Bleak Outlook Bleaker For Europe
Western Europe will endure a 3 percent year-over-year drop in outbound travel in 2009 as part of a recession that will last longer than it will in other geographic areas, said Kenneth McGill, executive managing director of the IHS Global Insight travel and tourism practice, at this week's National Business Travel Association Financial Forum in New York.
McGill said Western European outbound travel would experience a slow recovery with flat growth in 2010 and less than 2 percent growth in 2011.
Hampering the return to outbound travel growth in Western Europe is a corporate gross operating profit slide in 2008 of about 5 percent with a multi-year recovery, unlike other regions, where McGill expects sharp upward growth trends.
Only Japan has a more bleak forecast for real gross domestic product than Western Europe, where GDP will fall more than 2 percent in 2009 and will suffer a slow recovery through 2011, when it will show a slight increase of less than 2 percent.
Overall global travel will decrease in 2009 for the first time since 2003. According to McGill, in normal economic times, global travel growth consistently sits above 4.5 percent. In 2008, growth decelerated to about 2 percent and this year is projected to contract by about 2 percent from 2008. McGill does not anticipate travel growth to exceed the 4.5 percent milestone again until 2012.
As further evidence of the economic impact on travel in Europe, regional hotel occupancy fell 10.7 percent year-over-year in January, Smith Travel Research vice president Jan Freitag said at the meeting. He noted European hoteliers also experienced by far the worst drop in average daily rates, with a 22.5 percent change. Asia/Pacific was next in line with ADR losses of 12.2 percent.
Of 15 major global markets, London was the most severely hit as ADRs in the city dropped 31.1 percent year-over-year in January. In Paris, they fell 21.3 percent.