Euromonitor Head of Travel Research Caroline Bremner presented this session at ITB Berlin on 10 March 2017. This deck examines the impact of the current political environment on the global travel and tourism industry.

1. BREXIT AND TRUMP: TOURISM IN TIMES OF
POLITICAL DISRUPTIONS
10 MARCH 2017
CAROLINE BREMNER, HEAD OF TRAVEL AT EUROMONITOR INTERNATIONAL

2. GLOBAL VIEW
BREXIT IMPACT
TRUMP EFFECT
STRATEGIES FOR SUCCESS

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World economy – more optimistic in Q1 2017 vs Q4 2016
 World GDP growth forecast 3.3% in 2017
GLOBAL VIEW
Source: Euromonitor International Macro Model

4. Tourism
demand
Macro-economic
Population
Trade
Populism
Conflicts
Terrorism
Advisories
Black
swan
Disasters
Pandemics
Visas
Capacity
Open skies
Digital
Tax
Value for money
Competition
High levels of uncertainty lead to downside risks
Geopolitical
Connectivity
Price
positioning

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0
100
200
300
400
500
600
2001 2006 2010 2015 2020
MillionTrips
World Arrivals by Region in Trips 2001-2020
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and
Africa
North America
Western Europe
Tourism demand yet to peak
GLOBAL VIEW
 Global arrivals grown consistently over 20 years, shows very little signs of slowing
 Western Europe remains most popular region vs Asia’s ascent

6. GLOBAL VIEW
BREXIT IMPACT
TRUMP EFFECT
STRATEGIES FOR SUCCESS

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The UK strikes out alone – economic slowdown expected if no deal
BREXIT IMPACT
 Article 50 triggered end March 2017
 No Brexit Deal scenario points to slowdown in 2017-2018

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Comparative risks to the UK economy
BREXIT IMPACT
Comparative Threats – Probability
Global crisis 4%
No Brexit 5%
Severe US recession 6%
China hard landing 10%
Eurozone recession 10%
No Deal Brexit 27%

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 No Deal Brexit scenario, UK arrivals potential growth of 3.4 million over 2017-2020
 30 year low in pound sterling encourages visitation
 Questions over capacity as airlines reduce exposure
32,000
34,000
36,000
38,000
40,000
42,000
44,000
46,000
2017 2018 2019 2020
‘000trips
Destination UK Arrivals: Scenarios 2017-2020
Pre-Brexit
Baseline
No-Deal Brexit
UK inbound benefits from the currency effect
BREXIT IMPACT
2020 target:
40 million

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10BREXIT IMPACT
London
Frankfurt
ParisAmsterdam
Dublin
Copenhagen
Glasgow
0
10
20
30
40
50
60
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000
ShareofGVAfrombusinessservices(%)
Total GVA from business services US$ million 2015
Importance of Business Services in Key Cities 2015
London Frankfurt Paris Amsterdam Dublin Copenhagen Glasgow
Brexit threatens to undermine London’s ease of doing business & start-hub
Competition from Paris, Frankfurt, Berlin, Stockholm, Dublin and Amsterdam
Challenge to UK’s business crown

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0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
%valueCAGR2015-2020
£million
UK Inbound Spending by Key
Category £ million 2015/2020
2015 2020 2015-20 CAGR %
UK to focus on its value for money proposition
BREXIT IMPACT
Japan
+452%
Mexico
+46%
Taiwan
+21%
Canada
+28%
Japan
+452%
Mexico
+46%
Taiwan
+21%
Thailand
+10%
Malaysia
+7%
Korea
+11%
UK
+9%
Canada
+28%
International Luxury Spend Largest Increase % 2013-15
Russia
-22%
China
-15%
France
-9%
Germany
-2%
Russia
-22%
US
-4%

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Embracing new business models for choice
BREXIT IMPACT
New disruptors like the sharing economy refresh the tourist offer

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0%
20%
40%
60%
80%
100%
2015 2020
%value
UK Travel Sales by Platform
2015/2020 % Value Share
Mobile Travel Sales to Residents
Desktop/PC
Offline Travel
Connected to consumers
BREXIT IMPACT
48%online travel
Penetration 2020
£10bnmobile travel sales
2020

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 UK fourth largest outbound market , after the US, Germany and China, with 82 million departures
 Ireland, Cyprus and Spain are highly dependent on the UK so high exposure
UK outbound slump to cause shockwaves
BREXIT IMPACT
0.0
10.0
20.0
30.0
40.0
50.0
60.0
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
UK%shareofarrivals
Trips,'000
Destinations Exposure to UK Arrivals 2016
UK arrivals % UK share of total

15. GLOBAL VIEW
BREXIT IMPACT
TRUMP EFFECT
STRATEGIES FOR SUCCESS

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The US economy powers on, despite uncertainty
TRUMP EFFECT
Downside risks to US economy
Uncertain trade tariffs and immigration
restrictions
Attempted travel ban sends strong
message about openness
Uplift from stimulus package
Source: Euromonitor International Macro Model
US Real GDP Growth Alternative Scenarios
% %
2016 2017 2018
Euromonitor baseline
Optimistic scenario
Fiscal Stimulus Boom
Pessimistic scenario
Major Downturn
-2
-1
0
1
2
3
4
-2
-1
0
1
2
3
4
Note: Forecast Update February 2017

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65,000
70,000
75,000
80,000
85,000
90,000
2015 2016 2017 2018 2019 2020 2021
‘000trips
US Inbound Arrivals Scenarios
2015-2021
Baseline (Actuals)
Pre-Trump Forecast
Severe US Recession
Marginal downgrade to US inbound performance
TRUMP EFFECT
US inbound decline in 2016
Fall from major markets – Canada, Mexico,
Brazil & UK
Optimistic outlook but short of 100 mn target

18. GLOBAL VIEW
BREXIT IMPACT
TRUMP EFFECT
STRATEGIES FOR SUCCESS

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Global crisis scenario as worst case
South East Asia, China & US resilient
Shift to higher value spend
Global crisis scenario shows potential loss in outbound expenditure
STRATEGIES FOR SUCCESS

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Destinations seek resilient source markets
STRATEGIES FOR SUCCESS
India

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Is this the future in a post-reality world?
STRATEGIES FOR SUCCESS
Mobile first
AI & automation
Biometrics
DNA profiling
Emotion recognition
Personalisation
Human element
Automated hotel
Source: Henna an Hotel

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WINNERSLOSERS
Joining the dots
Building resilience
Asia for new growth
Digital connectivity
Personalisation for enhanced UX
 Wave of populism
 Barriers for trade & people
 Industry consolidation
Challenges and opportunities
STRATEGIES FOR SUCCESS

23. THANK YOU FOR LISTENING
Caroline Bremner
Head of Travel
@CarolineBremner
caroline.bremner@euromonitor.com
www.euromonitor.com/travel