The global tourism sector is gradually recovering from the impact of the Covid-19 pandemic. According to the UN Tourism’s World Tourism Barometer published in September 2024, international tourism reached 98% of pre-pandemic levels during the first nine months of that year, with an estimated 1.1bn international arrivals. This revival has been underpinned by the release of pent-up demand, increased air connectivity and a resurgence, especially in Asian markets and destinations. These factors indicate a strong rebound, leading to expectations of a full recovery by the end of 2024. This outlook is further supported by growing consumer confidence following the relaxation of travel restrictions worldwide.
However, the rebound has been uneven across different global regions. The Middle East led the recovery in relative terms, experiencing a 29% increase in arrivals compared to 2019 levels. Europe, the world’s most-visited region, exceeded 2019 levels by 1%, largely due to intra-regional demand and travel from the US. Africa also exceeded pre-pandemic levels, this time by 6%. Meanwhile, the Americas and Asia-Pacific achieved 97% and 85% of pre-pandemic visitors, respectively. By subregion, North Africa and Central America registered the strongest performance compared to 2019.
Infrastructure Priority
According to UNESCO, infrastructure is the single most important key to tourism growth and performance. Most tourism spending goes towards transport and travel, accommodation, food and drink, and retail and leisure. There is a need for destination managers to develop products, services or partnerships that return more financial value, which would support site management and sustainability. This is particularly applicable to less-developed economies in sub-Saharan Africa and South-east Asia, where large gaps in transport infrastructure remain, ranging from lower road and rail density, to a lack of access to efficient and high-quality public transport.
The pandemic had a profound impact on the sectors facilitating tourism and travel, particularly in relation to infrastructure supporting air transport and tourist services. In May 2022 the World Economic Forum released its Travel and Tourism Development Index (TTDI) and associated insights. These findings highlighted a notable drop in the average scores for air transport infrastructure and tourist service infrastructure during the pandemic, with declines of 9.4% and 1.5%, respectively. The number of per capita short-term rental units decreased by about 20% between mid-2019 and 2021 across economies ranked in the index.
As a result, the direct travel and tourism contribution to global GDP fell from 3.2% to 1.6%, with the contribution to global employment decreasing from 3.8% to 3.1% between 2019 and 2020. Many of these businesses, mostly small and medium-sized enterprises, lacked the means to survive prolonged drops in demand or restrictions on person-to-person contact. Despite these challenges, the development of ground transport supporting tourism-related activities continued to grow, with results indicating a 2.2% improvement in the average score for the ground and port infrastructure pillar since 2019. This underscores the resilience and ongoing investment in transport infrastructure even amid broader economic setbacks.
Sustainability Imperatives
The global travel and tourism sector has been undergoing significant shifts in demand trends, largely influenced by the constraints imposed by the pandemic. According to UN Tourism, formerly known as the UN World Tourism Organisation, the trends driving the sector’s recovery include an increase in domestic tourism, a preference for travel close to home, and a growing interest in open-air activities and nature-based offerings, as well as rural excursions.
These trends have been reflected in data collected by the World Travel & Tourism Council (WTTC), which shows that the share of domestic spending in travel and tourism expenditure within the 117 economies covered by their index increased from 50.8% in 2019 to 62.6% in 2020. This highlights the resilience of domestic demand in contrast to the collapse in international spending activity resulting from the pandemic.
However, the shift towards nature-based and rural tourism, while beneficial for the diversification of the sector, presents its own challenges. For instance, regions such as the Americas, Asia-Pacific and sub-Saharan Africa, while scoring above average for natural resources, underperform in terms of environmental sustainability. This discrepancy highlights the potential stress that increased tourism can place on these regions’ natural environments.
In this regard, it is important to consider the environmental footprint of the travel and tourism sector as a whole. According to the WTTC, the sector’s greenhouse gas (GHG) emissions rose at an average annual rate of 2.5% between 2010 and 2019, amounting to around 8.1% of global emissions in 2019. The sector’s energy consumption, predominantly driven by oil-derived fuels such as petroleum, diesel and kerosene, accounted for 10.6% of global energy consumption in 2019.
While the sector’s GHG emissions have indeed increased, the emissions intensity – defined as the rate of emissions produced per unit of travel and tourism GDP – decreased by 15% during the same period. This positive trend indicates improvements in energy efficiency and a reduction in the carbon footprint per economic output in the travel and tourism sector.
Beyond emissions and energy consumption, the sector’s water usage is another crucial aspect of its dependency on the natural environment. Although it accounted for only 0.9% of global water use in 2019, water usage within the sector remains significant. Notably, two-thirds of the sector’s water footprint can be attributed to agriculture and food production to serve visitors and travellers. Additionally, transport and hospitality combined account for 8% of the total water usage, highlighting the diverse ways in which the sector relies on water resources.
Forward Steps
As global tourism activity continues to move towards full normalisation, key inbound markets are embracing the trends, and making strides in leveraging their advantages and addressing infrastructure gaps. Indonesia witnessed a 3.4% upward trend in its TTDI score for 2022 compared to 2019, denoting a shift toward sustainable tourism. According to a 2023 survey by the country’s Ministry of Tourism and Creative Economy, 56.8% of experts concurred on the increasing demand for environmentally friendly tourism options.
The country is prioritising infrastructure development and facilities enhancement at tourist destinations to improve service quality and safety, particularly the destinations of Lake Toba (North Sumatra), Borobudur (Central Java), Mandalika (West Nusa Tenggara), Labuan Bajo (East Nusa Tenggara) and Likupang (North Sulawesi), previously highlighted in the country’s 10 New Balis initiative. Specifically in the transport sector, in October 2023 Indonesia launched South-east Asia’s first high-speed railway. This development has significantly reduced travel time between Jakarta and Bandung, the country’s two-largest cities, along the 140-km route – from three hours to 40 minutes.
Eco-Tourism
Sub-Saharan Africa, which has exhibited the most significant TTDI improvement since 2019, is focusing on nature tourism. This commitment calls for increased attention to environmental sustainability. The Ghanaian government, for instance, has secured a $40m loan from the World Bank in order to upgrade infrastructure at tourist and heritage sites.
Furthermore, a $50m deal was signed with the GUMA Group to make Ghana a leading tourism destination in West Africa. This investment could potentially benefit a range of attractions, including the Kintampo waterfalls, the Buabeng-Fiema monkey sanctuary, the Buoyam bat caves and the Menji crocodile pond. The proper development of roads and facilities will be critical not only to increase the value of these sights, but also to improve safety and elevate the overall tourist experience.
In the Americas, the region’s rich biodiversity is a crucial aspect of its tourism offering, with more than half of its economies scoring above the TTDI average for the natural resources pillar. However, the region’s less developed areas require considerable investment in mobility services and infrastructure, especially for ground transport. Governments across the hemisphere are seeking to address these gaps.
For example, between 2019 and 2023 Mexico received a record investment of MXN617.6bn ($36.4bn) directed towards tourism infrastructure, with 40% of funding allocated to railway projects. Additionally, the country is incorporating climate risks into its tourism infrastructure expansion and reconstruction efforts. This approach is exemplified by the Mexican government’s issuance of a $3.4bn recovery and support plan for Acapulco in November 2023, following the devastation caused by Hurricane Otis the previous month.
Meanwhile, the MENA region is making progress, with the UAE emerging as the best TTDI performer in the region. Saudi Arabia, home to the largest tourism market in the region, has notably climbed in rankings, moving from 43rd to 33rd in the global ranking – with a 2.3% increase in score since 2019.
Sustainable Buildings
The GCC is focusing on culture and heritage tourism – an underdeveloped segment with sizeable growth potential – particularly in terms of sustainability. According to projections by consulting firm Strategy&, if all the cultural assets set for construction in the GCC by 2030 are built using sustainable methods, moving away from a linear model of consumption, this could lead to a reduction in lifetime carbon emissions of 1.3m tonnes. To put this in perspective, this would be equivalent to taking 320,000 cars off the road for a year. Moreover, this shift could potentially generate a net present value of around $14bn over the assets’ lifespan. Beyond the economic benefits, pairing culture and sustainability could attract substantial foreign investment given the global trends with increased adherence towards environmental, social and governance principles in investment activity.
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