Rising fuel prices; exchange rate fluctuations; increased taxation related to air travel and continued threats to travellers' health, safety and security....

These are just a few of the challenges that have faced the global tourism industry in 2007. Yet, over the first eight months of the year, outbound travel rose by between 5-6% worldwide in terms of trip volume, resulting in what is expected to be the fourth consecutive year of sustained growth.  And this trend is forecast to continue in 2008, albeit at a slightly slower rate (+4-5%).

This was one of the main messages to come out of the three days of presentations and intensive discussions between world tourism experts gathered in Pisa from 24-26 October for the 15th World Travel Monitor Forum.  The meeting, more commonly known as the Pisa Forum, and which was once again sponsored by ITB Berlin, was as usual organised by IPK International, founders and producers of the World Travel Monitor survey, in co-operation with the European Travel Commission.  

The growth, which is above that forecast for 2007 12 months ago in Pisa, owes much to the healthy global economy, said Rolf Freitag, President & CEO of IPK International, as well as a robust air transport sector, and an increasing resilience to negative events and developments.  Although the weakness of the US dollar, for example, has had an impact on travel from the USA and other dollar-lined markets, it has not affected overall trends.  

Other important contributing factors cited by participants at the Pisa Forum include the expansion and spread of low-cost/low-fare airline services – almost all regions of the world are now benefiting from the trend – and significant increases in outbound travel from emerging markets and less traditional European source countries.

The average growth in world tourism demand clearly masks some wide variations from one region and source country to another, said Freitag.  European outbound trips increased by 3% from January through August 2007 – led by Spain (+11%), Russia (+10%) and Italy (+7%) – with Norway, Ireland, Sweden and France also achieving above average growth rates.

Nevertheless, Europe's most important outbound travel markets, Germany and the UK, have turned in disappointing performances this year so far, and are not expected to show much improvement before the end of 2007.  In Germany's case, the market's sluggish performance was attributed by Pisa participants to uncertainties over employment prospects, together with the negative impact of the three percentage point rise in VAT at the start of the year.

­Stagnation in the UK market, on the other hand, is blamed on the government's decision to sharply increase the Air Passenger Duty, as well as a possible saturation in demand for secondary short breaks using low-cost carriers, and increased hassles associated with travel through UK airports as a result of stepped-up security and immigration checks.  However, as representatives of the USA, Canada and, e.g. Kenya in Pisa confirmed, while total trip volume has stagnated, demand from the UK for long-haul destinations has recorded a healthy increase.

To put things into perspective, outbound travel from the USA increased by just 1% through the month of August, according to official data from the US Department of Commerce – due in no small part to the weak dollar – while the growth for some Asian and Latin American markets exceeded 20% (in terms of either expenditure and/or trip volume). 

South Korea, India, Brazil and China led the growth from emerging markets, although a number of other developing economies have confirmed their growth potential.  By way of example, the World Tourism Organization cited the United Arab Emirates, Argentina, Malaysia and Indonesia.

In line with the increase in low-cost/low-fare airline services, low-fare traffic demand has risen sharply this year.  In Europe alone, following a 15% increase in demand for low-fare trips in 2006, the first eight months of 2007 saw a further 17% growth – to 39% of total airline trips.

This goes a long way to explaining the continued strong boom in short city breaks in 2007 which, alongside touring trips, have been the fastest growth sector of the market this year so far.

Nearly 40% of all European trips – up 13% on 2006 – are now booked at least partially online, while travel agents' share of total bookings has slipped by a further one percentage point to 25%.  Close to 60% of all trips are also packaged – ie they include both transport and accommodation – even if they are self-packaged online.  In line with forecasts made at the Pisa Forum in November 2006, consumers are demanding more and more control when making their travel arrangements, and this is likely to stimulate online booking further.

Prospects for 2008 remain bullish, although the Pisa Forum concluded that the US market would show decreasing consumer confidence as a result of the subprime crisis, and that the impact of the credit crunch may impact on European travel demand as well. Other characteristics of the changing market include a stronger focus on hospitality, authenticity and tradition, as well as increasing demand for uniqueness, individuality, nature-based tourism and sustainability. Quality is now the buzzword, replacing ‘cheap is chic', said Freitag.

Climate change is emerging as important issue, although there is no evidence that it has had a negative impact on demand until now, the Pisa Forum agreed.  But this could change in the future, although the tourism industry's potential to adapt to the new threat and introduce effective mitigation policies remains high.