commencing a new direct route between Beijing and Dublin. However, the a
slowdown in global economic activity will present a headwind in 2018.
11
Monthly International Air Passenger Growth Jan-18

% year, RPK
Feb-18
14
Mar-18
12
Apr-18
10
0
America
Source: IATA
Africa is now the slowest growing of all the regions with year-to-date growth to
April of only 2.9%. We still expect that this situation will improve as the year
progresses. Oxford Economics has nudged down its Nigerian GDP forecast for
2018 – but only marginally to 2.0% (from 2.1%) whilst the South African
economy lost some momentum in Q1 2018 in spite of improved confidence and
medium-term prospects remaining positive. Furthermore, the Egyptian tourism
industry is experiencing a recovery.
The Middle East (alongside North America) is the next slowest growing global
region with year-to-date growth to April of 4.9%. The blockade of Qatar, which
has now passed its first anniversary is clearly one factor in the relatively slow
regional RPK growth in the Middle East. The region’s RPK outlook might be
expected to improve once the initial impact of the proposed travel bans to the
US fall out the historical data.
International Air Passenger Traffic Growth Total

% year, RPK
20 3mth mav
15
10
-5
-10
-15
févr.-09
mai-10
févr.-14
oct.-10
mai-15
avr.-13
oct.-15
avr.-08
août-11
août-16
avr.-18
janv.-17
sept.-08
juil.-09
mars-11
janv.-12
sept.-13
juil.-14
mars-16
déc.-09
juin-12
nov.-12
déc.-14
juin-17
nov.-17
Source: IATA
European RPK growth slowed only moderately in year-to-date data to 6.6%

growth as the upward trend in demand continues. However, the slowdown in
12
Europe in April is especially marked with growth on the same month one year
earlier falling from 9.5% in March to 3.7%. IATA claims that the slowdown only
reflects developments one year ago.
North American traffic continues to pick-up from the levels of growth seen in
2016 and 2017. RPKs grew by 4.9% in the first four months of the year. The
US is on track to record its strongest GDP growth in four years and solid
fundamentals support this. However, the economy may well already have
reached its growth peak and President Trump’s isolated position at the G7
meeting in Canada and the imposition of tariffs may solicit a response.
International Air Passenger Traffic Growth N. America

% year, RPK
35 Europe
30 Asia/Pacific
25
20
15
10
5
0
-5
-10
-15
-20
févr.-09
mai-10
avr.-13
févr.-14
mai-15
avr.-08
avr.-18
oct.-10
août-11
oct.-15
août-16
janv.-12
janv.-17
sept.-08
juil.-09
mars-11
sept.-13
juil.-14
mars-16
déc.-09
juin-12
nov.-12
déc.-14
juin-17
nov.-17
Source: IATA
Trans-Atlantic demand is still lagging significantly behind Asia/Pacific demand

growth but should continue to support European growth throughout 2018. This
is despite exchange rate movements resulting in much of Europe being more
expensive for US travellers compared to 2017.
European Airlines Capacity

ASK, monthly average, % change year ago
9
8
7
6
5
4
3
2 2016 2017 2018
1
0
Q1 Q2 Q3 Q4
Source: IATA
Available Seat Kilometres (ASK) in Europe are currently up 4.3% on one year
earlier (based on data to April). Passenger load factors started 2018 high even
when compared to 2017 but - whilst it is too early to speak of a ‘levelling off’ –
13
April’s monthly load factor was rather less than might have been expected on
the basis of the earlier months of 2018, suggesting that growth and demand
might be falling more into line.
3.2 ACCOMMODATION
When compared to the same months in 2017, the period January to May 2018
1.3% saw occupancy growth in all regions – albeit minimal in the case of the Middle
East / Africa. Occupancy growth is slower than in previous years for most
Occupancy rate growth in destination regions with less spare capacity now evident. However, when
Europe in 2018 to date denominated in euros, all regions other than Europe saw declining ADR and
this far offset occupancy growth, driving declines in RevPAR.
YTD growth based on data
to May
Global Hotel Performance
Jan-May year-to-date, % change year ago
4
2
0
-2
-4
-6
-8 Occ
-10 ADR (€)
-12 RevPAR (€)
-14
Asia/Pacific Americas Europe Middle East/Africa
Source: STR
In the Asia/Pacific. Occupancy rates were 1.2% higher compared to the same
period of 2017. When denominated in US dollar terms, ADR was 8.0% higher
and RevPAR was 9.3% higher. However, with the dollar being about 12%
weaker than over the same months last year both ADR and RevPAR fell when
euro-denominated (by 3.9% and 2.8% respectively).
The weaker US dollar has also led to relatively more affordable rooms in the
Americas. Occupancy rates were up 1.0% in the first five months of 2018
compared to the same period of 2017. However, the occupancy increase was
insufficient to offset lower rates (down 8.3%) which resulted in lower RevPAR
(down 7.4%) when priced in euro terms.
The worst performing region was the Middle East / Africa. Occupancy barely
grew and, whilst falls in both ADR and RevPAR were minimal in dollar terms,
when expressed in euro terms they were significant with ADR falling by 11.5%
and RevPAR by 11.3%.
Hotels in Europe as a whole reported growth across all indicators for the first
five months of 2018. Occupancy rates increased by 1.3% compared to the
14
same period in 2017 which, when coupled with a marginal increase in ADR
(0.2%), yielded RevPAR growth of 1.5%. This continues the shift from previous
periods, when ADR has been the more important growth factor for RevPAR.
Lower pricing may be related to euro appreciation and relative loss of
competitiveness, as well as some discounting in shoulder months to drive
demand in these periods.
15
4. SPECIAL FEATURE: SOUTH

KOREAN OUTBOUND TRAVEL IN 2018
SOUTH KOREAN OUTBOUND TRAVEL TRENDS
Outbound travel from South Korea has grown strongly since 2000, with the only
Six times as many outbound exception being the brief dip associated with the Great Recession. There are
trips from South Korea now six times as many outbound trips from the country expected in 2018
expected in 2018 compared compared to 2000 and more than five times as many overnights. The
to 2000 composition of outbound travel has been changing too with the increased
participation of older age cohorts.
Outbound Travel from South Korea

000s
140.000
120.000
Trips
100.000 Overnights
80.000
60.000
40.000
20.000
0
2000 2003 2006 2009 2012 2015 2018
Globally, South Korean outbound travel accounts for nearly 31 million visits and
122 million nights. Of this, Europe receives 3.9 million visits and 13.2 million
nights, or around 13% of visits and nearly 11% of nights 1.
Europe‘s share of outbound visits from South Korea has been relatively
constant in the range 12-13% for the period 2000-18, but peaked in 2014 at
14.7%. Western Europe’s share of outbound travel from South Korea declined
from 8.0% to 5.1% before recovering to 8.2% by 2014 but has since fallen back
to 7.1%. Emerging Europe’s share of visits is erratic, peaking in 2007 at 7.7%
and again in 2014 at 6.5%, but now takes 5.6% of outbound visits from South
Korea. As well as the usual range of macro-economic drivers, volatility has
been driven by geopolitical factors as Korean travellers overall tend to be very
reactive to adverse events.
1 Based on 2017 figures of 29.8 million outbound trips and 118 million outbound nights.
16
KEY DRIVERS OF TRAVEL
Outbound travel growth has grown significantly faster than population and GDP
over the period 2000-18. While outbound travel volumes are six times larger
Outbound travel will continue than in 2000, real GDP has only doubled while population is largely unchanged.
to outpace wider economic However, over the same period, an estimated 4.5 million more households are
growth thanks to a rising now able to afford international travel. The proportion of households earning
proportion of middle class over an estimated threshold value increased from 35% to 50%.
households
The rapidly changing relationship between South Korea and North Korea may
also be affecting current trends. South Korea does not currently permit its
citizens to travel to the DPRK, but that situation may change rapidly given
apparent easing of relations. That changing relationship may also have
implications for domestic tourism in provinces close to the border.
Outbound travel demand in 2017 will have been affected by the October 2 nd
one-time holiday which extended the annual Chuseok holiday to a ten-day
period. Part of the motivation was to encourage spending and domestic tourism
but may also have yielded longer outbound trips.
Over the next ten years, real GDP is forecast to increase by 23%. However,
outbound travel is forecast to increase even more strongly; by nearly 53%,
driven by a further increase in the proportion of the population with enough
personal disposable income to travel. By 2027 it is estimated that outbound
trips will have increased from 30.6 million to 46.7 million despite minimal
population growth.
EUROPEAN SHARE OF KOREAN TRAVEL DEMAND
The Asia-Pacific region is forecast to take an even larger share of South

Korean outbound up to 2027, as to will the Americas. But Europe’s share of
South Korea outbound is expected to fall as a result, with 10.8% of outbound
visits expected to touch down in Europe in 2027.
Europe is expected to take 1
in every 10 outbound trips
Outbound Travel from South Korea: Europe vs. Elsewhere
from South Korea in 2027 000s % market share
60.000 Non-Europe 13,0%
Emerging Europe
50.000 Western Europe 12,5%
European share of total
12,0%
40.000
11,5%
30.000
11,0%
20.000
10,5%
10.000 10,0%
0 9,5%
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Nevertheless, this falling share of outbound trips implies a significant increase

in the actual numbers: an additional 1.1 million South Korean visits to European
17
destinations, taking the total expected in 2027 to over 5 million and more than 7
million additional nights. Some increase in average length of stay is expected,
driven by some change in terms of destination mix, with faster growth to
Western Europe than to Emerging European destinations.
Over the past 15 years growth in South Korean arrivals to Europe has
outpaced overall growth in arrivals from long-haul source markets. South Korea
accounts for a growing share of European arrivals, even if Europe is losing
share of total South Korean outbound. The graphic below show growth for
‘trough to peak’ cycles in travel to Europe. South Korea has held up well as a
source market with only limited slowdown in the 2009-18 period than in the
previous 2003-08 period. Other long-haul markets slowed more on average.
Visits Growth to Europe: South Korea vs. Long-haul

% CAGR
South Korea
14
Long-haul
12
10
0
2003-08 2009-18
TRAVEL BY EUROPEAN DESTINATION
The usual trade-off between market size and growth is not immediately
apparent when looking at South Korean travel to European destinations. There
is some evidence of this looking at smaller (mainly Western European)
markets. However, for many destinations, we see an essentially flat relationship
whereby size has little or no impact on the rate of growth of arrivals and for the
larger markets there is some positive correlation. Most favoured destinations
are potentially also benefiting from being top of the list of new places to visit
among the new travelling class.
Turkey was the only destination to have seen declines in the 2010-18 period
due to its political situation and terror attacks in recent years. By contrast
Slovenia and Croatia both stand out having seen growth driven by television
programmes. In both cases, the baseline figures for visits from South Korea
were small, hence the very large CAGRs over the 2010-18 period.
18
South Korea Outbound Travel to Europe: Arrivals vs. Growth

CAGR, 2010-18
60%
50% Slovenia Croatia
40%
30%
Belgium Portugal
Finland Czech Rep.
20% Austria
Poland Switzerland
Sweden France
Russia
10% Netherlands
Spain Germany
Italy Slovakia UK
0%
Turkey
-10%
0 100 200 300 400 500
Arrivals, 2018 (000s)
TRENDS IN KEY EUROPEAN DESTINATIONS FOR SOUTH KOREAN

TRAVELLERS
Czech Republic signed a strategic partnership agreement in 2015. Currently

ranks first on visits but nights share is relatively low because of multi-
destination visits.
Croatia had a clear step change in time series between 2013 and 2014, driven
by a reality TV show.
France – and Paris in particular – has tended to be seen as a highly desirable

tourism destination but not without a dip over the period when terrorist attacks
were high on the minds of South Korean tourists, who tend to be sensitive to
security issues.
Germany has seen a slow - but far from dramatic – decline in both its share of
global visits from South Korea and its share of nights.
Austria has been keen to promote itself as a MICE for business tourists from
Asian countries. However, visits share from South Korea peaked in 2014 and
2015 and has since fallen back to 1.0%.
Since 2003 Switzerland Tourism has used K-Pop stars and celebrity
ambassadors to promote the country with particular activity in this area during
2015 and 2016, appealing to younger age Korean age cohorts.
Spain benefited from an upsurge, possibly as a result of a South Korean

sitcom but also through the country’s five million practising Catholics.
South Korean visits to the UK are strongly weighted towards London

(accounting for more than 80% of visits) with especially little current interest in
the ‘Rest of England’.
Italy does not make it into the Top 10 rankings for visits but it has the third
highest number of nights after France and the UK.
19
5. KEY SOURCE MARKET

PERFORMANCE
2018: SOME HEADWINDS, BUT GROWTH REMAINS STRONG
 All destinations have enjoyed arrivals growth in early-2018.
 For most destinations growth came from a well-balanced mix of intra-European and
long-haul source markets.
 A slowing global economy is beginning to weigh on tourism demand.
Trends discussed in this section in some cases relate to the first three months of the year although
actual coverage varies by destination. For the majority of countries March or April will be the latest
available data point. Further detailed monthly data for origin and destination, including absolute
values, can be obtained from TourMIS, http://tourmis.info.
5.1 KEY INTRA-EUROPEAN MARKETS
Travel growth from Germany was reported by 26 out of 32 European

destinations based on latest available 2018 data. A slowing global economy,
which has hit European exports, may begin to weigh on outbound travel growth
from Germany. But for now, consumers appear to be undeterred, with a handful
26 of destinations enjoying significantly higher visits from Germany compared to

the same period a year ago.
out of 32 destinations
Visits growth from Germany to Montenegro has ramped up compared to earlier
reported arrivals growth from
in the year as expected following the increase in the number of direct
Germany
connections between the two countries. Arrivals growth from Germany was
62.9% based on data for the first four months of the year, compared to 40.1%
for the first two months of the year. Overnights growth has accelerated from
33% in the first two months of the year to 91% based on data to April. Greater
frequency of flights between the two may be facilitating more flexibility in terms
of trip length.
Croatia also reported very strong growth in German arrivals and overnights
(75.5% and 62.4% respectively). In absolute terms growth of such magnitude is
significant since Germany is Croatia’s single largest source market, accounting
for around 17% of total arrivals in 2017. This growth should continue to expand
alongside the programmes of major tour operators.
Turkey continues to recoup some German demand, although in absolute terms

arrivals remain well below prior peak levels; 2017 arrivals were around 2 million
below 2015’s peak. Although growth has accelerated compared to earlier in the
year, arrivals are not expected to reach prior peak levels until after 2020. The
prospect of protests and demonstrations around the time of Turkey’s
presidential election in June are a potential hurdle.
Six markets reported declines in German arrivals and overnights compared to

last year while Monaco reported lower arrivals, but an increase in overnights.
20
Switzerland reported the largest falls and may have suffered due to its relative
lack of cost-competitiveness as a winter destination when pitted against the
likes of Bulgaria and Austria. Bulgaria in particular enjoyed robust arrivals
growth during the winter season from a range of source markets, including
Germany, helped by its relative cost-competitiveness.
German visits and overnights to select destinations Arrivals

2018 year-to-date*, % change year ago Nights
40
35
Montenegro, 62.9% (A) & 91% (N)
30 Croatia, 75.5% (A) & 62.4% (N)
25
20
15
10
5
0
Belgium
Malta
Montenegro
Turkey
Norway
Poland
Austria
Portugal
Denmark
Croatia
Cyprus
Lithuania
Netherlands
Hungary
Serbia
Italy
Slovakia
Slovenia
Monaco
Spain
Greece
Ireland Rep
Finland
Czech Rep.
Iceland
Switzerland
Latvia
Luxembourg
Sweden
Estonia
Bulgaria
Romania
-5
-10
The Netherlands provided a source of arrivals growth for 22 out of 29 reporting

destinations based on latest available 2018 data. Slovenia was recipient of the
22 fastest growth in relative terms; it reported arrivals growth of 73.2% and
overnights growth of 61.8% based on data for the first four months of the year.
Montenegro also reported significant arrivals growth, serviced by an increasing
number of direct flights between the two countries with more to come.
Netherlands
Norway, Iceland, Monaco, and Denmark were amongst a handful of
destinations which reported declines as Dutch travellers gravitated to more
relatively cost-competitive destinations. Lithuania also reported lower arrivals,
but this comes off the back of some strong growth in 2017. Travel to Portugal
was also down, likely as a result of travellers returning to Turkey.
21
Dutch visits and overnights to select destinations Arrivals

30
Slovenia, 73.2% (A) & 61.8% (N)
Lithuania, -26.6% (A)
20 Denmark, -28.9% (N)
10
Belgium
Austria
Montenegro
Turkey
Norway
Portugal
Denmark
Slovenia
Cyprus
Slovakia
Croatia
Malta
Poland
Hungary
Lithuania
Serbia
Czech Rep.
Spain
Switzerland
Germany
Sweden
Iceland
Monaco
Finland
Latvia
Romania
Luxembourg
Bulgaria
Estonia
-10
-20
The number of countries reporting growth from France as a proportion of total

reporting destinations has decreased compared to earlier in the year; data
23 made available for the Q1 report indicated that close to 90% of reporting
destinations had enjoyed some form of growth from France, however,
out of 33 destinations according to latest available data, this figure now sits just under 70%. Air Traffic
reported arrivals growth from Control strikes between March and May will have had an impact and further
France strikes planned for June are likely to exacerbate this slowdown in French
outbound travel demand.
Arrivals from France to Turkey grew by 40% based on data to April. This
represents significant acceleration since earlier in the year (29.5% growth was
reported based on data to February). Greece also reported some strong growth
(26.9% based on data to March). Both countries have seen the number of
French arrivals decline to a varying degree in recent years, and growth in 2018
represents recovery rather than true growth. This recovery appears to have
come at some cost to Spain, which has reported a decline in French arrivals. In
absolute terms, a decline of this magnitude is significant since in 2017 France
accounted for 14% of total arrivals to Spain. However, the summer season
beckons, and Spain may benefit from further strikes if French holidaymakers
opt to drive to a holiday destination rather than fly.
22
French visits and overnights to select destinations Arrivals

30
25 Turkey, 40% (A)

Greece, 35.6% (A)
20
15
10
0
Turkey
Norway
Denmark
Montenegro
Belgium
Slovakia
Austria
Malta
Portugal
Slovenia
Lithuania
Hungary
Italy
Poland
Luxembourg
Monaco
Croatia
Serbia
Netherlands
Germany
Switzerland
Czech Rep.
Spain
Cyprus
Ireland Rep
Greece
Iceland
Sweden
Finland
Romania
Latvia
Bulgaria
Estonia
-5
-10
Almost all destinations reported some form of growth from Italy based on latest
available 2018 data. Turkey has reported some strong growth as it recoups
ground lost over the past few years. Norway, Sweden, and many other
28 destinations on the Baltic coast have reported some strong growth, proving
their appeal as winter destinations.
The explosion of intra-European routes offered by low-cost carriers has allowed
Europeans to traverse the region with ease. However, some of Italy’s
Italy
neighbours have perhaps paid the price. Of the small number of destinations
which reported declines in Italian arrivals, almost all share a border with Italy
and can be considered ski destinations; heavy snowfall and high avalanche risk
across the western and southern Alps made both travel and skiing nearly
impossible. In addition, the increasing ease and decreasing cost with which
Europeans can now travel further afield has led to a fickler approach to
destination selection. Greater competition between destinations exacerbates
this.
Italian visits and overnights to select destinations Arrivals

30
25 Turkey, 41.1% (A)

Norway, 31.7% (N)
20 Serbia, -11.1% (N)
15
10
0
Turkey
Norway
Malta
Montenegro
Portugal
Denmark
Belgium
Austria
Lithuania
Slovakia
Hungary
Netherlands
Iceland
Ireland Rep
Cyprus
Croatia
Czech Rep.
Poland
Spain
Germany
Slovenia
Switzerland
Serbia
Sweden
Monaco
Latvia
Luxembourg
Bulgaria
Finland
Romania
Estonia
-5
-10
23
Travel demand from the UK has grown in 25 out of 33 reporting destinations

based on latest available data for 2018. A significant number of these reported
double-digit growth in either arrivals or overnights, or both. Croatia reported
25 58.2% more arrivals and 60.7% more overnights in the first quarter of 2018
compared to the same period a year ago. A drive to attract visitors during the
out of 33 destinations off-season via a variety of means and ever-improving connectivity between the
reported arrivals growth from UK and Croatia has contributed growth, along with Croatia’s relative
the UK affordability compared to some other Eurozone destinations. Slovenia also
reported significant growth from the UK, with it too reaping the rewards of
greater connectivity between the UK and South-eastern Europe.
Arrivals growth from the UK to Turkey accelerated slightly compared to earlier

in the year (33% based on data to February versus 33.5% based on data to
April). However, in absolute terms, travel remains well below peak 2014 levels.
However, Turkey’s gain (as well as that of more easterly European

destinations) is Spain and Portugal’s loss, it seems; both have struggled to
attract British tourists so far this year with reported declines of 1.6% and 6.3%
respectively. These declines are significant since the UK is a large source
market for both.
Ireland has reported arrivals growth of 1.1% based on data to April, which will
be welcome given the UK’s significance as a source market. But given declines
of 5.2% in 2017, without some pickup throughout the remainder of the year,
Ireland will remain in deficit of UK arrivals relative to pre-EU referendum peak.
UK visits and overnights to select destinations Arrivals

40
35
30 Croatia, 58.2% (A) & 60.7% (N)
Slovenia, 60% (A)
25 Serbia, -12.5% (A) & -14% (N)
20
15
10
5
0
Malta
Belgium
Turkey
Montenegro
Norway
Portugal
Denmark
Germany
Austria
Croatia
Slovakia
Poland
Italy
Slovenia
Cyprus
Lithuania
Hungary
Serbia
Latvia
Czech Rep.
Netherlands
Switzerland
Ireland Rep
Spain
Romania
Greece
Monaco
Sweden
Iceland
Bulgaria
Finland
Luxembourg
Estonia
-5
-10
Turkey continues to build upon its recovery of Russian arrivals, following a

period of weak Russian demand amid diplomatic fallout between the two
27 countries. Growth in 2017 was sufficient to restore prior peak arrivals numbers,
and year-to-date arrivals growth of 63.9% based on data to April indicates a
out of 32 destinations new peak will be reached in 2018 which should far surpass the prior.
Some strong growth from Russia in Portugal and Spain is helping to offset
Russia
losses from other source markets. This growth is likely building upon some of
the infrastructure put in place by travel operators to provide alternatives to
24
Turkey when it was declared a no-go destination. As a result, authorities in

Spain and Portugal are now directing efforts towards attracting more Russian
tourists. However, although the process is relatively straightforward, the need
for Russian’s to obtain a visa to visit Europe will likely inhibit growth.
Russian visits and overnights to select destinations Arrivals

45
Turkey, 63.9% (A)

35 Portugal, 42.1% (A)
Greece, -36.6% (A)
25
15
Slovakia
Turkey
Portugal
Denmark
Austria
Belgium
Norway
Malta
Montenegro
Lithuania
Hungary
Netherlands
Slovenia
Germany
Iceland
Switzerland
Czech Rep.
Spain
Poland
Croatia
Serbia
Sweden
Monaco
Cyprus
Italy
Latvia
Luxembourg
Greece
Finland
Romania
Estonia
Bulgaria
-5
-15
25
5.2 NON-EUROPEAN MARKETS
A weaker dollar notwithstanding, growth from the US remains strong for many
European destinations, with over three quarters of countries reporting some
form of demand growth.
Destinations which have reported the strongest rates of US travel growth

include a number of cruise destinations, and some of these may be jointly
benefitting within that market. Arrivals growth in Cyprus, Montenegro, and
24 Croatia was particularly strong (all in excess of 30% based on latest available
data for 2018). Cruise visits however, do not typically yield a correspondingly
out of 31 destinations strong rate of overnights growth; and overnights growth from the US in both
reported some form of Montenegro and Croatia paled in comparison to US arrivals growth (overnights
growth from the United data were not available for Cyprus).
States
Lithuania reported the largest decline in US arrivals, following a very strong
growth year in 2017. Growth was particularly strong in the second half of 2017,
a trend which was also evident in Latvia. This growth coincided with Lithuania’s
appointment of its first US representative, made in a bid to attract US visitors
for overnight stays. Lithuania is a typical day-stop on cruises to the Baltic,
grouped with Latvia and Estonia or on trips that include Helsinki and St.
Petersburg, but new programs combining Lithuania and Poland are in the
works. However, a decline in US travel to Lithuania in early-2018 compared to
the same period of 2017 is at odds with some significant growth to Poland, and
any programs which would jointly benefit both might reverse these declines.
US visits and overnights to select destinations Arrivals

35
30
Cyprus, 50.8% (A)
25 Lithuania, -20.6% (A)
20
15
10
5
0
Lithuania
Montenegro
Norway
Portugal
Malta
Turkey
Belgium
Austria
Denmark
Spain
Serbia
Poland
Germany
Cyprus
Croatia
Hungary
Italy
Netherlands
Slovenia
Monaco
Sweden
Iceland
Slovakia
Luxembourg
Finland
Romania
Switzerland
Czech Rep.
Latvia
Greece
Bulgaria
-5
-10
-15
Demand from Japan has gathered some steam compared to earlier in the year,
23 with a greater proportion of destinations reporting growth; 23 of 29 European
destinations reported some form for demand growth based on latest available
out of 29 destinations data for 2018.
reported some form of
growth from Japan Turkey, Estonia, and Latvia all reported arrivals growth in excess of 60%.
Turkish arrivals growth involves an element of recovery from prior falls, but
26
growth has been spurred by a conscious marketing drive directed towards

Japan, with Cappadocia proving to be a popular draw.
Estonia and Latvia are jointly benefitting, along with Lithuania, from a recent
pact made between Japan and the three republics. Prime Minister Abe’s visit to
these destinations in January as part of an unprecedented tour by a sitting
Japanese Prime Minister has provided exposure. Serbia, Bulgaria, and
Romania also formed part of the same tour and have clearly benefitted.
Luxembourg has benefitted similarly from a separate visit this year.
Japanese visits and overnights to select destinations Arrivals

50
Turkey, 95.4% (A)
40 Estonia, 61.3% (A) & 73.2% (N)
Latvia, 66.2% (A)
30 Iceland, -21.6% (A)
Montenegro, 21.7% (A) & -29.6% (N)
20
10
0
Belgium
Turkey
Denmark
Austria
Norway
Portugal
Montenegro
Lithuania
Hungary
Serbia
Croatia
Netherlands
Spain
Switzerland
Germany
Italy
Slovakia
Poland
Slovenia
Sweden
Czech Rep.
Luxembourg
Monaco
Iceland
Finland
Latvia
Romania
Estonia
Bulgaria
-10
-20
Some distortion caused by the shifted timing of the Chinese New Year yielded
23 some unpleasant data earlier in the year for travel from China. There was a
clear relationship between latest month reported and arrivals and overnights
growth, with those countries reporting only to January more likely to have
experienced declines, whilst those reporting to February or March were more
growth from China
likely to have seen strong growth. This is no longer the case, and more typical
trends in Chinese travel demand seem to have been restored.
The EU-China tourism year, which aims to support further growth as well as
joint investment in tourism, is now in full swing. Southern and Central
destinations are so far outperforming other areas, albeit absolute arrivals
numbers to some of these destinations are likely to be low. Serbia and
Montenegro in particular have reported some significant growth compared to
the same period a year ago, as too have Cyprus and Croatia. These are all
likely jointly benefitting from a combination of cruise tours and land tours which
allow Chinese visitors to pack the most into their trip to Europe.
Turkey has also reported some strong arrivals growth from China. Some of this
will be recovery but growth will be further stimulated by China’s declaration of
2018 as “Turkey Tourism Year”.
Belgium has also seen some strong arrivals growth from China, albeit from
relative low volumes. Some of this is ongoing recovery from large declines in
2016 due to terror attacks. But some growth has been helped by more
focussed and pragmatic marketing by Belgian’s travel agencies in conjunction
27
with its destination markets organisations in the form of a customised travel

portal for Chinese travellers in an attempt to put Belgium on their radar.
Chinese visits and overnights to select destinations Arrivals

50
40 Serbia, 137% (A) & 97.7% (N)

Turkey, 97.8% (A)
30 Monaco, -34.3% (A) & -22.6% (N)
20
10
0
Turkey
Montenegro
Belgium
Austria
Portugal
Denmark
Norway
Serbia
Lithuania
Hungary
Germany
Croatia
Poland
Cyprus
Slovakia
Spain
Netherlands
Slovenia
Iceland
Monaco
Czech Rep.
Finland
Switzerland
Sweden
Latvia
Romania
Luxembourg
Bulgaria
Estonia
-10
Arrivals from India have increased in all reporting destinations according to

latest available 2018 data. This represents a reversal of declines reported by
21 some destinations earlier in the year.
This growth has been helped by Air India’s expansion of its network including
greater frequency, as it seeks to grow its market share. Icelandic low-cost
carrier Wow air plans to provide connections between Asia (via India) and its
growth from India
network in North America and Europe. Starting in December, it plans to fly
directly between Delhi and Keflavik airport five times per week and will further
connect to multiple destinations in both North America and Europe. This will aid
future travel demand growth between India and Europe.
Montenegro was the top growth destination, but note this growth is based on
relatively small absolute numbers. However, reported growth from India for
larger markets, such as 79.8% in Spain, is more significant.
28
Indian visits and overnights to select destinations Arrivals

100
23 90
80 Montenegro, 1,480% (A) & 603% (N)
Latvia, 123% (N)
out of 27 destinations 70
reported some form of 60
growth from Canada 50
40
30
20
10
0
Belgium
Montenegro
Turkey
Denmark
Austria
Hungary
Slovakia
Monaco
Spain
Poland
Germany
Croatia
Netherlands
Sweden
Switzerland
Finland
Czech Rep.
Luxembourg
Latvia
Romania
Bulgaria
-10
Growth from Canada was reported in 23 out of 27 reporting destinations based

on latest available 2018 data. Some similarly strong growth in nearby
Mediterranean destinations, coupled with relatively low overnights growth
compared to arrivals are indicative of cruise driven growth. This can ease the
burden of tourism of locals, where tourism can sometimes cause discomfort
where amenities and infrastructure are inadequate. But it can also bring
massive benefits to the local economy. For this reason, many destinations are
directing efforts towards the pursuit of cruise visitors, including Cyprus and
Montenegro.
Canadian visits and overnights to select destinations Arrivals

40
35
30 Latvia, 259% (A) & 173% (N)
Croatia, 63.7% (A)
25
Lithuania, -24.5% (A)
20
15
10
5
0
Turkey
Montenegro
Denmark
Belgium
Austria
Portugal
Slovakia
Hungary
Lithuania
Croatia
Cyprus
Italy
Poland
Germany
Serbia
Sweden
Czech Rep.
Netherlands
Spain
Switzerland
Monaco
Slovenia
Iceland
Finland
Latvia
Romania
Bulgaria
-5
-10
29
6. ORIGIN MARKET SHARE ANALYSIS

METHODOLOGY
Based on the Tourism Decision Metrics (TDM) model, the following charts and analysis show
Europe’s evolving market position – in absolute and percentage terms – for selected source
markets. 2018 values are, in most cases, year-to-date estimates based on the latest available
data and are not final reported numbers.
Data in these charts and tables relate to reported arrivals in all destinations as a comparable
measure of outbound travel for calculation of market share.
For example, US outbound figures featured in the analysis are larger than reported departures
in national statistics as long-haul trips often involve travel to multiple destinations. In 2014 US
data reporting shows 11.9m departures to Europe while the sum of European arrivals from the
US was 23.4m. Thus, each US trip to Europe involved a visit to two destinations on average.
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and

Switzerland;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR

Macedonia, Greece, Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary,

Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia,
and Ukraine.
30
6.1 UNITED STATES

US Market Share Summary
2017 Growth (2017-22) Growth (2012-17)
Annual Cumulative Cumulative
Level Share** Share 2022** Share 2012**
average growth* growth*
Total outbound travel (000s) 113,870 - 4.9% 27.0% - 43.8% -
Long haul (000s) 68,506 60.2% 5.6% 31.0% 62.1% 40.5% 61.6%
Short haul (000s) 45,364 39.8% 3.9% 21.0% 37.9% 49.1% 38.4%
Travel to Europe (000s) 30,547 26.8% 4.9% 27.1% 26.8% 48.2% 26.0%
Northern Europe (000s) 7,540 6.6% 4.8% 26.3% 6.6% 54.8% 6.2%
Western Europe (000s) 11,112 9.8% 2.3% 12.2% 8.6% 43.8% 9.8%
Southern Europe (000s) 8,150 7.2% 6.7% 38.1% 7.8% 52.7% 6.7%
Central/Eastern Europe (000s) 3,744 3.3% 8.3% 49.0% 3.9% 40.0% 3.4%
*Shows cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
US Long Haul* Outbound Travel

Visits, 000s
80.000 Rest of Long Haul
70.000 Central/Eastern Europe
Southern Europe
60.000 Western Europe
Northern Europe
50.000
40.000
30.000
20.000
10.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside North America
Europe's Share of US Market Northern Europe

% share of long haul* market Western Europe
18% Southern Europe
Central/Eastern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2007 2009 2011 2013 2015 2017 2019 2021
31
6.2 CANADA
Canada Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Annual Cum ulative Cum ulative
average grow th* grow th*
Long haul (000s) 14,468 39.5% 3.7% 20.2% 40.6% 30.8% 31.3%
Short haul (000s) 22,140 60.5% 2.8% 14.8% 59.4% -8.7% 68.7%
Western Europe (000s) 2,010 5.5% 1.1% 5.5% 5.0% 30.4% 4.4%
Central/Eastern Europe (000s) 263 0.7% -2.4% -11.5% 0.5% -15.4% 0.9%
*Show s cumulative change over the relevant time period indicated
Canada Long Haul* Outbound Travel

Visits, 000s
18.000 Rest of Long Haul Central/Eastern Europe
16.000 Southern Europe Western Europe
14.000 Northern Europe
12.000
10.000
8.000
6.000
4.000
2.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Europe's Share of Canadian Market

% share of long haul* market Northern Europe
18% Western Europe
Southern Europe
16% Central/Eastern Europe
14%
12%
10%
8%
6%
4%
2%
0%
2007 2009 2011 2013 2015 2017 2019 2021
32
6.3 MEXICO
Mexico Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 3,111 14.6% 4.2% 22.9% 15.3% 53.8% 12.4%
Short haul (000s) 18,175 85.4% 3.1% 16.4% 84.7% 26.7% 87.6%
Northern Europe (000s) 141 0.7% 0.2% 0.9% 0.6% 63.7% 0.5%
Western Europe (000s) 730 3.4% 2.8% 14.9% 3.4% 48.8% 3.0%
Southern Europe (000s) 572 2.7% 2.3% 12.1% 2.6% 45.5% 2.4%
Central/Eastern Europe (000s) 160 0.8% 2.2% 11.4% 0.7% 54.4% 0.6%
Mexico Long Haul* Outbound Travel

Visits, 000s
3.500
Rest of Long Haul
Southern Europe
Northern Europe
2.000
1.500
1.000
500
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Europe's Share of Mexican Market

Western Europe
35% Southern Europe
30%
25%
20%
15%
10%
5%
0%
2007 2009 2011 2013 2015 2017 2019 2021
33
6.4 ARGENTINA
Argentina Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 3,321 27.0% -1.7% -8.4% 23.7% 54.7% 28.4%
Short haul (000s) 8,996 73.0% 1.7% 8.8% 76.3% 66.3% 71.6%
Travel to Europe (000s) 1,297 10.5% -3.9% -18.1% 8.3% 68.7% 10.2%
Northern Europe (000s) 161 1.3% -0.9% -4.5% 1.2% 53.8% 1.4%
Western Europe (000s) 69 0.6% 0.0% 0.2% 0.5% 66.9% 0.5%
Southern Europe (000s) 954 7.7% -5.6% -25.1% 5.6% 74.5% 7.2%
Argentina Long Haul* Outbound Travel

Visits, 000s
3.500
Rest of Long Haul
Southern Europe
Northern Europe
2.000
1.500
1.000
500
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside South America
Europe's Share of Argentinian Market

Western Europe
35% Southern Europe
30%
25%
20%
15%
10%
5%
0%
2007 2009 2011 2013 2015 2017 2019 2021
34
6.5 BRAZIL
Brazil Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 7,347 72.9% 2.0% 10.4% 68.5% 14.0% 72.0%
Short haul (000s) 2,729 27.1% 6.4% 36.5% 31.5% 8.6% 28.0%
Travel to Europe (000s) 3,987 39.6% -0.9% -4.6% 32.1% 13.2% 39.3%
Northern Europe (000s) 260 2.6% 5.6% 31.3% 2.9% -2.7% 3.0%
Western Europe (000s) 1,591 15.8% 0.3% 1.6% 13.7% -3.5% 18.4%
Southern Europe (000s) 1,781 17.7% -4.2% -19.5% 12.1% 36.1% 14.6%
Brazil Long Haul* Outbound Travel

Visits, 000s
Northern Europe
7.000
6.000
5.000
4.000
3.000
2.000
1.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Europe's Share of Brazilian Market

Western Europe
30% Southern Europe
25%
20%
15%
10%
5%
0%
2007 2009 2011 2013 2015 2017 2019 2021
35
6.6 INDIA
India Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 17,354 96.0% 6.0% 33.8% 95.9% 51.7% 95.5%
Short haul (000s) 732 4.0% 6.3% 35.8% 4.1% 34.6% 4.5%
Western Europe (000s) 942 5.2% 2.9% 15.6% 4.5% 64.4% 4.8%
Southern Europe (000s) 324 1.8% 5.2% 28.6% 1.7% -2.9% 2.8%
India Long Haul* Outbound Travel

Visits, 000s
20.000
Rest of Long Haul Central/Eastern Europe
18.000
Southern Europe Western Europe
16.000
Northern Europe
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside South Asia
Europe's Share of Indian Market

Western Europe
7% Southern Europe
6%
5%
4%
3%
2%
1%
0%
2007 2009 2011 2013 2015 2017 2019 2021
*Long haul defined as tourist arrivals to destinations outside South Asia
36
6.7 CHINA
China Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 44,368 49.9% 6.9% 39.7% 52.4% 128.5% 39.4%
Short haul (000s) 44,490 50.1% 4.8% 26.4% 47.6% 48.7% 60.6%
Western Europe (000s) 5,527 6.2% 7.5% 43.5% 6.7% 79.1% 6.3%
Central/Eastern Europe (000s) 5,381 6.1% 5.8% 32.6% 6.0% 137.8% 4.6%
China Long Haul* Outbound Travel

Visits, 000s
50.000 Southern Europe
Western Europe
30.000
20.000
10.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside Northeast Asia
Europe's Share of Chinese Market

Western Europe
25% Southern Europe
20%
15%
10%
5%
0%
2007 2009 2011 2013 2015 2017 2019 2021
37
6.8 JAPAN
Japan Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Total outbound travel (000s) 22,949 - 3.6% 19.1% - -3.0% -
Long haul (000s) 14,904 64.9% 3.4% 17.9% 64.3% 4.5% 60.3%
Short haul (000s) 8,045 35.1% 3.9% 21.4% 35.7% -14.4% 39.7%
Travel to Europe (000s) 4,219 18.4% 3.8% 20.6% 18.6% -8.5% 19.5%
Northern Europe (000s) 607 2.6% -0.3% -1.3% 2.2% 7.7% 2.4%
Western Europe (000s) 1,695 7.4% 5.6% 31.1% 8.1% -24.9% 9.5%
Japan Long Haul* Outbound Travel

Visits, 000s
Rest of Long Haul Central/Eastern Europe
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Europe's Share of Japanese Market Northern Europe

18% Southern Europe
16%
14%
12%
10%
8%
6%
4%
2%
0%
2007 2009 2011 2013 2015 2017 2019 2021
38
6.9 AUSTRALIA
Australia Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 16,563 95.7% 3.7% 19.8% 95.7% 17.5% 96.7%
Short haul (000s) 744 4.3% 3.7% 20.0% 4.3% 53.4% 3.3%
Western Europe (000s) 1,657 9.6% 0.1% 0.6% 8.0% -8.5% 12.4%
Australia Long Haul* Outbound Travel

Visits, 000s
14.000
12.000
10.000
8.000
6.000
4.000
2.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside Oceania
Europe's Share of Australian Market Northern Europe

Southern Europe
14% Central/Eastern Europe
12%
10%
8%
6%
4%
2%
0%
2007 2009 2011 2013 2015 2017 2019 2021
*Long haul defined as tourist arrivals to destinations outside Oceania
39
6.10 UNITED ARAB EMIRATES

United Arab Emirates Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Long haul (000s) 1,722 52.7% 2.6% 13.4% 44.1% 43.0% 38.2%
Short haul (000s) 1,547 47.3% 9.9% 60.3% 55.9% -20.5% 61.8%
Western Europe (000s) 378 11.5% 0.9% 4.5% 8.9% 26.2% 9.5%
UAE Long Haul* Outbound Travel

Visits, 000s
Western Europe
1.400
Northern Europe
1.200
1.000
800
600
400
200
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to destinations outside Middle East
Europe's Share of Emirati Market

Western Europe
30% Southern Europe
25%
20%
15%
10%
5%
0%
2007 2009 2011 2013 2015 2017 2019 2021
*Long haul defined as tourist arrivals to destinations outside Middle East
40
6.11 RUSSIA
Russia Market Share Summary
2017 Grow th (2017-22) Grow th (2012-17)
Total outbound travel (000s) 26,815 - 5.2% 28.5% - -25.0% -
Long haul (000s) 6,345 23.7% 4.8% 26.6% 23.3% -17.5% 21.5%
Short haul (000s) 20,470 76.3% 5.2% 29.1% 76.7% -27.0% 78.5%
Travel to Europe (000s) 20,470 76.3% 5.2% 29.1% 76.7% -27.0% 78.5%
Northern Europe (000s) 1,391 5.2% 5.9% 32.9% 5.4% -23.7% 5.1%
Western Europe (000s) 1,602 6.0% 4.0% 21.5% 5.6% -20.3% 5.6%
Central/Eastern Europe (000s) 8,779 32.7% 6.8% 38.8% 35.4% -47.0% 46.3%
Russia Long Haul* Outbound Travel

Visits, 000s Rest of World
Western Europe
35.000
Northern Europe
30.000
25.000
20.000
15.000
10.000
5.000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
*Long haul defined as tourist arrivals to all destinations
Europe's Share of Russian Market

Western Europe
60% Southern Europe
50%
40%
30%
20%
10%
0%
2007 2009 2011 2013 2015 2017 2019 2021
*Long haul defined as tourist arrivals to all destinations
41
7. ECONOMIC OUTLOOK
Assessing recent tourism data and industry performance is a useful way of directly monitoring
the key trends for travel demand across Europe. This can be complemented by looking at key
trends and relationships in macroeconomic performance in Europe’s key source markets
which can provide further useful insight into likely tourism developments throughout the year.
The linkages between macro and tourism performance can be very informative. For example,
strong GDP or consumer spending growth is an indication of rising prosperity with people more
likely to travel abroad. It is also an indication of rising business activity and therefore stronger
business travel. Movements in exchange rates against the euro can be equally important as it
can influence choice of destination. For example, if the euro appreciated (gained value)
against the US dollar, the Eurozone would become a more expensive destination and
therefore potentially less attractive for US visitors. Conversely, depreciation of the euro against
the US dollar would make the Eurozone a relatively cheaper destination and therefore more
attractive to US travellers.
7.1 OVERVIEW
Mounting trade tensions, along with higher oil prices, have the potential to
exacerbate the ongoing global slowdown. However, Oxford Economics (OE)
expect neither to trigger a sharp loss of economic momentum and still see only
a moderate deceleration in global GDP growth. OE has kept its 2018 and 2019
world GDP growth forecasts unchanged at 3.1% and 2.9% respectively,
supported by US fiscal stimulus and healthy Chinese domestic demand.
World: GDP & PMI

Index % y/y
55.0 Global composite PMI (LHS) 3.4
54.5
Global GDP (RHS) 3.2
54.0
53.5 3.0
53.0
2.8
52.5
2.6
52.0
51.5 2.4
51.0
2.2
50.5
50.0 2.0
Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 Jul 17 Jan 18
Source : Oxford Economics/Haver Analytics/Markit
The US decision to impose steel and aluminium tariffs on the EU, Canada and
Mexico will, on its own, have only marginal direct economic effects, but it raises
the risk of a series of tit-for-tat action that could prove far more damaging. The
worrisome outcome of the recent G7 meeting further adds to concerns that
trade relations between advanced economies will get worse before they get
better. OE’s baseline remains that a major escalation will be avoided. But the
uncertainty created could well lead to weaker investment in the short term and
42
limit the degree to which both the US and the eurozone bounce back after their
disappointing starts to the year.
Solid global oil demand, supply cuts in Iran and Venezuela and pipeline
constraints in the US will support a firmer oil price environment in the near
term. Higher energy prices will erode household discretionary incomes and
weigh on consumer spending, though stronger energy sector investment is
likely to provide some offset.
Eurozone economic activity is slowing this year, putting downward pressure on

the euro. OE still expect the euro to appreciate against the dollar over the next
18 months in response to rising US twin deficits and a narrowing in the growth
differential between the US and the eurozone. In addition, it does not think
recent growth readings and currency moves will affect the ECB’s plan for
monetary policy normalization.
Risks clouding the outlook for emerging markets (EMs) have increased, with
rising oil prices and tighter financial conditions coinciding with growing trade
risks and less synchronised global activity. That said, OE expect a weaker
dollar in the medium term to alleviate pressures, which should keep EM growth
supported this year.
Summary of economic outlook, % change year ago*

2018 2019
Consumer Unemploy- Exchange Consumer Unemploy- Exchange
Country GDP Inflation GDP Inflation
expenditure ment * rate*** expenditure ment ** rate***
UK 1.3% 1.1% 0.2% 1.0% 2.6% 1.4% 0.7% 0.0% 2.7% 1.8%
France 1.7% 0.8% -0.5% 0.0% 1.9% 1.6% 1.2% -0.5% 0.0% 1.6%
Germany 2.0% 1.3% -0.4% 0.0% 2.0% 1.8% 2.0% -0.4% 0.0% 1.9%
Netherlands 2.5% 2.5% -1.0% 0.0% 1.7% 1.7% 1.3% -0.1% 0.0% 1.7%
Italy 1.3% 0.9% -0.4% 0.0% 1.3% 1.4% 1.2% -0.4% 0.0% 1.7%
Russia 1.8% 3.0% -0.1% -7.5% 2.9% 1.3% 2.8% 0.1% -1.8% 4.0%
US 3.0% 2.6% -0.5% -5.5% 2.6% 2.3% 2.1% -0.3% -2.0% 2.1%
Canada 1.8% 2.0% -0.4% -4.8% 2.3% 1.8% 1.9% 0.1% -1.5% 1.9%
Brazil 1.6% 1.9% -0.2% -15.3% 3.3% 3.1% 3.1% -1.4% -0.9% 4.2%
China 6.4% 7.7% 0.0% 0.7% 2.3% 6.1% 7.1% 0.0% -0.1% 2.7%
Japan 1.2% 0.8% -0.4% -2.1% 1.1% 1.1% 1.2% 0.0% -2.2% 1.2%
India 7.5% 7.2% 0.1% -6.9% 5.0% 7.1% 7.0% 0.0% 0.6% 5.2%
* Unless otherw ise specified
** Percentage point change
*** Exchange rates measured against the euro. A positive change indicates stronger local currency against the euro and therefore a positive impact on
outbound tourism demand. A negative change indicates w eaker local currency against the euro and therefore a negative impact on outbound tourism
demand.
43
7.2 EUROZONE
The slowdown in quarterly GDP growth to 0.4% in Q1 was driven by a plunge

in exports as Europe started to feel the pinch from the slowing global economy.
Recent indicators confirm OE’s view that downside risks are materialising and
thus expect growth to remain broadly stable at the rate seen in Q1. As a result,
OE has nudged down its 2018 GDP growth projection for the eurozone to 2.1%
(from 2.2% previously) and for 2019 we see growth slowing to 1.8%.
A breakdown of the national accounts showed the slowdown in Q1 was driven

by a plunge in exports, which contracted for the first time in six years. On a
positive note, household spending was stronger than anticipated, although OE
expect it to weaken again as the impact of higher inflation feeds through to
consumers.
Eurozone: Consumption and real income

% y/y
4 Household spending Forecast
3 Real disposable income
-1
-2
-3
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source : Oxford Economics/Haver Analytics
Following some signs of stabilisation in April, latest survey data has dampened
hopes of a bounce-back in activity. Momentum is clearly on a downward trend,
with the PMIs falling in May and a drop in the Sentix index in June pointing to
further declines. The little hard data available for Q2 does not offer much hope
either, with weak growth in retail sales and industrial production likely to have
fallen in April. OE expect GDP growth to settle at around 0.4% a quarter for the
rest of the year.
Inflation jumped to 1.9% in May. Although this was driven by a sharp rise in oil
prices, core inflation is also back on an upward trend following the temporary
dip seen in April. OE expect both headline and core inflation to rise gradually as
the year moves on and have raised our CPI forecast to an average of 1.8% for
2018.
As a result, the ECB is now publicly discussing its exit strategy, which should
be announced this month or next. OE continue to expect bond purchases to
end this year, but no interest rate hike is seen until H2 2019.
44
7.3 UNITED KINGDOM
OE has lowered its near-term forecast for GDP growth slightly due to an
upward revision to its assumption for oil prices, which will mean that inflation
stays higher for longer. OE now expect the UK to grow by 1.3% in 2018 and
1.4% in 2019. But mounting evidence that the Q1 weakness was exaggerated
by temporary factors is likely to mean that the MPC raises interest rates in
August.
The second estimate for Q1 confirmed that quarterly GDP growth was just
0.1%, the weakest outturn for more than five years. But OE continue to attribute
the bulk of the slowdown to temporary factors – namely the week of snow at
end-February/early-March and the collapse of Carillion, the UK’s second
largest construction company – and expect growth to rebound in Q2. April’s
robust post-snow recovery in retail sales offers strong backing for this view,
while the CIPS surveys were also firmer in May. Quarterly GDP growth of
around 0.4% is expected in Q2.
Mounting evidence that the weak outturn for Q1 was a blip is likely to embolden
the MPC to raise interest rates again soon. The June meeting may be too soon,
given that this will come before the Committee has access to any services
output data for the post-snow period. In addition, a June move would come as
a severe shock to financial markets, which are currently pricing in less than a
10% chance of a June hike.
But the MPC is likely to use the minutes of the June meeting to prepare
markets for an August move. This will coincide with an Inflation Report,
enabling the MPC to explain its thinking. And though some commentators have
suggested that the change to the publication timetable for GDP releases will
prevent an August hike because the Committee will not have a preliminary
estimate for Q2 GDP, it will have the new monthly GDP estimates up to May,
which should confirm that the Q1 disruption has unwound. OE continue to
assume only one rate hike in 2019.
UK: Exchange rates

2.2
US$/£ Forecast
2.0
1.8
1.6
1.4 Euro/£
1.2
1.0
2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
45
7.4 UNITED STATES
The US economy is currently growing at the strongest pace in four years, with
Q2 growth expected to surpass 4% for the first time since 2014. The economy
should record a 3% advance in 2018, supported by a large fiscal boost. OE do,
however, recognize the risk from rising trade protectionism and elevated
energy prices. A closed output gap and higher energy prices will push inflation
to the Fed’s 2% inflation target, leading to four rate hikes in 2018.
News from the labor market remains very encouraging. The economy added
223,000 jobs in May as the unemployment rate fell to its lowest level since
2000 at only 3.8%. The latest labor market dynamics data show just under one
unemployed individual per job opening. Meanwhile, wage growth firmed
modestly to 2.8% in May and anecdotal evidence continues to indicate acute
labor shortages in some sectors.
Business and consumers maintain their positive take on current economic

conditions and expectations, though OE note business confidence has slowed
in recent months on increased worries about disruptions to trade from imposed
and threatened tariffs.
News on the trade front has been disappointing, with the administration
implementing 25% steel and 10% aluminum tariffs on all trading partners,
including Mexico, Canada, and the EU. Retaliation measures were swiftly
announced, and there is a growing sentiment that global players are saying
“enough is enough” to President Trump’s trade tantrums. Trade tensions
between Beijing and Washington fluctuate daily with the specter of tariffs on
$50 billion of US imports from China looming and influenced by negotiations
with North Korea and the fate of Chinese telecom firm ZTE. On NAFTA, the
news isn’t encouraging either, and the odds of a 2018 deal are very low.
A positive output gap, a weaker dollar and higher oil prices will lift PCE inflation
to the Fed’s 2% target, and prompt three more rate hikes during the rest of
2018.
46
7.5 JAPAN
A reasonable outlook for consumption and investment will support growth

during the rest of 2018 even as rising oil prices and protectionism weigh on the
economy. In Q1 sluggish domestic demand led to the first q/q contraction in
GDP since the end of 2015, but consumption and trade have picked up in early
Q2 and OE expect GDP to grow by 1.2% on average in 2018 and 1.1% next
year.
Japan: Contributions to GDP growth

% year
6
4 GDP Domestic
demand
2
Net exports
-2
-4
F'cast
-6
2005 2007 2009 2011 2013 2015 2017 2019
Source: Oxford Economics / Haver Analytics
GDP contracted 0.2% q/q in Q1, hit by weak domestic demand. According to
the second estimate of the national accounts, private consumption fell 0.1% on
the quarter while total investment was flat, even as business investment
expanded 0.3% q/q. Despite the soft outcome for Q1, OE continue to look for a
pick-up in domestic demand, as the latest monthly indicators suggest a
recovery in consumption and trade in Q2, while the investment outlook remains
positive, given still solid levels of confidence and the boost from the 2020
Tokyo Olympics.
However, there are notable downside risks to the outlook – from protectionism
(which may weigh on trade and undermine sentiment) and a larger than
expected slowdown in global growth. In particular, recent threats by the US
administration to explore tariffs on Japanese car exports may dampen
confidence and investment spending. In addition, the planned consumption tax
increase will weigh on growth in 2019, although Prime Minister Abe has made it
clear that he is ready to provide additional stimulus to offset the negative
impact.
Inflation remains below the Bank of Japan’s (BoJ) 2% target, so OE see no

change in monetary policy for the foreseeable future. Meanwhile, eurozone
instability and rising protectionism are bolstering the yen’s safe-haven
properties. OE has adjusted its forecast and now see the Japanese yen at 108
per dollar over 2018-2019.
47
7.6 EMERGING MARKETS
CHINESE ACTIVITY REMAINS RESILIENT
Despite increased US-China trade frictions, growth in the Chinese economy

appears to have remained solid in Q2, with PMI surveys suggesting continued
expansion, supported by robust domestic demand. Indeed, goods imports
posted solid growth in April-May, rising an estimated 11.8% in volume terms
after 9.6% in Q1, suggesting that domestic demand has stayed resilient despite
tighter financial policies and slower real estate activity.
Meanwhile, export growth in volume terms is easing, confirming OE’s view that
global trade growth has peaked. Going forward, OE expect exports to continue
to benefit from reasonably healthy global demand trends, trade frictions with
the US notwithstanding.
China: Total goods trade volumes

Real, % yoy, 3mma
20 Exports
Imports
15
10
-5
-10
2012 2013 2014 2015 2016 2017 2018
Source : Oxford Economics/CEIC
Domestically, OE still expect demand momentum to ease, but do not look for a
sharp slowdown and think policymakers will want to keep their policy stance
flexible and ease further if needed, to ensure that overall GDP growth does not
deviate too much from their target of “around 6.5%”.
In light of the downgrade to OE’s global growth outlook, it recently revised

down China’s GDP growth forecast for this year to 6.3% from 6.4%, but the
latest economic data and a slightly easier macro policy stance imply upside
risks to its China growth outlook.
RBI HIKES RATE IN JUNE, ONE MORE ON THE WAY
Indian GDP growth unexpectedly accelerated to 7.7% y/y in Q1 from a

downwardly revised 7% in Q4. Gross Value Added (GVA) growth also
increased 1ppt from Q4 2017 to 7.6% y/y. In FY2018 as a whole, GDP grew
6.7% and GVA 6.5% versus 7.1% for both in FY2017.
While Q1 growth was boosted by a surge in government spending, private

consumption growth increased for the first time in three quarters. The growth
outlook remains constructive in the short term, with monthly activity indicators
painting a broadly optimistic picture at the start of the second quarter – both the
48
Nikkei manufacturing and services PMIs in April pointed to a solid pace of

expansion in output, while vehicle sales showed a healthy rise. Meanwhile, the
RBI hiked 25bp at its June meeting, in line with OE’s long-standing view. With
inflationary pressures on the rise and core inflation already at 6% in April, OE
retains its view of another hike in 2018.
India: Monetary conditions

%
14
CPI inflation
F'cast
12
10
4 Repo rate
0
2006 2008 2010 2012 2014 2016 2018 2020
Source: Oxford Economics
STRIKES CRIPPLE GROWTH IN BRAZIL
A 12-day truck drivers’ strike brought Brazil to a standstill late last month,
prompted by discontent as rising global fuel prices and a weakening BRL
meant diesel prices surged 12% in just two months. Only a hasty decision to
slash diesel prices via a tax cut and the resignation of Petrobras’s CEO ended
the dispute. The severe disruptions to supply chains and goods shortages
mean OE has lowered its 2018 growth forecast to 1.6% from 1.9%. While the
government has intervened to reverse part of the increase in diesel prices,
there will be second-round effects on the price of food and other goods due to
shortages. As a result, OE has raised its end-2018 inflation forecast 0.4pp to
3.5%.
Brazil: GDP forecast before and after the strike

% quarter % 12m
1.75 3.1 3.5
1.61
1.50 3.0
2.9
1.25 2.5
1.9
1.00 2.0
0.75 1.6 1.5
0.50 1.0
0.25 0.5
0.00 0.0
QoQ (new), LHS QoQ (old), LHS
-0.25 -0.5
-0.32 12mMA (new), RHS 12mMA (old), RHS
-0.50 -1.0
2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4
Source: Oxford Economics/Haver Analytics
49
The surge in prices was the unintended result of Petrobras’s sensible decision
in 2016 to scrap subsidies and use market fuel prices. Politically, the sequence
of events – the inability of the government to control the strikes, a hasty
decision to cut diesel prices and the resignation of Petrobras’s CEO –
highlights just how weak President Temer is, four months before Brazil’s
presidential elections. We see Petrobras as the biggest loser (its stock has
tumbled 45% in three weeks), while the damage to the fiscal accounts is likely
to be manageable.
TURKEY FORCED INTO EMERGENCY RATE HIKES
A tumultuous month in Turkey saw the lira (TRY) come under severe market
pressure, losing more than 15% of its value between May 1 and May 23, when
the central bank (CBRT) was forced to hike interest rates by 300bp during an
emergency MPC meeting. A few days later, the CBRT pledged to simplify the
monetary policy framework by reverting to the use of the one-week repo rate as
the main policy rate and setting it at 16.5%. But with the pass through from a
weaker TRY and higher oil prices pushing up inflation in May to 12.1%, the
CBRT moved again, raising the one-week repo rate by 125bp to 17.75% at its
June meeting.
While this is likely to calm markets in the run-up to the 24 June election, OE
thinks tighter policy and a fall in sentiment will weigh on growth, which has
revised down by 0.2pp to 4% this year. It also expects higher inflation this year,
and which will now likely stay in double digits until mid-2019.
Turkey: CBRT monetary policy framework

%
20 One-week repo (policy rate)
Overnight borrowing rate
18 Overnight lending rate
Weighted average cost of CBRT funding
16 Late liquidity window rate
14
12
10
2
2013 2014 2015 2016 2017 2018
CEE PMIS CATCH UP WITH EUROGLOOM
Last month brought more bad news for the CEE region – the manufacturing
PMIs fell to a nine-month low in both Poland and the Czech Republic, closely
following a sharp decline in Germany. And in contrast to the April PMIs, the
latest readings are no longer pointing to a stabilisation in activity in Q2,
particularly as export orders have weakened further. And already-weak Czech
50
GDP growth for Q1 was revised down from 0.5% to 0.4%, as strong domestic
demand (including investment) boosted imports while exports slowed.
Manufacturing PMI: CEE and Germany

PMI-50, 3mma
Germany
14
Poland
12 Czech
10 Hungary
8
6
4
2
0
-2
-4
-6
-8
2011 2012 2013 2014 2015 2016 2017 2018
51
8. APPENDIX 1
GLOSSARY OF COMMONLY USED TERMS AND ABBREVIATIONS
Airline industry indicators
ASK – Available Seat Kilometers. Indicator of airline supply, available seats x kilometers flown;
PLF – Passenger Load Factor. Indicator of airline capacity. Equal to revenue passenger
kilometers (RPK) / available seat kilometers (ASK);
RPK – Revenue Passenger Kilometers. Indicator of airline demand, paying passenger x

kilometers flown;
3mth mav – Three month moving average.
Hotel industry indicators
ADR – Average Daily Rate. Indicator of hotel room pricing, equal to hotel room revenue /
rooms sold in a given period;
Occ – Occupancy Rate. Indicator of hotel performance, equal to the number of hotel rooms
sold / room supply;
RevPAR – Revenue per Available Room. Indicator of hotel performance, equal to hotel room
revenue / rooms available in a given period.
Central Banks
BoE – Bank of England;
MPC – Monetary Policy Committee of BoE;
BoJ – Bank of Japan;
ECB – European Central Bank;
Fed – Federal Reserve (US);
RBI – Reserve Bank of India;
OBR – Office for Budget Responsibility;
PBoC – People’s Bank of China.
Economic indicators and terms
BP – Basis Point. A unit equal to one hundredth of a percentage point;
Broad money – Key indicator of money supply and liquidity including currency holdings as
well as bank deposits that can easily be converted to cash;
52
CPI – Consumer Price Index. Measure of price inflation for consumer goods;
FDI – Foreign Direct Investment. Investment form one country into another, usually by
companies rather than governments;
GDP – Gross Domestic Product. The value of goods and services produced in a given
economy;
LCU – Local Currency Unit. The national unit of currency of a given country, e.g., pound, euro,
etc.;
PMI – Purchasing Managers’ Index. Indicator of producers’ sentiment and the direction of the
economy;
PPI – Purchase Price Index. Measure of inflation of input prices to producers of goods and
services;
PPP – Purchasing Power Parity. An implicit exchange rate which equalises the price of
identical goods and services in different countries so they can be expressed with a common
price;
QE – Quantitative Easing. Expansionary monetary policy pursued by central banks involving

asset purchases to reduce bond yields and increase liquidity in capital markets;
G7 – Group of seven industrialised countries comprising the United States, the United
Kingdom, France, Germany, Italy, Canada, and Japan.
53
9. APPENDIX 2
ETC MEMBER ORGANISATIONS
Austria – Austrian National Tourist Office (ANTO)

Belgium: Flanders – Tourism Flanders
Wallonia – Wallonie-Belgique Tourisme (WBT)
Bulgaria – Bulgarian Ministry of Tourism
Croatia – Croatian National Tourist Board (CNTB)
Cyprus – Cyprus Tourism Organisation (CTO)
Czech Republic – CzechTourism
Denmark – VisitDenmark
Estonia – Estonian Tourist Board - Enterprise Estonia
Finland – Business Finland Oy
Germany – German National Tourist Board (GNTB)
Greece – Greek National Tourism Organisation (GNTO)
Hungary – Hungarian Tourism Agency Ltd.
Iceland – Icelandic Tourist Board
Ireland – Fáilte Ireland and Tourism Ireland Ltd.
Italy – Italian Government Tourist Board
Latvia – Latvian Tourism Development Agency (TAVA)
Lithuania – Lithuanian State Department of Tourism under the Ministry of Economy
Luxembourg – Luxembourg for Tourism (LFT)
Malta – Malta Tourism Authority (MTA)
Monaco – Monaco Government Tourist and Convention Office
Montenegro – National Tourism Organisation of Montenegro
Netherlands – NBTC Holland Marketing
Norway – Innovation Norway
Poland – Polish Tourist Organisation (PTO)
Portugal – Turismo de Portugal, I.P.
Romania – Romanian Ministry of Tourism
San Marino – State Office for Tourism
Serbia – National Tourism Organisation of Serbia (NTOS)
Slovakia – Ministry of Transport and Construction of the Slovak Republic
Slovenia – Slovenian Tourist Board
Spain – Turespaña - Instituto de Turismo de España
Switzerland – Switzerland Tourism
Turkey – Ministry of Culture and Tourism
54

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European Tourism in 2018: Trends & Prospects (Q2/2018)

EUROPEAN TOURISM IN 2018:

Quarterly Report (Q2/2018)

A quarterly insights report produced for the Market Intelligence Group

Brussels, July 2018

Copyright © 2018 European Travel Commission

European Tourism in 2018: Trends & Prospects (Q2/2018)

Published and printed by the European Travel Commission

ISSN No: 2034-9297

This report was compiled and edited by:

3.2 Accommodation ..................................................................................... 14

4. Special Feature: South Korean Outbound Travel in 2018 ............................ 16

5.2 Non-European Markets .......................................................................... 26

6. Origin Market Share Analysis........................................................................ 30

6.2 Canada ................................................................................................... 32

6.3 Mexico .................................................................................................... 33

6.4 Argentina ................................................................................................ 34

6.5 Brazil ...................................................................................................... 35

6.6 India ....................................................................................................... 36

6.7 China ...................................................................................................... 37

6.8 Japan ..................................................................................................... 38

6.9 Australia ................................................................................................. 39

6.10 United Arab Emirates ........................................................................... 40

6.11 Russia .................................................................................................. 41

7. Economic Outlook ......................................................................................... 42

7.2 Eurozone ................................................................................................ 44

7.3 United Kingdom...................................................................................... 45

7.4 United States.......................................................................................... 46

7.5 Japan ..................................................................................................... 47

7.6 Emerging Markets .................................................................................. 48

European tourism demand remains robust, continuing the trends observed

Foreign visits to select destinations

Source: TourMIS *date varies (Jan-May) by destination

Iceland (+6%) grew at a more moderate pace compared to recent years,

RECENT INDUSTRY INDICATORS SUGGEST ANOTHER POSITIVE YEAR

Annual International Air Passenger Growth 2016

LARGE INTRA-EUROPEAN AND LONG-HAUL SOURCE MARKETS

Several destinations continue to benefit from strong travel demand from

European Tourism Demand by Origin

ENHANCING DIALOGUE TO STIMULATE TOURISM GROWTH AND

Jennifer Iduh (ETC Executive Unit)

Source: TourMIS *date varies (Jan-May) by destination

A further eight European destinations have reported arrivals or overnights

Opposition to mass/over-tourism in Spain has been gathering steam and

Tourism Performance, 2018 Year-to-Date

2. GLOBAL TOURISM FORECAST

3. RECENT INDUSTRY PERFORMANCE

3.1 AIR TRANSPORT

Global air transport, measured in Revenue Passenger Kilometres (RPK), grew

Monthly International Air Passenger Growth Jan-18

International Air Passenger Traffic Growth Total

European RPK growth slowed only moderately in year-to-date data to 6.6%

International Air Passenger Traffic Growth N. America

Trans-Atlantic demand is still lagging significantly behind Asia/Pacific demand

European Airlines Capacity

4. SPECIAL FEATURE: SOUTH

Outbound Travel from South Korea

KEY DRIVERS OF TRAVEL

EUROPEAN SHARE OF KOREAN TRAVEL DEMAND

The Asia-Pacific region is forecast to take an even larger share of South

Nevertheless, this falling share of outbound trips implies a significant increase

Visits Growth to Europe: South Korea vs. Long-haul

Source: Tourism Economics

TRAVEL BY EUROPEAN DESTINATION

South Korea Outbound Travel to Europe: Arrivals vs. Growth

50% Slovenia Croatia