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BREXIT AND TRUMP: TOURISM IN TIMES OF POLITICAL DISRUPTIONS10 MARCH 2017
CAROLINE BREMNER, HEAD OF TRAVEL AT EUROMONITOR INTERNATIONAL
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World economy – more optimistic in Q1 2017 vs Q4 2016
World GDP growth forecast 3.3% in 2017
GLOBAL VIEW
Source: Euromonitor International Macro Model
Tourism demand
Macro-economicPopulationTrade
PopulismConflicts TerrorismAdvisories
Black swan
DisastersPandemics
Visas Capacity
Open skiesDigital
TaxValue for
moneyCompetition
High levels of uncertainty lead to downside risks
Geopolitical
Connectivity
Price positioning
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2001 2006 2010 2015 20200
100,000
200,000
300,000
400,000
500,000
600,000 World Arrivals by Region in Trips 2001-2020
Asia Pacific
Australasia
Eastern Europe
Latin America
Middle East and Africa
North America
Western Europe
Mill
ion
Trip
sTourism demand yet to peakGLOBAL VIEW
Global arrivals grown consistently over 20 years, shows very little signs of slowing
Western Europe remains most popular region vs Asia’s ascent
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The UK strikes out alone – economic slowdown expected if no dealBREXIT IMPACT
Article 50 triggered end March 2017
No Brexit Deal scenario points to slowdown in 2017-2018
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Comparative risks to the UK economyBREXIT IMPACT
Comparative Threats – Probability
Global crisis 4%No Brexit 5%Severe US recession 6%China hard landing 10%Eurozone recession 10%No Deal Brexit 27%
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No Deal Brexit scenario, UK arrivals potential growth of 3.4 million over 2017-2020
30 year low in pound sterling encourages visitation
Questions over capacity as airlines reduce exposure
2017 2018 2019 202032,00034,00036,00038,00040,00042,00044,00046,000
Destination UK Arrivals: Scenarios 2017-2020
Pre-Brexit Baseline
‘000
trip
sUK inbound benefits from the currency effectBREXIT IMPACT
2020 target:
40 million
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0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,0000
10
20
30
40
50
60
GlasgowCopenhagen
DublinAmsterdam Paris
Frankfurt
London
Importance of Business Services in Key Cities 2015
London Frankfurt Paris Amsterdam Dublin Copenhagen Glasgow
Total GVA from business services US$ million 2015
Sha
re o
f GV
A fr
om b
usin
ess
serv
ices
(%)
Brexit threatens to undermine London’s ease of doing business & start-hub
Competition from Paris, Frankfurt, Berlin, Stockholm, Dublin and Amsterdam
Challenge to UK’s business crown
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Lodgin
g
Activit
iesFo
od
Shopp
ing
Trave
l in D
estin
ation
01,0002,0003,0004,0005,0006,0007,0008,000
0.00.51.01.52.02.53.03.54.04.5
UK Inbound Spending by Key Category £ million 2015/2020
2015 20202015-20 CAGR %
£ m
illio
n
% v
alue
CA
GR
201
5-20
20
UK to focus on its value for money propositionBREXIT IMPACT
Japan+452%
Mexico +46%
Taiwan+21%
Canada+28%
Japan+452%
Mexico +46%
Taiwan+21%
Thailand +10%
Malaysia +7%
Korea+11%
UK+9%
Canada+28%
International Luxury Spend Largest Increase % 2013-15
Russia-22%
China-15%
France-9%
Germany-2%
Russia-22%
US-4%
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Embracing new business models for choiceBREXIT IMPACT
New disruptors like the sharing economy refresh the tourist offer
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2015 20200%
20%
40%
60%
80%
100%
UK Travel Sales by Platform 2015/2020 % Value Share
Offline TravelDesktop/PCMobile Travel Sales to Residents
% v
alue
Connected to consumersBREXIT IMPACT
48%online travel Penetration 2020
£10bn mobile travel sales 2020
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UK fourth largest outbound market , after the US, Germany and China, with 82 million departures
Ireland, Cyprus and Spain are highly dependent on the UK so high exposure
UK outbound slump to cause shockwavesBREXIT IMPACT
Spain
Franc
e
Ireland
USAIta
ly
Portug
al
German
y
Greec
e
Turke
yUAE
Poland
Netherlan
ds
Cypru
sIndia
Austria
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Destinations Exposure to UK Arrivals 2016
UK arrivals % UK share of total
Trip
s, '0
00
UK
% s
hare
of a
rriva
ls
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The US economy powers on, despite uncertaintyTRUMP EFFECT
Downside risks to US economy
Uncertain trade tariffs and immigration restrictions
Attempted travel ban sends strong message about openness
Uplift from stimulus package
Source: Euromonitor International Macro Model
US Real GDP Growth Alternative Scenarios% %
2016 2017 2018
Euromonitor baselineOptimistic scenarioFiscal Stimulus BoomPessimistic scenarioMajor Downturn
-2
-1
0
1
2
3
4
-2
-1
0
1
2
3
4
Note: Forecast Update February 2017
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2015 2016 2017 2018 2019 2020 202165,000
70,000
75,000
80,000
85,000
90,000
US Inbound Arrivals Scenarios 2015-2021
Baseline (Actuals)Pre-Trump ForecastSevere US Recession
‘000
trip
sMarginal downgrade to US inbound performance TRUMP EFFECT
US inbound decline in 2016
Fall from major markets – Canada, Mexico, Brazil & UK
Optimistic outlook but short of 100 mn target
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Global crisis scenario as worst case
South East Asia, China & US resilient
Shift to higher value spend
Global crisis scenario shows potential loss in outbound expenditureSTRATEGIES FOR SUCCESS
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Destinations seek resilient source marketsSTRATEGIES FOR SUCCESS
India
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Is this the future in a post-reality world?STRATEGIES FOR SUCCESS
Mobile firstAI & automationBiometricsDNA profilingEmotion recognition
PersonalisationHuman element
Automated hotel Source: Henna an Hotel
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WIN
NE
RS
LO
SE
RS
Joining the dots
Building resilience
Asia for new growthDigital connectivity Personalisation for enhanced UX
Wave of populism Barriers for trade & people Industry consolidation
Challenges and opportunitiesSTRATEGIES FOR SUCCESS
THANK YOU FOR LISTENINGCaroline BremnerHead of Travel
@CarolineBremnercaroline.bremner@euromonitor.comwww.euromonitor.com/travel
