ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19 Adam Sacks - PowerPoint PPT Presentation

ECONOMIC AND TRAVEL OUTLOOK IN THE SHADOW OF COVID-19 Adam Sacks President Tourism Economics adam@tourismeconomics.com May 2020

Drivers of the outlook POLICY RESPONSE ECONOMY PANDEMIC TIMELINE Cases/deaths Confidence Lock downs Upside Testing Income Social distancing Therapeutics Supply Capacity limits Baseline Vaccine Consumption Border closures Downside

Most of the world has been in lockdown in early Q2 Global lockdowns China Italy Spain 16% France Germany Past US (specific states) UK India Australia Japan Other 65% Present 0 20 40 60 80 100 % of global GDP Source : Oxford Economics/Haver Analytics

Sharpest fall in GDP since WWII

US recovery should accelerate into 2021 but will remain below par

Massive job loss

90% of unemployed expect to return to their jobs

Travel in the US is beginning the long climb back National weekly travel spending $ billions $25 $19.8 $20 $14.6 $15 $10 $6.2 $3.3 $3.0 $5 $2.9 $2.9 $2.4 $2.5 $2.3 $0 2/29 3/7 3/14 3/21 3/28 4/4 4/11 4/18 4/25 5/2 5/9 5/16 Source: Tourism Economics

Europe is most exposed to seasonal peak impact

But Europe has little long-haul exposure

Expect a big initial bounce in GDP World: GDP Forecast % quarter Non-China EM q/q contribution 6 China q/q contribution Advanced economies q/q contribution Global % quarter 4 2 0 -2 -4 -6 -8 2007 2009 2011 2013 2015 2017 2019 2021 Source : Oxford Economics/Haver Analytics

But the risks are heavily skewed to the downside

Pent-up demand is real, but trips will adapt

Domestic opportunity is massive if international travel halts US Balance of Travel (2019, trips) Canada Balance of Travel Thousands Thousands 120,000 40,000 35,000 100,000 35,313 97,492 30,000 80,000 25,000 78,896 60,000 20,000 22,230 15,000 40,000 13,083 10,000 20,000 5,000 18,597 0 0 Outbound departures Inbound arrivals Trip Opportunity Outbound departures Inbound arrivals Opportunity Source: Tourism Economics Source: Tourism Economics 13 million more Canadian 19 million more US outbound outbound trips than inbound trips than inbound

This opportunity (and risk) varies significantly across Europe Domestic & International Travel Spend by Destination US$ bn, 2019, domestic % share as label Iceland 34% Inbound Finland 80% Domestic Denmark 60% Norway 72% Sweden 58% Switzerland 60% Austria 52% Russia 81% Turkey 44% Spain 46% France 68% United Kingdom 84% Italy 76% Germany 89% 0 50 100 150 200 250 300 350 Source: Oxford Economics, WTTC

Domestic to become a larger source of demand in Europe Europe: International and domestic hotel guestnights mn guestnights 1,800 1,600 1,400 1,200 1,000 800 Domestic 600 International 400 200 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Tourism Economics

​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Destination performance will partly rely on source market mix European city reliance on domestic and long-haul arrivals, 2019 100% Less volatile Domestic % share of total arrivals Hamburg 80% Gothenburg Cracow Stockholm Warsaw Oslo 60% Berlin Bergen Helsinki More volatile Madrid Rome Milan Paris 40% Sevilla Copenhagen London Istanbul Geneva Florence Zurich Amsterdam Vienna Barcelona 20% Lisbon Dublin Reykjavik Prague Venice Dubrovnik 0% 0% 20% 40% 60% Long-haul % share of foreign arrivals Source: Tourism Economics

Destination performance will partly rely on source market mix Hotel room demand by customer type Share of 2019 room nights sold 100% Nashville St Louis Denver Atlanta Norfolk/Virginia Beach Minneapolis 90% New Orleans Most resilient mix Chicago Philadelphia Washington, DC San Diego Seattle Detroit 80% Houston Domestic Share Orlando Boston Tampa Phoenix 70% Los Angeles Dallas 60% Anaheim/Santa Ana Miami New York Montreal Oahu San Francisco Toronto Least resilient mix 50% Vancouver 40% 55% 60% 65% 70% 75% 80% 85% 90% Transient Share

After previous recession, it took 7 quarters for demand to recover its prior peak, and 12 quarters for ADR in the US Prior recession: Prior recession: • 9.8% decline from • 10.7% decline from peak peak • 7 quarters to recover • 12 quarters to recover to prior peak to prior peak

Full recovery in hotel demand may take twice as long as prior recession Demand recovers its prior peak by the end of 2023, approximately 14 quarters after trough.

Recovery is tempered…but inevitable Demand Relative to 2019 10% 0% -5% -10% -12% -17% -20% -30% -40% -39% -50% -60% -64% -66% -70% -68% -80% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2020 2021 2022

Anatomy of a recovery Initial recovery Return to “normal” • Leisure levels of travel will be a • Especially drive multi-year effort (likely 2023) Secondary recovery • Essential business • Small- and medium-size groups • Regional international (intra-Americas, intra-Europe) Final recovery • Long-haul international • Large events

Determine strategies to accelerate recovery Decisions must be informed by a recovery timeline and profile Funding Market Staffing Safety Messaging Channels Incentives Partnerships New focus protocol and events positioning

Access to global travel forecasts and scenarios • We are extending a time-limed offer to access our forecasts for a paid 3-month period: Includes access to our data and forecasts for Global Travel Service , 185 countries and Global City Travel , over 300 cities plus regularly updated COVID-19 analysis PLUS • A popular request is Custom Scenarios and Analysis – assess the impact of COVID-19 and expected recovery - when and in what form To receive further information, please contact: bhindley@oxfordeconomics.com

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