The global tourism sector is gradually recovering from the impact of the Covid-19 pandemic. According to UN Tourism’s World Tourism Barometer published in January 2024, international tourism ended 2023 at 88% of pre-pandemic levels, with an estimated 1.3bn international arrivals. The revival has been underpinned by the release of pent-up demand, increased air connectivity, and a robust resurgence of Asian markets and destinations, leading to an expected full recovery by the end of 2024.
However, the rebound has been uneven across different global regions. The Middle East led the recovery in relative terms, experiencing a 22% increase in arrivals compared to 2019 levels. Europe, the world’s most-visited region, neared 94% of its 2019 figures, largely due to intra-regional demand and travel from the US. Africa and the Americas reached 96% and 90% of pre-pandemic visitors, respectively. Meanwhile, the Asia-Pacific region reached 65% of its pre-pandemic numbers, with South Asia attaining 87% of 2019 levels and North-east Asia around 55%.
Prioritising Infrastructure
According to UNESCO, infrastructure is the 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 significant gaps in their transport infrastructure remain, ranging from lower road and rail density to a lack of access to efficient and 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, did not have the means to survive prolonged drops in demand or restrictions on person-to-person contact. Nevertheless, the development of ground transport supporting tourism grew, with results showing a 2.2% improvement in the average score for the ground and port infrastructure pillar since 2019.
Sustainability Imperatives
The global travel and tourism sector has been undergoing significant shifts in demand trends, largely influenced by the constraints imposed by the ongoing pandemic. According to UN Tourism, the key trends driving the sector’s recovery include a marked increase in domestic tourism, a preference for travel close to home, and a growing interest in open-air activities, nature-based offerings and rural excursions. These trends have been reflected in data collected by the World Travel and Tourism Council (WTTC), which shows that the share of domestic spending in travel and tourism for 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 notable contrast to the collapse that was witnessed in international demand as a result of 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, between 2010 and 2019 the sector’s greenhouse gas (GHG) emissions increased at an average annual rate of 2.5%, amounting to around 8.1% of global emissions in 2019. The sector’s energy consumption, dominated by the use of oil-derived fuels like petroleum, diesel and kerosene, accounted for 10.6% of global energy consumption in 2019. While the sector’s GHG emissions have increased, the emissions intensity – that is, the rate of emissions produced per unit of travel and tourism GDP – actually decreased by 15% between 2010 and 2019.
Beyond emissions and energy consumption, the sector’s water usage, although only 0.9% of global water use in 2019, is a crucial aspect of its dependency on the natural environment. In fact, two-thirds of the sector’s water footprint can be attributed to agriculture and food production, with transport and hospitality combined accounting for 8% of total water usage.
Forward Steps
As global tourism activity moves towards full normalization, key inbound markets are embracing the trends, and making significant strides in leveraging their advantages and addressing infrastructure gaps. In Indonesia, an upward trend of 3.4% in the TTDI score is observed, denoting a shift toward sustainable tourism. According to a 2023 survey by the Ministry of Tourism and Creative Economy, 56.8% of experts concurred on the increasing demand for environmentally friendly tourism options. The country is emphasizing infrastructure development and facilities enhancement at tourist destinations to improve service quality and safety, particularly the five super-priority destinations of Lake Toba (North Sumatra), Borobudur (Central Java), Mandalika (West Nusa Tenggara), Labuan Bajo (East Nusa Tenggara) and Likupang (North Sulawesi), which were part of the previously highlighted 10 New Balis initiative announced in 2016. Specifically in the transport sector, in October 2023 Indonesia launched Southeast Asia’s first high-speed railway. This development has reduced travel time between Jakarta and Bandung, the country’s two largest cities, from three hours to 40 minutes.
Meanwhile, the Middle East and North Africa region is also 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 made notable progress, moving from 43rd to 33rd in the global ranking, with a 2.3% increase in score since 2019.
The Gulf Cooperation Council (GCC) is focusing on culture and heritage tourism, an underdeveloped segment with growth potential for sustainability. According to consulting firm Strategy&, if all the cultural assets set for construction in the GCC by 2030 are built using sustainable methods, this could lead to a reduction in lifetime carbon emissions by 1.3m tonnes, which is akin to taking 320,000 cars off the road for a year. This could potentially generate a net present value of around $14bn over the assets’ lifespan. Additionally, pairing culture and sustainability could attract substantial foreign investment given the global trends toward increased adherence towards environmental, social and governance principles in investment activity.
Eco-Tourism
Sub-Saharan Africa, which has exhibited the most significant TTDI improvement since 2019, is focusing on nature tourism, which calls for increased attention to environmental sustainability. The Ghanaian government, for instance, has secured a $40m loan from the World Bank 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 could potentially benefit a range of destinations, such as the Kintampo waterfalls, the Buabeng-Fiema monkey sanctuary, the Buoyam bat caves and the Menji crocodile pond. The proper development of roads and facilities is fundamental not only to increasing the value of the destinations, but also to improving safety.
In the Americas, the region’s rich biodiversity is a key 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 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) in 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 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.
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