Travel industry begins ‘staggered recovery’ – but one swallow doesn’t make a summer

Date: 02/05/02

Laurence Frost assesses the challenges which face EU tourism ministers.

THE FIRST task faced by tourism ministers gathering for their annual informal meeting tomorrow (3 May) in Santander, Spain, will be to take stock of the fallout from the 11 September attacks and the economic slowdown - a double whammy that has hit travel firms hard.

Global tourism shrank by 1.3 in 2001, as a result of the 11 slump during the last four months of the year.

The previous year had set a hard act to follow, with millennial events boosting international arrivals (a measure of activity in the sector) by 7 to a record high.

But 2001 saw the most significant decline since World War II - and according to the latest figures available, the sector is likely to continue feeling the effects of the terrorist attacks until the end of the year.

'Our industry has weathered the most serious crisis in its history,' said Francesco Frangialli, secretary-general of the World Tourism Organisation - not to be confused with the international trade body sharing the WTO acronym. 'The prospects for medium and long-term growth remain strong.'

According to WTO figures for January and February, a 'staggered recovery' has already begun, but is not expected to restore activity to pre-11 September levels until the third or fourth quarter.

The economic consequences are pronounced for Europe, the most visited region in the world. Tourism and related activities now account for 12 of GDP and 20 million jobs, the second largest EU sector after retail and distribution (and until September the fastest growing).

But beyond these basics, the European Commission and even national governments know relatively little about the way this important industry works and how it responds to crises.

This is partly due to the sheer number of actors involved. Although recent consolidation has produced a few big players, 97 of the industry is still made up of firms with fewer than 10 employees.

Control over tourism policy is often devolved to regional or local authorities, each of which monitors sector activity and gathers such straightforward statistics as the number of foreign visitors it receives in completely different ways.

This makes it difficult to predict the effects on tourism of broader economic developments or unpredictable events such as 11 September - or even to measure the fallout when it arrives.

Now, after several failed Commission attempts to introduce a common tourism policy at the EU inter-governmental conferences of the late 1990s, industry chief Erkki Liikanen appears to be making more headway with a non-binding 'cooperative' approach.

The tourism ministers will this weekend discuss a draft resolution, approved by their representatives in Brussels last week, which endorses a set of measures proposed by Liikanen last November. These include initiatives on sustainability, training and information technologies - an area in which the commissioner believes the travel industry workforce is lagging behind other sectors - as well as better information exchange and a more uniform system of data-gathering.

'We need to better analyse the economic role and influence of tourism on the economy,' Liikanen said. 'More information on the destinations and on the demand side is needed to make better policy suggestions.'

In getting his communication adopted, Liikanen also extracted a pledge from his fellow commissioners to give more consideration to tourism when drawing up policies in their own areas.

Liikanen's spokesman, Per Haugaard, said the planned 'satellite accounts' system would lead to a 'harmonised and operational basis' for gathering and reporting tourism's vital statistics.

But the main weakness of Liikanen's strategy could be precisely the 'cooperative approach' that has made it possible to win EU governments' tentative approval.

Even if they formally adopt the resolution when they meet on 21 May, the measures it contains will not be binding on governments - and some still harbour reservations.

'The Commission's keen for everyone to put the tourism satellite accounts into place,' said one member state official.

'We're saying we may or may not. It's a big administrative burden to change the whole system, and it would cost a lot of money - we already trust our own information.'

Author assesses the challenges which face EU tourism ministers ahead of their informal meeting in Santander, Spain, 3 May 2002.