The global tourism industry has turned the clock back to 2019. As confirmed by the data published in this report, the gigantic hole in worldwide passenger arrivals created by the Covid-19 pandemic in 2020 has finally been plugged.
True, once again, the recovery of foreign direct investment (FDI) in the global tourism cluster is lagging behind. But it’s a nuanced picture, with investors taking on new endeavours in fast-growing geographies, while remaining more conservative in more mature markets.
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If the industry can cheer up, other stakeholders have mixed feelings. Particularly in Europe, local communities in major tourist hotspots have lost their temper with mass tourism. At the heart of their discontent is the fact that overcrowding exacerbates the challenges of climate change and inflation.
Tourism leaders must embrace those challenges. As suggested throughout this report, they can do so by leveraging technology, capital, relations and policies. The stakes are high as the current backlash travels across borders and turns into a global reputational issue. The rewards, in the form of a more environmentally, socially and financially sustainable global tourism industry, can be even higher.
fDi Intelligence has newly teamed up with UN Tourism to look at the current state of the global tourism cluster through the lens of international arrivals and greenfield FDI.
The figures on international tourism arrivals provide a clear measure of the ongoing trajectory of the tourism industry. The gap with pre-Covid levels further narrowed in 2023, when UN Tourism tracked 1300 million global arrivals, up from 975 million a year earlier and closer to the 1475 million recorded in 2019.
When taking inflation into account, international tourism receipts show a similar trajectory, with the gap with pre-Covid levels closing to 2.5% in 2023.
An FDI recovery has yet to ensue off the back of these figures. For the third year in a row, announced greenfield FDI in the tourism cluster didn’t exceed the $11bn mark in 2023, as shown in the figures featured in this report, which are based on fDi Intelligence proprietary database of greenfield FDI projects, fDi Markets. That is about six times less than the more than $59bn recorded in 2019. Preliminary figures for the first seven months of 2024 hardly show a change of sentiment among foreign investors.
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Beyond the data, global tourism has to face up to a rising reputational issue. Holiday-goers woke up to street protests in places like Spain and Greece, with other forms of local opposition shaping up across Europe.
Overcrowding is the main source of discontent, but per se it’s nothing new and doesn’t tell the whole story. Climate change adds a challenge to it. Water resources in many of the communities where protests erupted are under severe pressure because of extreme weather, as well as increasing uses for civil and industrial purposes.
Besides, post-pandemic tourism has been a major source of inflation as operators had to deal with the double-whammy of pandemic lockdowns and soaring energy bills. Costlier, but also more ubiquitous holiday rentals, in particular, have come under fire from the locals, who see their own rents going through the roof.
This backlash has to be a wake-up call for the industry. More has to be done in terms of diversifying destinations, staggering arrivals, leveraging policies and technology to reduce the tourists’ impact on local communities. Foreign investors also have a part to play by promoting quality employment and reinvesting locally some of their profits. It’s a cultural issue too. The ways of mass tourism will hardly ever be sustainable. Some countries like Colombia are rather betting on an eco-tourism offer which promotes quality over quantity. This is probably the biggest lesson the industry can learn.
The pandemic was a shock to the tourism system. For years, the industry endeavoured to shore up arrivals figures and default back to pre-Covid levels. But the world we live in is a different one. Climate change is an ever-growing risk; technology an ever-growing opportunity. Now that the recovery in numbers is over, it might well be the time to focus on quality to make tourism work for all.
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This article is part of the Special Report:
Tourism Investment Report 2024