The Tourism Industry in Europe Is Still Facing Increasing Global Risks

By February 17, 2020 Recent, Tourism

In 2019, Europe saw a healthy 4% growth in its tourist arrivals as opposed to 2018, according to the recent quarterly European Travel Commission (ETC). While the growth rate across certain destinations was slower than in the past, the regional overall performance remained good. The increasing number of tourism arrivals creates revenue and promotes employment and investment in Europe, not only as a catalyst for economic expansion, but also contributes to the social and cultural value in the region and demonstrates it.

Two-digit increases in tourist arrivals were reported in Montenegro, Turkey, and Lithuania, while the average was higher in Portugal, Serbia Slovakia, and the Netherlands. The 21 percent increase for Montenegro was supported by greater connectivity and infrastructure investment, with Turkey (+ 14 percent) set to make heavy investments and diversify its tourism promotion activities all year round with a view to increasing tourist volume and quality. The latest award for the most open tourism destination 2019 to Portugal (+ 7%) represents the country’s efforts to support accessible tourism. Air connectivity has led to Lithuania (+ 10%). Also important in terms of encouragement of tourism, especially in Serbia, are visa relief policies and bilateral business relation between destinations and source markets (+ 7 percent).

Nevertheless, for all European destinations, it was not entirely positive. The problems relating to infrastructure and tourism growth in Romania (-4 percent) remain, while the disintegration of WOW Air and a solid Krona accounts for the steep decline in Iceland arrivals (-14 percent).

The study also analyzes tourist taxes and explores how taxes of this kind can be imposed in an area where competition has undermined any other price stimulus.

US passengers, helped by an economic environment, are likely to obstruct the outbound travel of China by unforeseen events.

The findings in the study indicate that the US still supports travelers in good economic conditions. The dollar’s value against the euro has been improved by favorable economic conditions, which have made Europe accessible. Whereas growth in GDP is expected to slow slightly in 2020, the record low unemployment rates combined with rising wages have led to significant increases in consumer confidence and consumption. At the end of 2019, tourist arrivals increased in most European cities with fastest growth in Turkey (+ 30%), Cyprus (+ 27%) and Montenegro (+ 26%).

The US / China trade truce should help restore confidence, but China’s challenges continue to be a key part of the last Lunar New Year’s travel season, following the outbreak of COVID-19. Although necessary, the measures taken to prevent spread of the virus (e.g. travel prohibitions and cancelation of routes) intensify issues and concerns about the effects of an outbreak on the international tourism sector and pose a significant downside risk for the demand for Chinese travel in 2020. According to the Tourism Economics forecast, in 2020 Chinese arrivals are projected to be 7% (most likely) and 25% (downside), lower than the previous crisis prediction. All of these factors are being highly ended for 2019 for Chinese visits into Europe, with the surge of Chinese tourists in a handful of European destinations, namely Montenegro (+ 83%), Serbia (+ 39%) and Monaco (+ 38%), being the key destinations.

Threats to 2020 and Future Growth Plans

European tourism overall resists pulling major global downside risks, including global economic slowdown or conflicts, global health crises, sustainability and climate disasters. Despite reduced international trade tensions and additional clarity around Brexit, risks that are increased can not be ignored. In view of the importance of tourism to European economic and social development, the sector will try to mitigate these risks. Diversifying marketing and promotion approaches, tackling customer change, improving cooperation between destinations and through initiatives to promote sustainable tourism growth will lead to competitiveness in the long term.

In this way, it should also be remembered that growth is not the only metric for the tourism industry’s performance. To order to remain competitive in the long term, the sustainable development of a destination is important and prevents being the victims of its own success. A new understanding of performance needs to be developed in future.

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