european travel market | trends & prospects | q2 2015

2 European Tourism in 2015: Trends & Prospects (Q2/2015)

© European Travel Commission, July 2015

EUROPEAN TOURISM in 2015: TRENDS & PROSPECTS

Quarterly Report (Q2/2015)

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 2015

ETC Market Intelligence Report

European Tourism in 2015: Trends & Prospects (Q2/2015) 3


Copyright © 2015 European Travel Commission

European Tourism in 2015: Trends & Prospects (Q2/2015)

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

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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 Global, 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

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Website: www.etc-corporate.org

Email: [email protected]

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

Cover: Ruins of the ancient city of Kourion, Cyprus Copyright belongs to Kirill__M

In memoriam Mr Tom Ylkänen

http://www.tourmis.info/index_e.html

http://www.etc-corporate.org/

mailto:[email protected]



Foreword

Sustained growth for European tourism in 2015

Growth remains solid at the beginning of the year

confirming the continued positive performance of

European destinations. Positive results before the

summer period are driven by increased demand

from both intra-regional and overseas markets.

These results confirm the sustained upward trend

estimated for 2015 and proves the on-going

efforts of destinations to fight seasonality.

The vast majority of reporting ETC destinations

record increased numbers of international tourists

arriving in the first five months1 compared to the

same period last year. Destinations registering a

substantial increase are Iceland (+30%),

Montenegro (+19%) and Romania (+16%). Other

destinations posting double-digit growth rates are

Ireland, Cyprus, and Slovenia accounting for a

+14%, +10% and +10% increase respectively.

Amongst Europe’s most popular destinations

Germany (+5%), Spain (+4%), Italy (+4%) and the

UK (+3%) see handsome growth in international

arrivals, with the peak travel season yet to begin.

Among the top performers are also Balkan

countries, Croatia and Serbia, recording increased

number of arrivals by +14% and +10%

respectively at the end of April.

Some destinations continue to feel the slowing of

Russian travel demand. Finland sees its

international tourist arrivals slump (-11%), being

strongly affected by dwindling numbers of Russian

holiday-makers. Arrivals in Baltic countries are

also consistently low in Latvia (+1%) and

Lithuania (-1%) whereas foreign arrivals in

Estonia (-9%) plunge dramatically suffering a

painful setback attributed to the Russia Effect in

Russian travel demand.

Overall, European air traffic continues to grow in

2015 with Revenue Passenger Kilometres (RPK)

increasing by 5% as compared to the same period

last year and in spite of economic uncertainties

and recent disruption caused by striking air traffic

controllers in France, Spain and Germany.

Generally speaking, travel flows from and to

Europe are boosting momentum based on YTD

data.

1 Year-to-date data reported by individual destinations varies between January and May.

International Traffic by Region of Airline registration

% change, year ago

Source: Compiled by UNWTO from IATA

Russia, Inbound travel by destination, YTD growth (top),

share of foreign arrivals (bottom)

Source: TourMIS

International Tourist Arrivals 2015

2015 YTD, % change year ago

Source: ETC based on TourMIS data



Growth momentum projected from largest long-haul market

Outbound flows from the largest European source markets have gained momentum in

the first months in 2015 contributing to the resilience of the European tourism sector.

Although the Eurozone is still facing economic challenges and uncertainties, this does

not appear to suppose a drawback for travel-hungry citizens from Germany, the

Netherlands, France and Italy who are positively stimulating the tourism sector this

year. Moreover, travel from the United Kingdom is spurred by favourable exchange

rates in the continent. Long-haul markets appear to be faring even better contributing

significantly to growth in European tourism and with increased demand coming

especially from the USA and Asian markets.

Economic indicators suggest a positive recovery in the USA in 2015 as the country

shows signs of a solid rebound supported by a stronger US dollar, higher disposable

income, an increase in power spending, and business and consumer confidence. As a

matter of fact, this dispersed concerns few months back when GDP fell sharply. In

addition, according to the World Economic Outlook report2, growth is expected to

reach 3.1% percent in 2015. Additionally, a weaker euro will keep posing an upturn in

long-haul travel demand from the USA. In the contrary, economic growth in China is

estimated to follow a more modest pace. Nevertheless, the Chinese travel outbound

market keeps showing signs of growth posting increasing results in European

destinations. Japan began the year gaining momentum owing to economic

improvements despite GDP contraction and a weaker yen. Notwithstanding, Europe

still remains an aspirational destinations for both Chinese and Japanese outbound

travellers.

As expected, the Russian outbound travel market remains lower facing difficulties to

level off while the economy is still expected to suffer a deep backdrop this year. A

decrease in oil prices and the consequent plunge in the rouble against the euro are

expected to hit European tourism destinations in 2015 while international sanctions

have already affected on the tourist industry. Foreign travel has become costly for

Russian tourists with traditional hot-spot destinations being the most affected.

Besides, as the influx of tourists across borders declines so is the spending among

those that actually travel as their expenditure sharply plummeted by 6% in 20143.

Fostering competitiveness at a pan-European level

International tourism worldwide is experiencing growth primarily driven by the

performance of advanced economies and long-haul markets. The travel and tourism

sector still remains Europe’s main driver of growth under the cloud of socio-economic

disruptions. However, to ensure Europe’s leading position as the #1 tourist destination

worldwide amid a challenging and uncertain socio-economic environment, European

tourism organisations are called to foster sustainable product development and

promotion encouraging the diversity of products and experiences offered by the

destination at a pan-European level.

“In order to remain the world’s first tourist destination, Europe must respond to shifting

patterns in global tourism capitalizing on the potential of tomorrow’s outbound travel

markets whose expanding middle-classes are a growing market for European

destinations”, said Eduardo Santander, Executive Director European Travel

Commission.

Jennifer Iduh (ETC Executive Unit)

With the contribution of the ETC Market Intelligence Group

2 World Economic Outlook Report www.imf.org/external/pubs/ft/weo/2015/01/pdf/text.pdf 3 UNWTO World Tourism Barometer, Volume 13, April 2015

http://etc-corporate.org/?page=market-intelligence

http://www.imf.org/external/pubs/ft/weo/2015/01/pdf/text.pdf



2015 Tourism Performance Summary

The bulk of reporting countries have continued to welcome increasing numbers of

foreign visitors as well as foreign visitor nights according to data for the first four

months of 2015. A weaker than average euro continues to aid price attractiveness for

Eurozone destinations. A recent study by Tourism Economics estimates that the

dollar’s 2015 appreciation will result in European inbound arrivals being 1.1% higher

this year than would have been the case had the dollar retained its 2014 value.

Therefore, such currency movements have been significant in offsetting weakness

from Russian outbound travel, with European destinations now more affordable than

they were one year ago.

However, it should be noted that these year-to-date trends remain in their infancy,

covering what is low season for many destinations. As such, growth rates shown in

this section are not indicative of expected full year performance but rather serve to

highlight emerging trends.

Top performers in 2015 have changed little from those of 2014 with Iceland in

particular managing to sustain, for the third consecutive year, growth in foreign visits in

excess of 30% based on the first five months of 2015 compared to the same period in

2014. Montenegro has also grown steadily over the past number of years with growth

of 19.3% in foreign visits and growth of 18.1% in overnights based on data to April.

Along with Romania, Montenegro was one of only two reporting destinations which

saw growth in visits from Russia and the only country which saw growth in overnights

from Russia.

Slovakia, after enduring over a year of declining visitor numbers, has finally seen its

fortunes reversed, posting 3.6% growth in foreign visits. However, although of a much

smaller magnitude than has been observed in recent months, overnights fell by 1.2%.

Despite some concerns that Serbia might be overly reliant on Russian visitors, its

visitor base appears to be well spread with growth so far this year (to April) in excess

of 10% in terms of both foreign visits and foreign overnights. This bolsters Serbia’s

position amongst the many emerging tourism destinations within Europe, having seen

some strong growth in both visits and nights over the past number of years.

Switzerland’s tourism industry has paid the price for removing the Swiss franc’s peg to

the euro, a move designed to safeguard it from depreciation against the US dollar.

However, this means that a holiday to Switzerland is now relatively more expensive

when priced in euro terms. Visits to Switzerland fell by 0.1% in the first four months of

2015 compared to the same period in 2014, while overnights fell by 3%.

-10

-5

0

5

10

15

20

Icela

nd

Monte

negro

Ro

ma

nia

Cro

atia

Irela

nd R

ep

Serb

iaS

lovenia

Cypru

sH

ungary

Bulg

aria

Czech R

ep

Austr

iaM

alta

Germ

an

yP

ola

nd

Neth

erlands

Spain

Italy

Slo

vakia

Latv

iaS

witzerland

Turk

ey

Lithuania

Esto

nia

Fin

lan

d

Foreign visits to select destinations2015, year-to-date*, % change year ago

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

30.4

-12.1 -10

-5

0

5

10

15

20

Monte

negro

Cro

atia

Serb

iaN

eth

erlands

Port

ugal

Norw

ay

Sw

eden

Po

land

Slo

venia

Hungary

Germ

any

Austr

iaD

enm

ark

Malta

Czech R

ep

Italy

Spain

Latv

iaLuxem

bourg

Slo

va

kia

Sw

itzerland

Lithuania

Esto

nia

Fin

land

Foreign visitor nights in select destinations2015, year-to-date*, % change year ago


-11



Estonia and Finland’s recent decline highlight the vulnerability of being overly reliant

on any one source market. However, since these countries tend to be popular winter

destinations for Russian tourists, arrivals will likely rebound as the summer months

offer an opportunity for these countries to capitalise on the weaker euro.

The possibility that Greece might be forced to leave the Eurozone remains a key risk,

with discussions between Greece and its creditors still ongoing at the time of writing.

Nevertheless, hotels data for Athens remains robust suggesting that some confidence

in the Greek economic growth remained during the first half of the year. We will

continue to monitor Greek performance closely in the coming weeks and months.

Country % ytd to month % ytd to month

Austria 6.3 Jan-May 4.0 Jan-May

Bulgaria 7.1 Jan-Apr

Croatia 13.5 Jan-May 14.7 Jan-May

Cyprus 9.6 Jan-May

Czech Rep 6.7 Jan-Mar 3.3 Jan-Feb

Denmark 3.5 Jan-Apr

Estonia -8.8 Jan-Apr -7.5 Jan-Apr

Finland -12.1 Jan-Apr -11.0 Jan-Apr

Germany 5.1 Jan-Apr 4.2 Jan-Apr

Greece

Hungary 9.6 Jan-Apr 5.8 Jan-Apr

Iceland 30.4 Jan-May

Ireland Rep 12.1 Jan-May

Italy 4.3 Jan-Mar 3.3 Jan-Mar

Latvia 1.0 Jan-Mar -0.1 Jan-Mar

Lithuania -0.9 Jan-Mar -4.3 Jan-Mar

Luxembourg -1.0 Jan-Apr

Malta 5.7 Jan-Apr 3.5 Jan-Apr

Montenegro 19.3 Jan-Apr 18.1 Jan-Apr

Netherlands 4.5 Jan-Mar 10.4 Jan-Mar

Norway 9.1 Jan-Apr

Poland 4.7 Jan-Mar 7.8 Jan-Mar

Portugal 9.2 Jan-Mar

Romania 16.0 Jan-Apr

Serbia 10.3 Jan-Apr 13.7 Jan-Apr

Slovakia 3.6 Jan-Mar -1.2 Jan-Mar

Slovenia 9.8 Jan-Apr 5.9 Jan-Apr

Spain 4.4 Jan-Apr 2.7 Jan-Apr

Sweden 8.1 Jan-Apr

Switzerland -0.1 Jan-Apr -3.0 Jan-Apr

Turkey -0.5 Jan-Apr

UK 3.0 Jan-Apr

Source: TourMIS, http://www.tourmis.info; available data as of 1.7.15

Measures used for nights and arrivals vary by country

See TourMIS for further data including absolute values.

Tourist Arrivals and Nights

2015 Performance, Year to Date

International Arrivals International Nights



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.

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017

data/estimate/forecast *** d d e f f d d e f f

World 4.6% 4.4% 3.6% 4.3% 4.4% 4.5% 4.4% 3.6% 4.3% 4.7%

Americas 3.0% 8.1% 3.6% 3.6% 4.1% 2.7% 4.0% 4.7% 4.3% 4.1%

North America 3.4% 9.2% 3.4% 3.6% 4.3% 1.8% 3.7% 5.9% 4.7% 4.1%

Caribbean 2.1% 6.2% 2.5% 3.0% 3.8% -1.6% 4.7% 5.6% 6.5% 8.2%

Central & South America 2.7% 5.9% 4.8% 4.1% 3.7% 6.6% 4.6% 1.1% 2.3% 3.4%

Europe 4.8% 2.7% 2.5% 4.2% 3.7% 3.6% 2.5% 1.6% 4.0% 4.0%

ETC+3 4.4% 4.7% 3.7% 4.3% 3.2% 1.7% 3.8% 4.1% 4.7% 3.6%

EU 3.9% 4.7% 3.7% 4.2% 2.9% 1.1% 3.7% 4.1% 4.8% 3.6%

Non-EU 8.1% -3.8% -1.8% 4.3% 6.9% 11.4% -0.9% -5.6% 1.6% 5.1%

Northern 2.9% 3.5% 4.4% 4.1% 3.4% 1.3% 3.9% 4.6% 4.9% 3.4%

Western 2.5% 1.9% 3.4% 3.9% 2.0% 1.4% 4.1% 3.4% 4.5% 3.5%

Southern/Mediterranean 6.4% 7.2% 4.2% 4.8% 4.0% 0.7% 6.4% 2.8% 3.0% 2.3%

Central/Eastern 6.3% -3.6% -2.7% 3.4% 5.9% 9.3% -1.8% -2.8% 3.4% 6.1%

- Central & Baltic 4.7% 6.5% 2.4% 3.8% 3.8% 5.1% 0.2% 6.3% 6.5% 5.6%

Asia & the Pacific 6.5% 5.6% 5.6% 5.0% 5.8% 7.1% 6.7% 4.9% 4.4% 5.7%

North East 3.5% 7.3% 5.7% 4.7% 6.6% 6.9% 7.9% 5.1% 4.2% 5.7%

South East 11.3% 2.7% 5.4% 5.4% 5.0% 8.9% 1.4% 5.8% 4.7% 5.3%

South 7.7% 9.5% 6.8% 4.0% 6.1% 4.4% 15.5% 3.3% 5.7% 5.9%

Oceania 4.0% 6.2% 3.8% 5.4% 4.1% 5.3% 4.3% -0.8% 5.3% 8.0%

Africa 0.4% 2.2% 4.9% 4.3% 3.6% 3.3% 3.3% 5.3% 3.9% 3.7%

Mid East 3.5% 7.8% 4.7% 5.1% 5.3% 2.9% 8.3% 7.6% 6.3% 6.2%

* 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

Note: world inbound and outbound do not match exactly in historic data or forecast. This is due to visits to multiple destinations.

For example, one outbound trip may be to more than one destination. Some sample error may also be evident in historic data.

*** d - data reported by national statistical agencies are available for all years to 2014

e - 2015 estimated using all available year-to-date data, and forecasts for the rest of the year

f - forecasts according to Tourism Economics' global economic and tourism forecast models

ETC+3 = ETC members plus France, Netherlands, and UK

EU = Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Greece, Germany, Hungary,

Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia,

Slovenia, Spain, Sw eden, UK

Non-EU Europe is all European countries (listed below ) outside EU

Northern Europe = Denmark, Finland, Iceland, Ireland, Norw ay, Sw eden, UK

Western Europe = Austria, Belgium, France, Germany, Luxembourg, Netherlands, Sw itzerland

Southern/Mediterranean Europe = Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece, Italy, Malta,

Central/Eastern Europe = Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan, Kyrgyzstan, Latvia,

Lithuania, Poland, Romania, Russian Federation, Slovakia, Ukraine

of w hich

Central Europe & Baltic countries = Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia

TDM Visitor Growth Forecasts, % change

Outbound**Inbound*



Recent Industry Performance

Air Transport

Revenue Passenger Kilometers continue to

grow steadily in 2015 with growth of 6.3% to

April compared to the same period of 2014.

There is little indication that such growth will

cease anytime soon.

All regions have contributed to this growth with

the exception of Africa which has dragged on

World growth in each of the four months of this

year. Lower oil prices are still the prime culprit

with African producers hostage to a higher

breakeven price per barrel of oil produced,

which in turn has dampened outbound travel

demand. The ongoing terror threat exemplified

by recent events in Tunisia has many

countries on high alert, as well as some

lingering ebola concerns, may still be deterring

some inbound travel.

Asia/Pacific enjoyed a boost in March

potentially linked to a post-Lunar New Year

pick-up, and the region has enjoyed 8.7%

growth so far this year. However, there has

been a notable weakening in regional trade in

recent months, which has, and will continue to

stifle some business-related travel.

Travel to and from Europe maintains its

momentum according to year-to-date data to

April, growing by 4.8% compared to the same

period in 2014. Moreover, this upward trend is

likely to continue despite some downward

pressures on economic progress due to

firming in the euro as well as oil prices.

For North American carriers, although RPK

grew by 2.4% YTD to April, the stronger US

dollar will have dragged on inbound travel

growth to the reigon.

Strong industry growth a positive sign

RPK continues to grow smoothly

Last-minute cancellations of planned strike action mean only minor disruption

was caused by industry protestors

A strong dollar helps boost travel growth between Europe and the Americas

which continues to outpace total European air passenger traffic growth

European hotel performance is broadly positive across all measures.

-5

0

5

10

15

Africa Asia/Pacific Europe LatinAmerica

Mid.East N.America World

Jan-15 Feb-15 Mar-15 Apr-15

% year

Source: IATA

Monthly international air passenger growth

-5

0

5

10

15

Africa Asia/Pacific Europe LatinAmerica

Mid.East N.America World

2013 2014 2015 ytd

% year, RPK

Source: IATA

Annual international air passenger growth

-12

-9

-6

-3

0

3

6

9

12

15

18

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total

3mth mav

Source: IATA

Icelandic Ash Cloud Impact

International air passenger traffic growth% year, Revenue Passenger Kilometers



Data from the Association of European Airlines (AEA) shows lower European airline

capacity for much of the beginning of 2015 compared to 2014. However this gap

closed towards the end of Q2 where a continuation of the current trend would suggest

European airlines will be operating with greater capacity than at the same time in

2014. Although oil prices have largely stabilised after a lengthy period of decline, with

data suggesting that next to none of the lower world oil prices was passed onto the

consumer, this should have no bearing on demand. Airlines were reluctant to increase

their capacity in line with demand in order to keep prices high. Strike action lasting 48

hours taken by French air traffic controllers in relation to changes to the age of

retirement caused some disruption, with a small contraction in airline capacity

observed at the beginning of Q2. Passenger load factor (PLF) appears to be following

a broadly similar pattern as in 2013 and 2014, with the exception of the strike

disruption.

Travel between Europe and Asia increased at a faster rate than total European airline

passenger growth throughout most of 2014, but slowed later in the year and into 2015

in line with slowing Chinese consumer spending. Long haul travel from Asian markets

is likely to grow in line with economic trends in the region, which is to pick up from the

slower pace of growth observed in recent months. On the whole, air passenger traffic

between Europe and the Americas continued to grow at a faster rate than total

scheduled travel to and from Europe in 2015 to date. United States outbound travel to

Europe is likely to be particularly strong, driven by the appreciation of the dollar

against most key currencies – and notably against the euro – as well as by favourable

economic conditions in the United States. Recent analysis by Tourism Economics

estimates that the dollar’s recent appreciation will result in European inbound arrivals

being 1.1% higher in 2015 than they would have been had the dollar retained its 2014

value. This highlights the significance of air passenger flows between these two

regions.

60

65

70

75

80

85

90

Q1 Q2 Q3 Q4

2013 2014 2015

Weekly load factor, %

Source: AEA

European airlines passenger load factor

-5

0

5

10

Q1 Q2 Q3 Q4

2013 2014 2015

ASK, 4 week moving average, % change year ago

Source: AEA

European airlines capacity

-4

-2

0

2

4

6

8

10

12

14

201

2Q

1

2012Q

2

2012Q

3

2012Q

4

2013Q

1

2013Q

2

2013Q

3

2013Q

4

2014Q

1

2014Q

2

201

4Q

3

2014Q

4

2015Q

1

201

5Q

2

Americas Total

RPK, 4 week moving average, % change year ago

RPK = revenue passenger kmsSource: AEA

European airline passenger traffic: Americas

-4

-2

0

2

4

6

8

10

12

14

201

2Q

1

2012Q

2

2012Q

3

201

2Q

4

2013Q

1

2013Q

2

2013Q

3

2013Q

4

2014Q

1

2014Q

2

2014Q

3

2014Q

4

2015Q

1

2015Q

2

Asia Total

RPK, 4 week moving average, % change year ago

RPK = revenue passenger kmsSource: AEA

European airline passenger traffic: Asia



Accommodation

Occupancy rates grew across all regions of the World based on data to May

compared to the same period in 2014. Occupancy rates in Europe saw the greatest

gains, up 2.3% compared to the first four months of 2014. In the Americas, occupancy

rates were 2% higher than in the same period in 2014. In the Middle East/Africa and

Asia/Pacific, occupancy rates increased by 1%, and 0.4% respectively. When

denominated in US dollar terms, monetary performance measures were much more

varied. Asia/Pacific and the Middle East/Africa, both average daily rate (ADR) and

revenue per available room (RevPAR) fell. In the case of Asia/Pacific these fell by

6.3% and 5.9% respectively and in the Middle East/Africa by 2.7% and 1.7%

respectively. However, if denominated in euro terms, these same measures were

comfortably positive, reflecting the vast gains made by the US dollar on foreign

exchange markets and the added relative expense incurred by a Eurozone traveller

wishing to go beyond the Eurozone.

-10

-5

0

5

10

15

20

Esto

nia

Turk

ey

Denm

ark

Malta

Port

ugal

Lithuania

Cze

ch R

ep

ub

lic

Ru

ssia

Irela

nd

Hu

ng

ary

United

Kin

gd

om

Spa

in

Gre

ece

Neth

erl

and

s

Belg

ium

Sw

itzerla

nd

Italy

Pola

nd

Germ

any

Austr

ia

Rom

an

ia

Fin

lan

d

Fra

nce

Slo

vakia

Hotel average daily rate (ADR)Jan-May year to date, local currency, % change year ago

Source : STR Global

Asia/Pacific Americas Europe MiddleEast/Africa

-10

-5

0

5

10

15

20 Occ ADR* RevPAR*

Global Hotel Performance, Jan-May 2015

% change year ago

Source: STR Global * ADR and RevPAR denominated in US$ except for Europe



Key Source Market Performance

Trends discussed in this section relate to the first five 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.

Key intra-European markets

Montenegro is now the top European destination in the eyes of the German traveller,

reportedly receiving 49.9% more foreign visits in the first four months of 2015 than it

did during the same period of 2014. Overnight visits from Germany grew by 73.2%.

Still in its low season, Montenegro looks well placed to see even more growth from

Germany as high season air corridors continue to open and operate at higher

frequencies.

Croatia has also seen a large increase in the number of German visitors it received,

and should be well placed to maintain momentum into the summer months for the

same reasons as Montenegro.

German interest in Bulgaria, Hungary, and Switzerland has waned as the year has

progressed. Interestingly, none of the three are in the European monetary union,

suggesting that the decline in interest is economically motivated more than anything

else as these destinations have lost some competitiveness.

This is particularly clear in the case of Switzerland which is one of the more costly

European countries to live and holiday in. Latest data suggests a revival of interest in

its Eurozone neighbours as the relative weakness of the euro will have made trips to

non-Eurozone countries less viable than they were this time last year.

Mostly a picture of growth

European travel demand continues to grow across the majority of markets

Falling oil prices and a weaker euro have mostly had a positive impact

Russian economy has shown some signs of improvement with exports helping

to stabilise the falling rouble, but this has yet to boost outbound tourism with

almost all countries reporting falls

A strong US and Canadian dollar, and a weaker euro have boosted long-haul

travel demand

-10

-5

0

5

10

15

20

25

30

Monte

negro

Cro

atia

Icela

nd

Cypru

sLatv

iaC

zech R

ep

Neth

erlands

Pola

nd

Esto

nia

Fin

land

Slo

vakia

Malta

Austr

iaT

urk

ey

Slo

venia

Rom

ania

Lithuania

Spain

Se

rbia

Italy

Hu

ng

ary

Bulg

aria

Sw

itzerland

Visits from Germany to select destinations2015, year-to-date*, % change year ago


35.4

39.9

49.9

-10

-5

0

5

10

15

20

25

30

Monte

negro

Cro

atia

Latv

iaN

eth

erlands

Czech R

ep

Serb

iaP

ort

ugal

Luxem

bourg

Pola

nd

Malta

Fin

land

Slo

vakia

Austr

iaD

enm

ark

Lithuania

Sw

eden

Esto

nia

Norw

ay

Italy

Slo

ve

nia

Sp

ain

Hungary

Sw

itzerland

German visitor nights in select destinations2015, year-to-date*, % change year ago


46.5

73.2 34.3

http://tourmis.info/



Latvia and Estonia have enjoyed large gains in the number of visits and overnights

from Netherlands, aided by an ever increasing air network linking Western and

Northern Europe and eastern European countries. Other emerging European

destinations such as Slovenia, Iceland, and Croatia also saw gains in Dutch visits and

overnights. The southern climes of Cyprus and Italy have also gained increased

interest from the Netherlands so far in 2015 (based on data to May and March

respectively) with visits growth of 21.8% and 40.7%.

Similar to German sentiment, Switzerland has lost out on some visitors from the

Netherlands, likely linked to the decision at the beginning of the year the Swiss

National Bank made the decision to abandon its three year old cap against the euro.

Interestingly, it was economic and political instability in the Eurozone in 2011 which

prompted the move to impose the cap. Three years later, similar economic and

political instability surrounded the reversal of that decision.

Many European destinations have seen the number of visits received from France

grow markedly so far this year. Chief recipients of this growth were largely emerging

destinations such as Lithuania, Iceland, Latvia, Montenegro, and Serbia but the

French continue to show increasing interest in some of Europe’s more mature

destinations such as Cyprus, Portugal, and Spain.

Turkey endured substantial losses in terms of the number of French visitors it

received: in the first four months of 2015 it welcomed 21.1% less visitors than in the

same period of 2014. Switzerland once again finds itself losing visits from a large

European source market with visits having fallen by 7.3% and overnights by 7.2%.

Combined with losses from elsewhere, Switzerland looks unlikely to end the year with

a net gain in visitor numbers compared to 2014. Denmark is also experiencing lower

French demand and euro weakness is likely the root cause of falling French visitors

numbers across the majority of affected countries.

-20

-15

-10

-5

0

5

10

15

20

Cypru

sLatv

iaItaly

Esto

nia

Pola

nd

Icela

nd

Czech R

ep

Lithuania

Slo

venia

Slo

vakia

Austr

iaG

erm

any

Rom

ania

Bulg

aria

Fin

land

Cro

atia

Malta

Spain

Sw

itze

rla

nd

Hu

ng

ary

Mo

nte

ne

gro

Serb

iaT

urk

ey

Visits from Netherlands to select destinations2015, year-to-date*, % change year ago


40.7

36.7

21.8

-20

-15

-10

-5

0

5

10

15

20

Latv

iaItaly

Esto

nia

Czech R

ep

Slo

venia

Sw

eden

Pola

nd

Norw

ay

Luxem

bourg

Port

ugal

Austr

iaS

lovakia

Germ

any

Serb

iaM

alta

Fin

land

Cro

atia

Lithuania

Sw

itze

rla

nd

Sp

ain

Hu

ng

ary

Monte

negro

Denm

ark

Netherlands nights in select destinations2015, year-to-date*, % change year ago


-25

37

-20.2

30.3

35.2 20.7

-21.3

-10

-5

0

5

10

15

20

25

30

Lithuania

Cypru

sIc

ela

nd

Latv

iaM

onte

negro

Esto

nia

Serb

iaF

inla

nd

Malta

Bulg

aria

Hungary

Pola

nd

Slo

vakia

Rom

ania

Spain

Germ

any

Czech R

ep

Neth

erlands

Italy

Au

str

iaC

roatia

Slo

venia

Sw

itzerland

Turk

ey

Visits from France to select destinations2015, year-to-date*, % change year ago


47.1

44.7

36.5

32.8

-21.1-10

-5

0

5

10

15

20

25

30

Lithuania

Serb

iaN

orw

ay

Port

ugal

Esto

nia

Latv

iaM

alta

Po

land

Spain

Hung

ary

Czech R

ep

Fin

land

Neth

erlands

Sw

eden

Germ

any

Slo

vakia

Italy

Monte

negro

Austr

iaC

roatia

Denm

ark

Luxem

bourg

Sw

itzerland

Slo

venia

French visitor nights in select destinations2015, year-to-date*, % change year ago


41.8



Lithuania had a larger number of Italian visitors pass through its borders in the first

three months of 2015 compared to the same period last year. Ireland has also fared

well, receiving 36.2% more Italian visitors to March compared to the same period in

2014. At least some proportion of these additional visits was displaced travel

otherwise destined for the UK had euro weakness not made Ireland the more

appealing option. The weaker euro has also paved the way for other, less expensive,

non-Eurozone destinations such as Poland and Czech Republic to gain share at the

expense of other, more expensive, non-Eurozone destinations such as Switzerland

and Denmark.

The relative strength of British pound against the euro has made the Eurozone a more

appealing destination for the British visitor. Only Switzerland, which is not a member of

the European monetary union, reported falling visits from the UK and only a minority of

countries reported falls in the number overnights.

It was Baltic and Eastern European destinations which proved most popular with

Latvia, Slovakia, and Lithuania all enjoying growth in British visitor numbers in excess

of 40%. Montenegro and Romania also gained share, receiving 36.7% and 21.2%

more visits in the first four months of 2015 compared to 2014 respectively.

-20

-15

-10

-5

0

5

10

15

20

Lithuania

Icela

nd

Slo

vakia

Pola

nd

Esto

nia

Latv

iaB

ulg

aria

Rom

ania

Malta

Hungary

Spain

Fin

land

Monte

negro

Slo

venia

Czech R

ep

Germ

any

Austr

iaC

roatia

Ne

the

rla

nds

Se

rbia

Sw

itze

rla

nd

Cypru

sT

urk

ey

Visits from Italy to select destinations2015, year-to-date*, % change year ago


37.736.2

35

-20

-15

-10

-5

0

5

10

15

20

Lithuania

Port

ugal

Malta

Pola

nd

Esto

nia

Spain

Czech R

ep

Slo

vakia

Hungary

Fin

land

Latv

ia

Slo

venia

Neth

erlands

Monte

negro

Sw

eden

Se

rbia

Germ

any

Austr

ia

Cro

atia

Luxem

bourg

Sw

itzerland

Denm

ark

Italian visitor nights in select destinations2015, year-to-date*, % change year ago


118 30.5

23.226

24 20.2

37.4

-10

0

10

20

30

40

50

Lithuania

Slo

vakia

Latv

iaH

ungary

Monte

negro

Esto

nia

No

rwa

yC

zech R

ep

Neth

erlands

Sw

eden

Denm

ark

Pola

nd

Slo

venia

Germ

an

yA

ustr

iaP

ort

ugal

Cro

atia

Luxem

bourg

Fin

land

Malta

Spain

Sw

itzerland

Serb

iaItaly

British visitor nights in select destinations2015, year-to-date*, % change year ago


68

52.7

-10

0

10

20

30

40

50

Latv

iaS

lovakia

Lithuania

Monte

negro

Hungary

Icela

nd

Rom

ania

Cypru

sE

sto

nia

Bulg

aria

Czech R

ep

Italy

Slo

venia

Irela

nd R

ep

Austr

iaG

erm

any

Spain

Neth

erlands

Malta

Pola

nd

Cro

atia

Tu

rke

yF

inla

nd

Serb

iaS

witzerland

Visits from UK to select destinations2015, year-to-date*, % change year ago




The recent announcement that EU foreign ministers have extended economic

sanctions against Russia until the end of January 2016 as well as latest trends point to

further falls in Russian travel demand.

All but two reporting destinations have recorded falling arrivals from Russia and all but

one has recorded falling nights – including some traditional Russian holiday hotspots

such as Turkey and Estonia.

These large falls partly reflect the impact of falling oil prices on Russian aggregate

income as well as other political and economic uncertainties which caused the rouble

to depreciate markedly (over the better part of a year) making foreign travel relatively

more expensive for the Russian traveller. Since January, however, the rouble has

seen something of a rebound and with oil prices now relatively stable, although at a

much lower level than one year ago, the economy appears to be on a slightly firmer

footing. However, current economic and tourism demand remains well below levels

experienced in early 2014 and all indicators still point to a deep recession in Russia

this year. An eventual recovery in tourism demand is possible towards the end of the

year albeit from a very low base.

Montenegro was one of only two reporting destinations which saw visits from Russia

grow by 2.4% and overnights by 5% in the first four months of 2015 compared to the

same period in 2014.

Romania – the only other country to see visits growth from Russia – has been one of

the most forthright backers of EU sanctions and has urged both NATO and the United

States to step-up military presence. Interestingly, however, this seems not to have

deterred Russians from visiting with numbers up 2.2% to April compared to the same

period in 2014.

Greek-Russian relations may yield some benefits for Greece in 2015 as the new

government begins to forge alliances beyond the EU and through its lax imposition of

Western-led sanctions against Russia, arguably preparing for the worst in terms of its

future as an EU member state.

Because the Russia-Ukraine crisis began in mid-March 2014, we are still comparing

post-crisis data with mostly pre-crisis data and these falls should become less

substantial once the annual comparison is based on a post-crisis period.

-60

-50

-40

-30

-20

-10

0

10

Monte

negro

Rom

ania

Serb

iaC

roatia

Italy

Cypru

sS

lovenia

Sp

ain

Tu

rkey

Bulg

aria

Germ

any

Hungary

Sw

itzerland

Austr

iaIc

ela

nd

Neth

erlands

Lithuania

Slo

vakia

Latv

iaE

sto

nia

Czech R

ep

Fin

land

Pola

nd

Malta

Visits from Russia to select destinations2015, year-to-date*, % change year ago


-60

-50

-40

-30

-20

-10

0

10

Monte

negro

Luxem

bourg

Serb

iaC

roatia

Italy

Norw

ay

Spa

inS

witze

rla

nd

Germ

any

Neth

erlands

Port

ugal

Sw

eden

Hungary

Austr

iaD

enm

ark

Slo

venia

Lithuania

Latv

iaE

sto

nia

Czech R

ep

Slo

vakia

Fin

land

Pola

nd

Malta

Russian visitor nights in select destinations

2015, year-to-date*, % change year ago




Non-European markets

Latest data show that travel to Europe from the US was positive in all but a few

reporting destinations. The US economy continues to strengthen according to the

latest economic data with an upswing in consumer spending through jobs and wage

growth. There remains scope for growth in outbound travel particularly in terms of long

haul travel, helped by appreciation in the dollar against key currencies such as the

euro.

Latvia and Iceland enjoyed particularly strong visits growth from the US by 45.4% and

42.4% respectively, based on data to March and May. Many other European

destinations, both emerging and mature, have seen arrivals from the US grow as the

stronger dollar and favourable economic conditions make travel to these destinations

more viable than they would have been as recently as a year ago.

However, some destinations saw arrivals fall – most notably Malta and Cyprus which

received 10.8% and 33.4% less visits from the US respectively.

Data pertaining to Japanese visitors suggests an appetite for emerging, particularly

Eastern European destinations such as Latvia, Estonia, Poland, and Lithuania, all of

which posted visits growth of 29% or more.

Visits and overnights from Japan suggest that the export-led policies of the Bank of

Japan have not affected travel behaviour as much as initially feared in spite of lower

spending power in international markets from the weaker yen. The number of

European countries that reported a growing number of arrivals from Japan versus

falling arrivals continues to grow.

-20

-10

0

10

20

30

40

Latv

iaIc

ela

nd

Serb

iaE

sto

nia

Hungary

Monte

negro

Lithuania

Ro

ma

nia

Slo

vakia

Cro

atia

Czech R

ep

Slo

venia

Spain

Bulg

aria

Turk

ey

Austr

iaF

inla

nd

Sw

itzerland

Pola

nd

Germ

an

yItaly

Neth

erlands

Malta

Cypru

s

Visits from US to select destinations



42.445.4

-33.4-20

-10

0

10

20

30

40

Monte

negro

Latv

iaS

erb

iaC

roatia

Hungary

Luxem

bourg

Slo

venia

Czech R

ep

Slo

vakia

Spain

Denm

ark

Port

ugal

Austr

iaS

witzerland

Germ

any

Pola

nd

Fin

land

Norw

ay

Ne

the

rla

nds

Italy

Sw

ed

en

Malta

Lithuania

US visitor nights in select destinations



66.1

-24.5

57.1

-30

-20

-10

0

10

20

30

40

Cypru

s

Latv

ia

Esto

nia

Pola

nd

Italy

Lithuania

Spain

Slo

venia

Icela

nd

Cro

atia

Au

str

ia

Germ

any

Slo

vakia

Hungary

Czech R

ep

Sw

itze

rla

nd

Fin

land

Serb

ia

Neth

erlands

Bulg

aria

Turk

ey

Monte

negro

Visits from Japan to select destinations2015, year-to-date*, % change year ago


57.3

46.4

-64.5

58.1

106

-30

-20

-10

0

10

20

30

40

Italy

Esto

nia

Spain

Slo

venia

Pola

nd

Latv

iaLithuania

Cro

atia

Slo

vakia

Norw

ay

Germ

any

Austr

iaLuxem

bourg

Sw

eden

Hungary

Czech R

ep

Neth

erlands

Denm

ark

Sw

itze

rla

nd

Fin

lan

dP

ort

ug

al

Serb

iaM

onte

negro

Japanese visitor nights in select destinations2015, year-to-date*, % change year ago


58.4

46.2

44.4

-52.7



Outbound travel from China continues to gain momentum as 2015 progresses in

terms of both visits and overnights with double digit growth observed in all but a

handful of destinations. This is positive amid concerns of a slowdown in the Chinese

economy and industrial activity and both consumer surveys and retail sales data

remain robust. Travel to Europe as a whole was estimated to have grown by over 17%

in 2014 as a whole – the fifth consecutive year of growth. However, given the relatively

small volumes, travel from China to Europe should not be overvalued, accounting for

just 1.5% of European arrivals in 2014.

As with China, arrivals growth from India was positive in the majority of European

destinations for which there was data, and in many cases double digit growth was

reported. Croatia has seen the highest rate of growth relative to the comparable period

in 2014 enjoying overnights growth of 96.5% based on data to May. Montenegro,

according to data to April, has seen overnight arrivals from India grow by 28.4%,

which, while impressive, falls far short of the triple digit growth (161%) observed

earlier in the year. At the same time visits from India decreased (by 37.7%) indicating

that although less are coming, those that do are staying sufficiently long enough to

offset the fall in visits.

Indian arrivals still represent a relatively small proportion of total European arrivals and

some volatility should be expected but with limited impact on overall destination

performance. In the longer-term, growth prospects remain strong with potential

economic reform. Given these positive economic trends, there is clear potential for

India to catch-up with China as an emerging source market.

-30

-20

-10

0

10

20

30

40

50

Cro

atia

Spain

Hungary

Czech R

ep

Austr

ia

Fin

lan

d

Germ

any

Latv

ia

Bulg

aria

Sw

itzerland

Turk

ey

Pola

nd

Italy

Slo

va

kia

Neth

erlands

Monte

negro

Visits from India to select destinations2015, year-to-date*, % change year ago


79.2

-37.7

77.7

-30

-20

-10

0

10

20

30

40

50

Cro

atia

Hungary

Spain

Czech R

ep

Latv

ia

Au

str

ia

Monte

negro

Pola

nd

Denm

ark

Fin

land

Germ

any

Neth

erlands

Slo

vakia

Sw

itze

rla

nd

Sw

eden

Italy

Indian visitor nights in select destinations2015, year-to-date*, % change year ago


96.5 63.4

-10

0

10

20

30

40

50

60

70

80

90

100

Cypru

sS

erb

iaS

lovakia

Icela

nd

Cro

atia

Spain

Slo

venia

Turk

ey

Au

str

iaLatv

iaItaly

Sw

itze

rla

nd

Germ

any

Lithuania

Rom

ania

Fin

land

Czech R

ep

Neth

erlands

Hungary

Pola

nd

Esto

nia

Mo

nte

ne

gro

Bulg

aria

Visits from China to select destinations2015, year-to-date*, % change year ago


145

-10

0

10

20

30

40

50

60

70

80

90

100

Lithuania

Norw

ay

Serb

ia

Slo

vakia

Cro

atia

Slo

venia

Denm

ark

Austr

ia

Fin

land

Italy

Sw

itzerland

Pola

nd

Esto

nia

Hu

ng

ary

Czech R

ep

Germ

any

Latv

ia

Spain

Luxem

bourg

Sw

eden

Monte

negro

Neth

erlands

Chinese visitor nights in select destinations2015, year-to-date*, % change year ago


176.8



Some promising growth from Canada has been reported by the majority of reporting

destinations, many of which have seen visits and overnights from Canada grow by

double digit figures. Falling World oil prices caused the Canadian dollar to depreciate

against its US counterpart, making US holidays less appealing. At the same time, the

Canadian dollar appreciated against the euro, making European destinations more

attractive.

Lithuania, Serbia, and Spain were some of the destinations to benefit from these

currency movements with visitor numbers growing by 60.8%, 34.6%, and 29.4%,

respectively. Many other destinations reported strong, double-digit growth rates,

including some large developed markets, indicating the benefit of the increased price

attractiveness.

-30

-20

-10

0

10

20

30

Lithuania

Serb

ia

Spain

Latv

ia

Italy

Slo

venia

Cro

atia

Slo

vakia

Turk

ey

Hungary

Po

land

Czech R

ep

Rom

ania

Icela

nd

Bulg

aria

Ne

the

rla

nds

Germ

any

Sw

itzerland

Austr

ia

Monte

negro

Fin

land

Cypru

s

Visits from Canada to select destinations2015, year-to-date*, % change year ago


60.8

34.6

-51.0-30

-20

-10

0

10

20

30

Se

rbia

Slo

venia

Spa

in

Monte

negro

Port

ugal

Latv

ia

Cro

atia

Slo

vakia

Pola

nd

Lithuania

Ne

the

rla

nds

Hungary

Italy

Sw

itzerland

Germ

any

Czech R

ep

Denm

ark

Austr

ia

Fin

land

Sw

eden

Canadian visitor nights in select destinations2015, year-to-date*, % change year ago


61.842.4

38.932.1

-39.5



Origin Market Share Analysis

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. 2015 values are year-to-date estimates based on the

latest available data and are not final reported numbers.

United States

Methodology note:

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 is 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.

Note: this analysis is based on the Tourism Decision Metrics

(TDM) model. The geographies of Europe are defined as:

Northern Europe: Denmark, Finland, Iceland, Ireland,

Norway, Sweden, UK

Western Europe: Austria, Belgium, France, Germany,

Luxembourg, Netherlands, Switzerland

Southern/Mediterranean Europe: Albania, Bosnia-

Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece, Italy,

Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, Turkey

Central/Eastern Europe: Armenia, Azerbaijan, Bulgaria,

Czech Republic, Estonia, Hungary, Kazakhstan, Kyrgyzstan,

Latvia, Lithuania, Poland, Romania, Russian Federation,

Slovakia, Ukraine

Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010

Total outbound travel (000s) 95,788 - 4.1% 22.2% - 26.1% -

of which:

Long haul (000s) 58,750 61.3% 5.0% 27.7% 64.1% 28.6% 60.1%

Short haul (000s) 37,039 38.7% 2.6% 13.4% 35.9% 22.3% 39.9%

Travel to Europe***

Europe (000s) 25,560 26.7% 4.5% 24.8% 27.3% 31.8% 25.5%

Northern Europe (000s) 5,887 6.1% 6.0% 34.1% 6.7% 29.2% 6.0%

Western Europe (000s) 9,573 10.0% 3.5% 18.8% 9.7% 27.4% 9.9%

Southern Europe (000s) 6,569 6.9% 3.8% 20.5% 6.8% 34.5% 6.4%

Central/Eastern Europe (000s) 3,531 3.7% 5.9% 33.5% 4.0% 44.6% 3.2%

US Market Share Summary

2015 Growth (2015-20) Growth (2010-15)

* Levels are in 000s unless otherwise specified

*** Shares are expressed as a % of total outbound travel

** Shows cumulative change over the relevant time period indicated

0

10

20

30

40

50

60

70

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US long haul* outbound travel Rest of Long Haul

Central/Eastern Europe

Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside North America

Source: Tourism Economics

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

20

05

20

06

20

07

20

08

20

09

20

10

20

11

201

2

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

Europe's share of US marketNorthern Europe

Western Europe

Southern Europe


% of long haul* market





0

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Canada long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Europe's share of Canadian market Northern Europe

Western Europe

Southern Europe





Canada




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 11,329 31.7% 4.7% 26.0% 32.3% 9.2% 33.3%

Short haul (000s) 24,446 68.3% 4.1% 22.4% 67.7% 17.7% 66.7%

Travel to Europe***

Europe (000s) 4,301 12.0% 2.5% 13.1% 11.0% 9.1% 12.7%

Northern Europe (000s) 986 2.8% 5.6% 31.5% 2.9% 12.9% 2.8%

Western Europe (000s) 1,547 4.3% 1.4% 7.0% 3.7% -3.5% 5.1%


Central/Eastern Europe (000s) 187 0.5% 5.6% 31.6% 0.6% -27.0% 0.8%


2015 Growth (2015-20) Growth (2010-15)

Canada Market Share Summary





Mexico




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 2,393 11.8% 4.6% 25.1% 11.4% 44.6% 10.8%

Short haul (000s) 17,873 88.2% 5.5% 30.7% 88.6% 31.5% 89.2%

Travel to Europe***

Europe (000s) 1,254 6.2% 2.6% 13.9% 5.4% 46.8% 5.6%


Western Europe (000s) 577 2.8% 3.3% 17.9% 2.6% 36.4% 2.8%

Southern Europe (000s) 445 2.2% 0.7% 3.6% 1.8% 57.9% 1.8%

Central/Eastern Europe (000s) 132 0.7% 4.3% 23.3% 0.6% 61.2% 0.5%




Mexico Market Share Summary

2015 Growth (2015-20) Growth (2010-15)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mexico long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

5%

10%

15%

20%

25%

30%

35%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Mexican marketNorthern Europe

Western Europe

Southern Europe







Argentina




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 2,235 29.0% 4.0% 21.6% 29.3% 33.5% 28.5%

Short haul (000s) 5,468 71.0% 3.7% 19.9% 70.7% 30.2% 71.5%

Travel to Europe***

Europe (000s) 822 10.7% 4.1% 22.2% 10.8% 38.0% 10.1%


Western Europe (000s) 45 0.6% 4.3% 23.6% 0.6% 41.2% 0.5%




2015 Growth (2015-20) Growth (2010-15)



Argentina Market Share Summary

0.0

0.5

1.0

1.5

2.0

2.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Argentina long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside South America


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Argentinean market

Northern Europe

Western Europe

Southern Europe







Brazil




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 6,794 71.0% 4.2% 22.8% 70.8% 52.2% 66.6%

Short haul (000s) 2,777 29.0% 4.4% 23.8% 29.2% 23.8% 33.4%

Travel to Europe***

Europe (000s) 3,298 34.5% 1.2% 6.2% 29.7% 39.3% 35.3%


Western Europe (000s) 1,542 16.1% 0.6% 3.0% 13.5% 43.1% 16.1%

Southern Europe (000s) 1,202 12.6% -0.7% -3.3% 9.9% 32.2% 13.6%




Brazil Market Share Summary

2015 Growth (2015-20) Growth (2010-15)


0

1

2

3

4

5

6

7

8

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Brazil long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

5%

10%

15%

20%

25%

30%

35%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Brazilian marketNorthern Europe

Western Europe

Southern Europe







India




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 13,105 94.5% 5.7% 32.2% 94.1% 39.2% 96.2%

Short haul (000s) 765 5.5% 7.2% 41.4% 5.9% 106.7% 3.8%

Travel to Europe***

Europe (000s) 2,064 14.9% 6.2% 34.9% 15.1% 41.1% 15.0%


Western Europe (000s) 731 5.3% 6.4% 36.4% 5.4% 47.5% 5.1%



India Market Share Summary



2015 Growth (2015-20) Growth (2010-15)


0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

India long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside South Asia


0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Indian marketNorthern Europe

Western Europe

Southern Europe



*Long haul defined as tourist arrivals to destinations outside South Asia




China




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Note Chinese outbound shown here is smaller than

reported departures in national statistics as the latter

includes same day visits to Hong Kong and Macau.

Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 29,552 41.9% 4.6% 25.3% 43.9% 154.0% 33.0%

Short haul (000s) 41,051 58.1% 2.8% 15.0% 56.1% 73.8% 67.0%

Travel to Europe***

Europe (000s) 9,645 13.7% 4.6% 25.5% 14.4% 138.5% 11.5%


Western Europe (000s) 5,448 7.7% 4.0% 21.6% 7.9% 176.7% 5.6%




Growth (2015-20) Growth (2010-15)



China Market Share Summary

2015

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

China long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside Northeast Asia


0%

5%

10%

15%

20%

25%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

2013

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Chinese marketNorthern Europe

Western Europe

Southern Europe







Japan




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 13,446 61.7% 2.8% 14.8% 59.9% 8.1% 57.7%

Short haul (000s) 8,364 38.3% 4.3% 23.4% 40.1% -8.4% 42.3%

Travel to Europe***

Europe (000s) 4,273 19.6% 1.5% 7.6% 17.9% 2.9% 19.2%


Western Europe (000s) 2,046 9.4% 1.0% 5.1% 8.3% 5.5% 9.0%




2015 Growth (2015-20) Growth (2010-15)



Japan Market Share Summary

0

2

4

6

8

10

12

14

16

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Japan long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million



0%

2%

4%

6%

8%

10%

12%

14%

16%

18%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Japanese marketNorthern Europe

Western Europe

Southern Europe







United Arab Emirates




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010

Total outbound travel (000s) 2,922 - 4.9% 26.9% - -14.3% -

of which:

Long haul (000s) 1,213 41.5% 2.9% 15.2% 37.7% 9.5% 32.5%

Short haul (000s) 1,710 58.5% 6.2% 35.1% 62.3% -25.7% 67.5%

Travel to Europe***

Europe (000s) 656 22.4% 1.9% 9.7% 19.4% 5.8% 18.2%

Northern Europe (000s) 220 7.5% -1.4% -7.0% 5.5% 8.0% 6.0%

Western Europe (000s) 270 9.2% 2.8% 14.9% 8.4% 15.6% 6.9%





2015 Growth (2015-20) Growth (2010-15)


United Arab Emirates Market Share Summary

0.0

0.5

1.0

1.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

UAE long haul* outbound travel Rest of Long Haul


Southern Europe

Western Europe

Northern Europe

Million

*Long haul defined as tourist arrivals to destinations outside the Middle East


0%

5%

10%

15%

20%

25%

30%2

00

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Emirati marketNorthern Europe

Western Europe

Southern Europe



*Long haul defined as tourist arrivals to destinations outside the Middle East




Russia




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:







destinations; In 2014 US data reporting shows 11.9m




Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 7,999 23.9% 9.4% 57.1% 28.1% 27.3% 24.0%

Short haul (000s) 25,408 76.1% 4.8% 26.5% 71.9% 27.7% 76.0%

Travel to Europe***

Europe (000s) 25,408 76.1% 4.8% 26.5% 71.9% 27.7% 76.0%

Northern Europe (000s) 1,779 5.3% 3.8% 20.8% 4.8% 29.0% 5.3%

Western Europe (000s) 2,118 6.3% 3.7% 20.0% 5.7% 58.3% 5.1%




2015 Growth (2015-20) Growth (2010-15)



Russia Market Share Summary

0

5

10

15

20

25

30

35

40

45

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Russia outbound travel Rest of World


Southern Europe

Western Europe

Northern Europe

Million

*Outbound travel defined as tourist arrivals to all destinations


0%

10%

20%

30%

40%

50%

60%

70%

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

2013

201

4

201

5

201

6

201

7

201

8

201

9

202

0

Europe's share of Russian marketNorthern Europe

Western Europe

Southern Europe


% of outbound* market

*Outbound market defined as tourist arrivals to all destinations




Economic outlook summary: key source markets

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 avail of international travel. 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.

Eurozone GDP growth is forecast to grow in 2015 across all key markets, most notably

Germany as a result of low inflation, falling unemployment, and more competitive

exports.

The UK recovery is in full flow with strong growth across all key macro indicators

expected in 2015 and 2016, particularly GDP and consumer expenditure up 2.6% and

2.9% respectively compared to 2014. This growth is being led by low inflation which is

being driven by lower oil prices.

Russian growth has slowed substantially in 2015 and Oxford Economics’ latest outlook is

recession with GDP expected to fall 3.6%. This is partly linked to the large devaluation of

the rouble which began last year and risks related to capital flight in emerging markets,

while a falling oil price will also affect government revenue and spending. There has

been some reprieve in recent months, however, with more competitive exports helping to

ease the pain currently being felt elsewhere in the economy. However, the continued

sanctions and counter-sanctions will act as a further drag on growth.

Chinese growth has been downgraded again. Relatively strong GDP and consumer

expenditure growth is still expected, albeit slower than Indian growth expectations in the

short to medium term.

Lower fuel prices, steadily reducing inflation and higher business and investor

confidence suggest that growth in India will accelerate in the coming months and strong

GDP and consumer expenditure growth will pave the way for outbound travel growth.

GDP

Consumer

expenditure

Unemploy-

ment **

Exchange

rate*** Inflation GDP

Consumer

expenditure

Unemploy-

ment **

Exchange

rate*** Inflation

UK 2.6% 2.9% -0.8% 11.0% 0.3% UK 2.8% 2.9% -0.2% 2.0% 1.7%

France 1.3% 1.9% 0.2% 0.0% 0.4% France 1.7% 1.5% -0.1% 0.0% 1.8%

Germany 2.0% 2.3% -0.2% 0.0% 0.6% Germany 2.2% 1.7% -0.1% 0.0% 1.9%

Netherlands 1.8% 1.0% -0.8% 0.0% 0.6% Netherlands 1.5% 0.9% -0.3% 0.0% 1.3%

Italy 0.5% 0.4% -0.1% 0.0% 0.3% Italy 1.0% 0.8% -0.2% 0.0% 1.1%

Russia -3.6% -6.2% 1.1% -19.4% 14.4% Russia 0.9% 1.1% 0.5% 3.0% 7.8%

US 2.2% 2.9% -0.8% 19.9% 0.3% US 2.8% 2.9% -0.3% 4.0% 2.3%

Canada 1.4% 1.9% -0.2% 9.4% 0.6% Canada 2.2% 2.2% -0.1% 7.6% 2.1%

Brazil -1.4% -1.1% 1.6% -7.6% 8.4% Brazil 0.5% 1.4% 0.8% -2.4% 6.3%

China 6.6% 7.1% 0.0% 17.9% 1.3% China 6.1% 7.0% 0.0% 1.8% 1.4%

Japan 1.0% 0.5% -0.1% 2.6% 0.3% Japan 1.8% 2.1% 0.1% -2.9% 0.6%

India 7.5% 7.1% 0.0% 15.6% 5.6% India 7.5% 7.2% -0.1% 1.3% 5.9%

* unless otherwise specified

** percentage point change

Note: Colour coding relates to each individual column and highlights the strongest performing countries shaded as dark green (e.g. China fastest growing GDP), and

weakest performaing countries as dark red (e.g. rising unemployment and falling GDP, consumer expenditure, and exchange rate in Russia).

Summary of economic outlook: 2015% growth y-y*

Macroeconomic indicators

Summary of economic outlook: 2016% growth y-y*

Macroeconomic indicators

*** 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 weaker local currency against the euro and therefore a negative impact on outbound tourism demand.



-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

1991 1994 1997 2000 2003 2006 2009 2012 2015

BRICs total Non-BRIC EM

EMs: Contribution to world trade growth% point contributions to y/y growth in world goods trade

Source : Oxford Economics/Haver Analytics

% point contributions to y/y growth in world goods trade


-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

-150

-100

-50

0

50

100

150

2011 2012 2013 2014 2015

US: Yields and economic surprises%


US Economic surprise index(LHS)

Change in US 10-year yields(RHS)

% points, 3m

Overview: Drag from emergers pulls down World growth

This month sees another downgrade to our

world growth forecasts, to 2.5% for 2015 and

3.0% for 2016, from 2.6% and 3.1% last

month.

A key factor behind this downgrade is the

weak performance of emerging markets. In

Q1, we estimate that 17 large emergers cut 0.9

percentage points from annual world trade

growth – a phenomenon not seen since the

global financial crisis.

China accounted for much of this, but imports

were also weak in other emergers where lower

commodity prices, high debt and structural

weaknesses are all contributing to slower

growth. Forecasts have been cut in several

emerging Asian countries this month.

As a result, we now forecast world trade

growth at just 1.8% for 2015, a pace usually

associated with global recessions. Trade

growth is expected to remain below its long-

term average next year too, at 4.4%.

Sluggish global demand has contributed to

weaker US growth in the early part of 2015,

with exports also probably suffering from the

strong dollar – Eurozone and Japanese

exports have held up better.

US growth is still set to improve in H2 helped

by a strong labour market, but our forecast for

all of 2015 is for growth of just 2.1% (from

2.3% last month).

The moderate pace of growth in major

economies makes the global upswing more

vulnerable to adverse shocks than in previous

cycles, as does the increased weight of

emergers in world GDP.

Despite these risks upward pressure on global

bond yields has continued. This reflects

several factors including a correction from

over-bought levels – especially in the

Eurozone where markets had been pricing in

an excessively deflationary scenario.

Indeed, Eurozone yields are now not only

above pre-QE levels but are also closing in on

the levels seen last August when ECB

president Draghi first flagged that QE was

coming. This suggests that an ECB policy

response is also a downside risks to global

yields now, as well as slow world growth.



2014 2015 2016 2017 2018 2019Real GDP

North America

United States 2.4 2.1 2.8 2.7 2.8 2.8 Canada 2.4 1.4 2.2 2.7 2.7 2.4

Europe

Eurozone 0.9 1.6 1.8 1.7 1.6 1.5 Germany 1.6 2.0 2.2 1.7 1.3 1.0 France 0.2 1.3 1.7 1.6 1.5 1.6 Italy -0.4 0.5 1.0 1.1 1.0 1.0 UK 2.8 2.6 2.8 2.7 2.5 2.3 EU27 1.3 1.8 2.1 2.0 1.9 1.8

Asia

Japan -0.1 1.0 1.8 0.8 0.6 0.8 China 7.4 6.6 6.1 5.7 5.5 5.3 India 7.1 7.5 7.5 7.0 6.8 6.7

G7 1.6 1.7 2.4 2.1 2.1 2.0 World 2.6 2.5 3.0 3.1 3.2 3.1 World 2010 PPPs 3.3 3.2 3.8 3.9 3.8 3.8 World trade 3.0 1.8 4.4 5.3 5.5 5.2Inflation (CPI)

North America

United States 1.6 0.3 2.3 2.2 2.2 2.2 Canada 1.9 0.6 2.1 2.0 1.9 1.9

Europe

Eurozone 0.4 0.3 1.5 1.5 1.6 1.6 Germany 0.9 0.6 1.9 1.9 1.8 1.5 France 0.5 0.4 1.8 1.6 1.6 1.7 Italy 0.2 0.3 1.1 1.1 1.3 1.7 UK 1.5 0.3 1.7 1.8 1.7 1.8 EU27 0.6 0.3 1.6 1.7 1.7 1.7 Asia

Japan 2.7 0.3 0.6 2.0 1.3 0.9 Emerging Asia, excl Japan 5.3 5.2 4.7 4.4 4.3 4.3 China 2.0 1.3 1.4 2.1 2.6 2.8 India 6.6 5.6 5.9 5.8 5.6 5.4

World 3.2 3.3 3.7 3.3 3.0 2.9Exchange Rates

US$ Effective 78.4 89.9 91.8 91.6 90.2 88.8 $/€ 1.33 1.11 1.07 1.06 1.09 1.11 ¥/$ 105.9 123.5 132.2 136.1 137.9 138.0Commodity Prices

Brent Oil ($/bl) 99.0 62.0 68.7 71.3 72.9 74.1

Summary of International Forecasts



-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

-25

-20

-15

-10

-5

0

5

10

15

2004 2006 2008 2010 2012 2014


Eurozone: Employment & emp. intentionsPercent balance % quarter

Employment (RHS)

EC survey of employment

intentions (LHS)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Jan 14 Jul 14 Jan 15

Ten year Eurozone swap rate

Ten-year German government bond yield

Source : Oxford Economics/Haver Analytics/Bloomberg

Eurozone: Interest Rates

% year

ECB formally announced QE

Eurozone Economy

Although Q1’s Eurozone GDP expansion was

a bit weaker than we had expected, the limited

available data for Q2 are fairly encouraging

and suggest that another quarter of solid

growth – by Eurozone standards – is on the

cards.

What’s more, while Q1’s 0.4% rise may have

been on the lower side of expectations, Q4’s

modest upward revision and the breakdown

offered signs of encouragement. Quarterly

household spending growth picked up from

0.4% to 0.5% in response to the oil price

windfall. While the sharp rise in inflation since

the start of Q1 will act as a headwind to

household spending in Q2 and beyond, this

may be offset by a strengthening labour

market as domestic healing continues,

suggesting that our forecast for growth of 1.8%

this year still looks reasonable.

Another plus was a further pick-up investment

growth. At 0.8% the quarterly gain was steady

rather than spectacular, but it provides hope

that the recovery is beginning to broaden.

Our central view is still that investment and

exports – the latter grew only sluggishly in Q1

– will make larger contributions to growth as

the effects of the weaker euro, stronger

demand and the ECB’s efforts to boost the

supply of credit gradually take effect. As a

result, we see GDP growth picking up from an

above trend 1.6% this year to 1.8% in 2016.

Nonetheless, the recovery remains fragile and

thus susceptible to shocks. Weaker than

assumed global trade growth, a Greek exit (to

which we attach a near 50% probability), or

renewed rises in the euro could all undermine

the recovery resulting in rather slower growth.

Against this backdrop, we continue to think

that early tapering by the ECB is unlikely.

Indeed, on the back of the fairly dovish

comments by President Draghi at June’s

interest rate press conference, increased bond

purchases would be more likely than not if

these downside risks emerged.

The possibility of a Greece-less Eurozone

looms large with sizeable consequences. At

the time of writing the situation is still unclear

and the referendum has yet to take place.

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

-8

-6

-4

-2

0

2

4

2007 2008 2009 2010 2011 2012 2013 2014 2015

Quarterly change (RHS)

Annual change (LHS)


Eurozone: GDP

% year % quarter



UK Economy

The second estimate of GDP growth in Q1

2015 was unrevised at 0.3%, with upward

revisions to the manufacturing and

construction sectors offset by a downgrade to

the estimate for the services sector. But with a

glaring disparity between the very soft official

output data and most other evidence on the

state of the economy, we continue to expect

Q1 growth to be revised upwards over time.

While the PMI surveys have been more mixed

so far in Q2, indicators related to the consumer

sector have been almost universally positive.

In particular, retail sales volumes have

continued to grow at an annual pace of around

5%, while the CBI’s May survey reported the

most upbeat expectations for retail sales in 27

years. The strong performance of the

consumer sector reflects the substantial

improvement in household spending power

caused by the temporary absence of inflation –

the CPI measure even dipped into negative

territory in April – combined with a pickup in

wage growth and a reduction in the tax bill for

most workers following April’s large increase in

the tax free personal allowance.

The Chancellor has decided to present a

‘summer Budget’ on 8 July. We expect this to

reveal a much greater emphasis on achieving

the desired reduction in government spending

through savings from the welfare budget,

rather than departmental spending, thus

removing the worst of the spending

‘rollercoaster’, which had appeared in the

March Budget. However, given that the

Conservatives appear likely to follow similar

fiscal rules to those adopted by the previous

coalition government and, therefore, engage in

a similar degree of fiscal consolidation, we do

not expect the Budget to have any tangible

impact on our forecast.

May’s Inflation Report saw the MPC revise

down its forecasts for GDP growth, bringing

them into line with our own. Two members

appear close to voting for higher rates once

more, while the Committee as a whole

believes there is little slack left in the economy.

However, very low rates of inflation are likely to

preclude the Committee from increasing

interest rates this year and we still expect the

first hike to come in Q1 2016, at the earliest.

96

97

98

99

100

101

102

103

104

Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15

Manufacturing

Construction

Services

UK: Monthly outputApr 2014 = 100


Horizontal lines denote quarterly averages

Forecast

-3

-2

-1

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Inc fuel Exc fuel

UK: Retail sales volumes%3m-on-3m, yr ago

Source : Haver Analytics

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: Oxford Economics

Euro/£

US$/£

UK: Exchange rates

Forecast



US Economy

As expected, revisions to Q1 GDP data showed the

US economy contracting 0.7% in Q1. Looking into

Q2, we expect a moderate GDP growth rebound

just shy of 2%; the advance will be constrained by a

strong dollar, depressed oil investment and

inventory depletion.

Consumer spending disappointed in April with a flat

reading as consumers remained cautious in the

face of rebounding gas prices. However, with

nonfarm payrolls growing strongly in May, and

averaging a monthly gain of 255,000 over the past

year, we see solid underpinnings for household

outlays through the remainder of 2015.

Monthly wage growth rose modestly in May, and we

see firmer labor compensation in the coming

months as labour market slack continues to

dissipate.

With consumer confidence still very strong and

inflation subdued, consumer spending is expected

to advance 2.8% in 2015.

Activity in the housing sector remains hesitant, but

the latest data were more encouraging with housing

starts and permits reaching multi-year highs in

April. We see faster wage growth, low interest rates

and moderate home price inflation supporting a

gradual housing rebound.

The strong US dollar and sluggish global growth

continue to weigh on exports while solid domestic

activity maintains the pull on imports. Net trade may

subtract 0.5 percentage points from 2015 growth.

We see reduced oil and gas investment weighing

on Q2 growth and lingering through the rest of the

year, while the mining sector will continue to

experience sizeable job losses.

Headline inflation will soon accelerate towards 2%

on rebounding gasoline prices, less of an impact

from the stronger dollar and base effects.

Meanwhile core inflation will also accelerate on

strengthening activity.

We have revised down our forecast for real GDP

growth in 2015 to 2.1% (from 2.3%) on a slow start

to the year, but maintain our call for 2.8% growth in

2016 as growth firms in H2 2015. As such, we see

the Fed proceeding to rate lift-off in September

2015.



Japanese Economy

Both the preliminary and second estimates of

Q1 GDP growth provided upside surprises to

consensus 0.4% expectations. The latest

estimate is for 1% growth in the quarter, the

fastest among developed economies. Over half

(0.6 percentage points) of growth was due to a

build-up of inventories. The other big positive

came from investment spending, up 2.7% in the

quarter. As a result of the strong start to the

year we have increased our GDP forecast for

2015 to 1% (from 0.8%).

A repeat of the stock building boost is unlikely

in the near term. But there is scope for a

sustained increase in investment spending – if

demand prospects are sufficiently favourable.

On the export side there has been a revival in

exports (goods and services), which are up by

7.4% in the four quarters to Q1. Japan has

clearly benefited from the 30% fall in its

effective exchange rate over the last 2.5 years.

The current export outlook is clouded

somewhat by the slowdown in China, but

stronger US growth later this year will provide

an offset to this. Consumer spending continues

its modest if unspectacular recovery after last

year’s consumption tax hike. Consumption

increased by 0.4% in Q1 – a trend that is likely

to continue into 2016. After 1% GDP growth this

year we expect 1.8% next year as consumption

gains momentum, partly in anticipation of the

next consumption tax rise in 2017.

Consumer price inflation (now free of

consumption tax distortions) was just 0.3% in

April on the target measure. A dip below zero is

possible later this year, especially if energy

prices fall back. At best inflation is likely to be

1% over the next year or so, still well below the

Bank of Japan’s 2% target. Unless GDP growth

surprises to the upside a further expansion of

QE is likely, probably in October. We expect

annual asset purchases to rise to Y100trn from

Y80trn.

The effects of QE have been mainly on the

exchange rate and equity prices. Growth is not

likely to be boosted very significantly in the near

term by extra QE. But JGB yields may well fall

back as the BoJ steps up its bond purchases.

92

96

100

104

108

Q1-05 Q1-07 Q1-09 Q1-11 Q1-13 Q1-15


Japan real household consumption 2012 Q1 =100

-3

-2

-1

0

1

2

3

Apr-99 Apr-03 Apr-07 Apr-11 Apr-15


Japan CPI (excluding fresh food and consumption tax)

%

BoJ''s inflation target

6000

8000

10000

12000

14000

16000

18000

20000

2200065

70

75

80

85

90

95

100

105

110

115

May 12 Nov 12 May 13 Nov 13 May 14 Nov 14 May 15

Nikkei 225

Source: Haver Analytics

Japan: Exchange rate and stock marketYen TWI (2010=100)

Nikkei 225 index (RHS, inverted)

JP Morgan nominal trade-weighted Yen index (LHS)



0

2

4

6

8

10

12

14

16

18

2002 2004 2006 2008 2010 2012 2014

US$ bn (seasonally adjusted)

Source: China Customs / Oxford Economics

China: Imports

Germany

Taiwan

Korea

Emerging Market Economies

Chinese imports are falling sharply…

China’s goods imports (in dollar terms) contracted by

more than 17% on the year in May, the same pace as in

Q1 and the seventh straight month that they have fallen.

Although some of the weakness can be explained by

lower commodity prices, we estimate that volumes are

falling at a 5-6% annual pace in Q2, little different from

the 7% drop in Q1. And we do not see any near term pick

up as the structural adjustments underway will continue

to dampen demand. In April new housing starts fell by

17% on the year and real estate investment grew by just

6%.

Sharply weaker construction is depressing output in

sectors related to housing such as cement and steel.

Other sectors that have built up excess supply over the

past few years, for example coal and iron ore, are also

running down output, further dampening growth. The

HSBC PMI contracted for a third month in May and the

risk that the slowdown will be sharper than the authorities

would be able to control seems to be increasing. To ease

the risks, we see the PBoC continuing to loosen policy,

taking the one-year lending rate to 4.1% by mid-2016 and

lowering the amount of reserves banks have to keep at

the central bank to maintain adequate liquidity. However,

these measures will support a managed slowdown rather

than a rebound in activity and, as a result, the

considerable downward pressure on world trade will

persist, particularly dampening activity elsewhere in Asia.

…weighing on global trade, particularly Asia

We have reduced our forecasts for 2015 growth in Korea,

Thailand, Hong Kong, Singapore, Malaysia and Taiwan

this month on weaker trade. We expect Korea to grow by

2.8% this year, down from 3.3% in 2014 and for growth in

Taiwan to slow to 2.7% from 3.8% in 2014. In Malaysia

we see growth slowing from 6% last year to just 4.5%.

No scope for policy to boost Brazil activity…

Chile and Brazil are sensitive to shifts in Chinese demand

and for Brazil the weak external backdrop will only

exacerbate the deep domestic malaise. The economy

contracted in Q1 and the high frequency data indicate a

larger drop in Q2. Inflation is above 8% and likely to stay

high due to rising regulated prices and the pass-through

from the exchange rate depreciation. As a result, the

central bank raised interest rates again in June to

13.75%, the highest since 2008. On the fiscal front, the

government is raising taxes and cutting spending in order

to avert a sovereign rating downgrade. Although we

-20

-10

0

10

20

30

40

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Overall IP

Electricity

Cement

Steel

Plate glass

China: Industrial production by industry% year

Source: Oxford Economics/Haver Analytics

3 month moving average

0 2 4 6 8 10 12 14 16 18 20

Hong KongSingapore

TaiwanKorea

VietnamMalaysia

ChileThailandAustralia

MENASS Africa

PhilippinesJapan

RussiaIndonesia

BrazilEurozone

USIndia

MexicoTurkey

Exports to China, 2014

% of GDP


1̂00



expect the public debt to reach nearly 70% in 2016, from

just 55% in 2013, we still believe that Brazil will maintain

its investment grade status in the coming years.

...and political uncertainty higher in Turkey

In the June 7 parliamentary election in Turkey the ruling

party lost its parliamentary majority, effectively ending

thirteen years of single-party rule. This comes after a time

when policy making had lost its way and forecasts of

medium-term growth have weakened. GDP surprised on

the upside in Q1 but leading indicators suggest this is

unlikely to be maintained and high inflation and a weak

currency leaves no room for further monetary easing.

Policy to mitigate downside risks in India…

Headline GDP growth accelerated to 7.5% in Q1 2015

but monthly data paint a mixed picture, raising concerns

about both the pace and sustainability of the recovery.

Upside risks to inflation from a possible drought limit the

room for further policy easing but, provided food prices

do not surge, we expect the RBI to cut rates by a further

25bp in the next few months (taking the repo rate down

to 7%). We also expect infrastructure investment to be

increased. Indeed in February, the government pushed

out its fiscal consolidation roadmap by a year to FY2018

and pegged the FY2016 fiscal deficit at 3.9% of GDP.

India’s vulnerability to external stress has lessened but

not disappeared; investor confidence could falter due to a

slow pace of reforms or the upcoming Fed rate hike,

leading to large portfolio outflows and INR depreciation.

…and in Russia, as inflation is now easing

Preliminary estimates indicate that Russia contracted by

1.9% year-on-year in Q1, undermined by sanctions and

lower oil prices. And leading indicators of economic

activity continued to worsen in April: industrial output and

fixed capital investment both fell by more than 4% on the

year. Meanwhile, consumption has been especially hard

hit, with retail sales volumes, a good proxy for consumer

demand, falling by 9.8% year-on-year in April, in tandem

with a 13.2% drop in real wage growth. However, inflation

has been slowing in recent months and this, coupled with

the negative output gap and falling inflation expectations,

ensures the CBR has the scope to ease policy, and we

expect a further 100 basis point cut at the next MPC

meeting on June 15. The rouble has weakened by about

10% since mid-May in response to a combination of the

CBR starting to buy foreign exchange in an effort to stem

the rouble’s rally and the oil price stabilising after its rise

from January lows.

-15

-10

-5

0

5

10

15

20

25

30

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

% year

Consumer spending


Brazil: GDP, consumer spending & investment

GDP

Investment

-3

0

3

6

9

12

15

18

2000 2002 2004 2006 2008 2010 2012 2014

%


India: Interest rates & inflation

Repo rate

CPI (industrial workers)

Total WPI

-30

-20

-10

0

10

20

30

2002 2004 2006 2008 2010 2012 2014

% year


Russia: Wages, retail sales & capital spending

Retail sales

Capital spending

Real wages



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 Responsilbility

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

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 Quantitive 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 US, UK, France,

Germany, Italy, Canada, Japan



ETC Member Organizations

Austria Austrian National Tourist Office (ANTO)

Belgium Flanders: Visit Flanders

Wallonia: Tourist Office for Wallonia-Brussels

Bulgaria Ministry of Economy and Energy

Croatia Croatian National Tourist Board (CNTB)

Cyprus Cyprus Tourism Organisation (CTO)

Czech Republic CzechTourism

Denmark VisitDenmark

Estonia Estonian Tourist Board - Enterprise Estonia (ETB)

Finland Visit Finland – Finpro ry

Germany German National Tourist Board (GNTB)

Greece Greek National Tourism Organisation (GNTO)

Hungary Hungarian Tourism Ltd.

Iceland Icelandic Tourist Board

Ireland Fáilte Ireland and Tourism Ireland Ltd.

Italy ENIT – Agenzia Nazionale del Turismo

Latvia Latvian Tourism Development Agency (TAVA)

Lithuania Lithuanian State Department of Tourism

Luxembourg Luxembourg National Tourist Office (ONT)

Malta Malta Tourism Authority (MTA)

Monaco Monaco Government Tourist and Convention Office (DTC)

Montenegro National Tourism Organisation of Montenegro

Norway Innovation Norway

Poland Polish National Tourist Office (PNTO)

Portugal Turismo de Portugal, I.P.

Romania Romanian National Authority for Tourism

San Marino State Office for Tourism

Serbia National Tourism Organisation of Serbia (TOS)

Slovakia Slovak Tourist Board

Slovenia SPIRIT Slovenia

Spain Turespaña - Instituto de Turismo de España

Sweden VisitSweden

Switzerland Switzerland Tourism (ST)

Turkey Ministry of Culture and Tourism