European tourism 2016 trends and prospects q3

European Tourism in 2016: Trends & Prospects (Q3/2016)
SEUROPEAN
TOURISM 2016
TRENDS & PROSPECTS
APRIL 2016

1
EUROPEAN TOURISM IN 2016:
TRENDS & PROSPECTS
Quarterly Report (Q3/2016)
A quarterly insights report produced for the Market Intelligence Group
of the European Travel Commission (ETC)
by Tourism Economics (an Oxford Economics Company)
Brussels, November 2016
ETC Market Intelligence Report

2
Copyright © 2016 European Travel Commission
All rights reserved. The contents of this report may be quoted, provided the source is given accurately
and clearly. Distribution or reproduction in full is permitted for own or internal use only. While we
encourage distribution via publicly accessible websites, this should be done via a link to ETC's
corporate website, www.etc-corporate.org, referring visitors to the Research/Trends Watch section.
The designations employed and the presentation of material in this publication do not imply the
expression of any opinions whatsoever on the part of the Executive Unit of the European Travel
Commission.
Data sources: This report includes data from the TourMIS database (http://www.tourmis.info), STR
Global, IATA, AEA and UNWTO.
Economic analysis and forecasts are provided by Tourism Economics and are for interpretation by
users according to their needs.
Published and printed by the European Travel Commission
Rue du Marché aux Herbes, 61, 1000 Brussels, Belgium
Website: www.etc-corporate.org
Email: info@visiteurope.com
ISSN No: 2034-9297
This report was compiled and edited by:
Tourism Economics (an Oxford Economics Company)
on behalf of the ETC Market Intelligence Group
Cover: Europe, Transylvania, Romania, 13th century Castle Bran, associated with Vlad II the Impaler,
AKA Dracula. Queen Marie of Romania’s later residence.
Image ID: 445665049
Copyright: Emily Marie Wilson

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TABLE OF CONTENTS
Foreword ............................................................................................................. 4
1. Tourism Performance Summary 2016 ............................................................ 7
2. Global Tourism Forecast Summary .............................................................. 10
3. Recent Industry Performance ....................................................................... 11
3.1 Air Transport .......................................................................................... 11
3.2 Accommodation ..................................................................................... 15
4. Special Feature ............................................................................................. 17
5. Key Source Market Performance.................................................................. 21
5.1 Key Intra-European Markets.................................................................. 21
5.2 Non-European Markets.......................................................................... 25
6. Origin Market Share Analysis........................................................................ 28
6.1 United States.......................................................................................... 29
6.2 Canada................................................................................................... 30
6.3 Mexico.................................................................................................... 31
6.4 Argentina................................................................................................ 32
6.5 Brazil ...................................................................................................... 33
6.6 India ....................................................................................................... 34
6.7 China...................................................................................................... 35
6.8 Japan ..................................................................................................... 36
6.9 Australia ................................................................................................. 37
6.10 United Arab Emirates........................................................................... 38
6.11 Russia .................................................................................................. 39
7. Economic Outlook ......................................................................................... 40
7.1 Overview ................................................................................................ 40
7.2 Eurozone................................................................................................ 43
7.3 United Kingdom...................................................................................... 44
7.4 United States.......................................................................................... 45
7.5 Japan ..................................................................................................... 46
7.6 Emerging Markets.................................................................................. 47
8. Appendix 1 .................................................................................................... 51
9. Appendix 2 .................................................................................................... 53

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FOREWORD
STRONG GROWTH OVER THE SUMMER PERIOD
The earlier strong performance in Europe continued into the third quarter of
2016. Despite challenges including safety and security, most destinations
across the region shared in the good summer growth in visitor numbers.
According to UNWTO, Europe experienced a 3% increase in international
tourist arrivals compared to the first six months of 20151
.
One in three reporting destinations enjoyed double-digit growth in arrivals.
Iceland’s staggering growth (+34%) is partly due to its key position as a hub for
trans-Atlantic travel while Slovakia and Cyprus (both +19%) benefited from
deferred Russian travel typically bound for Turkey. Southern/Mediterranean
destinations, Portugal (+12%), Serbia, Slovenia and Spain (all +10%) also saw
a robust increase. Fast growth was also recorded by Bulgaria (+13%),
Lithuania and Romania (both +10%), all three considered as key destinations
for bargain hunters.
Turkey (-32%) continues to endure the aftermath of its diplomatic tensions,
threat of terrorism, and weakened relations with its largest source market,
Russia, after a decade of sustained tourism growth. Belgium’s tourism
performance is still at a low ebb (-13%), affected by the slowdown in arrivals
from both short and long-haul markets following the attacks in March 2016.
European air passenger traffic (measured by Revenue Passenger Kilometres
(RPK)) remains robust up 3.5% based on 2016 year-to-date data. Growth is
fuelled by strong demand from the Americas, mainly from the US helped by a
stronger US dollar against key European currencies and good economic
1 UWNTO World Tourism Barometer Vol. 14 September 2016
International tourist arrivals by destination
2016 year-to-date, % year
Source: ETC, TourMIS

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conditions. Low oil prices continue to result in lower air fares, and both factors
play a role in sustaining air travel demand.
GROWTH MOMENTUM DRIVEN BY KEY LONG-HAUL MARKETS
Since the UK voted to leave the European Union on June 23rd, there has been
considerable uncertainty about the long run impact of ‘Brexit’. Although a
weaker sterling against the euro has made travel abroad more expensive for
Britons, they continue to travel internationally with two in three reporting
destinations posting double-digit growth from the UK. Large
Southern/Mediterranean destinations such as Portugal (+14%) and Spain
(+13%) saw substantial growth from British visitors based on data to August.
However, many of these travellers would have planned their trip before the
decision to leave the EU and it is still too early to untangle the likely impact of
this decision on outbound travel from the UK.
Tourist flows from Russia continue to recover following a long period of
weakness. Top destinations rebounding from previous years’ poor performance
are Cyprus, Iceland and Slovakia up 45%, 22% and 21% respectively. Russia’s
travel ban to Turkey was cancelled at the end of June this year, however a
slowing economy and a devalued rouble continue to weigh on outbound travel
from this market. While year-to-date data points to a 4.5% decline in travel from
Russia, in the longer run an estimated 8% increase is forecasted over the next
four-year period.
A number of European destinations saw encouraging visitor arrivals form the
US. Travellers from this market continue to take advantage of a stronger
currency and competitive air fares. Despite security concerns and travel alerts
issued by the US Government, the flow of US holidaymakers to Europe
continues to grow. Compared to the same period last year it is estimated that
US arrivals to Europe has increased by 7% so far in 2016. Despite its economic
Inbound travel from Russia by destination
Russian share of total arrivals, 2015
Source: ETC, TourMIS

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slowdown, the Chinese market is showing signs of growth as many
destinations reported double-digit growth in arrivals during the first six months
of the year. Chinese arrivals to Europe has been growing at a moderate pace
(+13% a year on average 2005-2015) and growth is so far estimated at 6%.
Prospects remain positive, helped by the rapid growth of China’s middle class.
Nevertheless, there are fears in terms of safety and security concerns
dissuading Chinese travel to Europe.
INDUSTRY-WIDE COLLABORATION TOWARDS A SUSTAINABLE
PROMOTION OF EUROPE
Entering the final part of the year, European tourism continues to grow strongly
showing great resilience to economic woes, geopolitical tensions and threats of
terrorism. ETC’s Outlook for the coming year remains positive with growth in
arrivals forecasted to be 3% among ETC members. “To foster Europe’s
competitiveness and achieve a better promotion of the region as a tourism
destination, European authorities should capitalise on attracting investment
from public and private stakeholders in order to increase flows of tourist to
Europe, especially from third markets” said Eduardo Santander, Executive
Director of the European Travel Commission.
Jennifer Iduh (ETC Executive Unit)
With the contribution of the ETC Market Intelligence Group

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1. TOURISM PERFORMANCE
SUMMARY 2016
The overwhelming majority of European destinations report continued growth in
tourism demand through the summer months. 33 destinations have now
submitted 2016 year-to-date data in some capacity, with most reporting data for
the peak months of July and August. 28 of these destinations have recorded
either positive arrivals or overnights growth so far in 2016. In most cases it is
both. By contrast Turkey, Belgium, Switzerland, Monaco, and Greece have all
reported a fall in either arrivals, overnights, or both so far in 2016.
Many of the very high growth rates observed in some destinations earlier in the
year have now moderated, which is typical as data now include the more
important and less volatile summer months. This will likely continue over the
remainder of 2016, including further peak season months. Nonetheless, some
impressive growth rates remain.
Iceland remains the top growth destination in Europe, based on data to
September, keeping it on an impressive growth trajectory which it has
maintained since 2012. This growth is supported by a wide array of both short
and long haul markets and this has perhaps been key to Iceland’s longevity as
the top performing Europe destination market since its exposure to risks and
economic shocks is well-spread. Ongoing growth in air capacity on transatlantic
routes using Iceland as a hub continues to benefit the destination and suggests
that arrivals growth is not yet ready to abate, although there are some
suggestions that accommodation capacity constraints may start to bite.
Slovakia’s strong start to the year helped it retain position as Europe’s second
fastest growth market in the year-to-date. Growth has moderated from earlier in
the year when arrivals and overnights growth both exceeded 20%. Based on
data to August arrivals growth was 19.1% and overnights growth was 17.5%
and this should secure its status as a top performing destination in 2016. This
-35
-25
-15
-5
5
15
25
35
Iceland
Slovakia
Cyprus
Bulgaria
Portugal
IrelandRep
Norway
Serbia
Spain
Romania
Slovenia
Lithuania
Poland
Croatia
Malta
CzechRep
Estonia
Latvia
Montenegro
Netherlands
Austria
Sweden
Denmark
Hungary
Finland
UK
Germany
Luxembourg
Greece
Monaco
Switzerland
Belgium
Turkey
Arrivals
Nights
Source: TourMIS *date varies (Jan-Sep) by destination
2016 year-to-date*, % change year ago
Foreign visits and overnights to select destinations
28
The number of
European destinations
reporting growth in 2016 to
date
33 destinations have
reported on tourism
performance in 2016

8
growth is a continuation of the rebound in 2015 following on from a poor 2014
growth performance, and some slowdown is still likely later in 2016.
Cyprus enjoyed both strong arrivals and overnights growth of 18.8% and 8.6%
respectively based on data to September. This may involve some gain in
market share at the expense of Turkey given the threat of terrorism and its
tumultuous political landscape of late. Russia was a notable contributor to this
growth with arrivals up 44.5% and overnights 28.2% higher, more than
offsetting the falls in 2015.
The Czech Republic, Serbia, Bulgaria, and Romania all appear to be faring
well, each making strong gains in both arrivals and overnights. As relatively
lower cost markets growth this perhaps reflects some continued bargain-
hunting in the market. With the exception of Bulgaria, these markets have all
enjoyed double digit growth from the UK, and while post-Brexit data is limited at
this stage, growth from the UK to these markets may accelerate as British
holiday makers look to stretch a relatively weak pound.
Following the UK’s vote to leave the EU, the outlook for outbound travel
demand has been downgraded. This is in line with weaker near-term growth
prospects amid significant uncertainty as well as a fall in the value of the
pound. But weaker sterling means the UK is now a more price-attractive
destination and inbound travel should continue to thrive. This will mostly be
supported by leisure travel growth, while domestic UK travel should also benefit
due to these pricing effects.
Arrivals growth has been strong in Ireland, with growth reported as 12.3%
based on data to August. However, it shoulders a particularly large exposure to
Brexit fallout since the UK is its biggest European source market, albeit with
limited impact in 2016 to date. Since a holiday within the Eurozone became
approximately 10% more expensive when paid for in sterling following the
outcome of the referendum, Ireland will have lost some its appeal from a UK
standpoint. Additionally, a weaker pound will inevitably encourage some
displacement in travel from other source markets away from Ireland and
towards the UK.
The relative strength of the Swiss franc continues weighed on Switzerland’s
performance in 2016 to date. Both arrivals and nights to Switzerland have fallen
by 2.1% and 2.5% respectively based on data to August. This marks an
acceleration in the rate of decline compared to arrivals growth to April and
compounds similar falls endured in 2015.
Turkey reported lower arrivals from all monitored source markets based on
data to data to August as it continues to suffer from a combination of political
unrest, weakened relations with the large source market of Russia, and the
threat of terrorism.
Attacks in Turkeys came after threats by the same group which claimed
responsibility for attacks carried out in tourist resorts in Tunisia and Egypt and
in excess of 100 people have been killed as a result of these attacks in 2016
alone. This will only continue to discourage some tourists from visiting Turkey
and travel to Turkey for 2016 as a whole is looking likely to fall further following
a more modest drop in 2015. Russia’s temporary ban on travel to Turkey
following the shooting down of a Russian bomber will have had a large impact
Travel from the UK to other
European destinations may
fall following the Brexit vote,
primarily due to weaker
sterling.
UK should benefit as a
destination from the currency
movement
31.8%
Drop in tourist arrivals in
Turkey in the first eight
months of 2016.
Arrivals in Turkey fell 1.6% in
2015 as a whole and a larger
drop is likely this year.

9
given that Russia typically accounts for over 10% of arrivals to Turkey. Russian
arrivals accounted for around 75% of the fall in European travel to Turkey in
2015, with larger falls seen so far this year. But with the ban now lifted and the
restoration of relations between the two underway, this negative trend may be
reverse in 2017. However, international travel to Turkey in 2016 as a whole is
likely to be lower than in 2015 before recovery fully begins next year.
Tourism Performance, 2016 Year-to-Date
Country % ytd to month % ytd to month
Austria 5.1 Jan-Sep 4.9 Jan-Sep
Belgium -13.9 Jan-Aug -12.3 Jan-Aug
Bulgaria 13.2 Jan-Aug
Croatia 7.3 Jan-Aug 8.8 Jan-Aug
Cyprus 18.8 Jan-Sep 8.6 Jan-Jul
Czech Rep 6.5 Jan-Jun 4.1 Jan-Jun
Denmark 4.9 Jan-Aug
Estonia 6.5 Jan-Aug 6.4 Jan-Aug
Finland 3.8 Jan-Aug 1.7 Jan-Aug
Germany 1.3 Jan-Aug 1.3 Jan-Aug
Greece -1.6 Jan-Jun
Hungary 4.6 Jan-Aug 4.0 Jan-Aug
Iceland 33.9 Jan-Sep
Ireland Rep 12.0 Jan-Sep
Latvia 4.1 Jan-Jun 5.7 Jan-Jun
Lithuania 9.5 Jan-Jun
Luxembourg 1.0 Jan-Aug
Malta 8.3 Jan-Aug 5.7 Jan-Aug
Monaco -1.9 Jan-Sep
Montenegro 5.6 Jan-Aug -2.6 Jan-Aug
Netherlands 5.5 Jan-Jul 5.6 Jan-Jul
Norw ay 11.7 Jan-Sep
Poland 6.8 Jan-Aug 9.2 Jan-Aug
Portugal 12.3 Jan-Aug 10.9 Jan-Aug
Romania 9.9 Jan-Aug
Serbia 11.1 Jan-Sep 11.7 Jan-Sep
Slovakia 19.1 Jan-Aug 17.5 Jan-Aug
Slovenia 9.7 Jan-Aug 8.3 Jan-Aug
Spain 10.1 Jan-Aug 10.1 Jan-Aug
Sw eden 5.1 Jan-Sep
Sw itzerland -2.1 Jan-Aug -2.6 Jan-Aug
Turkey -31.8 Jan-Aug
UK 3.0 Jan-Aug
Source: TourMIS, http://w w w .tourmis.info; available data as of 7.11.16
Measures used for nights and arrivals vary by country
See TourMIS for further data including absolute values
International Arrivals International Nights

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2. GLOBAL TOURISM FORECAST
SUMMARY
Tourism Economics’ global travel forecasts are shown on an inbound and outbound basis in the
following table. These are the results of the Tourism Decision Metrics (TDM) model, which is updated
in detail three times per year. Forecasts are consistent with Oxford Economics’ macroeconomic
outlook according to estimated relationships between tourism and the wider economy. Full origin-
destination country detail is available online to subscribers.
TDM Visitor Growth Forecasts, % change year
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
d e f f f d e f f f
World 4.1% 4.5% 3.8% 3.8% 4.6% 3.2% 4.7% 4.0% 4.0% 4.8%
Americas 8.5% 6.1% 4.2% 3.8% 4.0% 6.9% 5.1% 3.7% 4.6% 4.0%
North America 9.7% 5.6% 3.6% 3.8% 4.0% 8.3% 4.4% 4.8% 5.3% 4.2%
Caribbean 5.3% 8.1% 3.6% 4.3% 3.7% 9.6% 16.1% 3.8% 2.8% 3.9%
Central & South America 6.8% 6.5% 6.4% 3.7% 4.2% 1.7% 6.8% -0.7% 2.1% 3.1%
Europe 2.1% 4.7% 1.9% 3.0% 4.4% -0.2% 3.3% 1.8% 2.8% 4.6%
ETC+4 4.4% 4.9% 1.9% 2.6% 4.1% 2.4% 5.5% 2.8% 2.5% 4.4%
EU 4.4% 5.5% 3.9% 2.1% 3.8% 2.0% 5.4% 2.8% 2.6% 4.5%
Non-EU -6.2% 1.5% -6.4% 7.1% 6.9% -8.9% -5.8% -2.8% 3.7% 5.2%
Northern 5.2% 6.5% 5.1% 3.5% 4.4% 5.2% 7.4% 4.3% -0.6% 4.2%
Western 2.2% 3.9% -0.5% 1.9% 3.8% -1.2% 3.3% 1.2% 3.7% 4.7%
Southern/Mediterranean 7.1% 4.7% 0.9% 2.7% 4.4% 5.9% 7.5% 2.8% 3.1% 4.2%
Central/Eastern -7.9% 5.2% 5.2% 4.5% 5.0% -4.8% -3.8% -0.3% 5.0% 5.1%
- Central & Baltic 1.9% 7.2% 8.4% 2.4% 3.4% 6.4% 7.7% 5.8% 4.9% 3.7%
Asia & the Pacific 5.2% 5.8% 8.8% 4.6% 4.9% 6.7% 7.8% 8.8% 5.4% 5.3%
North East 7.3% 4.3% 8.6% 4.2% 5.0% 8.0% 8.9% 10.2% 5.3% 5.4%
South East 2.8% 8.1% 9.2% 5.2% 4.8% 4.5% 6.4% 7.2% 6.0% 5.9%
South 9.7% 3.5% 9.2% 4.3% 5.3% 13.8% 9.0% 5.4% 6.7% 6.2%
Oceania 6.1% 7.2% 9.0% 5.3% 4.3% 3.9% 4.0% 4.6% 4.7% 2.6%
Africa 2.1% -4.7% -2.6% 5.7% 6.2% 3.9% 1.8% -0.2% 4.0% 4.1%
Mid East 8.0% 1.9% 3.6% 5.6% 6.1% 8.7% 1.4% 4.2% 7.3% 8.0%
* Inbound is based on the sum of the country overnight tourist arrivals and includes intra-regional flows
** Outbound is based on the sum of visits to all destinations
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and Switzerland;
ETC+4 is all ETC members plus France, the Netherlands, Sweden, and the United Kingdom
Source: Tourism Economics
Central & Baltic Europe is Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania,
and Slovakia;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR Macedonia, Greece,
Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary, Kazakhstan,
Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia, and Ukraine;
data/estimate/forecast ***
Outbound**Inbound*

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3. RECENT INDUSTRY PERFORMANCE
INDUSTRY PERFORMANCE STRONG
 Passenger growth in 2016 to date has continued in line with the strong expansion
seen in 2015 worldwide.
 European passenger growth has been maintained and the deterrent of further terror
attacks in Europe has eased but still weighs on growth from Asia.
 A strong dollar helps bring travel growth from the Americas to Europe.
 European hotel industry is exercising pricing power but tourists remain price
conscious.
3.1 AIR TRANSPORT
In the year to August, World Revenue Passenger Kilometre (RPK) growth was
5.8%, slightly slower than earlier 2016 year-to-date growth but still comfortably
above the average annual growth rate over the past 10 years (5.2%). Growth
has been helped by low oil prices continuing to feed into reduced air fares.
RPK growth was strongest in the Middle East based on 2016 year-to-date data,
with many of its hubs benefitting as gateways between Asia, Europe, and the
Americas. Growth has exceeded that for 2015 as a whole and is despite some
weaker regional traffic related to the oil industry. However, capacity growth has
continued to outstrip that of demand and passenger load factors (PLF) have
declined in the year to August on some transcontinental routes via the Middle
East and some routes to and from the Middle East itself. As these hubs
continue to jostle for market share, by adding new routes, PLF may suffer
further.
Africa Asia/Pacific Europe Latin
America
Mid. East N. America World
0
2
4
6
8
10
12
14
2014
2015
2016 ytd
Source: IATA
% year, RPK
Annual International Air Passenger Growth
5.8%
The rate of World RPK
growth in 2016 to date
YTD growth based on data
to August

12
Air passenger demand to and from Asia/Pacific has grown by 8.6% so far in
2016 based on data to August. The reported rate of RPK growth marks 2016 as
the fastest growth year of the past decade, excluding the post-recession
rebound in 2010 of 9%. Fears of slowing economic growth in China have eased
in recent months, with indicators from the services side of the economy
indicating that it is still expanding strongly. Household wealth and spending
continues to rise and is supporting international travel demand.
In Latin America year-to-date RPK growth has slowed to its lowest rate since
2009. Recessions in Venezuela and Argentina, coupled with the particular deep
recession in Brazil offset demand growth elsewhere in the Latin America region
and total regional growth will remain sluggish in 2016. Both business and
leisure-related travel are suffering and RPK growth is unlikely to surpass that of
2015 at any point this year. In the case of Brazil, the summer’s Olympic Games
in Rio de Janeiro may have provided temporary respite, while recoveries in
Venezuela and Argentina are currently a distant prospect.
In Europe, year-to-date RPK growth is also at its slowest since 2009 but growth
is still robust and has grown in all months of 2016 so far. Fear of further terrorist
attacks such as those seen Paris and Brussels are a likely cause of this as
some European destinations are perhaps being substituted for destinations
elsewhere.
Africa Asia/Pacific Europe Latin
America
Mid. East N. America World
0
2
4
6
8
10
12
14
May-16
Jun-16
Jul-16
Aug-16
Source: IATA
% year, RPK
Monthly International Air Passenger Growth

13
Data from the Association of European Airlines (AEA) confirmed that strong
growth in European airline capacity continued throughout the first quarter of
2016. Growth has averaged 4.5% so far in 2016 compared to 4.2% for the
same period in 2015. This remains in line with the trend in recent years and
continued capacity expansion at this rate is supportive of further demand
growth.
Airline load factors have eased a little in recent months but remain high despite
this capacity growth. Oil prices have risen recently, but remain historically low
and continue to feed into lower air fares, in line with the usual lag period due to
price hedging, providing a further boost to demand. Average load factor for the
year-to-date is only marginally lower than for the same period in previous years
(78% compared to 80.9% in 2015 and 80.5% in 2014).
-15
-10
-5
0
5
10
15
20
août-06
janv.-07
juin-07
nov.-07
avr.-08
sept.-08
févr.-09
juil.-09
déc.-09
mai-10
oct.-10
mars-11
août-11
janv.-12
juin-12
nov.-12
avr.-13
sept.-13
févr.-14
juil.-14
déc.-14
mai-15
oct.-15
mars-16
août-16
Total
3mth mav
Source: IATA
% year, RPK
International Air Passenger Traffic Growth
-2
0
2
4
6
8
10
12
14
Q1 Q2 Q3 Q4
2014
2015
2016
Source: AEA
ASK, 4 week moving average, % change year ago
European Airlines Capacity

14
In 2016 total European airline passenger growth has significantly outpaced
demand on European-Asian routes. This may be related to fears regarding
recent terrorist attacks, as well as some slowdown in emerging markets. This is
particularly true in the case of travel to France where nearly 40% fewer
Japanese and 23% fewer Chinese arrivals are reported in year-to-date data to
October (not available through TourMIS). Passenger demand growth for Asian
routes has diverged from total European passenger demand to an
unprecedented extent in 2016: the average percentage point (pp) difference
has widened further to 3.4pp (compared to 2.8pp as of Q2 2016). This follows a
period in 2014 and 2015 when travel between Europe and Asia increased at a
faster rate than total European airline passenger growth.
Air passenger flows between Europe and the Americas continued to grow at a
faster rate than total scheduled travel to and from Europe in 2016. The two
flows have also diverged to an unprecedented degree. The average difference
between them was 5.3pp for 2016 to date. This is a substantial premium
compared to the average difference in 2015 of 1.7pp. The greatest percentage
point difference observed in 2016 was 9.7. United States outbound travel to
Europe has been particularly strong due to the relative strength of the dollar
70
72
74
76
78
80
82
84
86
88
90
Q1 Q2 Q3 Q4
2014
2015
2016
Source: AEA
Weekly load factor, %
European Airlines Passenger Load Factor
-10
-5
0
5
10
15
20
Asia
Total
Source: AEA
RPK, 4 week moving average, % change year ago
European Airline Passenger Traffic: Asia
87%
Peak of European airline
passenger load factor in
2016 to date
Based on data to Q3

15
against key European currencies as well as favourable economic conditions in
the United States. Even with some slightly softer US demand implied by this
data in recent months it will remain an important long-haul growth market in
2016, especially with some weakening demand from Asia.
3.2 ACCOMMODATION
Global accommodation sector performance remained mixed in the first nine
months of 2016. The worst performing region was the Middle East & Africa; all
three measures of Occupancy, ADR and revenue per available room (RevPAR)
showed a downturn compared to the first nine months of 2015. Meanwhile all
other regions boasted at least one positive performance measure – although in
Europe’s case this was just occupancy.
In Asia/Pacific occupancy was up 1.8% compared to the first nine months of
2015. However, this growth was likely aided by lower average daily rates (ADR)
in the region which fell 3.2% in euro terms over the same period. As a result,
-5
0
5
10
15
20
Americas
Total
Source: AEA
RPK, 4 week moving average, % change year ago
European Airline Passenger Traffic: Americas
-10
-8
-6
-4
-2
0
2
4
Asia/Pacific Americas Europe Middle East/Africa
Occ
ADR (€)
RevPAR (€)
Source: STR Global
Jan-Sep year to date, % change year ago
Global Hotel Performance
9.7pp
The gap between Europe-
Americas and total European
airline passenger growth in
2016
This is the biggest observed
pp difference in 2016

16
RevPAR also fell – the only global region for which this was the case. This
modest demand and price cutting is consistent with some weakening
economies and softer travel demand from Asian markets.
In the Americas, room rates continued to rise in US dollar terms (2.3%) but this
continued to be entirely buoyed by North American performance; ADR in other
regions of the Americas fell over the same period. North American hotel
occupancy was unchanged from 2015 levels, allowing hotels to continue to
exercise pricing power and raise rates, indicating a degree of optimism
regarding future growth. However, across the rest of the Americas occupancy
rates were down with large falls in the Caribbean and South America. South
America’s accommodation sector in particular continued to feel the pinch of
recessions.
In Europe as a whole, accommodation sector performance was exceptionally
lacklustre with occupancy growing by just 0.2% alongside a 2.3% reduction in
ADR over the same period. This led to RevPAR contraction of 2.1%. However,
the regional growth trend includes ADR priced in euros while in local currency
terms a majority of destinations were able to raise room rates. Notably, the UK
and Russia have been able to raise rates in local currency terms – in Russia’s
case by 12% in rouble terms – but, because of weaker currencies in 2016 to
date, ADR is lower than a year ago in euro terms. Recent depreciation of
sterling will exacerbate this trend for the UK.
0.2%
The rate of occupancy
growth in Europe in 2016
Based on 2016 year-to-date
data to September

17
4. SPECIAL FEATURE
THE IMPACTS OF BREXIT ON EUROPEAN TOURISM
The UK voted to leave the EU in the referendum held on 23rd June with
significant and far-reaching implications for a wide range of business activities,
including tourism. A previous special feature (in the Q1/2016 report) considered
the potential impacts of a UK vote to leave on economic growth. This feature
updates that prior analysis and describes potential impacts on tourism across
Europe.
Since the so-called ‘Brexit’ vote, the economic outlook for the UK has
deteriorated, although recession still appears unlikely. Following some initial
gloomy data releases and surveys, the UK economy has enjoyed some good
news with continued growth reported in output and spending. But this growth is
slower than the trend earlier in the year and Oxford Economics’ current
baseline expectation of 1.4% GDP growth in 2017 is consistent with prior
scenarios of Brexit.
Business investment is set to drop over the next year and will be the largest
drag on the economy in coming years. Large businesses are unwilling to spend
due to the uncertainty surrounding the UK’s future relationship with the EU.
Political announcements had removed some of the uncertainty surrounding the
timing of the UK’s formal exit from the EU and the future relationship, but the
high court ruling that this is subject to parliamentary approval adds further
confusion. A deadline of the end of March 2017 has been set by the
Government for triggering Article 50 of the Lisbon Treaty which begins the
formal process of leaving the EU and the start of official negotiations. This
would begin a two-year negotiating period and the UK will therefore no longer
be part of the EU by early 2019. But greater parliamentary approval and input
may affect this timing and also the goals of negotiations.
Government statements have clarified that a key point for the UK in any future
relationship will be control over immigration. This stance is incompatible with
1.0
1.1
1.1
1.2
1.2
1.3
1.3
1.4
1.4
1.5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
New baseline
Pre-Brexit baseline
£1 = €
Exchange Rate: Sterling vs Euro
1.4%
UK GDP growth in 2017 as
recession should be avoided
Slower growth is due to
weaker investment with
heightened uncertainty

18
the UK remaining within the European Economic Area. The UK government’s
current preferred option appears to be to negotiate a free trade agreement with
the EU; involving complex negotiations within a relatively short timeframe. The
alternative would be a reversion to trading under WTO rules. Both options
would likely involve lower trade volumes and long-run GDP lower than under a
pre-Brexit baseline outlook.
There has been a strong reaction in currency markets to the clarifications of the
UK’s future status outside of the EU. Sterling fell further against the euro and
the US dollar in October and is likely to remain relatively weak for the duration
of the negotiation period. Oxford Economics’ forecasts suggest an average rate
€1.15 for 2017; only a modest improvement from the current low rates. This
expected rate is 15% weaker than the rate of €1.35 which was anticipated for
2017 prior to the vote.
The value of sterling, and this large swing in value, is an important factor in
understanding the impact on tourism demand. A fall in the value of sterling
typically results in a narrowing of the tourism balance. The UK typically runs a
negative tourism balance as tourism exports (inbound spending) are smaller
than tourism imports (outbound spending) and this is expected to become
smaller in 2017 and 2018 as a result of the falls in sterling. The weaker
currency means that UK is a more affordable destination resulting in an
increase in visits. At the same time, foreign travel has become more expensive
and UK departures are set to fall.
The benefit to UK inbound travel may be partly offset by a possible fall in
business travel related to the lower investment. Weaker business activity in the
UK and less inward investment will act as a drag on related travel demand.
Draft headline UK arrivals data have been published for the year to August and
show some modest improvement in the two months following the referendum
vote (more detailed data, including the split by source market is only available
for months to June fully consistent with that sourced through TourMIS in the
source market performance section).
UK outbound travel has also not been immediately affected in total for 2016 to
date according to both UK departures data and data reported by other
70
80
90
100
110-25
-20
-15
-10
-5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Tourism balance (lhs)
Exchange rate index (rhs)
Tourism exports minus imports, £ bn
UK tourism balance and exchange rate index
Exchange rate index, inverted
€1.15
Expected value of sterling for
2017 on average
15% weaker value than pre-
Brexit vote expectations

19
European destinations through TourMIS. A majority of European destinations
are reporting slower growth from the UK than earlier in the year, but this is also
part of the wider trend of more moderate growth being evident as less volatile
peak summer months are included in year-to-date calculations.
Larger impacts on UK outbound and inbound travel demand are likely to be
evident in 2017 given the more recent movements in the currency and typical
lags between this and tourism behaviour due to pre-bookings.
UK outbound travel is set to fall by around 2.5% in 2017, taking into account
the slower economic growth and weaker value of sterling. This contrasts with
an expectation of around 3.5% growth prior to the Brexit vote. This 6% point
swing in expected growth will vary considerably by destination.
Typical relationships between exchange rates and travel demand show that
long-haul travel demand is more price sensitive than short-haul travel. Hence,
UK travel to longer-haul destinations will see more of an impact. In fact some
UK travellers may switch away from more expensive long-haul trips with a
relative benefit to less expensive alternative destinations within the region.
The overall impact for European impacts is likely to be for slower growth from
the UK and potential declines at least in the short-term. Exposure to the UK
market will determine the extent to which this will affect the market as a whole.
Many short-haul destinations are more heavily reliant on the UK as a source
market, in which case the overall impact on performance will be larger.
However, looking at a city destination level, there are some large long-haul
market with high exposure to the UK market.
All impacts, are of course, uncertain given the ongoing developments in the
political relationships. As well as the economic uncertainty the precise outcome
of the negotiated relationship between UK and the EU will be important in
several areas. For example, UK currently benefits from high air access as all
-4.6%
-4.6%
-4.8%
-4.8%
-4.8%
-4.9%
-5.5%
-5.9%
-6.1%
-6.2%
-6.5%
-6.5%
-7.0%
-7.3%
-7.7%
-7.8%
-7.8%
-7.9%
-8.1%
-9% -8% -7% -6% -5% -4% -3% -2% -1% 0%
Portugal
France
Belgium
Sweden
UAE
Italy
Spain
Greece
Czech Republic
Poland
Egypt
Ireland
Canada
Cyprus
United States
China
Thailand
India
Australia
UK visitor arrivals by top 20 destinations, pp change in growth, 2017
Note: Destinations in Europe shaded as light blue.

20
EU carriers can freely operate across borders. Any reduction in air capacity
from a new agreement could directly increase travel costs2.
2 http://www.oxera.com/Latest-Thinking/Publications/Reports/2016/How-could-Brexit-affect-the-transport-sector.aspx
30%
9%
10%
18%
16%
8%
7%
18%
12%
10%
23%
5%
8%
3%
11%
0 200 400 600 800 1,000 1,200 1,400
Dublin
New York, NY
Paris
Amsterdam
Orlando, FL
Dubai
Antalya
Warsaw
Las Vegas, NV
Barcelona
Cracow
Istanbul
Rome
Bangkok
Berlin
000s arrivals
City arrivals from the UK, 2015 % share of
international
arrivals

21
5. KEY SOURCE MARKET
PERFORMANCE
2016 MAINTAINS ITS MOMENTUM
 European travel demand continues to grow across the majority of markets.
 Intra-European travel remains crucial for future growth while US travel demand
continues to grow – helped by a strong dollar.
 Economic slowdown and a weaker pound in the UK as a result of the Brexit
referendum is a concern for outbound travel demand but UK inbound will benefit.
Trends discussed in this section in some cases relate to the first nine months of the year although
actual coverage varies by destination. For the majority of countries July or August will be the latest
available data point. Further detailed monthly data for origin and destination, including absolute
values, can be obtained from TourMIS, http://tourmis.info.
5.1 KEY INTRA-EUROPEAN MARKETS
The vast majority of European destination markets have reported growth from
Germany so far in 2016 compared to the same period of 2015. Iceland boasted
the strongest growth in arrivals from Germany: 22.7% higher based on data to
September compared to the same period in 2015. Bulgaria has also enjoyed
strong growth from Germany (+19.2%). German tourists typically comprise over
10% of all arrivals to Bulgaria, hence growth of this magnitude represents a
substantial number of new arrivals. Travel to Belgium and Turkey has fallen
sharply as travellers are deterred from both destinations in the aftermath of
terror attacks.
-20
-15
-10
-5
0
5
10
15
20
25
Iceland
Bulgaria
Norway
Estonia
Portugal
Slovakia
Monaco
Latvia
CzechRep
Poland
Croatia
Malta
Austria
Cyprus
Lithuania
Spain
Slovenia
Denmark
Netherlands
IrelandRep
Sweden
Romania
Serbia
Finland
Greece
Montenegro
UK
Luxembourg
Switzerland
Hungary
Belgium
Turkey
Arrivals
Nights
German visits and overnights to select destinations
Turkey, -27.6% (A)
26
out of 32 destinations
reported growth from
Germany pointing to
continued intra-regional
growth in 2016

22
Montenegro has enjoyed strong arrivals growth of 55.7% from the Netherlands
in 2016 to date as well as strong overnights growth (+34.3%), both based on
data to August. Iceland has also reported robust growth from the Netherlands
based on data to September which showed the number of Dutch arrivals to be
up 24.5% compared to the same period in 2015.
Arrivals from the Netherlands to the UK have grown strongly based on data to
June, and this growth will potentially be bolstered by the weaker pound in the
second half of 2016.
Some of the caution that existed at the beginning of the year appears to have
dissipated and the majority of destinations are now reporting some growth from
France, returning to more normal trends. Lithuania, Iceland, and Norway in
particular have reported strong growth from France. The UK is one of the few
destinations which reported falling arrivals from France based on data to June,
6% lower than the same period in 2015. As data relevant to the weaker pound
becomes available we would expect to see a return to growth.
-25
-15
-5
5
15
25
Montenegro
Iceland
Norway
Estonia
Bulgaria
Lithuania
Slovakia
Portugal
Spain
Malta
UK
Denmark
Finland
CzechRep
Austria
Slovenia
Greece
Croatia
Romania
Hungary
Serbia
Luxembourg
Poland
Switzerland
Germany
Sweden
Monaco
Cyprus
Belgium
Latvia
Turkey
Arrivals
Nights
Dutch visits and overnights to select destinations
Montenegro, 34.3% (N) & 55.7% (A)
-10
-5
0
5
10
15
20
25
30
35
Lithuania
Iceland
Norway
Cyprus
Slovakia
Bulgaria
Portugal
Estonia
Denmark
Croatia
Spain
Finland
Slovenia
IrelandRep
Malta
Poland
Romania
Montenegro
Luxembourg
Germany
Monaco
Netherlands
Latvia
Serbia
Switzerland
CzechRep
Austria
Hungary
Sweden
UK
Belgium
Greece
Turkey
Arrivals
Nights
French visits and overnights to select destinations
Belgium, -14.2% (N) & -15.2% (A)
Greece, -20.6% (A)
Turkey, -33.5% (A)
French travel behaviour has
seemingly ‘normalised’
following the disruption
earlier in the year related to
terror attacks.

23
Iceland was the favoured destination of Italians in arrivals growth terms based
on data to September, closely followed by Denmark and Slovakia based on
data to August. The UK and Estonia also reported strong growth from Italy
based on data to June and August respectively. The UK could see this growth
accelerate in the second half of the year thanks to a weaker pound. However, a
large minority of destinations report some falling demand from Italy in the year
to date, and growth prospects remain subdued.
Thirteen reporting destinations have enjoyed double-digit arrivals growth from
the UK so far in 2016. Three of these destinations (Latvia, Iceland, and Croatia)
have enjoyed arrivals growth in excess of 20%. The large destinations of Spain,
Portugal, and Ireland each reported handsome double-digit growth in arrivals
and overnights based on data to August. Since arrivals from the UK equate to
around 50% of total arrivals to Ireland, 25% of total arrivals to Spain, and 16%
of total arrivals to Portugal, such growth is a substantial driver of total growth
for all three destinations.
But following the UK’s referendum vote to leave the EU the near-term growth
prospects have been downgraded amid significant uncertainty. UK outbound
travel demand expectations have been downgraded due to the weaker growth
outlook for the UK economy, coupled with a fall in the value of the pound.
Notably, the pound has lost in excess of 10% of its value against the euro in
2016. And whilst Britons will continue to travel, some destinations will shoulder
a greater proportion of the Brexit burden than others in the short-term, namely
Ireland, Spain, and Portugal given their high share of British arrivals.
-10
-5
0
5
10
15
20
25
30
Iceland
Denmark
Slovakia
UK
Estonia
Luxembourg
Portugal
IrelandRep
Monaco
Romania
Poland
Finland
Cyprus
Slovenia
Spain
Montenegro
Malta
Latvia
Serbia
Bulgaria
Croatia
Greece
Switzerland
Netherlands
Austria
Hungary
Sweden
CzechRep
Germany
Lithuania
Belgium
Turkey
Arrivals
Nights
Italian visits and overnights to select destinations
Belgium, -31.4% (N) & -31.5% (A)
Turkey, -57.7% (A)
Weaker sterling is likely to
weigh on UK outbound in the
short term.

24
Turkey has endured the largest decline in Russian arrivals so far in 2016, down
87.9% based on data to August, even weaker than the 67.7% decline reported
earlier in the year based on data to April. Relations between the two have been
fragile since the Turkish Air Force shot down a Russian fighter jet on the
Syrian-Turkey border in November 2015. Russia had imposed (but has since
lifted) travel restrictions on Russian tourists visiting Turkey, and, notable efforts
have been made to restore relations between the two countries. Some
improvement in tourism performance may follow in 2017, but Russians will still
share the same safety concerns of other European markets regarding travel to
Turkey and any growth is unlikely to immediately offset these falls.
Cyprus, Iceland, and Slovakia all reported strong arrivals growth from Russia.
In Cyprus, arrivals growth was in double-digit territory (+44.5%) based on data
to September. But this includes some rebound from falls in prior years and
potentially some substitution from travel which would ordinarily have been
bound for Turkey.
-25
-15
-5
5
15
25
35
Latvia
Iceland
Croatia
Slovakia
Montenegro
Denmark
Spain
Portugal
IrelandRep
Greece
Slovenia
Sweden
Romania
Cyprus
Poland
Serbia
Netherlands
CzechRep
Hungary
Norway
Lithuania
Malta
Austria
Estonia
Switzerland
Germany
Luxembourg
Bulgaria
Finland
Monaco
Belgium
Turkey
Arrivals
Nights
UK visits and overnights to select destinations
Turkey, -30.9% (A)
-30
-20
-10
0
10
20
30
Cyprus
Iceland
Slovakia
Bulgaria
Greece
Spain
Montenegro
Latvia
Croatia
Romania
Serbia
Estonia
Norway
Lithuania
Luxembourg
Poland
Slovenia
Portugal
Monaco
Hungary
UK
Denmark
Switzerland
CzechRep
Finland
Germany
Netherlands
Austria
Sweden
Belgium
Malta
Turkey
Arrivals
Nights
Russian visits and overnights to select destinations
Cyprus, 44.5% (A)
Malta, -31.4% (N)
Turkey, -87.9% (A)
20
out of 32 destinations
reported falling arrivals or
overnights from Russia. The
most sizeable falls were
observed in Turkey.

25
5.2 NON-EUROPEAN MARKETS
All but six destinations have reported some growth from the US so far in 2016.
Iceland was the most popular US growth destination, up 63.5% based on data
to September. This growth is aided by Iceland’s growing importance as a hub
for trans-Atlantic travel. Both Europeans and North Americans have been
increasingly breaking up trans-Atlantic trips with some nights in Iceland. In
addition, continued growth in scheduled seats on flights between Iceland and
the US, and also to European destinations will allow continued growth.
Latvia and Portugal also fared well; each reporting respective US arrivals
increases of 41.1% and 20.1% with almost equal overnights to match based on
data to June and August respectively.
Turkey and Belgium have seen notably lower arrivals from the US, each down
in excess of 25%, due to a combination of political unrest and terror threats.
The US government issued a travel alert to US citizens regarding the risk of
potential terrorist attacks throughout Europe in 2016. Perceived high-risk
destinations included France due to Euro 2016, Poland, which hosted World
Youth Day (which attracted around 2 million visitors) and Turkey. This travel
alert expired at the end of August 2016 and is therefore reflected in much of the
reported data.
Arrivals growth was reported in just over half of reporting European
destinations, although Japan remains a large source market for many
destinations despite this relative stagnation. Some strengthening of the yen in
2016, and notably following the Brexit vote, has aided affordability for Japanese
travellers, but does not fully offset prior currency depreciation. Japan’s
economy has been in and out of recession over the past few years and this has
been evident in reported outbound tourism performance. Growth has been
notable in Montenegro, where arrivals from Japan in excess of 50% (albeit from
a relatively low base). Japanese arrivals growth was also strong in Iceland and
Poland where volumes increased in excess of 25% based on data to
September and August respectively. Turkey and Belgium were amongst the
least popular destination markets due to a combination of political unrest and
the threat of terrorism.
-25
-15
-5
5
15
25
35
Iceland
Latvia
Portugal
Norway
Slovakia
Serbia
Malta
Poland
Netherlands
Finland
Montenegro
Slovenia
Spain
Croatia
Denmark
Estonia
Romania
Greece
Switzerland
Germany
Sweden
Lithuania
Hungary
CzechRep
UK
Austria
Bulgaria
Monaco
Cyprus
Luxembourg
Belgium
Turkey
Arrivals
Nights
US visits and overnights to select destinations
Iceland, 63.5% (A)
Belgium, -25.7% (N) & -25.5% (A)
Turkey, -37.2% (A)

26
China continues to be a source of huge arrivals growth for many European
destinations, albeit from some lower volumes than for more established
markets. Half a dozen countries reported arrivals growth from China in excess
of 30%. The UK reported a 16% fall in the number of Chinese arrivals it
received based on data to June but a weaker pound may help to soften this fall
in the latter half of the year.
Turkey and Belgium were again amongst the least popular Chinese destination
markets due to the perceived threat of terror attacks and security issues which
will likely continue to undermine some Chinese growth to Europe for the
remainder of 2016. This is further evidenced in some reported French year-to-
date data to October (not available through TourMIS) which reports large falls
in Chinese visitors in 2016 compared to 2015.
All but six reporting destinations enjoyed arrivals growth from India. Three of
these are familiar in the form of Turkey, Belgium, and the UK. Croatia was the
most popular Indian growth destination with arrivals 78.6% higher and
overnights 68.8% higher in 2016 than 2015 based on data to August. This
growth across the majority of destinations has been aided by a strong
-30
-20
-10
0
10
20
30
Montenegro
Iceland
Poland
Slovakia
Bulgaria
UK
Portugal
Latvia
Norway
Lithuania
Sweden
Estonia
Denmark
Finland
Cyprus
Serbia
Spain
Monaco
Switzerland
Austria
CzechRep
Hungary
Germany
Slovenia
Croatia
Luxembourg
Netherlands
Romania
Belgium
Turkey
Arrivals
Nights
Japanese visits and overnights to select destinations
Montenegro, 50.9% (A)
Belgium, -41.5% (N) & -46.2% (A)
Turkey, -56.8% (A)
-20
-10
0
10
20
30
40
50
Slovakia
Norway
Hungary
Serbia
Latvia
Iceland
Poland
Sweden
Finland
Spain
Slovenia
Bulgaria
Portugal
CzechRep
Romania
Estonia
Croatia
Lithuania
Austria
Denmark
Germany
Cyprus
Montenegro
Netherlands
UK
Luxembourg
Switzerland
Monaco
Belgium
Greece
Turkey
Arrivals
Nights
Chinese visits and overnights to select destinations
Switzerland, -21.8% (A)
Belgium, -23.8% (N) & -26.9% (A)
Greece, -27.6% (A)
Turkey, -50.8% (A)

27
economic backdrop in India (led by strong GDP growth, a positive consumer
spending outlook, and a rising number of middle-income households). And,
although current arrivals numbers from India are low in absolute terms, India
will become increasingly more important as a source market for European
destinations in the coming years.
Many destinations have reported sizeable arrivals and overnights growth from
Canada so far in 2016. Travel to Iceland was strong to September (+62.1%),
aided by its hub status on transatlantic flights. Continued growth in scheduled
seats on flights between Iceland and Canada and onward to European
destinations will facilitate further growth. Strong growth to Finland is skewed by
substantial flows in January when Finland hosted the Ice Hockey World Junior
Championships with reported arrivals growth of 175% and overnights growth of
701% compared to January 2015. This has since abated to more typical rates.
Spain was also the recipient of some very strong arrivals growth from Canada
(45.9% based on data to August), albeit from a very small base. It is possible
that along with Spain is benefitting from some displaced travel which may have
otherwise been bound for France if not for recent terrorist activity.
-10
0
10
20
30
40
50
Croatia
Latvia
Netherlands
Slovakia
Romania
Poland
Bulgaria
Austria
Hungary
Denmark
CzechRep
Finland
Germany
Sweden
Montenegro
Switzerland
Monaco
UK
Belgium
Turkey
Arrivals
Nights
Indian visits and overnights to select destinations
Croatia, 68.8% (N) & 78.6% (A)
Belgium, -21.8% (N) & -31.8% (A)
Turkey, -35.6% (A)
-20
-10
0
10
20
30
40
50
Iceland
Finland
Spain
Slovakia
Poland
Croatia
Portugal
Romania
Serbia
Slovenia
Montenegro
Lithuania
Denmark
Sweden
Hungary
Monaco
Netherlands
CzechRep
Austria
Switzerland
Germany
Greece
Bulgaria
Latvia
Cyprus
Belgium
Turkey
Arrivals
Nights
Canadian visits and overnights to select destinations
Iceland, 62.1% (A)
Belgium, -22.0% (N) & -21.3% (A)
Turkey, -37.6% (A)

28
6. ORIGIN MARKET SHARE ANALYSIS
METHODOLOGY
Based on the Tourism Decision Metrics (TDM) model, the following charts and analysis show
Europe’s evolving market position – in absolute and percentage terms – for selected source
markets. 2015 values are, in most cases, year-to-date estimates based on the latest available
data and are not final reported numbers.
Data in these charts and tables relate to reported arrivals in all destinations as a comparable
measure of outbound travel for calculation of market share.
For example, US outbound figures featured in the analysis are larger than reported departures
in national statistics as long haul trips often involve travel to multiple destinations. In 2014 US
data reporting shows 11.9m departures to Europe while the sum of European arrivals from the
US was 23.4m. Thus each US trip to Europe involved a visit to two destinations on average.
The geographies of Europe are defined as follows:
Northern Europe is Denmark, Finland, Iceland, Ireland, Norway, Sweden, and the UK;
Western Europe is Austria, Belgium, France, Germany, Luxembourg, Netherlands, and
Switzerland;
Southern/Mediterranean Europe is Albania, Bosnia-Herzegovina, Croatia, Cyprus, FYR
Macedonia, Greece, Italy, Malta, Montenegro, Portugal, Serbia, Slovenia, Spain, and Turkey;
Central/Eastern Europe is Armenia, Azerbaijan, Bulgaria, Czech Republic, Estonia, Hungary,
Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Poland, Romania, Russian Federation, Slovakia,
and Ukraine.

29
6.1 UNITED STATES
US Market Share Summary
2016
Total outbound travel (000s) 105,002 - 4.5% 24.6% - 36.1% -
Long haul (000s) 62,358 59.4% 5.3% 29.4% 61.7% 32.4% 61.0%
Short haul (000s) 42,644 40.6% 3.3% 17.6% 38.3% 41.9% 39.0%
Travel to Europe (000s) 27,446 26.1% 5.5% 30.4% 27.4% 32.9% 26.8%
Northern Europe (000s) 6,648 6.3% 5.8% 32.6% 6.7% 34.8% 6.4%
Western Europe (000s) 9,368 8.9% 4.3% 23.2% 8.8% 19.5% 10.2%
Southern Europe (000s) 7,786 7.4% 5.4% 29.9% 7.7% 44.7% 7.0%
Central/Eastern Europe (000s) 3,645 3.5% 7.9% 46.4% 4.1% 45.7% 3.2%
*Shows cumulative change over the relevant time period indicated
**Shares are expressed as % of total outbound travel
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Central/Eastern Europe
Southern Europe
Western Europe
Northern Europe
*Long haul defined as tourist arrivals to destinations outside North America
Visits, 000s
US Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Northern Europe
Western Europe
Southern Europe
% share of long haul* market
Europe's Share of US Market

30
6.2 CANADA
Canada Market Share Summary
2016
Total outbound travel (000s) 32,609 - 4.1% 22.2% - -0.8% -
Long haul (000s) 12,588 38.6% 3.2% 17.0% 37.0% 16.9% 32.8%
Short haul (000s) 20,021 61.4% 4.6% 25.4% 63.0% -9.4% 67.2%
Western Europe (000s) 1,656 5.1% 2.4% 12.8% 4.7% 7.9% 4.7%
Central/Eastern Europe (000s) 296 0.9% -0.2% -1.2% 0.7% 17.7% 0.8%
*Show s cumulative change over the relevant time period indicated
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul Central/Eastern Europe
Southern Europe Western Europe
Northern Europe
Visits, 000s
Canada Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Canadian Market

31
6.3 MEXICO
Mexico Market Share Summary
2016
Long haul (000s) 2,776 12.8% 4.1% 22.0% 13.2% 38.9% 12.7%
Short haul (000s) 18,920 87.2% 3.3% 17.4% 86.8% 37.8% 87.3%
Northern Europe (000s) 105 0.5% 2.5% 13.2% 0.5% 27.8% 0.5%
Western Europe (000s) 601 2.8% 4.8% 26.5% 3.0% -2.8% 3.9%
Southern Europe (000s) 557 2.6% 2.2% 11.4% 2.4% 43.3% 2.5%
Central/Eastern Europe (000s) 160 0.7% 2.5% 13.0% 0.7% 66.4% 0.6%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
500
1.000
1.500
2.000
2.500
3.000
3.500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Southern Europe
Western Europe
Northern Europe
Visits, 000s
Mexico Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
5%
10%
15%
20%
25%
30%
35%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Mexican Market

32
6.4 ARGENTINA
Argentina Market Share Summary
2016
Long haul (000s) 2,971 28.3% 5.4% 30.2% 31.7% 54.9% 27.8%
Short haul (000s) 7,545 71.7% 2.0% 10.6% 68.3% 51.6% 72.2%
Western Europe (000s) 58 0.5% 6.8% 39.0% 0.7% 54.6% 0.5%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
500
1.000
1.500
2.000
2.500
3.000
3.500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Southern Europe
Western Europe
Northern Europe
*Long haul defined as tourist arrivals to destinations outside South America
Visits, 000s
Argentina Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
5%
10%
15%
20%
25%
30%
35%
40%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Argentinian Market

33
6.5 BRAZIL
Brazil Market Share Summary
2016
Long haul (000s) 5,691 71.1% 4.6% 25.0% 72.3% -0.1% 69.1%
Short haul (000s) 2,316 28.9% 3.3% 17.6% 27.7% -9.0% 30.9%
Travel to Europe (000s) 2,747 34.3% 2.0% 10.2% 30.8% -11.9% 37.8%
Northern Europe (000s) 233 2.9% 7.8% 45.8% 3.5% -15.5% 3.3%
Western Europe (000s) 1,119 14.0% 3.3% 17.9% 13.4% -18.8% 16.7%
Southern Europe (000s) 1,158 14.5% -1.5% -7.2% 10.9% -3.3% 14.5%
Central/Eastern Europe (000s) 238 3.0% 4.3% 23.6% 3.0% -11.2% 3.2%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Southern Europe
Western Europe
Northern Europe
Visits, 000s
Brazil Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
5%
10%
15%
20%
25%
30%
35%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Brazilian Market

34
6.6 INDIA
India Market Share Summary
2016
Long haul (000s) 15,023 96.0% 7.2% 41.5% 95.8% 48.2% 94.9%
Short haul (000s) 624 4.0% 8.4% 49.9% 4.2% 13.8% 5.1%
Western Europe (000s) 811 5.2% 8.2% 48.5% 5.4% 31.7% 5.8%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Northern Europe
*Long haul defined as tourist arrivals to destinations outside South Asia
Visits, 000s
India Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
1%
2%
3%
4%
5%
6%
7%
8%
Northern Europe
Western Europe
Southern Europe
*Long haul defined as tourist arrivals to destinations outside South Asia
Europe's Share of Indian Market

35
6.7 CHINA
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
50.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Southern Europe
Western Europe
Northern Europe
*Long haul defined as tourist arrivals to destinations outside Northeast Asia
Visits, 000s
China Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
5%
10%
15%
20%
25%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Chinese Market
China Market Share Summary
2016
Long haul (000s) 39,862 45.8% 7.0% 40.1% 48.7% 179.8% 35.0%
Short haul (000s) 47,079 54.2% 4.5% 24.9% 51.3% 78.0% 65.0%
Western Europe (000s) 5,308 6.1% 10.7% 66.3% 7.7% 112.3% 6.1%
Central/Eastern Europe (000s) 3,675 4.2% 7.9% 46.5% 4.7% 105.4% 4.4%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**

36
6.8 JAPAN
Japan Market Share Summary
2016
Long haul (000s) 14,825 65.6% 6.2% 35.1% 67.3% 18.2% 56.9%
Short haul (000s) 7,776 34.4% 4.6% 25.2% 32.7% -18.1% 43.1%
Western Europe (000s) 1,934 8.6% 8.8% 52.4% 9.9% -1.8% 8.9%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Northern Europe
Visits, 000s
Japan Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Northern Europe
Western Europe
Southern Europe
Europe's Share of Japanese Market

37
6.9 AUSTRALIA
Australia Market Share Summary
2016
Long haul (000s) 16,081 96.1% 3.9% 20.9% 96.0% 18.1% 96.8%
Short haul (000s) 659 3.9% 4.2% 22.7% 4.0% 47.8% 3.2%
Western Europe (000s) 1,714 10.2% 0.4% 2.2% 8.6% 0.6% 12.1%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
18.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Northern Europe
*Long haul defined as tourist arrivals to destinations outside Oceania
Visits, 000s
Australia Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
2%
4%
6%
8%
10%
12%
14%
Northern Europe
Western Europe
Southern Europe
*Long haul defined as tourist arrivals to destinations outside Oceania
Europe's Share of Australian Market

38
6.10 UNITED ARAB EMIRATES
United Arab Emirates Market Share Summary
2016
Long haul (000s) 1,770 47.8% 1.1% 5.7% 40.2% 52.8% 40.4%
Short haul (000s) 1,930 52.2% 7.6% 44.3% 59.8% 12.8% 59.6%
Western Europe (000s) 430 11.6% -0.9% -4.4% 8.8% 51.6% 9.9%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of Long Haul
Southern Europe
Western Europe
Northern Europe
*Long haul defined as tourist arrivals to destinations outside Middle East
Visits, 000s
UAE Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
5%
10%
15%
20%
25%
30%
Northern Europe
Western Europe
Southern Europe
*Long haul defined as tourist arrivals to destinations outside Middle East
Europe's Share of Emirati Market

39
6.11 RUSSIA
Russia Market Share Summary
2016
Long haul (000s) 5,022 26.5% 8.0% 46.8% 24.5% -17.6% 19.8%
Short haul (000s) 13,953 73.5% 10.2% 62.8% 75.5% -43.5% 80.2%
Travel to Europe (000s) 13,953 73.5% 10.2% 62.8% 75.5% -43.5% 80.2%
Northern Europe (000s) 1,047 5.5% 8.9% 53.5% 5.3% -35.6% 5.3%
Western Europe (000s) 1,345 7.1% 7.3% 42.0% 6.3% -19.1% 5.4%
Southern Europe (000s) 4,296 22.6% 10.1% 61.6% 23.1% -35.5% 21.6%
Central/Eastern Europe (000s) 7,265 38.3% 11.0% 68.7% 40.7% -50.8% 47.9%
Growth (2016-21) Growth (2011-16)
Level Share**
Annual
average
Cumulative
growth*
Share 2021**
Cumulative
growth*
Share 2011**
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rest of World
Southern Europe
Western Europe
Northern Europe
*Long haul defined as tourist arrivals to all destinations
Visits, 000s
Russia Long Haul* Outbound Travel
2006 2008 2010 2012 2014 2016 2018 2020
0%
10%
20%
30%
40%
50%
60%
70%
Northern Europe
Western Europe
Southern Europe
*Long haul defined as tourist arrivals to all destinations
Europe's Share of Russian Market

40
7. ECONOMIC OUTLOOK
Assessing recent tourism data and industry performance is a useful way of directly monitoring
the key trends for travel demand across Europe. This can be complemented by looking at key
trends and relationships in macroeconomic performance in Europe’s key source markets
which can provide further useful insight into likely tourism developments throughout the year.
The linkages between macro and tourism performance can be very informative. For example,
strong GDP or consumer spending growth is an indication of rising prosperity with people more
likely to avail of international travel. It is also an indication of rising business activity and
therefore stronger business travel. Movements in exchange rates against the euro can be
equally important as it can influence choice of destination. For example, if the euro appreciated
(gained value) against the US dollar, the Eurozone would become a more expensive
destination and therefore potentially less attractive for US visitors. Conversely, depreciation of
the euro against the US dollar would make the Eurozone a relatively cheaper destination and
therefore more attractive to US travellers.
7.1 OVERVIEW
GLOBAL REVISIONS TO POTENTIAL GROWTH
Oxford Economics’ world GDP growth forecasts are currently at 2.2% for 2016,
which would be the lowest since 2009, and 2.6% in 2017.
Short-term activity indicators have been mixed. The global PMI rose to an
eight-month high in September, but growth remains subdued compared with its
long-term average. In addition, other high-frequency data such as the Citigroup
economic surprise indices have been trending down since August.
Indicators of international trade continue to show signs of weakness: the
volume of world trade fell 1.1% on the year in July and was flat in the seven
months to July. That said, the latest data for some countries show a pick-up in
trade volumes in August, particularly in Asia.
-60
-40
-20
0
20
40
60
80
100
Jan-16 Mar-16 May-16 Jul-16 Sep-16
G10 Emerging markets UK
Source : Oxford Economics/Haver Analytics/Citigroup
World: Economic surprise indices
%

41
The forecast for GDP growth in the US in 2017 as been lowered from 2.3% to
2% given weaker momentum in the private sector, particularly consumption and
investment.
Activity in the UK continues to surprise to the upside, therefore supporting our
above-consensus call on UK growth (1.9% this year and 1.2% in 2017). But
sterling is bearing the brunt of the adjustment, falling to new lows against most
major currencies. This has led us to revise our end-year GBP forecasts to 1.25
to the US$ and 1.12 to the euro (from 1.28 and 1.19 last month).
Long-term forecasts have been reviewed and a weaker outlook for capital
accumulation and productivity growth means the Eurozone and the UK have
seen their potential growth cut by 0.2% a year over the next decade.
Lower growth in the Eurozone and the UK has consequences for interest rates
as well. We now do not expect the ECB to start raising the refinancing rate
until early-2020, and see it peaking at 2.75% in 2028 (versus 3% in 2025
previously). In the UK, the BoE terminal rate has been cut to 3.5% (from
3.75%). Also, our expected path for 10-year bond yields has flattened
significantly in most Eurozone countries.
In Japan, Abe’s policies should alleviate the worst of the demographics
slowdown, but this still results in potential growth of only 0.4% a year. This shift
away from monetary policy means that we now see yields on 10-year Japanese
bonds capped at 0% until 2020.

42
Summary of economic outlook, % change year ago*
UK 2.1% 2.8% -0.1% -11.6% 0.7% 1.4% 1.2% 0.2% -5.9% 2.7%
France 1.3% 1.6% -0.3% 0.0% 0.2% 1.5% 1.5% -0.2% 0.0% 1.3%
Germany 1.8% 1.4% -0.3% 0.0% 0.5% 1.5% 1.2% -0.2% 0.0% 1.8%
Netherlands 1.6% 1.3% -1.2% 0.0% 0.4% 1.5% 1.3% -0.3% 0.0% 1.6%
Italy 0.8% 1.2% -0.5% 0.0% 0.1% 0.9% 0.7% -0.1% 0.0% 1.5%
Russia -0.7% -3.8% 0.0% -9.6% 7.2% 1.2% -0.3% 0.2% 11.1% 5.4%
US 1.5% 2.7% -0.4% -0.5% 1.1% 2.0% 2.5% -0.2% 2.3% 2.0%
Canada 1.2% 2.2% 0.2% -3.8% 1.5% 1.8% 1.7% 0.1% 2.7% 1.8%
Brazil -3.2% -4.4% 3.2% -4.8% 8.9% 1.0% 0.2% 1.1% 6.8% 5.4%
China 6.7% 7.5% 0.0% -5.7% 1.9% 6.4% 6.9% 0.0% -1.9% 2.1%
Japan 0.6% 0.5% -0.3% 12.6% -0.2% 0.6% 1.1% -0.3% 3.3% 0.2%
India 7.5% 7.8% -0.1% -4.9% 5.3% 7.2% 7.5% 0.0% 2.2% 5.3%
* Unless otherw ise specified
** Percentage point change
2016 2017
Country
*** Exchange rates measured against the euro. A positive change indicates stronger local currency against the euro and therefore a positive impact on
outbound tourism demand. A negative change indicates w eaker local currency against the euro and therefore a negative impact on outbound tourism
demand.
GDP
Consumer
expenditure
Unemploy-
ment **
Exchange
rate***
Inflation
Consumer
expenditure
Unemploy-
ment *
Exchange
rate***
InflationGDP

43
7.2 EUROZONE
We continue to think that the Eurozone economy will fare pretty well in H2 this
year and is on track to perform better than the consensus in 2017.
Recent data has been something of a mixed bag for the region. Strikingly, the
composite PMI fell in September to its lowest level since the onset of QE, but it
still does not point to a marked slowdown in GDP growth in Q3. We also think
that the recent weakness may be caused by some volatility in the German data
and may thus overstate the degree to which service sector growth has
weakened. By contrast, the EC’s Economic Sentiment Indicator has picked up
and on balance the hard data suggests that GDP growth probably improved a
touch in Q3.
For now, then, there is little reason to alter our above-consensus growth
assessment for the near term. We still expect GDP growth to slow only slightly,
from 1.6% this year to 1.5% in 2017. But looking ahead, we have become more
pessimistic about the growth outlook, reflecting the expectation that total factor
productivity growth will remain subdued. We now think that Eurozone potential
GDP growth is probably only around 1%. As a result, we forecast growth will be
about 1.4% in 2018-19 and then tail off thereafter.
We expect weaker potential growth to result in a slower normalization of official
interest rates and government bond yields. We now do not expect the policy
rate to be raised until 2020. Even so, in the shorter term we think the ECB will
be forced to raise its inflation forecasts in December. We expect this revision,
plus the reasonably solid growth outlook, to result in the ECB announcing a
tapering of QE monthly asset purchases from March 2017, rather than a
continuation of monthly purchases of €80bn, which would be consistent with
recent comments from ECB insiders.
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
30
35
40
45
50
55
60
65
70
2004 2006 2008 2010 2012 2014 2016
GDP (RHS)
Composite PMI (LHS)
Eurozone Composite PMI & GDP
% change q/q
Source : Oxford Economics/Haver Analytics/Markit
Index

44
7.3 UNITED KINGDOM
The Quarterly National Accounts contained some good news, with Q2 GDP
growth upgraded from 0.6% to 0.7%. And the data for Q3 has continued to
surprise on the upside, indicating that the economy has weathered the shock of
the EU referendum result better than many had feared. In particular, the official
measure of services output showed a strong 0.4% monthly increase in July,
while the CIPS surveys and Gfk consumer confidence barometer all rebounded
strongly in August and September, after plunging in the aftermath of the
referendum. Our short-term model, which uses business survey results to fill
gaps in the official data, suggests that quarterly GDP growth will be around
0.3% in Q3.
Though the economic data has held up better than the MPC had expected, the
minutes of the September policy meeting suggested that this had not altered its
bigger-picture view of the economy post-referendum. As such, the majority of
members still expect to vote for another rate cut before the end of the year.
Typically, the MPC would move in a month in which there was an Inflation
Report, which would point to a rate cut in November, but it may wait until the
mid-December meeting to see whether the Chancellor implements a loosening
of fiscal policy in the Autumn Statement due late November.
At the Conservative Party conference, Prime Minister Theresa May confirmed
that she plans to trigger Article 50 of the Lisbon Treaty before the end of March
2017. This will start a two-year period of negotiations with the EU, with Brexit
finally occurring during Q1 2019. Commentary from the government suggests
that it is very likely that the UK will leave the customs union in order to be able
to negotiate free trade agreements (FTAs) with third countries and to regain
control over immigration policy. This would mean that the government would
either attempt to agree an FTA with the EU or – marginally more likely in our
opinion – it would revert to trading with the EU according to WTO rules.
-20
-15
-10
-5
0
5
10
15
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
% year
UK: Business investment and GDP
GDP
Business
investment
Source: Oxford Economics
Forecast

45
7.4 UNITED STATES
Real GDP growth was revised up to 1.4% in Q2 2016 on stronger
nonresidential investment, net exports and inventories. Final sales rose 2.6%
while inventories subtracted 1.2pp from GDP growth.
Despite a 0.1% monthly uptick in real disposable income, personal
consumption expenditures contracted 0.1% in August – the first decline since
February. However, while momentum may have slowed, real disposable
income growth of 2.4% y/y remains supportive of solid consumer outlays
growth. We see consumer spending growing by 2.7% in 2016 and 2.5% next
year.
September payrolls were up 156,000 while the 12-month moving average stood
above 200,000 jobs for the 30th consecutive month. The unemployment rate
rose a tick to 5% on higher labor force participation while wage growth firmed to
2.6% y/y. A maturing labour market will mean slower employment growth next
year, but reduced labor market slack should support stronger wage growth.
Residential activity has cooled despite pent-up demand, rising wages and low
interest rates. Low inventories and reduced construction activity point to
lingering supply constraints and elevated home price inflation. Residential
investment should add 0.2 percentage points (pp) to growth in 2016.
Business activity remains very weak, constrained by a strong dollar, sluggish
global demand and depressed energy activity. While a rebound in the oil-rig
count is encouraging, the weakness goes beyond energy. The business
response to soft final demand, domestically and abroad, may be the main
reason behind the lack of ‘animal spirits’.
Despite a surprising mid-year bounce, exports will remain constrained. Imports
will also grow at a moderate pace so that net trade represents a modest 0.2pp
drag on GDP growth in 2016-17.
Real GDP should grow 1.5% in 2016 – the weakest reading since 2009 – and
we expect it to firm to 2.0% next year (down from 2.3% previously) – albeit
above our estimate of long-term potential output (1.6%).

46
7.5 JAPAN
At September’s highly anticipated monetary policy meeting the Bank of Japan
(BoJ) announced that it was abandoning its monetary base target and replacing
it with targets for government bond yields. It also announced a commitment to
overshoot the 2% inflation target to boost inflation expectations.
However, at least in the short term, the latest announcements held little in the
way of new stimulus. The BoJ maintained its negative interest rate of -0.1% on
bank reserves held at the BoJ while stating that it will conduct asset purchases
broadly in line with the current pace of ¥80 trillion per year, albeit with some
flexibility based on the target of keeping the 10-year JGB yield around 0%. For
now, the BoJ can focus on changing the composition of the maturity of JGBs
without changing the average level of assets purchased. But in the future we
expect the BoJ will increase its average JGB holdings from around 65% of
GDP currently to above 80% next year to achieve its targets.
Despite further action expected by the BoJ, the yen is likely to stay relatively
close to current levels during the rest of this year and is forecast to weaken to
only 110 by mid-2018. The relatively strong yen further clouds the outlook for
exports and overall growth.
Indeed, while the final estimate for Q2 GDP growth was raised to 0.2% q/q from
the initial estimate of zero, export volumes still fell 1.5% on the quarter and
private non-residential investment also contracted, highlighting how the recent
strength in the yen is already affecting exporters and businesses in general.
However, while exports and business investment are expected to contract both
this year and in 2017, the recently approved fiscal stimulus package will
provide a boost to overall economic growth through a mixture of infrastructure
spending and cash handouts.
The impact of the fiscal stimulus will partly offset the relatively strong yen profile
and coupled with the stronger Q2 outcome, GDP is now forecast to grow by
0.6% pa in both 2016 and 2017, up marginally from September, followed by a
pick-up to 0.8% in 2018.
70
80
90
100
110
120
130
140
2005 2007 2009 2011 2013 2015 2017 2019
Source: Oxford Economics / Haver Analytics
Japan: Exchange rate per US$
F'cast
per US$

47
7.6 EMERGING MARKETS
SLIGHTLY IMPROVED GROWTH OUTLOOK IN CHINA
Policymakers in China successfully stabilised the economy with fixed asset
investment growth rebounding in August driven by a recovery in corporate and
real estate FAI growth and infrastructure investment growth remaining relatively
strong. Enthusiasm has returned to the property market, in particular in terms of
housing sales growth amid fast gains in house prices in many large cities.
Meanwhile, goods export volumes are also rising strongly, benefitting from a
weaker currency and slowly strengthening global demand momentum, while
consumption remains robust.
Overall, the August data suggest a slight improvement in the outlook and we
now expect GDP growth to average 6.6% this year, up from 6.5% in
September. But meeting the overly ambitious targets for GDP growth will
remain reliant on continued fiscal and monetary easing to shore up domestic
demand. While China may not be on the cusp of a financial crisis, the current
pace of credit growth is clearly unsustainable and will have to be reined in at
some point.
The wider region has also seen more reassuring data. Most emerging Asian
PMIs continued to benefit from rising new orders in September, suggesting that
manufacturing activity in most countries is beginning to turn around. Export
growth also continued to pick up across the region, suggesting a fairly broad-
based underlying improvement in trade. However, while the recovery in trade is
in line with our expectations, we remain cautious about its vigour, given our
view of a very gradual pick-up in global trade.
INDIA – “NEW” RBI BATS FOR GROWTH
The newly constituted monetary policy committee of the Reserve Bank of India
(RBI) unexpectedly cut the repo rate by 25bp to 6.25% in early October, taking
advantage of the dip in August inflation amid downward momentum in food
prices.
0
2
4
6
8
10
12
14
16
18
Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Jul 16
Retail sales
Value added industry
Fixed Asset investment (FAI)
China: Key cyclical indicators
% year, real
Source: Oxford Economics/Markit/Caixin

48
We agree with the RBI that India is in the midst of a consumption-driven
recovery and expect headline growth to bounce back to 7.5% over the next
couple of quarters. But we are less sanguine about the inflation trajectory. Our
baseline view is for a shallow correction in food prices that is likely to keep
inflation above the RBI’s 5% inflation target on average over the coming
months.
That said, the MPC’s approach to policy setting appears to be more tactical and
data-dependent than the ‘big picture’ approach taken by former Governor
Rajan. Hence, it is possible that the committee is less fixated on the 5% CPI
target for early 2017, and anchoring real rates around 2%, as long as inflation
is fairly close to the target. Thus, further easing cannot be ruled out even if
inflation averages 5.35% in Q1 2017, which is our baseline case.
CAUTIOUS EASING IN RUSSIA AND CEE
The Central Bank of Russia resumed its policy easing in September after a
three-month pause, cutting its main rate by 50bp due to falling inflation and
inflation expectations. But it sent strong signals of its intention to fight inflation,
indicating no further cuts to rates this year. We have adjusted our baseline
accordingly, and now expect the main policy rate to be 10% at end-2016,
though the bank’s calculations could change if inflation expectations fall further.
6.0
6.5
7.0
7.5
8.0
8.5
9.0
0
2
4
6
8
10
12
14
16
18
2012 2013 2014 2015 2016
% year
Food CPI
Source: Oxford Economics/Haver Analytics
India: Consumer prices
CPI
RBI's inflation
target
Repo rate
(RHS)
%
0
2
4
6
8
10
12
14
16
18
2006 2008 2010 2012 2014 2016 2018
Source: Oxford Economics
Russia: Central bank policy rate and inflation
Forecast
%
Policy rate
CPI inflation
Inflation target

49
Further west in the CEE region, we have pushed back the beginning of policy
normalisation to late 2019-early 2020 in Hungary and the Czech Republic to
reflect a change in view on the timing of ECB policy normalisation. Moreover, in
Hungary, the surge in the forint following S&P’s recent rating upgrade will likely
lead to policy easing. Meanwhile, the Polish and Romanian central banks are
expected to tighten policy in H2 2018 and early 2017 respectively over fears
that fiscal easing will put upward pressure on inflation.
DIVERGING POLICY OUTLOOK IN LATAM
In Latin America, we have left our short-term growth forecasts unchanged from
September, but have made important adjustments to our monetary policy
assumptions. In Brazil, falling inflation and a stable exchange rate will likely
give the central bank the ‘green light’ to cut rates as early as October
(previously we forecast a January move). We now see the Selic policy rate at
13.25% by end-2016, but the rush to cut rates means a less aggressive easing
cycle in 2017, with rates closing next year at 11.25% (10% previously). In
Mexico, we no longer expect the central bank to raise rates in December (after
hiking in September), but it is likely to keep a hawkish bias next year, raising
the target rate to 5.5% by H2 2017.
SLIGHTLY WEAKER GROWTH IN TURKEY
We expect Turkish growth to slow to below 3% in H2 2016, and have nudged
down our growth forecast for this year as a whole to 3.1% from 3.3%.
Thereafter, the economy is forecast to ‘muddle through’, with GDP growth of
3.2% in 2017 (in September we forecast 3.4%). Meanwhile, the central bank
lowered its overnight lending rate for the seventh consecutive month last
month, taking advantage of Fed inaction to maintain its dovish stance.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2010 2011 2012 2013 2014 2015 2016 2017
Brazil Mexico
Latin America: Policy rates
%
Source : Haver Analytics
Forecast

50
2
4
6
8
10
12
14
2013 2014 2015 2016
One-week repo (policy rate)
Overnight borrowing rate
Overnight lending rate
Overnight interbank rate (TRLIBOR)
Weighted average cost of CBRT funding
Source : Oxford Economics/Haver Analytics
Turkey: CBRT monetary policy framework
%

51
8. APPENDIX 1
GLOSSARY OF COMMONLY USED TERMS AND ABBREVIATIONS
Airline industry indicators
ASK – Available Seat Kilometers. Indicator of airline supply, available seats x kilometers flown;
PLF – Passenger Load Factor. Indicator of airline capacity. Equal to revenue passenger
kilometers (RPK) / available seat kilometers (ASK);
RPK – Revenue Passenger Kilometers. Indicator of airline demand, paying passenger x
kilometers flown;
3mth mav – Three month moving average.
Hotel industry indicators
ADR – Average Daily Rate. Indicator of hotel room pricing, equal to hotel room revenue /
rooms sold in a given period;
Occ – Occupancy Rate. Indicator of hotel performance, equal to the number of hotel rooms
sold / room supply;
RevPAR – Revenue per Available Room. Indicator of hotel performance, equal to hotel room
revenue / rooms available in a given period.
Central Banks
BoE – Bank of England;
MPC – Monetary Policy Committee of BoE;
BoJ – Bank of Japan;
ECB – European Central Bank;
Fed – Federal Reserve (US);
RBI – Reserve Bank of India;
OBR – Office for Budget Responsibility;
PBoC – People’s Bank of China.
Economic indicators and terms
BP – Basis Point. A unit equal to one hundredth of a percentage point;
Broad money – Key indicator of money supply and liquidity including currency holdings as
well as bank deposits that can easily be converted to cash;

52
CPI – Consumer Price Index. Measure of price inflation for consumer goods;
FDI – Foreign Direct Investment. Investment form one country into another, usually by
companies rather than governments;
GDP – Gross Domestic Product. The value of goods and services produced in a given
economy;
LCU – Local Currency Unit. The national unit of currency of a given country, e.g., pound, euro,
etc.;
PMI – Purchasing Managers’ Index. Indicator of producers’ sentiment and the direction of the
economy;
PPI – Purchase Price Index. Measure of inflation of input prices to producers of goods and
services;
PPP – Purchasing Power Parity. An implicit exchange rate which equalises the price of
identical goods and services in different countries so they can be expressed with a common
price;
QE – Quantitative Easing. Expansionary monetary policy pursued by central banks involving
asset purchases to reduce bond yields and increase liquidity in capital markets;
G7 – Group of seven industrialised countries comprising the United States, the United
Kingdom, France, Germany, Italy, Canada, and Japan.

53
9. APPENDIX 2
ETC MEMBER ORGANISATIONS
Austria – Austrian National Tourist Office (ANTO)
Belgium: Flanders – Tourism Flanders
Wallonia – Wallonie-Bruxelles Tourisme (WBT)
Bulgaria – Bulgarian Ministry of Tourism
Croatia – Croatian National Tourist Board (CNTB)
Cyprus – Cyprus Tourism Organisation (CTO)
Czech Republic – CzechTourism
Denmark – VisitDenmark
Estonia – Estonian Tourist Board - Enterprise Estonia
Finland – Visit Finland – Finpro ry
Germany – German National Tourist Board (GNTB)
Greece – Greek National Tourism Organisation (GNTO)
Hungary – Hungarian Tourism Agency
Iceland – Icelandic Tourist Board
Ireland – Fáilte Ireland and Tourism Ireland Ltd.
Italy – Italian Government Tourist Board
Latvia – Latvian Tourism Development Agency (TAVA)
Lithuania – Lithuanian State Department of Tourism
Luxembourg – Luxembourg for Tourism (LFT)
Malta – Malta Tourism Authority (MTA)
Monaco – Monaco Government Tourist and Convention Office (DTC)
Montenegro – National Tourism Organisation of Montenegro
Norway – Innovation Norway
Poland – Polish Tourist Organisation (PTO)
Portugal – Turismo de Portugal, I.P.
Romania – Romanian National Authority for Tourism
San Marino – State Office for Tourism
Serbia – National Tourism Organisation of Serbia (NTOS)
Slovakia – Slovak Tourist Board
Slovenia – Slovenian Tourist Board
Spain – Turespaña - Instituto de Turismo de España
Switzerland – Switzerland Tourism
Turkey – Ministry of Culture and Tourism

European tourism 2016 trends and prospects q3

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