Travel and tourism to boost UK economy in 2012

The UK will be increasingly reliant on travel and tourism in 2012 as jobs and economic growth in the sector outstrip the wider economy.

According to a report released today by the World Travel&Tourism Council (WTTC), the industry will grow by 1.3 percent in 2012 – over double the rate of growth in the wider economy, predicted to be 0.6 percent by the International Monetary Fund.

This rate of growth means that the travel and tourism industry is expected to directly contribute £35.6 billion and almost 950,000 jobs to the British economy.

When the wider economic impacts of the industry are taken into account, travel and tourism is forecast to contribute over £100 billion to the UK economy and generate 2.3 million jobs – or 1 in 13 of all jobs in the UK.

During 2012, some 30 million people will visit the UK, as the country maintains its position as one of the top 10 most-visited nations.

In 2011, the industry grew by 4.1 percent in the UK – or 5 times the rate of the economy as a whole; according to the Office of National Statistics, the UK economy grew by 0.7 percent in 2011.

David Scowsill, President and CEO of WTTC, said: “At a time of significant economic hardship, the travel and tourism industry is helping to beat the recession by generating jobs and growth at a faster rate than the wider UK economy. 2012 is likely to be bolstered by the cheap pound, the continued trend for domestic holidays, and the extra Bank Holiday weekend for the Golden Jubilee. The London Olympics are unlikely to have any significant effect.”

Figures for the UK for 2012 show a marked difference to the European Union as a whole. A tightening of consumer spending, uncertainty around the future of the Eurozone, and peripheral economies of Greece, Spain, Italy, and Portugal, and the impact of austerity measures kicking-in will result in a contraction of the industry of 0.3 percent.

The WTTC’s annual Economic Impact Report also shows that the global travel and tourism industry is set for a milestone year as the industry’s direct contribution to the global economy is expected to pass $2 trillion in GDP and 100 million jobs.

The report forecasts that the global travel and tourism industry will grow by 2.8 percent in 2012, marginally faster than the global rate of economic growth, predicted to be 2.5 percent.

This rate of growth means that the travel and tourism industry is expected to directly contribute $2 trillion to the global economy and sustain some 100.3 million jobs.

When the wider economic impacts of the industry are taken into account, travel and tourism is forecast to contribute some $6.5 trillion to the global economy and generate 260 million jobs – or 1 in 12 of all jobs on the planet.

Financial crisis for tour operator Thomas Cook

British tour operator Thomas Cook is struggling for survival after the number of bookings had fallen and fears the company are having difficultly repaying bank loans of £1billion.

 

Yesterday shares in the German-owned company slumped by 75 per cent after the company revealed they were seeking new agreements with its creditors.

 

Three profit warnings were issued earlier this year after the company revealed bookings were down.

 

In the past year the firm sold 22million trips to families in Britain and 20 other countries.

 

Yesterday executives insisted that trading would continue and there is no danger to its customer’s holidays or travel plans.

 

James Hollins, an analyst as investment bank Evolution Securities said, “Legitimate questions will be asked as to whether Thomas Cook can survive long-term”.

 

In cost cutting measures bosses plan to close more than 200 of its travel agent outlets on high streets, axing thousands of jobs.

 

In the summer the company – Europe’s second biggest tour operator – parted company with chief executive Manny Fontenla-Novoa.

 

Sam Weihagen the new interim chief executive said that trading had declined in the recent months, with bookings for the winter and next summer being poor.

 

The chief executive blamed the lack of bookings on the Eurozone crisis, which has resulted in financial turmoil, meaning families have cut on luxuries including foreign holidays.

 

Mr Weihagen said the company is a “robust business that has a great future”. This is following the collapse in share price, which since January is down 93 per cent.

 

He insisted the company had not fallen behind with bank repayment and the talks with its lenders were an act of ‘prudence’.

 

Travel industry trade body ABTA reassured Thomas Cook customers that flights and package holidays sold by the firm were protected.

 

 

Victoria Bacon, a spokesman for the company said, “the key thing is that anyone who has booked a holiday with them is protected. People can go ahead and book as normal”.

 

Article by Charlotte Greenhalgh

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthy growth of international tourism in first half of 2011

International tourism grew by almost 5% in the first half of 2011, totalling a new record of 440 million arrivals. Results confirm that, in spite of multiple challenges, international tourism continues to consolidate the return to growth initiated in 2010.

ADVANCED ECONOMIES GROW FASTER THAN EXPECTED

International tourist arrivals are estimated to have grown by 4.5% in the first half of 2011, consolidating the 6.6% increase registered in 2010. Between January and June of this year, the total number of arrivals reached 440 million, 19 million more than in the same period of 2010.

Growth in advanced economies (+4.3%) has maintained strength and is closing the gap with emerging economies (+4.8%), which have been driving international tourism growth in recent years. This trend reflects the decreases registered in the Middle East and North Africa, as well as a slight slowdown in the growth of some Asian destinations following a very strong 2010.

“The sustained growth registered in tourism demand in such challenging times clearly makes the case for the sector and reinforces our call to consider tourism as a priority in national policies. Tourism can play a key role in terms of economic growth and development, particularly at a moment when many economies, for the most part in Europe and North America, struggle for recovery and job creation,” said UNWTO Secretary-General Taleb Rifai.

All world (sub)regions showed positive trends with the exception of the Middle East and North Africa. Results were better than expected in Europe (+6%), boosted by the recovery of Northern Europe (+7%) and Central and Eastern Europe (+9%), and the temporary redistribution of travel to destinations in Southern and Mediterranean Europe (+7%) due to developments in North Africa (-13%) and the Middle East (-11%). Sub-Saharan Africa (+9%) continued to perform soundly.
The Americas (+6%) was slightly above the world average, with remarkably strong results for South America (+15%). Asia and the Pacific grew at a comparatively slower pace of 5%, but this more than consolidates its 13% bumper growth of 2010.

Results from recent months show that destinations such as Egypt, Tunisia, or Japan are seeing declines in demand clearly reverting. “We are very encouraged to see demand picking up in such important tourism destinations and call for continued support to these countries, which are today fully ready to receive travelers from all over the world,” added Mr. Rifai.

CONTINUED GROWTH AMID INCREASING UNCERTAINTY

So far, the growth of international tourism arrivals is very much in line with the initial forecast issued by UNWTO at the beginning of 2011, 4% to 5%, for the full year 2011, a rate slightly above the 4% long-term average.

As international tourism receipts were more affected by the 2008-2009 crisis and recovered somewhat slower than arrivals in 2010, this year should also see their further improvement.

Following an encouraging first half of 2011, growth in the remainder of the year is expected to soften somewhat, as recent months have brought increased uncertainty, hampering business and consumer confidence.

“We must remain cautious as the global economy is showing signs of increased volatility,” said Mr. Rifai, “Many advanced economies still face risks posed by weak growth, fiscal problems, and persistently high unemployment.

“Simultaneously, signs of overheating have become apparent in some emerging economies. Restoring sustained and balanced economic growth remains a major task.”

As UK Travel Companies Close, High-End Operators Take Their Place

The collapse of travel firm Sun 4 U  has raised questions for thousands of British holidayers. With over one-thousand travellers facing extra fees and accommodation expenses due to the company’s closure, an industry-wide drop in confidence could soon happen. It would be the first of many hits to Britain’s travel industry throughout the year, but it may not hurt all operators.

The high-end travel industry is fairly small in its visibility, but has remained highly profitable even throughout the financial crisis. Luxury holidays targeting those with a high net worth and unlimited holiday time have sold consistently over the last three years, keeping occupancy steady in some of the world’s most expensive and luxurious hotels.

It’s expected that the collapse of mid-range travel operators will do little to hurt the reputation of those that cater to the higher end, instead reinforcing their brands as icons of quality and customer support. Private luxury travel operators tend to operate with higher margins than other companies, targeting their operations to those with disposable income and the desire to relax overseas.

With the Intercontinental Hotels Group announcing an increase in occupancy, it appears that high-end travel is alive and well. The hotel chain has pointed to an increase in business travel and luxury personal travel as the primary reasons for its recovery, claiming that occupancy is up in most of its hotel network. Growth remains highest in the chain’s East Asian hotel and apartment properties.

The bankruptcy of Britain’s leading travel agents certainly won’t be a welcome sight to the country’s thousands of middle class holidayers, particularly those with package tours booked through a travel firm. While the ongoing cash flow struggle is unlikely to hit those at the top of the spending chain, a downturn in mid-range travel sales can and will push many travel agents towards insolvency.

Could Travel Bridge Vietnam’s Economic Gaps with the West?

Over the last decade, Vietnam has emerged as one of Asia’s most accessible and exciting travel and leisure destinations. It’s an unusual development, particularly as the country was one of the world’s most tightly controlled and economically inaccessible just twenty years ago. As Vietnam increases its ties with the United States, the surge in international visitors could speed up development.

It’s the summer of 2010, and Saigon’s large boulevards are showing signs of rapid development and economic improvement. While the rest of the world has spent the last three years fighting off major recessions, Vietnam has been in a state of nationwide development and economic improvement. The economic capital’s streets are teeming with activity, much of it dedicated to tourism and travel.

An estimated 4.2 million tourists visited Vietnam in 2008 – a huge increase from figures released in the previous decade. Development of numerous high-end hotels in Saigon and capital Hanoi seems to be speeding up the process even more significantly, with Vietnam eyeing up Thailand’s fourteen million visitors annually as a potential target.

While the country’s rapidly developing economy brings in the bulk of its income, many within the country believe that exposure to international visitors could help Vietnam’s educational sector and economy. The country, previously a tightly controlled communist economy, is now one of the most open and trade-based in the world, taking on investment capital from the United States and Europe.

Economists claim that international exposure has helped Vietnam’s development, citing its recent military cooperation with the United States as proof that economic interests can override national rhetoric and history. With tourism constantly increasing and overseas investment arriving at speeds unheard of internationally, it seems as if travel could be a major economic bridge for Vietnam.

Could Travel Company Bankruptcy Ruin Britain’s Holiday Season?

With the holiday season fast approaching, thousands of Britons are planning getaways to various overseas locales. Traditionally, British families have opted to use a travel agent to book overseas trips, accessing low-cost fares and enjoying exclusive offers in the process. But with several of the country’s largest travel agencies going belly-up, it seems like the time to book independently.

The latest travel industry bankruptcy case is that of Sun 4 U – a large travel company based in the city of Birmingham. The travel operator ceased business earlier this week due to falling revenues, citing the limited travel spending of many Britons as reason for its collapse. Holidayers are unsure whether the firm’s collapse could end up compromising their summer holiday plans.

For many Britons, the collapse of a travel agency could mean cancelled bookings and compromised refunds. Tickets booked through an agency are often retained by the company until claimed, leaving many of those who booked out of luck and without recourse. Any travellers affected by the collapse of a bookings and reservations company should contact the airlines and hotels responsible.

More dangerously, the collapse of travel firms could mean a major setback for holidayers that are already abroad. Sun 4 U’s closure is expected to leave over one-thousand Brits stranded overseas without a return ticket of complete itinerary, requiring them to arrange return travel independently and manage bookings without the assistance of a travel provider.

The problem appears to be one that’s compounded by itself. With more travel companies at the brink of bankruptcy, the number of Britons considering a holiday is rapidly decreasing. Airlines have reported an increase in booked seats and hotels an increase in occupancy respectively, though it appears that little of their fortune is trickling down to travel agencies.

Has Shanghai’s Rapid Development Hurt Traditional Tourist Sites?

Just twenty years ago, Shanghai’s bustling central business district was made up of small processing plants and farming communities. Today, Pudong is home to some of the world’s largest corporations and financial companies, with multinational firms competing for office space in some of the world’s largest towers. Is it pretty? Not quite. But it is the future, particularly for China’s business centres.

It’s a scene that’s becoming increasingly common across China’s eastern seaboard. With the country in a state of rapid development and its previously sheltered economy opened up to investment, this image of ultra-quick growth it one that’s ubiquitous throughout China. In most ways, it’s a fantastic achievement, but it’s also becoming a reason for tourism industry operators to begin to worry.

Rewind twenty years and Shanghai becomes a distinctly shorter city. The central district’s offices top out at ten stories, with farmland dominating the horizon and small shops bringing in almost all of the city’s revenue. It’s an idyllic tourist paradise, but it’s one that is almost completely invisible just twenty years later. Shanghai is growing, for lack of a better term, on steroids.

Some fear that it will kill the city’s tourist industry, as cultural locations and historical buildings are wiped off the map in favour of large office complexes and high-tech transport services. Others take a different approach to China’s rapid inner-city development, claiming that a high-tech centre will attract visitors in a similar fashion to that seen in Hong Kong.

For China’s small but dedicated historical tourism industry, it’s a major setback. With demand for accommodation within the city at a high point, it should be a victory for China’s tourism operators, particularly those in Shanghai. But alongside the rapid growth and economic development is a lack of care, one that’s been preserved in historical high-growth cities such as Hong Kong and Tokyo.