European Travel Commission Sees First Quarter Gains for Europe

European Travel Commission Sees First Quarter Gains for Europe

The European Travel Commission (ETC), in its first quarterly report on European Tourism in 2011, found that destination and industry data indicate a positive start to 2011. Foreign visitor arrivals were reported higher through the beginning months of the year by most destinations.

The report found that both airline and hotel industry data confirm the continuation of travel growth to Europe, though at a more measured pace than experienced during the peak growth periods of 2010. International passenger traffic to Europe outpaced global growth over the first two months of the year.

European airlines also report growth in traffic over the first 14 weeks of 2011, but growth has slowed over recent weeks. The report also found that hotel occupancy has improved further, but appears to have peaked. Average daily rates continue to push up across Europe in response to demand.

The ETC said it expects the overall growth trend to slow in 2011 as comparisons are made to stronger performance in 2010 and high energy prices affect both disposable income and transportation costs. Wage spiral inflation is unlikely in the developed economies as unemployment and spare capacity persist. Capacity utilization is higher in emerging markets where food and energy prices are also having a bigger impact, thus more monetary tightening is expected.

In addition, the ETC said the aftermath of the Tohoku earthquake will considerably affect the Japanese economy and consequently outbound travel in the short run. Japan is likely to briefly re-enter recession in 2011 with a 10 percent drop in outbound travel. A considerable rebound is expected on both fronts in 2012.

Capacity of European airlines continues to expand, carrying on the trend from late 2010. Capacity surged between late 2010 and early 2011, averaging a 7.8 percent increase in available seat kilometers over the first 14 weeks of 2011. According to the ETC, this should translate into competitive fares and act as a driver to travel demand over the next six-eight months.

Tourism Economics’ baseline forecast scenario anticipates overnight visitor growth to Europe of 2.6 percent in 2011 and 4 percent in 2012 Arrivals, hotel performance, and air capacity trends paint an encouraging picture of continued growth in 2011. Overall prospects for the coming two years are sound.

The near-term outlook for Japanese outbound has been revised downward with a 10 percent drop likely. Strong performance in travel from the U.S. carried over from the end of 2010 into the early months of 2011. Most destinations have reported strong growth in arrivals from the U.S. in the first months of the year and nights have increased for all reporting destinations.