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Tourism Knocked Down, But Not Out

The terrorist attacks on New York and Washington last month dealt a terrible blow to the tourism industry, but officials of the World Tourism Organization predict that the industry will demonstrate its characteristic resilience with a quick recovery.

“It is the first time that four aircraft have been hijacked at the same time, it is the first time that all U.S. airports have been shut down and it is the first time that international air traffic has been thrown into such chaos, so it is very difficult, if not impossible, to draw conclusions in such unusual circumstances,” said WTO Secretary-General Francesco Frangialli.

“The magnitude of the tourism crisis will also depend a great deal on what happens in the weeks to come. If further actions are confined to a single region of the world, there would be less repercussion,” he added.

Three main factors are currently wreaking havoc on the tourism industry: lack of consumer confidence in the safety of air travel; uncertainty about the near future; and a weakening of the global economy in recent months.

“The Gulf Crisis was very different, so we cannot take our evaluation directly from those years,” he said. In this case it is the United States that is most affected and the United States is the number one tourism power in terms of international receipts, domestic tourism and international spending, he said.

“It is true that Americans are worried about traveling, but U.S. outbound travel represents only 13% of the world total and experience has shown that tourists from other big generating markets such as Germany, the UK and Japan will continue to travel. They may divert their holidays to different parts of the world that are perceived as safer or stay closer to home, but they will still travel,” he added.

“More significantly, the United States is the largest economy in the world in terms of gross domestic product, so what happens there has profound consequences for the economies of the rest of the world,” he said.

During the first eight months of 2001, world tourism was on track for an increase of 5% to 3%, following an extraordinary growth rate of 7.4 percent in the millennium year 2000. Barring widespread new developments, 2001 should still see positive growth for tourism, albeit at a slightly slower rate of 1.5 to 2%.

Global tourism generated $476 billion last year. “Not only are many tourists and business travelers -especially in the United States- postponing their trips, there are additional costs for the industry as it increases and improves security,” said Mr.  Frangialli.

Tourism businesses are seeing their profits squeezed between declining activity, the cost of new security measures and the increasing price of oil. But he said world markets are over-reacting when it comes to losses in the share prices of airlines and tourism companies.

“We shouldn’t jump to conclusions,” Mr. Frangialli said. “We have learned from experience that the tourism industry recovers very quickly from adversity.”

International air passengers declined during the Gulf War, from 280 million in 1990 to 266 million in 1991, but tourist arrivals crept up by 1.2% and receipts increased by 2.1%. “Despite all the conflicts we’ve had in the world over the past 50 years, there has never been one year that experienced a decline in tourism,” said Mr. Frangialli.

Meanwhile, however, global distribution systems supplier Amadeus has reported a 28% drop in airline bookings following the terrorist attacks in the U.S. The North American market, which accounts for some 4% of Amadeus’ total annual booking volume, showed a 74% decline from 11-14 September, while reservations for the rest of the world decreased by an average of 19%, the president and chief executive officer of Amadeus, Jose Antonio Tazon, said:

“We hope the situation will stabilize in the coming weeks, now that commercial air traffic is being re-established.”

While the most immediate impact may be on the airlines there will also be consequences for the industry as a whole. Outbound travel from the US is likely to decrease, which will impact on the UK’s already struggling tourism industry.

Independent operators specializing in the U.S. and the Middle East also face a difficult period, and it will be a tough time for UK agents too, as travelers decide it is safer to stay at home.

The year after the conflict in the Gulf saw the number of U.S. tourists travelling to Europe fall by more than 20 percent, a figure that took three years to recover. Though some travelers say they are now scared to fly, and others say they are not, most make it clear they want to be at home when the U.S. responds to last week’s attacks.

The World Travel & Tourism Council (WTTC) is also assessing the economic impact on the travel and tourism industry after last month’s attack.

A report by WTTC research partner Oxford Economic Forecasting reviews the effects: on worldwide financial markets and monetary policy; impacts on consumer and business confidence in the US; international economic effects; and travel and tourism sector implications.

This report is available to the public at (www.wttc.org). “Travel and tourism needs peace more than any other sector,” said WTTC President Jean-Claude Baumgarten.

“Yet it can also help bring about peace by fostering understanding amongst those who travel and the communities that welcome them. For the sake of peace and worldwide prosperity, WTTC urges industry and government to work together to restore confidence in travel and tourism.”

Travel and tourism is an integral and diverse part of the economy of almost every state and nation.  According to WTTC research, travel and tourism is responsible for $4,495 billion in global activity. In the United States the industry generates 12.4% of employment throughout the wider economy (equivalent to 17 million jobs), 11.6% of gross domestic product ($481 billion), and generates as much as $1,405 billion in economic activity. Those figures will drop by at least 30% in the coming months.

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