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World Travel & Tourism Council

WTTC issues forecast of the impact of Sharm-el-Sheikh bombs

The World Travel & Tourism Council (WTTC) is appalled and saddened by the bombings in and around the Egyptian resort, Sharm-el-Sheikh

The World Travel & Tourism Council (WTTC) is appalled and saddened by the bombings in and around the Egyptian resort, Sharm-el-Sheikh, on Saturday morning. We offer our sincerest condolences to those affected by this horrific attack.



This is another example of terrorist groups` attempts to undermine confidence and cause widespread destruction and chaos, in what has become a global conflict. WTTC commends the Egyptian security authorities on their speedy response to the attacks and fully supports the Ministry of Tourism and other authorities in their determination to move forward with development plans.



Furthermore, The Council calls upon the whole industry to work together to ensure that Travel & Tourism, one of Egypt`s most important economic activities, continues to grow.



Jean-Claude Baumgarten, WTTC President said, Although the short-term impact of these attacks on tourism in Egypt may be significant, the long-term prognosis is more positive. Egypt has a thriving Travel & Tourism industry and we are confident that, as after the Luxor attacks in 1997, the government will put in place policies to support and encourage the continued growth of the industry.



This outlook is reflected in WTTC`s Crisis Forecasting Model which was put into operation for the second time since it was unveiled at the WTTC Global Summit in New Delhi in May. Initial estimates show that, as a result of the attacks, foreign visitors to Egypt and their spending may decline by 10.6 per cent from previously forecast figures. However, it is expected that beyond 2005, the impact will be minimal.



Mr Baumgarten went on to say, The international community must continue to travel in order to defeat the terrorists` aims. Travel can defy terrorism by encouraging and enriching exchange of customs and educating each other in the diverse cultures our world has to offer.



Details of the Impact of the Sharm-el-Sheikh bombings on Egypt`s Travel & Tourism



Following Saturday`s bombings in Sharm-el-Sheikh the World Travel & Tourism Council Crisis Committee was convened to discuss the events and the potential repercussion on Travel & Tourism in Sharm-el-Sheikh, Egypt and elsewhere.



The Committee unanimously agreed that early indications showed that:

  • The intensity of the event`s affect on international arrivals in Sharm-el-Sheikh would be severe for the next two months and moderate thereafter for the next year. Elsewhere in Egypt the affect on international arrivals would be limited.
  • The intensity of the event`s affect on residents` Travel & Tourism consumption confidence and Business Travel confidence should be minor.
  • The duration of the event`s affect on International arrivals, residents` Travel & Tourism consumption confidence and Business Travel confidence should be moderate.
  • The geographical reach of the event should be limited to Egypt.
  • The damage to the Travel & Tourism infrastructure was none.
  • The Egyptian government spending response to the event should and would be strong.


In light of these factors, the WTTC Crisis Event Forecasting Model developed by Oxford Economic Forecasting was engaged for the second time since its launch in May 2005. The Crisis Event Forecasting Model suggested that in 2005:

  • Egyptian visitor arrivals may decline by approximately 10.6 per cent from previously forecast levels.
  • Personal Travel & Tourism by Egyptian residents may decline by US$144.1 million, a loss of 3.8 per cent from previously forecast levels (US$3.8 billion).
  • Business Travel & Tourism by Egyptian companies may decline by US$52.3 million, representing a loss of 3.8 per cent previously forecast levels (US$1.4 billion).
  • Government Travel & Tourism expenditures may increase* by US$39.9 million, representing a gain of 6.3 per cent over previous forecast levels (US$639.1 million).
  • Visitor Exports may decrease 10.6 per cent or US$738.3 million from previously forecast levels (US$7.0 billion).
  • Travel & Tourism Industry GDP may decrease 7.5 per cent or US$527.8 million from previously forecast levels (US$7.1 billion).
  • Travel & Tourism Economy GDP may decrease 5.6 per cent or US$729.0 million from previously forecast levels (US$13.1 billion)
  • Travel & Tourism Industry employment may shrink by 3.6 per cent
  • Travel & Tourism Economy employment may reduce by 3.6 per cent.


*Note that it is not unusual for government spending levels to increase during a period of crisis as a result of increased activity, security and ultimately renewed marketing and promotion to re-engage visitors.



The WTTC Crisis Event Forecasting Model and the estimates it produces are limited by the historical database and simulation of previous events used in the analysis (see below) and the assumptions used to assess the current situation (see above). There is no guarantee or assurance that the estimates will materialize as suggested. It is for this reason that WTTC strongly recommends that these estimates be considered as one piece of information and reference, among many, that are used to guide government policy and business decisions during the reaction, recovery and rebuilding period.



Background



Travel & Tourism is one of the world`s largest and fastest growing industries. According to WTTC`s latest Tourism Satellite Accounting Research, in 2005 Travel & Tourism will account for 10.6 per cent of global GDP and over 221 million jobs worldwide.



Effective communications by governments, the private sector and the media all play an important role in ensuring that, at times of crisis, the huge contribution Travel & Tourism makes to jobs and economies is not put at risk unnecessarily.



WTTC believes that one way to establish common ground is to produce authoritative economic research that provides all stakeholders with reliable information. To this end, WTTC has extended its proprietary Tourism Accounting Research to examine a series of historical events that can be used to help forecast the impact of a new crisis/event and assist government and industry leaders to develop informed strategies to assess needs and speed of recovery.



The historical assessment is based on an in-depth analysis of natural and human-provoked events including: the Gulf War (1991), Croatia Peace (1996), Luxor Attack (1997), Hurricane George (1998), 9/11 USA (2001), 9/11 World (2001), Bali Bombing (2002) and Hong Kong SARS (2003). These events serve to benchmark the various variables that are necessary to define and characterize the scope and depth of impact on Travel & Tourism. The model also provides for the input of new events to be factored into the analysis so each new event will serve to enhance the quality of benchmarking.



The variables that are being used to define or characterize a crisis event currently include:

  • Consumer Confidence – in respect to international arrivals, personal Travel & Tourism, and business travel;
  • Timing – in respect to tourism seasonality;
  • Shock Factor -in respect to intensity / duration of the event;
  • Geographic Spread: localized, national, regional or global;
  • Infrastructure Needs – in respect to damage and pace of rebuilding
  • Government Response – in respect to recovery programs, marketing, promotion, etc.


The historical assessment and crisis variables are then combined with the proprietary WTTC / OEF TSA models from 174 countries to produce an immediate, near and long-term forecast from which industry leaders and government officials can make informed business and policy decisions.



Like the WTTC`s TSA research itself, the crisis forecast covers all components of Travel & Tourism demand including personal consumption, business travel, capital investment, government spending and exports. The forecast will then translate this information into economic concepts of production, such as gross domestic product and employment so the impact can be assessed relative to other industries and the economy as a whole.



It is the policy of WTTC to produce and release a crisis impact forecast only after humanitarian efforts have been fully engaged by authorities and a meeting of the WTTC Crisis Committee has been held to discuss and agree the characterization of the event.



Although the primary audience of this information will be industry and government leaders and is only intended for serious business and policy analysis, WTTC will also publicly release the information through the media and its website to assure the broadest dissemination possible.



Due to the uncertain nature and fluidity of such crisis events, each and every WTTC crisis forecast will be accompanied by a thorough description of the assumptions and characterizations of the event such that any variance from this basis can be understood and communicated to those who may use the information.



WTTC calls upon all Travel & Tourism stakeholders including governments, the private sector and the media to base communications at times of crisis on accurate and informed data. In this way, we can ensure that the impact on Travel & Tourism economies and jobs is kept to a minimum and a speedy recovery facilitated.

Co-Founder & Managing Director - Travel Media Applications | Website | + Posts

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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