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 January 2024, international tourism ended 2023 at 88% of pre-pandemic levels, with an estimated 1.3bn 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 optimistic 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 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 achieved 96% and 90% of pre-pandemic visitors, respectively. Meanwhile, Asia and the Pacific reached 65% of its pre-pandemic numbers, with South Asia attaining 87% of 2019 levels and North-east Asia around 55%.
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 significant gaps in transport infrastructure remain, ranging from lower road and rail density, to limited 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 2024 the World Economic Forum released its Travel and Tourism Development Index (TTDI) and associated insights. These findings highlighted that the average scores for air transport and tourist service infrastructure remained below 2019 levels, despite recoveries since 2021, signifying that expansion has not kept up with growing demand. The number of per capita short-term rental units also remained below 2019 levels, although accommodation capacity for hotels had increased by a marginal 1.4%.
However, the sector’s post-pandemic recovery is forecast to continue apace, with the direct travel and tourism contribution to global GDP expected to rise from 9.1% in 2023 to 11.4% in 2034, accounting for 12% of all jobs. This growth is underpinned by the digitalisation process accelerated by the pandemic, which provided many businesses – especially small and medium-sized enterprises – low-cost avenues to market their product. Indeed, ICT readiness improved by 7.2% between 2019 and 2023 around the globe, with previous editions of the TTDI showing a positive correlation between ICT readiness and international arrivals figures.
Sustainability Imperatives
The global travel and tourism sector has been undergoing shifts in demand trends, largely influenced by the constraints imposed by the pandemic. According to UN Tourism, 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.
These trends have been reflected in data collected by the World Travel & Tourism Council (WTTC), which shows that the share of domestic spending in tourism expenditure within the 117 economies covered by the index increased from 50.8% in 2019 to 62.6% in 2020. This highlights the resilience of domestic demand in contrast to the dip in international spending during 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 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. Indeed, the WTTC reported that sector GHG emissions had fallen to 6.5% of the global total in 2023 – itself 12% below the 2019 peak – reflecting the growing sustainability of the sector.
Beyond GHG emissions, the sector’s water usage is another key aspect of its dependency on the natural environment. Although it accounted for only 0.6% of global water use in 2021, both direct and indirect 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. However, the sector’s water intensity per unit of GDP has fallen since 2010, reflecting further progress in sustainability measures.
Forward Steps
As global tourism activity continues to move towards full normalisation, key inbound markets are making strides in leveraging their advantages and addressing infrastructure gaps. Saudi Arabia witnessed a 5.7% upward trend in its TTDI score for 2024 compared to 2019, moving it nine places up the ranking – the most of any country in the region – to rank 41st globally. In its Vision 2030 strategic development plan the Kingdom identified tourism as a key engine of diversification, and it is already reaping the rewards. According to Ministry of Tourism figures, the sector grew to account for 4.4% of total GDP – up from 3.6% in 2019 – and 7.4% of non-oil GDP in 2023. Employment in the sector reached 959,200 individuals in the first quarter of 2024. The country welcomed more than 100m tourists in 2023, hitting its goal seven years early, and enabling it to raise its target to 150m by 2030.
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, In December 2023 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 Boabeng-Fiema monkey sanctuary, the Buoyem bat caves and the Menji crocodile pond. The development of roads and facilities will be critical not only to increase the value of these sights, but also to improve safety outcomes and elevate the overall tourist experience.
In the Americas, the region’s 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 investment in mobility services and infrastructure, especially to expand ground transport. Governments across the hemisphere are seeking to address these funding 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. In December 2023 the country launched the Interoceanic Train, a passenger and cargo rail line spanning the narrowest point of the isthmus to connect the Gulf of Mexico and the Pacific Ocean. The project aims to attract investment to Mexico’s south and draw shipping traffic from the Panama Canal. The country is incorporating climate risks into its tourism infrastructure expansion 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.
Sustainable Development
Tourism accounted for 9% of the GCC’s GDP in 2023, but the sector is set to grow 7.7% annually through to 2032 – nearly three times the growth rate of the overall economy. In order to actualise the region’s potential, the GCC is centring sustainability development. To achieve this, member countries are focusing on culture and heritage tourism – an underdeveloped segment with sizeable growth potential – while also working to protect natural areas and biodiversity.
In developing a number of tourism-focused giga-projects, Saudi Arabia is balancing economic objectives with sustainability initiatives and GHG emissions targets. The Red Sea Project, for example, involves the conservation of 4000 km of coral reef, with the country designating nine islands as special conservation areas in order to help preserve terrestrial and marine biodiversity. In addition to maintaining protected natural areas, the project aims to power its destinations with renewable energy, achieving net-zero emissions in operations by 2030.
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, 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. This shift could generate a net present value of around $14bn over the assets’ lifespan. Beyond the economic benefits, pairing culture and sustainability could serve to attract higher levels of foreign investment given the increased global adherence towards environmental, social and governance principles in investment activity.
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