High oil prices have only limited impact on tourism growth, UN reports

Higher oil prices have so far had limited effect on international tourism growth, with only a small percentage of the increase passed onto consumers in terms of final purchase price, according to the United Nations World Tourism Organization (WTO).

“While the past oil price peaks had a significant negative impact on tourism through to the economy at large, on this occasion the global economy has remained relatively steady and the inflationary pressure appears to be limited for now,” WTO Secretary-General, Mr Francesco Frangialli said of a recently concluded agency report.

Unlike previous crises it is not an unexpected shock, but rather a progressive escalation predominantly reflecting a strong demand for energy driven by economic growth. Oil prices might affect the bottom-line results of tourism companies through higher costs. But for the moment consumer confidence is still high and tourism demand has not been affected.

According to latest data from the International Air Transport Association (IATA), passenger traffic from January through September this year increased by 8.3 per cent, with airlines in the Middle East and Africa reporting double-digit growth rates.

Demand for international tourism has remained strong through 2005, with WTO estimates showing an expected growth of 5 to 6 per cent in international tourist arrivals, which can be considered exceptional. International tourism is not only on track to consolidate the bumper year it had in 2004 (10.7 per cent), but will also exceed the forecast long-term average growth of 4 per cent.