european travel market | trends & prospects | q3 2015

European Tourism in 2014: Trends & Prospects Quarterly Report (Q2/2014)

This page is a placeholder and is to be replaced in the PDF document for the cover provided by ETC.

2 European Tourism in 2015: Trends & Prospects (Q3/2015)

© European Travel Commission, October 2015

EUROPEAN TOURISM in 2015: TRENDS & PROSPECTS

Quarterly Report (Q3/2015)

A quarterly insights report produced for the Market Intelligence Group

of the European Travel Commission (ETC)

by Tourism Economics (an Oxford Economics Company)

Brussels, October 2015

ETC Market Intelligence Report

European Tourism in 2015: Trends & Prospects (Q3/2015) 3


Copyright © 2015 European Travel Commission

European Tourism in 2015: Trends & Prospects (Q3/2015)

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

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 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

Rue du Marché aux Herbes, 61, 1000 Brussels, Belgium

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: Cityscape of Lucerne with Chapel Bridge, Switzerland Copyright belongs to Shutterstock/ Mariia Golovianko (Image ID: 284909354)

In memoriam Mr Tom Ylkänen

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

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

mailto:[email protected]



Foreword

Robust summer demand proved resilient

Demand for European destinations

continued to surge steadily half-way through

the year and has proved astounding

resilience to current socio-economic

agitations. Data reported so far by European

destinations featured a very positive picture

for the summer period and prospects

suggest a similar performance into this fall.

According to UNWTO, international tourist

arrivals to Europe were up 5% as compared

to the same period last year.

Growth was buoyed by large intra-regional

destinations and the on-going economic

recovery of the Eurozone. Iceland and

Romania continued to enjoy healthy growth

following a 27% and 18% increase

respectively. Slovenia (13%) and Serbia

(13%) also posted sound results. Standout

growth destinations were also Ireland (12%),

Montenegro and Slovakia (both 12%). World

key events also contributed to shape

demand with the Expo in Milan or the

increasing arrivals in Italy and by 6% during

this period (Figure 1).

Northward destinations are facing difficulties

to pick up in terms of arrivals and overnights.

Finland and Estonia dragged the weak start

of the beginning of the year and have been

strongly affected by the slowdown in tourist

arrivals from Russia.

International air passenger traffic continues

to thrive at a steady rate, with RPK up 6.7%

compared to same period last year. Positive

performance is fuelled by a strong dollar

spurring demand from the Americas and

lower oil prices. In the same line, the

accommodation sector also appeared

encouraging, posting healthy results in all

key measures in the first half of 2015.

International tourist arrivals by destination

2015 year-to-date, % per year

Source: ETC, TourMIS

Inbound travel from China by destination 2014, share of each destination’s Chinese foreign arrivals

Source: Tourism Economics



Key intra-European markets continue to boost tourism demand within

the region

Growth in arrivals was also supported by established source markets in Europe which

have evidenced to contribute significantly to the positive performance of many

European destinations. Unsurprisingly, more UK citizens are benefitting from the

strength of the pound against the euro to travel to Eurozone destinations as several

destinations reported growth in arrivals from this market. Visits from France and

Germany, are also mirroring the increase in consumer consumption and an improved

consumer confidence as a result of the region’s ongoing economic recovery.

International arrivals from Russia did not perform differently from Q1 or Q2 with growth

falling by an estimate 18% (non-ETC area incl.) so far this year. The on-going

geopolitical disruptions, the steep drop in oil prices, international sanctions, shrinking

wages and the slowdown of the economy has paved the way for Russian

holidaymakers opting for less expensive destinations. Romania, Montenegro and

Turkey lead as European holiday favourites due largely to affordability, easy access

and to the fact that they cater the sun and beach desires of Russian tourists.

European destinations reported healthy growth in terms of Chinese international

arrivals based on latest data available. Estimated figures indicate that arrivals from

China to Europe increased by 30% so far in 2015. It is expected that the recent market

turmoil in China should have no bearing on tourism demand to Europe as its

expanding middle class continue to travel internationally. The country’s sagging

growth rate, faltering oil and commodity prices and the recent plunge in the Shanghai

stock market suggest that China will endure an economic contraction in the near

future. However the long-term outlook remains positive with growth driven by an

increasing household income spurring travel demand especially to long-haul

destinations. Across the Atlantic, tourism demand from the US remains strong as key

macroeconomic indicators feature positive developments.

European tourism demand in the path to growth as prospects remain

upbeat

At midyear, European tourism continues to grow rapidly, and has proven resilient to

economic woes, geopolitical tensions or threats of terrorism. Far more importantly, the

region was able to offset the sag in arrivals from Russia and is expected to grow by

5% in 2015. Following the success of European tourism during the summer period

efforts should persist to foster tourism and encourage more tourists from long-haul

and intra-regional markets. Success shall be achieved by capitalising on Europe’s

potential to inspire and cater to different markets and travel segments and by

eliminating travel barriers, promoting tourism and working in close cooperation with

public and private administrations and all stakeholders. “Within Europe, we need to

look at our product and our services; we need to share best practice and push deep

cooperation between private and public sector” said Eduardo Santander, Executive

Director of the European Travel Commission.

Jennifer Iduh, ETC Executive Unit

ETC Market Intelligence Commitee



2015 Tourism Performance Summary

So far in 2015 all but a few countries continue to welcome increasing numbers of both

foreign visitors and foreign visitor nights according to data to August. Some of those

destinations which have yet to see growth in foreign visits could be described as

typically winter destinations, and as we move into the winter months some growth

should be expected to follow.

Relative to the US dollar the euro is weaker now than it has been at any other point in

the past decade. This has contributed to price attractiveness for Eurozone

destinations, and cheaper oil, the price of which also currently rests at a ten year low,

has helped boost real household incomes in net importing countries.

Iceland remains one of the top performing destinations so far this year with foreign

visits growing by 26.8% based on the first eight months of 2015 compared to the same

period in 2014.

Visits to Romania also grew steadily by 17.8% in 2015 to August. In the first few

months of this year Romania was one of only two countries which enjoyed visits

growth from Russia. However, this is no longer the case and is likely due to the

worsening relations between the two nations.

Ireland has done well so far this year, receiving 12.2% more visits in the year to

August compared to the same period in 2014. Some proportion of these additional

visits is likely displaced travel otherwise destined for the UK with relative euro

weakness against the pound making Ireland a more attractive option.

Montenegro has also enjoyed steady visits growth in the first eight months of this year,

with 11.9% more visitors than in the same period in 2014. Again, Montenegro was at

the beginning of the year enjoying some growth from Russian visitors. However, this

growth has since faded and in the first eight months of 2015 Russian visits to

Montenegro were down by 9.1%. Given that in 2013 visits from Russia accounted for

over a fifth of all visits to Montenegro, the fact that it has managed to sustain such

strong growth is testament to its broadening appeal as an emerging European

destination.

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

visitor base appears to be broad-based with growth of 12.7% in terms of visits and

15.1% in terms of visitor nights based on data to July compared to the same period in

2014. This cements Serbia’s position amongst the many emerging European tourism

destinations, having enjoyed strong growth in visits and visitor nights for the past

number of years.

-10

-5

0

5

10

15

20

Serb

iaS

weden

Norw

ay

Monte

negro

Slo

venia

Port

ugal

Slo

vakia

Cro

atia

Hungary

Pola

nd

Germ

any

Malta

Czech R

ep

Denm

ark

Austr

iaItaly

Spain

Luxem

bourg

Latv

iaL

ith

ua

nia

Sw

itzerland

Esto

nia

Fin

land

Cypru

s

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

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

-12.7-10

-5

0

5

10

15

20

Icela

nd

Gre

ece

Ro

ma

nia

Slo

venia

Serb

iaIr

ela

nd R

ep

Monte

negro

Slo

vakia

Hungary

Cro

atia

Czech R

ep

Austr

iaG

erm

any

Cypru

sItaly

Malta

Pola

nd

Spain

Latv

iaS

witzerland

Lithuania

Turk

ey

Bulg

aria

Esto

nia

Fin

lan

d

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


20.8

26.8



Switzerland’s tourism industry has faltered following the cessation of the Swiss franc’s

peg to the euro, a policy intended 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. Although visits grew by 2% in the first eight

months of 2015 compared to the same period in 2014, these visits are becoming

shorter as suggested by a reported fall in visitor nights by 1.6% over the same period.

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, arrivals may rebound as the winter months offer an opportunity to

capitalise on a weaker euro.

Country % ytd to month % ytd to month

Austria 7.0 Jan-Aug 3.6 Jan-Aug

Belgium

Bulgaria -1.1 Jan-Aug

Croatia 8.0 Jan-Aug 6.5 Jan-Aug

Cyprus 6.2 Jan-Aug -12.7 Jan-Aug

Czech Rep 7.5 Jan-Jun 4.3 Jan-Jun

Denmark 3.7 Jan-Jul

Estonia -4.4 Jan-Aug -5.6 Jan-Aug

Finland -7.1 Jan-Jul -5.9 Jan-Jul

Germany 6.5 Jan-Aug 5.5 Jan-Aug

Greece 20.8 Jan-Jun

Hungary 8.5 Jan-Aug 6.4 Jan-Aug

Iceland 26.8 Jan-Aug

Ireland Rep 12.2 Jan-Aug

Italy 5.5 Jan-Jun 3.0 Jan-Jun

Latvia 3.3 Jan-Jun -0.1 Jan-Jun

Lithuania -0.3 Jan-Jun -1.5 Jan-Jun

Luxembourg 0.2 Jan-Aug

Malta 5.1 Jan-Aug 4.4 Jan-Aug

Montenegro 11.9 Jan-Aug 10.9 Jan-Aug

Netherlands

Norway 11.2 Jan-Aug

Poland 4.7 Jan-Jul 6.4 Jan-Jul

Portugal 7.3 Jan-Jul

Romania 17.8 Jan-Aug

Serbia 12.7 Jan-Jul 15.1 Jan-Jul

Slovakia 11.6 Jan-Jul 7.3 Jan-Jul

Slovenia 12.8 Jan-Jul 9.0 Jan-Jul

Spain 4.1 Jan-Aug 2.8 Jan-Aug

Sweden 13.2 Jan-Aug

Switzerland 2.0 Jan-Aug -1.6 Jan-Aug

Turkey -0.4 Jan-Jul

UK 3.0 Jan-Mar

Source: TourMIS, http://www.tourmis.info; available data as of 14.10.15

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% 4.1% 4.4% 4.6% 4.4% 4.4% 3.7% 4.7% 4.9% 4.6%

Americas 3.3% 8.3% 3.9% 4.3% 4.7% 2.8% 7.2% 4.9% 4.8% 4.4%

North America 3.6% 9.4% 2.9% 4.6% 5.2% 2.1% 7.8% 5.6% 5.7% 4.8%

Caribbean 3.1% 5.2% 5.5% 3.6% 3.6% 4.2% 8.3% 6.4% 6.6% 7.1%

Central & South America 2.7% 6.8% 6.1% 4.0% 3.6% 5.6% 4.8% 2.3% 1.4% 2.5%

Europe 4.8% 2.1% 4.4% 3.8% 3.4% 3.8% 0.7% 3.3% 4.4% 3.8%

ETC+3 4.3% 4.5% 5.1% 3.7% 3.0% 2.3% 3.4% 5.2% 4.8% 3.5%

EU 4.1% 4.5% 5.4% 3.5% 2.7% 2.1% 3.4% 5.0% 4.8% 3.6%

Non-EU 7.2% -5.9% 0.6% 5.3% 6.1% 10.8% -9.0% -3.7% 2.7% 5.0%

Northern 2.8% 3.5% 4.3% 3.8% 3.5% 1.4% 3.3% 6.3% 5.4% 3.8%

Western 3.0% 2.2% 4.2% 3.1% 1.9% 3.9% 2.4% 3.7% 4.5% 3.4%

Southern/Mediterranean 5.6% 7.1% 5.9% 4.5% 3.6% -1.4% 3.6% 6.0% 3.6% 2.6%

Central/Eastern 6.6% -6.4% 2.5% 3.2% 4.9% 9.2% -4.0% -1.4% 3.7% 5.9%

- Central & Baltic 4.8% 4.3% 6.2% 2.4% 3.5% 4.7% 8.2% 8.2% 6.0% 5.0%

Asia & the Pacific 6.3% 5.6% 5.2% 6.7% 6.3% 6.6% 7.1% 7.3% 6.1% 6.3%

North East 3.5% 7.3% 4.0% 7.4% 7.6% 6.3% 7.6% 9.3% 6.1% 6.2%

South East 10.7% 2.8% 6.7% 6.2% 4.9% 8.1% 5.4% 2.9% 6.9% 6.3%

South 7.7% 8.3% 6.6% 3.3% 5.6% 4.9% 11.7% 9.2% 4.7% 7.2%

Oceania 4.0% 5.9% 6.1% 5.5% 3.5% 5.3% 3.8% 1.8% 5.4% 7.4%

Africa 1.3% 1.0% 1.0% 4.2% 3.6% 5.6% 1.4% 0.7% 4.1% 3.9%

Mid East 4.2% 9.2% 5.3% 5.5% 5.9% 8.7% 11.4% 8.6% 5.3% 5.1%

* 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,

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

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 (RPKs)

continue to grow steadily in 2015 with growth

of 6.7% to August compared to the same

period of 2014. And there is little indication

that growth will cease anytime in the near

future, but emerging market weakness

presents a risk.

All regions have contributed to this growth with

the exception of Africa which has dragged on

World growth in all of the first six months of

2015. Lower oil prices are a key factor with

African producers subject to a higher

breakeven price per barrel of oil produced.

This in turn has dampened outbound travel

demand. The ongoing terror threat exemplified

by recent events in Tunisia has many

countries on high alert, and some lingering

ebola concerns may also have been amongst

the chief deterrents. Data for July and August

are positive and could point towards some

recovery from all of the above, if it can be

sustained.

Asia/Pacific has continued to perform well

through the year and it en route to its highest

PRK growth year since 2010. 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

momentum based on data to August, up 5.2%

compared to the same period in 2014. This

has been aided by the weaker euro which

would serve to encourage intra-regional travel,

as well as inbound travel from some long haul

markets, namely the US and Canada.

The Middle East RPKs grew similarly over

2014 as 2014 did over 2013 at around 13%.

Industry performance is robust

RPK continues to grow at a steady rate

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

Some slowdown in the emerging economies has weakened the outlook for

economic growth, but RPK has so far been unaffected

European accommodation sector is performing well

-5

0

5

10

15

20

25

Africa Asia/Pacific Europe LatinAmerica

Mid.East N.America World

May-15 Jun-15 Jul-15 Aug-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) indicated lower European airline

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

closed towards the end of Q2, remained broadly similar throughout Q3, and in Q4

capacity rocketed to levels in excess of 10% greater than in the same period in 2014.

Although oil prices have stabilised after a lengthy period of decline, until recently

airlines appeared reluctant to add capacity in order to protect fares. Rather than pass

the windfall from lower oil prices onto consumers in the form of cheaper air fares, it

seems airlines have now responded by increasing capacity relative to 2014 levels.

Note, however, that at the same time in 2014, capacity relative to 2013 levels

plummeted. Therefore, the recent increase is likely to restore capacity to not much

above 2013 levels.

Passenger load factor (PLF) appears to be following a broadly similar pattern as in

2013 and 2014, with the exception of an upward deviation in the middle of Q3 when

PLF peaked at a decade high of 89.9%. There have also been some mild

disturbances resulting from strike action.

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.

This was in line with slowing Chinese consumer spending.

Nonetheless, travel growth between Europe and Asia still tended to exceed total travel

growth to and from Europe. 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 relative strength of the dollar against key currencies,

(most notably the euro) and 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.

-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

201

4Q

2

2014Q

3

2014Q

4

2015Q

1

2015Q

2

2015Q

3

2015Q

4

Asia Total

RPK, 4 week moving average, % change year ago

RPK = revenue passenger kmsSource: AEA

European airline passenger traffic: Asia

-4

-2

0

2

4

6

8

10

12

14

201

2Q

1

2012Q

2

2012Q

3

2012Q

4

2013Q

1

201

3Q

2

2013Q

3

2013Q

4

2014Q

1

2014Q

2

2014Q

3

2014Q

4

201

5Q

1

2015Q

2

2015Q

3

2015Q

4

Americas Total

RPK, 4 week moving average, % change year ago

RPK = revenue passenger kmsSource: AEA

European airline passenger traffic: Americas

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

15

Q1 Q2 Q3 Q4

2013 2014 2015

ASK, 4 week moving average, % change year ago

Source: AEA

European airlines capacity



Key Source Market Performance

Trends discussed in this section relate to the first eight months of the year, although actual

coverage varies by destination; for the majority of countries July or August 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 remains as the top European destination for German visitors, reportedly

receiving 44.7% more visitors in the first eight months of 2015 than in the same period

in 2014. Greece also enjoyed a large increase in the number of German visitors it

received, but with only three months of data the longevity of this trend is unclear.

Cyprus and Czech Republic both enjoyed large increases in the number of German

visitors they received, with growth of 34.8% and 15.3% respectively, based on data to

August and June respectively. Czech Republic looks well placed to see even more

growth from Germany as more summer data becomes available, reflecting more high

season air corridors and the higher frequencies at which they operate.

German interest in Switzerland and Bulgaria has continued to deteriorate as the year

has progressed, by 10.1% and 8.4% respectively based on the first eight months of

2015 compared to same period last year. Visits to the UK from Germany also fell by

4% in the first three months of 2015 (the only period for which data is currently

available). Interestingly, neither the UK or Switzerland are in the Eurozone (Bulgaria’s

currency is pegged to the euro), suggesting that the decline in interest is economically

motivated as currency movements have eroded some degree of competitiveness

formerly possessed by these countries.

This is particularly clear in the case of Switzerland. If, for example, its poor

performance is recognised and can trigger appropriate action on the part of Swiss ski

resort hoteliers who could drop rates in a bid to defend market share from their

Eurozone neighbours, then some growth may be salvaged in the winter season.

A strong summer…

European travel demand continues to grow across the majority of markets

Lower oil prices and weak euro aid European inbound tourism growth

Economic slowdown in China a distant worry?

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

Gre

ece

Cypru

sIc

ela

nd

Czech R

ep

Slo

vakia

Slo

venia

Ro

ma

nia

Turk

ey

Pola

nd

Fin

land

Latv

iaItaly

Cro

atia

Austr

iaM

alta

Serb

iaH

ungary

Spain

Esto

nia

Lithuania

UK

Bulg

aria

Sw

itzerland

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


35.9

44.7

-10.1

34.8

-10

-5

0

5

10

15

20

25

30

Monte

negro

Czech R

ep

Port

ugal

Fin

land

Italy

Slo

venia

Serb

ia

Sw

eden

Lithuania

Cro

atia

Slo

va

kia

Pola

nd

Latv

ia

Norw

ay

Luxem

bourg

Au

str

ia

Spain

Denm

ark

Hungary

Malta

Esto

nia

Sw

itzerland

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


59.5

-11.4

http://tourmis.info/



Cyprus was the best performing European destination in terms of visits from

Netherlands, enjoying a 41.8% increase based on data to August compared to the

same period in 2014.

Latvia, Lithuania, and Slovakia have all enjoyed a large increase in the number of

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

Northern Europe with eastern European countries. Based on the first half of the year

(six months in the case of Latvia and Lithuania, and seven in the case of Slovakia)

visits from the Netherlands grew by 33.4%, 17.7%, and 17% respectively, compared

to the same periods in 2014.

Other emerging European destinations such as Montenegro and Iceland also saw

gains in Dutch visits, by 18.6% and 9.3% respectively.

Switzerland and Bulgaria have both lost some visitors from the Netherlands. In the

case of Switzerland this is likely to be 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, this cap was imposed in 2011 due to economic and

political instability. Three years later, similar economic and political instability

surrounded the reversal of that decision.

Greece and the UK also saw a declining number of Dutch visitors based on the first

three months of 2015 compared to the same period last year. However, as more data

become available we would expect these falls to subside, and in the case of Greece

likely turn into growth. However, given the relative strength of the pound against the

euro, the UK might struggle.

A majority of European destinations have seen the number of visits received from

France increase in 2015, many of them quite substantially. Greece and Cyprus led the

way in terms of the fastest growing French destinations. In the first three months of

2015 arrivals from France to Greece grew by 94.2%, and to Cyprus by 30.6% based

on data to August compared to the same periods in 2014.

Many emerging destinations, such as Slovakia, Latvia, Iceland, Latvia, Serbia,

Hungary, Romania, and Montenegro, enjoyed double-digit growth in visits from

France. Interestingly, in stark contrast to visits from the Netherlands there was a large

increase in the number of French visits to Greece. However, given data for Greece

only covers the first three months of 2015, some volatility should be expected and

conclusions avoided until more data become available.

-20

-15

-10

-5

0

5

10

15

20

Cypru

sLatv

iaM

onte

ne

gro

Lithuania

Slo

vakia

Slo

venia

Icela

nd

Pola

nd

Rom

ania

Cro

atia

Spain

Austr

iaG

erm

any

Czech R

ep

Esto

nia

Serb

iaH

ungary

Malta

Italy

Fin

land

Turk

ey

UK

Sw

itzerland

Bulg

aria

Gre

ece

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


41.8

33.4

-25.3-20

-15

-10

-5

0

5

10

15

20

Latv

iaS

lovakia

Sw

eden

Monte

negro

Denm

ark

Spain

Slo

venia

Norw

ay

Pola

nd

Hungary

Czech R

ep

Port

ugal

Lithuania

Serb

iaE

sto

nia

Germ

any

Cro

atia

Austr

iaIt

aly

Luxem

bo

urg

Ma

lta

Fin

land

Sw

itzerland

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


33.4



Turkey saw falling numbers of French visitors in the first seven months of 2015,

welcoming 17.8% less visitors compared to the same period of 2014. This is an

improvement upon early 2015 performance and further gains may be made as more

summer data becomes available, but full year growth looks unlikely.

Switzerland lost visits from another large European source market in France with visits

down by 7.3% and overnights by 6.4%. Denmark and Turkey are also experiencing

lower French demand.

Lithuania saw a large increase in number of Italian visitors it received in the first six

months of 2015 compared to the first six months of 2014. Montenegro also saw a

large increase in the number of Italian visitors. Both destinations saw some similarly

large increases in the numbers of Italian visitor nights. Malta enjoyed a 13.7%

increase in Italian visits and a 25% increase in Italian visitor nights.

Italian visits to Turkey fell by 21.6% in the first seven months of 2015 compared to the

same period in 2014. Turkey has seen arrivals from many key source markets fall this

year. Part of the reason for this weaker demand is due to the mounting political unrest

and threat of terrorism. Although unlikely, events in Tunisia and Egypt this year will

have put people on guard, and direct threats against Turkey have been made by those

claiming responsibility for some of the attacks carried out in Tunisia and Egypt.

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

appealing destination for the British visitor. Only non-members of the European

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

reported falls in the number overnights.

-10

-5

0

5

10

15

20

25

30

Gre

ece

Cypru

sS

lova

kia

Latv

iaIc

ela

nd

Serb

iaH

ungary

Rom

ania

Monte

negro

Slo

venia

Fin

land

Spain

Pola

nd

Lith

ua

nia

Cro

atia

Italy

Malta

Germ

any

Esto

nia

Bulg

aria

Austr

iaC

zech R

ep

Sw

itzerland

UK

Tu

rke

y

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


30.6

94.2

-17.8-10

-5

0

5

10

15

20

25

30

Cypru

sS

erb

iaS

lovakia

Port

ugal

Spain

Monte

negro

Italy

Hu

ng

ary

Norw

ay

Latv

iaM

alta

Esto

nia

Fin

land

Sw

eden

Pola

nd

Cro

atia

Slo

venia

Germ

any

Lithuania

Luxem

bo

urg

Czech R

ep

Austr

iaD

enm

ark

Sw

itzerland

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


50.7

-20

-15

-10

-5

0

5

10

15

20

Gre

ece

Lithuania

UK

Monte

negro

Icela

nd

Slo

vakia

Rom

ania

Cypru

sM

alta

Latv

iaH

ungary

Slo

ve

nia

Austr

iaC

roatia

Spain

Germ

any

Esto

nia

Fin

land

Pola

nd

Czech R

ep

Bulg

aria

Serb

iaS

witzerland

Turk

ey

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


10522.5

-21.6

22.020.2

-20

-15

-10

-5

0

5

10

15

20

Lithuania

Malta

Monte

negro

Port

ugal

Slo

vakia

Hungary

Slo

venia

Spain

Pola

nd

Cro

atia

Latv

ia

Austr

ia

Fin

land

Germ

any

Esto

nia

Luxem

bo

urg

Czech R

ep

Serb

ia

Norw

ay

Sw

eden

Sw

itzerland

Denm

ark

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


71.3 23.823.025.0



Despite the pound appreciating upwards of 15% against the Turkish lira, this was

seemingly not enough to offset the perceived higher risk of a holiday to Turkey, with

visits from the UK falling by 0.9% based on data to July compared to the same period

in 2014.

The economic sanctions against Russia, which are due to last until the end of January

2016 at the earliest, is just one factor having a clear effect on travel flows from Russia.

Every reporting destination has recorded falling arrivals from Russia and all but one

has recorded falling nights. Amongst those reporting falling arrivals are some usually

popular Russian holiday destinations such as the Baltic countries, Finland, and

Turkey.

These large falls also reflect the impact of lower 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. The first few months of the year saw the

rouble rally against its key trading currencies (including the euro and the US dollar) but

it began to depreciate again starting in mid-May, stabilising at a record low rate.

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 in 2016 albeit from a very low base.

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

government begins to forge alliances beyond the EU as well as through its lax

imposition of Western-led sanctions against Russia. However, with data from Greece

only available to March for this market, this remains to be seen for this market.

-10

0

10

20

30

40

50

Slo

vakia

Gre

ece

Latv

iaM

onte

negro

Icela

nd

Slo

venia

Hungary

Lithuania

Ro

ma

nia

Cypru

sC

roatia

Italy

Czech R

ep

Irela

nd R

ep

Pola

nd

Austr

iaE

sto

nia

Germ

any

Malta

Spain

Fin

land

Sw

itze

rla

nd

Serb

iaT

urk

ey

Bulg

aria

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


-10

0

10

20

30

40

50

Monte

negro

Slo

vakia

Hu

ng

ary

Latv

iaN

orw

ay

Sw

eden

Slo

ve

nia

Cro

atia

Czech R

ep

Pola

nd

Esto

nia

Denm

ark

Germ

any

Po

rtug

al

Spain

Austr

iaM

alta

Italy

Fin

land

Luxem

bourg

Lithuania

Sw

itzerland

Cypru

sS

erb

ia

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


50.5

-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

Monte

negro

Serb

iaR

om

ania

Slo

venia

Cypru

sT

urk

ey

Hungary

Cro

atia

UK

Bulg

aria

Italy

Germ

any

Sw

itzerland

Au

str

iaE

sto

nia

Slo

vakia

Spain

Lithuania

Latv

iaP

ola

nd

Malta

Czech R

ep

Icela

nd

Fin

land

Gre

ece

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


-66.9-50

-45

-40

-35

-30

-25

-20

-15

-10

-5

0

Monte

negro

Serb

iaLuxem

bourg

Italy

Hungary

Slo

venia

Cro

atia

Germ

an

yS

witzerland

Sw

eden

Austr

iaE

sto

nia

Denm

ark

Cypru

sLithuania

Pola

nd

Port

ugal

Latv

iaC

zech R

ep

Fin

lan

dM

alta

Slo

vakia

Norw

ay

Spain

Russian visitor nights in select destinations

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


-52.8



Non-European markets

Travel to Europe from the US continues to boom in all but a few reporting destinations,

aided by a strong economy and a strong US dollar relative to its key trading currencies

such as the euro, worth more now than at any other point in the past decade.

Both emerging and mature European destinations 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.

Iceland and Montenegro enjoyed strong growth from the US by 53.3% and 32.8%

respectively, based on data to August compared to the same period in 2014. Greece

also reported a 49.7% increase in the number of US arrivals it received. This is based

on data to March, and although not likely to provide any firm indication of likely full

year performance, the strong dollar relative to the euro should ensure some degree of

growth.

Finland was the only country which saw a fall in both US visits and visitor nights based

on data to July. Cyprus also received less US visitors in the year to August, while

Lithuania saw US visitor nights fall by 23.5% in the first half of the year compared to

the same period in 2014. Its historic links with Russia may be partly to the cause.

Many emerging European destinations have seen a large increase in the number of

visitors received from Japan, particularly eastern European destinations such as

Latvia, Estonia, and Lithuania, all of which posted visits growth in excess of 30%,

accompanied by similarly strong growth in Japanese visitor nights.

These trends suggest that the export-led growth policy of the Bank of Japan has not

affected travel behaviour as much as feared initially despite the yen’s relative

weakness in international markets as a result of this policy. 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

Monte

negro

Cro

atia

Luxem

bourg

Serb

iaE

sto

nia

Slo

vakia

Denm

ark

Slo

venia

Czech R

ep

Port

ugal

Hungary

Latv

iaA

ustr

iaS

pain

Pola

nd

Germ

any

Sw

itzerland

Malta

No

rwa

yS

wed

en

Italy

Fin

land

Lithuania

US visitor nights in select destinations


Source: TourMIS *date varies (Jan-Aug) by destination-23.5

-20

-10

0

10

20

30

40

Icela

nd

Gre

ece

Mo

nte

ne

gro

Latv

iaS

lovakia

Spain

Cro

atia

Serb

iaH

ungary

Slo

venia

Czech R

ep

Rom

ania

Italy

Au

str

iaP

ola

nd

Bulg

aria

Sw

itzerland

Esto

nia

Germ

any

Turk

ey

UK

Lithuania

Malta

Fin

land

Cypru

s

Visits from US to select destinations



53.349.7



Outbound travel from China continues to grow in 2015 in terms of both visits and

visitor nights 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. However,

imports are declining, which may eventually come to include some outbound travel.

Travel to Europe as a whole was estimated to have grown by over 17% in 2014 – the

fifth consecutive year of growth from China, and there is no reason that future growth

cannot be safeguarded. The Bank of China and the Chinese government have many,

as yet unused, policy options available should the slowdown get out of hand.

Visits growth from India was broadly positive with many destinations reporting double

digit growth. Hungary and Croatia enjoyed the strongest growth in visits terms, each

seeing respective increases of 75.6% and 70.5% based on data to August compared

to the same period in 2014. They both saw similarly increases in the number of Indian

visitor nights. However, Latvia and Czech Republic both enjoyed greater increases of

115% and 76.6% respectively based on data to June. These four countries occupy the

top ranking spots in terms of both visits and visitor nights growth from India.

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

40Latv

iaLithuania

Esto

nia

Spain

Rom

ania

Slo

vakia

Italy

Icela

nd

Bulg

aria

Pola

nd

Serb

iaS

lovenia

Germ

any

Austr

iaF

inla

nd

Czech R

ep

Cro

atia

Hungary

Cypru

sS

witze

rla

nd

UK

Turk

ey

Monte

negro

Gre

ece

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


-81.4

63.4

74.0

-31.5-37.5

-30

-20

-10

0

10

20

30

40

Lithuania

Latv

ia

Italy

Slo

vakia

Esto

nia

Luxem

bourg

Slo

venia

Norw

ay

Pola

nd

Sw

eden

Se

rbia

Port

ugal

Germ

any

Cro

atia

Fin

land

Au

str

ia

Hungary

Czech R

ep

Spain

Sw

itzerland

Denm

ark

Monte

negro

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


62.7

47.9

46.7

-36.0

-10

0

10

20

30

40

50

60

70

80

90

100

Slo

vakia

Lithuania

Serb

iaIc

ela

nd

Spain

Monte

negro

Turk

ey

Gre

ece

Slo

venia

Latv

iaC

roatia

Austr

iaH

ungary

Germ

any

Czech R

ep

Sw

itzerland

Fin

land

Pola

nd

Rom

ania

UK

Bulg

aria

Cypru

sE

sto

nia

Italy

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


-10

0

10

20

30

40

50

60

70

80

90

100

Lithuania

Slo

vakia

No

rwa

y

Serb

ia

Slo

venia

Cro

atia

Austr

ia

Czech R

ep

Hungary

Latv

ia

Fin

land

Spain

Sw

itzerland

Sw

ed

en

Germ

any

Denm

ark

Mo

nte

ne

gro

Pola

nd

Luxem

bourg

Esto

nia

Italy

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


145.0



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

destinations, many of which have seen both visits and visitor nights from Canada grow

by double digit rates. Lower World oil prices have made the Canadian dollar weaker

against its US counterpart making a holiday to the US less price attractive.

Conveniently for much of Europe this coincides with a stronger Canadian dollar

against the euro which makes Eurozone destinations more price attractive.

Montenegro, Spain, and Latvia are some of the destinations benefitting from these

currency movements, with each seeing Canadian visits increase by 29.9%, 24.2%,

and 23.8% respectively.

-30

-20

-10

0

10

20

30

40

50

Hungary

Cro

atia

Czech R

ep

Latv

ia

Austr

ia

Slo

va

kia

Fin

land

Sw

itzerland

Germ

any

Pola

nd

Turk

ey

Spain

Italy

Bu

lgaria

UK

Monte

negro

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


75.6

70.5

62.7

59.2

-30

-20

-10

0

10

20

30

40

50

Latv

ia

Czech R

ep

Cro

atia

Hungary

Slo

vakia

Austr

ia

Sw

itze

rla

nd

Denm

ark

Pola

nd

Fin

land

Sw

eden

Germ

any

Monte

negro

Italy

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


114.8 72.1

76.6 64.0

-30

-20

-10

0

10

20

30

Gre

ece

Monte

negro

Spain

Latv

iaS

lovakia

Slo

venia

Rom

ania

Icela

nd

Cro

atia

Hungary

Cypru

sS

erb

iaLithuania

UK

Czech R

ep

Italy

Turk

ey

Austr

iaG

erm

an

yB

ulg

aria

Sw

itze

rla

nd

Pola

nd

Fin

land

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


39.3

-30

-20

-10

0

10

20

30

Monte

negro

Serb

ia

Slo

vakia

Slo

venia

Cro

atia

Port

ugal

Czech R

ep

Spa

in

Hungary

Latv

ia

Austr

ia

Germ

any

Sw

itzerland

Pola

nd

De

nm

ark

Italy

Fin

lan

d

Sw

eden

Lithuania

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


51.832.6



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

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


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



Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010

Total outbound travel (000s) 96,072 - 4.8% 26.6% - 26.3% -

of which:

Long haul (000s) 58,170 60.5% 6.2% 35.4% 64.8% 27.0% 60.2%

Short haul (000s) 37,902 39.5% 2.5% 13.1% 35.2% 25.2% 39.8%

Travel to Europe***

Europe (000s) 25,789 26.8% 5.8% 32.4% 28.1% 32.2% 25.6%

Northern Europe (000s) 6,073 6.3% 5.7% 32.2% 6.6% 30.2% 6.1%

Western Europe (000s) 9,374 9.8% 4.5% 24.5% 9.6% 24.8% 9.9%

Southern Europe (000s) 6,862 7.1% 6.4% 36.4% 7.7% 40.6% 6.4%

Central/Eastern Europe (000s) 3,480 3.6% 7.9% 46.3% 4.2% 42.1% 3.2%

** Shows cumulative change over the relevant time period indicated

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



Canada




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











0

2

4

6

8

10

12

14

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%

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 Canadian market Northern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 12,363 35.4% 4.5% 24.5% 35.9% 19.0% 33.3%

Short haul (000s) 22,588 64.6% 4.0% 21.8% 64.1% 8.7% 66.7%

Travel to Europe***

Europe (000s) 4,854 13.9% 2.0% 10.6% 12.5% 22.2% 12.7%

Northern Europe (000s) 1,046 3.0% 7.2% 41.4% 3.4% 16.2% 2.9%

Western Europe (000s) 1,826 5.2% 1.5% 7.8% 4.6% 13.9% 5.1%

Southern Europe (000s) 1,718 4.9% -1.1% -5.5% 3.8% 41.9% 3.9%

Central/Eastern Europe (000s) 265 0.8% 2.5% 13.2% 0.7% 2.1% 0.8%


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

Canada Market Share Summary





Mexico




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

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%

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 Mexican marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 2,879 13.6% 4.2% 23.0% 13.4% 73.4% 10.9%

Short haul (000s) 18,244 86.4% 4.6% 25.5% 86.6% 34.2% 89.1%

Travel to Europe***

Europe (000s) 1,513 7.2% 1.9% 9.9% 6.3% 76.2% 5.6%

Northern Europe (000s) 106 0.5% 2.3% 12.1% 0.4% 49.9% 0.5%

Western Europe (000s) 634 3.0% 4.3% 23.7% 3.0% 49.7% 2.8%

Southern Europe (000s) 612 2.9% -1.3% -6.2% 2.2% 117.3% 1.8%





Mexico Market Share Summary

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



Argentina




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











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%

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 Argentinean market

Northern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 2,248 29.3% 4.2% 22.6% 31.4% 33.7% 28.7%

Short haul (000s) 5,419 70.7% 2.2% 11.2% 68.6% 29.6% 71.3%

Travel to Europe***

Europe (000s) 915 11.9% 3.3% 17.8% 12.3% 53.0% 10.2%


Western Europe (000s) 44 0.6% 2.7% 14.1% 0.6% 37.5% 0.5%

Southern Europe (000s) 669 8.7% 2.7% 14.3% 8.7% 53.1% 7.5%



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



Argentina Market Share Summary



Brazil




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











0

1

2

3

4

5

6

7

8

9

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%

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 Brazilian marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 7,705 73.4% 2.4% 12.8% 73.8% 71.9% 66.9%

Short haul (000s) 2,786 26.6% 2.0% 10.6% 26.2% 25.4% 33.1%

Travel to Europe***

Europe (000s) 3,950 37.7% -0.9% -4.7% 32.0% 66.2% 35.4%


Western Europe (000s) 1,753 16.7% -0.9% -4.3% 14.2% 62.7% 16.1%

Southern Europe (000s) 1,509 14.4% -3.5% -16.3% 10.7% 66.0% 13.6%




Brazil Market Share Summary

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




India




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











0

2

4

6

8

10

12

14

16

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%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Europe's share of Indian marketNorthern Europe

Western Europe

Southern Europe



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


Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 14,289 95.2% 5.8% 32.6% 95.5% 51.7% 95.1%

Short haul (000s) 723 4.8% 4.1% 22.5% 4.5% 48.5% 4.9%

Travel to Europe***

Europe (000s) 2,432 16.2% 5.3% 29.6% 15.9% 64.9% 14.9%


Western Europe (000s) 883 5.9% 5.4% 29.9% 5.8% 78.1% 5.0%



India Market Share Summary



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




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.

0

5

10

15

20

25

30

35

40

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%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Europe's share of Chinese marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 35,629 45.3% 4.2% 22.9% 46.0% 202.7% 33.4%

Short haul (000s) 43,096 54.7% 3.6% 19.4% 54.0% 83.9% 66.6%

Travel to Europe***

Europe (000s) 10,910 13.9% 4.8% 26.1% 14.5% 167.0% 11.6%


Western Europe (000s) 6,140 7.8% 5.1% 28.5% 8.3% 211.9% 5.6%


Central/Eastern Europe (000s) 3,347 4.3% 3.8% 20.8% 4.2% 106.7% 4.6%


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



China Market Share Summary

2015



Japan




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











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%

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 Japanese marketNorthern Europe

Western Europe

Southern Europe





Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010

Total outbound travel (000s) 20,392 - 4.8% 26.7% - -5.5% -

of which:

Long haul (000s) 13,431 65.9% 4.0% 21.6% 63.2% 7.8% 57.7%

Short haul (000s) 6,961 34.1% 6.4% 36.5% 36.8% -23.7% 42.3%

Travel to Europe***

Europe (000s) 4,487 22.0% 2.0% 10.5% 19.2% 7.6% 19.3%


Western Europe (000s) 2,039 10.0% 2.6% 13.8% 9.0% 5.1% 9.0%


Central/Eastern Europe (000s) 584 2.9% 2.1% 11.1% 2.5% -5.9% 2.9%


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



Japan Market Share Summary



United Arab Emirates




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:











0.0

0.5

1.0

1.5

2.0

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%

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 Emirati marketNorthern Europe

Western Europe

Southern Europe



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


Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 1,540 43.1% 1.4% 7.1% 36.0% 38.2% 31.4%

Short haul (000s) 2,030 56.9% 7.7% 44.8% 64.0% -16.8% 68.6%

Travel to Europe***

Europe (000s) 902 25.3% 0.3% 1.3% 19.9% 44.0% 17.6%

Northern Europe (000s) 294 8.2% -2.8% -13.4% 5.6% 39.9% 5.9%

Western Europe (000s) 389 10.9% 0.7% 3.7% 8.8% 66.6% 6.6%


Central/Eastern Europe (000s) 24 0.7% 6.0% 33.7% 0.7% -44.5% 1.2%



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


United Arab Emirates Market Share Summary



Russia




Norway, Sweden, UK









Slovakia, Ukraine

Methodology note:







destinations; In 2014 US data reporting shows 11.9m




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%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Europe's share of Russian marketNorthern Europe

Western Europe

Southern Europe


% of outbound* market

*Outbound market defined as tourist arrivals to all destinations


Level* ShareAnnual

average

Cumulative

growth**

Share

2020

Cumulative

growth**

Share

2010


of which:

Long haul (000s) 7,174 27.4% 6.1% 34.2% 25.7% 14.0% 24.1%

Short haul (000s) 19,054 72.6% 7.8% 45.8% 74.3% -3.7% 75.9%

Travel to Europe***

Europe (000s) 19,054 72.6% 7.8% 45.8% 74.3% -3.7% 75.9%

Northern Europe (000s) 1,252 4.8% 5.2% 28.6% 4.3% -9.7% 5.3%

Western Europe (000s) 1,656 6.3% 4.5% 24.7% 5.5% 23.8% 5.1%


Central/Eastern Europe (000s) 8,571 32.7% 9.2% 55.3% 35.6% -26.7% 44.8%


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



Russia Market Share Summary



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 continues with strong growth across all key macro indicators expected

in 2015 and 2016, particularly GDP and consumer expenditure up 2.4% and 2.9%

respectively compared to 2014. This growth is being led by low inflation driven by lower

oil prices.

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

recession with GDP expected to fall 4%. 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 2.4% 2.9% -0.6% 10.9% 0.1% UK 2.5% 2.7% -0.1% 1.3% 1.1%

France 1.1% 1.6% 0.1% 0.0% 0.2% France 1.5% 1.5% -0.1% 0.0% 1.5%

Germany 1.6% 2.0% -0.3% 0.0% 0.3% Germany 2.3% 1.9% -0.1% 0.0% 1.4%

Netherlands 1.9% 1.3% -0.3% 0.0% 0.9% Netherlands 2.1% 1.9% -0.1% 0.0% 1.3%

Italy 0.8% 0.6% -0.6% 0.0% 0.1% Italy 1.2% 1.1% -0.3% 0.0% 0.7%

Russia -4.0% -9.8% 0.4% -25.5% 15.1% Russia -0.8% -0.9% 0.3% -8.9% 7.1%

US 2.5% 3.2% -0.9% 19.9% 0.2% US 2.6% 3.1% -0.4% 4.0% 1.9%

Canada 1.1% 2.0% -0.1% 3.6% 1.1% Canada 2.0% 2.2% -0.1% 4.2% 1.8%

Brazil -2.9% -3.5% 1.5% -17.2% 8.8% Brazil -1.7% -1.7% 0.7% -21.6% 7.3%

China 6.9% 7.3% 0.0% 17.6% 1.5% China 6.3% 7.0% 0.0% -1.2% 1.8%

Japan 0.6% -0.9% -0.2% 4.3% 0.8% Japan 1.5% 1.5% 0.0% 0.9% 0.5%

India 7.2% 7.2% 0.0% 14.3% 4.9% India 7.4% 7.1% -0.1% 1.1% 5.5%

* 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.



Eurozone Economy

While CPI inflation may have temporarily headed

back into negative territory in the Eurozone, activity

indicators continue to point to solid GDP growth.

Accordingly, we do not expect any significant

imminent monetary policy changes by the ECB.

Although the composite PMI eased to its lowest

level since February, the big picture is that it

remains consistent with solid GDP growth – a view

that is supported by our GDP indicator which now

points to quarterly growth of about 0.4% in Q3.

Looking ahead, the outlook remains positive too. In

addition to the recent weakness of inflation, which

we now expect to only inch up to 1.2% next year,

households appear to still be benefitting from a

steady recovery in employment.

Rising company profits, thanks in part to the weak

euro, the gradual improvement in bank credit

conditions and rising capacity utilization also

suggest that, absent any major external downside

surprises, the solid but unspectacular investment

recovery could gain some further momentum in

2016.

Of course, the export outlook poses a greater

concern. But despite the recent period of external

weakness centred on emerging markets, Eurozone

exports have held up thanks to developments in the

developed world – a much more important market

for the region. Our baseline view remains that

demand growth in the region’s key export markets

will pick up in the quarters ahead. This, combined

with the weaker euro, bodes well for exports.

In all, while the Eurozone recovery remains

susceptible to shocks, our baseline view is still for

GDP growth to pick up to an above consensus

1.8% in 2016. Well below target inflation may lead

QE to continue beyond the initial planned

termination date of September 2016. But we don’t

expect an increase in the size of monthly asset

purchases.

-4

-3

-2

-1

0

1

2

2000 2003 2006 2009 2012 2015

GDP % q/q

GDP Indicator

Source: Oxford Economics/Haver Analytics

Euro area GDP indicator

% q/q

-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)

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

-50

-40

-30

-20

-10

0

10

20

30

2002 2004 2006 2008 2010 2012 2014

EC service sector sentiment (LHS)

Services GVA (RHS)


Eurozone: Service output and sentiment

Percent balance % q/q



UK Economy

The ONS has carried out its annual re-write of UK

economic history, with the publication of the

Quarterly National Accounts data consistent with

the 2015 Blue Book. The strength of the pre-

financial crisis period was downgraded a little, with

the initial stages of the recovery in 2010 also now

looking softer. But the 2011-13 period is now much

stronger, particularly compared to the very weak

initial estimates for this period. Coming after even

larger upward revisions in last year’s Blue Book,

the post-financial crisis recovery now appears in a

much better light, with no double-dip – let alone

triple-dip – recession. Both the scale of the gap with

the pre-crisis trend and the size of the ‘productivity

puzzle’ have been reduced.

The revisions also have important implications for

policymakers and we expect the OBR to reduce its

estimates of the degree to which the financial crisis

permanently damaged the productive potential of

the economy, rather than reducing their estimate of

the output gap. This would bring them closer to our

long-held views in this area.

Quarterly growth in Q2 2015 was left unrevised at

0.7% but high frequency data suggest a slight loss

of momentum through Q3. Our short-term GDP

model points to GDP having risen by 0.6% in Q3,

but this growth is entirely dependent upon the

services sector, with the monthly official data

showing output contracting in both the

manufacturing and construction sectors through the

summer. Growth this year is now seen at 2.5%,

rising to 2.6% in 2016.

Recent commentary from the MPC has been fairly

dovish, albeit most members have been keen to

remind their audience that policy will have to be

tightened at some point. In the October minutes

some members argued that the global outlook had

weakened to the extent that it warranted a

downgrade to the MPC’s forecasts, while others felt

that the downside risks had escalated and there

were some concerns that this could start to weigh

on the domestic economy. We expect the first rate

rise to come in May 2016, with the risks skewed

towards a later move.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2010 2011 2012 2013 2014 2015

Previously Published

New data

UK: Revisions to GDP growth% year

Source : ONS

-6

-4

-2

0

2

4

6

2004 2006 2008 2010 2012 2014 2016 2018

% year

Consumer spending

Real disposableincome

Source: Oxford Economics

Forecast

UK: Consumer spending and income

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

1997-2007

2014 2015 2016 2017 2018 2019

Consumer spending Investment

Govt. consumption Inventories

Net trade

UK: Contributions to GDP growth

%pts

Source : Oxford Economics



US Economy

Real GDP growth was revised up to 3.9% in Q2,

following a weak start to the year. We expect the

bumpy ride to continue in H2, with growth

restrained by inventory decumulation in Q3 but

solid domestic momentum supporting activity in Q4.

Domestically, real consumer spending remains

robust, trending at a 3% pace for the past twelve

months and well supported by strong income

growth.

The September payroll report disappointed with

only 142,000 jobs added, and weekly earnings flat

at 2.2%. However, the broader picture continues to

show a solid employment trend with strong labor

market dynamics. We see these favorable

developments supporting stronger wage growth in

the coming months.

Solid income growth is also supporting housing

activity with sales and starts seemingly turning a

corner. Residential investment should add 0.3

percentage points (pp) to growth in 2015 and 2016.

Both exports and business investment are currently

held back by a strong dollar and weak global

growth but domestically-oriented businesses are

benefiting from solid consumer outlays.

Lower oil and gas extraction activity continues to

constrain US growth with the average drag from

lower oil and gas capex nearly 0.4pp in 2015.

Meanwhile, net external trade is expected to

subtract 0.7pp from growth this year as demand for

US exports remains constrained by sluggish global

demand and a strong US dollar.

Low oil prices and an appreciating US$ continue to

weigh on inflation, currently at 0.3% for headline

PCE. Core inflation however seems well supported,

and we see inflation gradually moving closer to the

Fed’s 2% target in the next 18-24 months.

In light of the persistent global headwinds, we have

revised our GDP growth outlook to 2.6% pa in

2016-2017, from 2.8% previously. This weaker

profile comes mostly from lower net exports,

although some of the weakness will seep into

domestic activity.

We now expect only two Fed funds rate hikes in

each of 2016 and 2017, following a December 2015

lift-off.

-3

-2

-1

0

1

2

3

2008 2010 2012 2014 2016

US: GDP%, year


Forecast



Japanese Economy

After the 0.3% contraction in Q2 GDP the economy

appears to have stabilized in Q3. External demand

is weakening, reflecting slowing growth elsewhere

in Asia. By contrast domestic demand indicators

are on balance positive, although hardly robust.

A softer outlook for H2 means we have

downgraded our 2015 GDP forecast to 0.6% (from

0.8%). For 2016 we now expect growth of 1.5%

instead of 1.8%. We await news of policy stimulus

(monetary and fiscal) before reviewing in detail the

growth profile for 2016 and beyond.

Monthly data point to a rebound of around 0.5% in

consumer spending in Q3. But labour market data

continue to show a combination of strong demand

but weak earnings growth. Despite this – and the

large fall in equity prices since August – consumer

confidence has held up reasonably well. The trend

in consumption is one of gradual recovery, in which

case the Q2 fall implies a rebound in Q3.

There are mixed messages from indicators of

business investment – Tankan up; machinery

orders down. On balance healthy corporate profits

should support modest expansion in investment

through the second half.

Net exports will in all probability be a significant

drag on growth in Q3. Monthly trade data up to

August on goods show exports little changed on

Q2, with imports up 1% on the same basis.

Having secured constitutional reform Prime Minister

Abe is reportedly now focused on the economy.

Concrete policy announcements should be

forthcoming in coming weeks and may include a

fiscal stimulus. But the main imminent call is the

expansion of QE by the Bank of Japan at its 30th

October meeting – one year after the last

expansion of monetary easing. As well as a

faltering economy, recent yen appreciation and

stock market correction strengthen the case for

more QE. We expect an increase in asset

purchases from ¥80trn a year to ¥100trn.

70

75

80

85

90

95

100

105

110

Aug-08 May-10 Feb-12 Nov-13 Aug-15

Industrial production Export volumes


Japan: industrial production and exports2010 =100

-3

-2

-1

0

1

2

3

Aug-99 Aug-03 Aug-07 Aug-11 Aug-15

CPI exc fresh food CPI exc food and energy

Source : Statistics Japan/Haver Analytics

Japan CPI inflation (excluding consumption tax)

%

BoJ's inflation target

-10

-8

-6

-4

-2

0

2

4

6

8

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

% year

GDP

Consumption


Japan: GDP and consumption

F'cast



Emerging Market Economies

Downward pressures persist in China

In China downward pressures persist as the real estate

downturn continues to weigh on activity, especially heavy

industry. Housing sales momentum has improved but

amid large inventories of unsold housing, starts were still

17% lower than a year earlier in August. And with land

acquisition down 32% this year compared to 2014, it is

unlikely the sector will recover any time soon. Meanwhile,

output in sectors related to construction also remain

under pressure. The Caixin manufacturing PMI

weakened fell to 47.2 in September and export orders

also fell as global demand remains soft and China has

become less price competitive in recent years. Indeed in

spite of the recent devaluation, the trade-weighted CNY

is still about 8% stronger than a year ago. Depreciation

pressures will persist as the US$ is likely to strengthen

ahead of the Fed raising rates. But policymakers are

unlikely to let the CNY weaken soon, given the bad

August experience (we see it at 6.6 to the US$ by end

Q2 2015, from 6.36 now).

The services sector continues to provide a helpful

cushion against the weakness in industry though, with

spending on tourism, hotels and catering, smartphones

and online retail looking particularly healthy. However,

with turnover on the stock market sharply lower from July,

the financial sector is likely to add much less to GDP

growth in H2 2015, having contributed nearly one-third of

H1 nominal GDP growth. And net exports may become a

drag on growth. Hence, we see GDP growth falling below

7% in H2, averaging 6.6% in 2015 overall.

And ‘junk’ Brazil faces a deeper recession

While risks are high in China, in Brazil the downside

scenario is already beginning to materialise. Late last

month the real (BRL) broke an all-time low of 4 to the

US$ and bond yields rose sharply after S&P’

downgraded Brazil to ‘junk’ status. Although the BRL has

rebounded a little, we expect more weakness in Q4 2015

and 2016 due to the poor fundamentals, high volatility

and US rate hikes. Domestically, we now see a deeper

recession – partly reflecting the higher borrowing costs

and risk premium associated with the downgrade – which

will make the fiscal adjustment even tougher. We see

GDP contracting by 2.9% this year (from 2.5%

previously) followed by a 1.7% drop in 2016 (from 1%

before). On the bright side, lower domestic demand and

the weaker BRL should allow Brazil to narrow its current

account deficit to 3% of GDP in the coming two years –

from 4.4% in 2014.

46

48

50

52

54

56

Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15

Manufacturing

Services

Composite

China: Output PMIindex

Source: Oxford Economics/Markit/Caixin

60

65

70

75

80

85

90

95

100

105

110

115

Jan 11 Jan 12 Jan 13 Jan 14 Jan 15

Index (Dec 30, 2010 = 100)

China

Source: Haver Analytics

Emergers: Exchange rates v US$

India

Indonesia

Korea

appreciation

70

75

80

85

90

95

100

105

110

2002 2004 2006 2008 2010 2012 2014

2012=100 (seasonally adjusted)


Brazil: Industrial output



Russia the second BRIC in deep recession

The one BRIC that beats Brazil in terms of depth of

recession is Russia and leading indicators point to a

continuation of the Russian economy’s broad-based

contraction. Investment demand deteriorated and private

spending weakened further. Slumping oil prices have

renewed the pressure on the rouble, leading to a pickup

in inflation and we expect the rouble to remain under

downward pressure. This has forced the central bank’s

hand, marking the end of the recent easing cycle in

September. Rates may rise in Q4 and we now expect

GDP to contract by 4% in 2015 (from 3.8% previously).

And we no longer see any prospects for a mild recovery

next year. Instead, forecast another year of recession in

2016, with growth falling by 0.9% (from -0.2% before).

Turkey faces many headwinds, all downside

Turkey ran a current account deficit of more than 6%

GDP in Q2, leaving the economy particularly vulnerable

to the general EM sell off in Q3 and we expect the lira to

remain under pressure. Inflation was 7.9% in September

(from a low of 6.8% in July) and the real effective

exchange rate has already depreciated to levels that

have previously triggered emergency rate hikes by the

central bank (raising the risk of this happening again). In

the baseline, we have pencilled in a 100bp increase in

interest rates in Q4, followed by 150bp in Q1 2016. The

economy continues to be weighed down by the twin

effects of poor external sentiment and increasingly fragile

domestic conditions. Political uncertainty ahead of new

elections in November has coincided with a flare up of

geopolitical tensions along the border with Syria and Iraq

and business confidence fell markedly in September with

consumer confidence dropping to the lowest since 2009.

We see 2.8% growth next year (from 3.5% in August).

India free to cut rates, but transmission slow

In sharp contrast to Brazil, Russia and Turkey, the RBI

(India) lowered rates by 50bp in September and looking

ahead, the risks are skewed towards further rate cuts.

Alhough the economy started Q3 positively, this start

faltered with rural demand, private investment and credit

growth all languishing. Meanwhile, downside risks have

increased; the global economic backdrop is weak and

monetary policy transmission has been slow. That said,

the RBI is likely to adopt a cautious stance until more

clarity emerges on the timing of the Fed rate hike. And

the disinflation trend is nearing an end as helpful base

effects begin to fade. Real interest rates should drop

gradually and we see the RBI pausing in 2015 and 2016.

20

30

40

50

60

70

8040

50

60

70

80

90

100

110

120

Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15

RUB per US$ (inverted)


Russia: RUB and oil priceOil price (US$ pb)

RUB per US$ (RHS)

Oil price (LHS)

0

3

6

9

12

15

18

21

24

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

%

"Core" inflation

Source: Haver Analytics / Oxford Economics

Turkey: Interest rates and inflation

Average bank lending rate

1-week interbank rate

6

7

8

9

10

11

12

Jan 11 Jan 12 Jan 13 Jan 14 Jan 15

%


India: Interest rates

3-month interbank rate

10-year government bond yield

Repo policy rate



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: Tourism Flanders

Wallonia: Wallonie-Bruxelles 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 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 Italian Government Tourist Board

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

Montenegro National Tourism Organisation of Montenegro

Norway Innovation Norway

Poland Polish Tourist Organisation (PTO)

Portugal Turismo de Portugal, I.P.

Romania Romanian National Authority for Tourism

San Marino State Office for Tourism

Serbia National Tourism Organisation of Serbia (NTOS)

Slovakia Slovak Tourist Board

Slovenia Slovenian Tourist Board

Spain Turespaña - Instituto de Turismo de España

Sweden VisitSweden

Switzerland Switzerland Tourism

Turkey Ministry of Culture and Tourism