Europe’s share of global international tourism arrivals is declining. High quality visa facilitation and border processes are essential to support growth from emerging markets. Only 17% of the EU’s visitors come from long-haul markets. In 2017, growth in international arrivals to non-EU European destinations outpaced growth to the EU: 8% average for EU, and an average of 12% to non-EU southern and Mediterranean Europe, including Turkey. The appeal of non-European destinations is also developing fast: part of that appeal is visa-free travel and smart visa processes. Visa policy remains particularly subject to political risk.
Tax and tourism
How tourism is taxed is the most influential factor on business viability. The added value of intermediation is often poorly understood. The EU is at a disadvantage for three reasons: it taxes tourism exports, the price of holidays to non-EU destinations is VAT-free, and local taxes have increased significantly. The increase in devolved tax-raising powers through overnight taxes and access charges was noted as a significant factor in competitiveness by the OECD in 2014. Visitors typically do not vote and they are any easy source of revenue. They do notice both price and service level, and they have a choice.
Package travel regulation
European package travel regulation was introduced in 1990 to protect consumers. In practice, it also suppresses innovation and causes market confusion. Much of the growth in retail travel took place outside the scope of the 1990 directive. Its successor came into force in July 2018 (PTD2) and includes welcome modernisation: no more should brochures be reprinted if prices change, electronic updates will suffice; compliance in one EU state is sufficient to sell to consumers in another; the addition of an ancillary service may not necessarily constitute a package. It also introduced the concept of a ‘linked travel arrangement’ that can give rise to several liability, and may therefore deter collaboration within the supply chain.