THE NEW REALITY FOR TRAVEL & TOURISM?

UFI IBRAHIMCHIEF OPERATING OFFICER

WORLD TRAVEL & TOURISM COUNCIL

Rising per capita incomes are a key driver of international tourism…

0.06

0.08

0.10

0.12

0.14

0.16

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

4.0

4.5

5.0

5.5

6.0

6.5

World: Overseas trips and per capita incomesNumber of trips

Source: Oxford Economics

Real GDP per capita

Trips per heads

2000 US$ 000s

Air passenger declines waning

-12

-9

-6

-3

0

3

6

9

12

15

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

% year, RPK

RPK = revenue passenger kms

Source: IATA

International air passenger traffic growth

3mth mav

-8 -6 -4 -2 0 2 4 6

Visitor Exports

CapitalInvestment

Business Travel

Personal T&T

Total Demand

Ten Year 2009 2008

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1999 2001 2003 2005 2007 2009 2011 2013

% year

Source: Oxford Economics

World: Travel & Tourism Economy GDP growth

Jan 2009 forecast

Intl Visitor Flows -Yr to date: UNWTO

World: -7.4%Europe: -8.4%Asia Pacific: -6.5%Americas: -6.7%Africa: +4.4%Middle East: -13.4%

WHEN AND WHERE WILL RECOVERY & GROWTH COME FROM IN SHORT/MED TERM?

• IMF states France and Germany already on path of recovery? Returned to growth.

• Emerging economies are even stronger. China and India.

While still below developed countries in ten years’ time…

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

1990 2000 2009 2020

US Eurozone

Brazil Russia

India China

World: GDP per capitaUS$ 2000 prices

Source : Oxford Economics/Haver Analytics

at Purchasing Power Parities

… Growth of BRICs’ per capita incomes are catching up rapidly…

0

5,000

10,000

15,000

20,000

25,000

1990 2000 2009 2020

Brazil Russia India China

BRICs: GDP per capitaUS$ 2000 prices

Source : Oxford Economics/Haver Analytics

at Purchasing Power Parities

…resulting in surge in Chinese trips abroad…

0

25

50

75

100

125

2000 2001 2002 2003 2004 2005 2006 2007 2020

0

25

50

75

100

125Outbound Chinesetourists (LHS)

Travel spend (RHS)

Chinese outbound tourism marketTourist mn

Source: Oxford Economics

US$ bn

…with similar trends likely across the other BRICs

0

20

40

60

80

100

120

2000 2009 2020

Brazil

Russia

India

China

BRICs: Residents' trips abroadMillions

Source : Oxford Economics

Take note of India...• 10.7 million outbound trips in 2008

annual growth of 12% per annum since 1998

• 40% business, 20% VFR, 20% leisure

• US$1.7bn spending in 1998; US$9.6bn in 2008 – nearly six fold increase

• Total trip volume doubled in 5 years

A world full of regulation...

• Tax, tax and more tax• Environmental Legislation

local, national, regional or international? Or all the above?

Value-trotters...

“globally aware, environmentally-

conscious, technologically-savvy, time-poor individuals who are spoiled by a wide range of choice

and consider themselves good world citizens.”

Ufi Ibrahim, 2007

University of Maryland Programme

on international policy attitudes

World Public Opinion Survey(2009):

19 nations

18,578 people

73% want higher priority for climate change

77% Britons want greater government intervention

44% of US Citizens want climate change to be a

major preoccupation of the Obama administration

Findings taken from Maryland University Programme on International Policy Attitudes,

World Public Opinion Survey

In China - 94% supported the need for government

to keep climate change on the front burner.

And in India, 59% of the public wanted their

government to make climate change a top

priority.Findings taken from Maryland University

Programme on International Policy Attitudes, World Public Opinion Survey

‘Take it for granted?’

The Tipping Point

The International Ecotourism Society

states that ecotourism is growing at three times the rate of

traditional vacationing, increasing annually up

to 30%

Risk Free?

What could be the impact of a

real H1N1 pandemic?

The swine flu epidemic so far

0

50

100

150

200

250

300

350

400

28-Apr-09

12-May-09

26-May-09

9-Jun-09

23-Jun-09

7-Jul-09

21-Jul-09

4-Aug-09

18-Aug-09

1-Sep-09

0

500

1000

1500

2000

2500

3000

3500

4000

Swine flu epidemic so far

Source : WHO updates, last data 13 Sep

Deaths(RHS)

Cases(LHS)

Reported cases ('000s) Reported deathsAffected:

Americas, esp. Mexico

Asia, fear of SARS repeat

and government stern response

Globally visitor exports fall 60% vs base forecast (US$620bn)

The epidemic also hits domestic tourism, causing

losses to the industry

beyond the fall in foreign

visitors

“It is not the strongest of the species that

survives, nor the most intelligent that

survives. It is the one that is the most

adaptable to change”

Charles Darwin