Tourism made up 10 percent of global GDP in 2019 and was worth almost $9 trillion, 1 making the sector nearly three times larger than agriculture. However, the tourism value chain of suppliers and intermediaries has always been fragmented, with limited coordination among the small and medium-size enterprises (SMEs) that make up a large portion of the sector. Governments have generally played a limited role in the industry, with partial oversight and light-touch management.
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COVID-19 has caused an unprecedented crisis for the tourism industry. International tourist arrivals are projected to plunge by 60 to 80 percent in 2020, and tourism spending is not likely to return to precrisis levels until 2024. This puts as many as 120 million jobs at risk. 2
Reopening tourism-related businesses and managing their recovery in a way that is safe, attractive for tourists, and economically viable will require coordination at a level not seen before. The public sector may be best placed to oversee this process in the context of the fragmented SME ecosystem, large state-owned enterprises controlling entry points, and the increasing impact of health-related agencies. As borders start reopening and interest in leisure rebounds in some regions, governments could take the opportunity to rethink their role within tourism, thereby potentially both assisting in the sector’s recovery and strengthening it in the long term.
In this article, we suggest four ways in which governments can reimagine their role in the tourism sector in the context of COVID-19.
1. Streamlining public–private interfaces through a tourism nerve center
Before COVID-19, most tourism ministries and authorities focused on destination marketing, industry promotions, and research. Many are now dealing with a raft of new regulations, stimulus programs, and protocols. They are also dealing with uncertainty around demand forecasting, and the decisions they make around which assets—such as airports—to reopen will have a major impact on the safety of tourists and sector employees.
Coordination between the public and private sectors in tourism was already complex prior to COVID-19. In the United Kingdom, for example, tourism falls within the remit of two departments—the Department for Business, Energy, and Industrial Strategy (BEIS) and the Department for Digital, Culture, Media & Sport (DCMS)—which interact with other government agencies and the private sector at several points. Complex coordination structures often make clarity and consistency difficult. These issues are exacerbated by the degree of coordination that will be required by the tourism sector in the aftermath of the crisis, both across government agencies (for example, between the ministries responsible for transport, tourism, and health), and between the government and private-sector players (such as for implementing protocols, syncing financial aid, and reopening assets).
Concentrating crucial leadership into a central nerve centeris a crisis management response many organizations have deployed in similar situations. Tourism nerve centers, which bring together public, private, and semi-private players into project teams to address five themes, could provide an active collaboration framework that is particularly suited to the diverse stakeholders within the tourism sector (Exhibit 1).
Exhibit 1
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We analyzed stimulus packages across 24 economies, 3 which totaled nearly $100 billion in funds dedicated directly to the tourism sector, and close to $300 billion including cross-sector packages with a heavy tourism footprint. This stimulus was generally provided by multiple entities and government departments, and few countries had a single integrated view on beneficiaries and losers. We conducted surveys on how effective the public-sector response has been and found that two-thirds of tourism players were either unaware of the measures taken by government or felt they did not have sufficient impact. Given uncertainty about the timing and speed of the tourism recovery, obtaining quick feedback and redeploying funds will be critical to ensuring that stimulus packages have maximum impact.
2. Experimenting with new financing mechanisms
Most of the $100 billion stimulus that we analyzed was structured as grants, debt relief, and aid to SMEs and airlines. New Zealand has offered an NZ $15,000 (US $10,000) grant per SME to cover wages, for example, while Singapore has instituted an 8 percent cash grant on the gross monthly wages of local employees. Japan has waived the debtof small companies where income dropped more than 20 percent. In Germany, companies can use state-sponsored work-sharing schemes for up to six months, and the government provides an income replacement rate of 60 percent.
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Our forecasts indicate that it will take four to seven years for tourism demand to return to 2019 levels, which means that overcapacity will be the new normal in the medium term. This prolonged period of low demand means that the way tourism is financed needs to change. The aforementioned types of policies are expensive and will be difficult for governments to sustain over multiple years. They also might not go far enough. A recent Organisation for Economic Co-operation and Development (OECD) survey of SMEs in the tourism sector suggested more than half would not survive the next few months, and the failure of businesses on anything like this scale would put the recovery far behind even the most conservative forecasts. 4 Governments and the private sector should be investigating new, innovative financing measures.
Revenue-pooling structures for hotels
One option would be the creation of revenue-pooling structures, which could help asset owners and operators, especially SMEs, to manage variable costs and losses moving forward. Hotels competing for the same segment in the same district, such as a beach strip, could have an incentive to pool revenues and losses while operating at reduced capacity. Instead of having all hotels operating at 20 to 40 percent occupancy, a subset of hotels could operate at a higher occupancy rate and share the revenue with the remainder. Thiswould allow hotels to optimize variable costs and reduce the need for government stimulus. Non-operating hotels could channel stimulus funds into refurbishments or other investment, which would boost the destination’s attractiveness. Governments will need to be the intermediary between businesses through auditing or escrow accounts in this model.
Joint equity funds for small and medium-size enterprises
Government-backed equity funds could also be used to deploy private capital to help ensure that tourism-related SMEs survive the crisis (Exhibit 2). This principle underpins the European Commission’s temporary framework for recapitalization of state-aided enterprises, which provided an estimated €1.9 trillion in aid to the EU economy between March and May 2020. 5 Applying such a mechanism to SMEs would require creating an appropriate equity-holding structure, or securitizing equity stakes in multiple SMEs at once, reducing the overall risk profile for the investor. In addition, developing a standardized valuation methodology would avoid lengthy due diligence processes on each asset. Governments that do not have the resources to co-invest could limit their role to setting up those structures and opening them to potential private investors.
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3. Ensuring transparent, consistent communication on protocols
The return of tourism demand requires that travelers and tourism-sector employees feel—and are—safe. Although international organizations such as the International Air Transport Association (IATA), and the World Travel & Tourism Council (WTTC) have developed a set of guidelines to serve as a baseline, local regulators are layering additional measures on top. This leads to low levels of harmonization regarding regulations imposed by local governments.
Our surveys of traveler confidence in the United Statessuggests anxiety remains high, and authorities and destination managers must work to ensure travelers know about, and feel reassured by, protocols put in place for their protection. Our latest survey of traveler sentiment in Chinasuggests a significant gap between how confident travelers would like to feel and how confident they actually feel; actual confidence in safety is much lower than the expected level asked a month before.
One reason for this low level of confidence is confusion over the safety measures that are currently in place. Communication is therefore key to bolstering demand. Experience in Europe indicates that prompt, transparent, consistent communications from public agencies have had a similar impact on traveler demand as CEO announcements have on stock prices. Clear, credible announcements regarding the removal of travel restrictions have already led to increased air-travel searches and bookings. In the week that governments announced the removal of travel bans to a number of European summer destinations, for example, outbound air travel web search volumes recently exceeded precrisis levels by more than 20 percent in some countries.
The case of Greece helps illustrate the importance of clear and consistent communication. Greece was one of the first EU countries to announce the date of, and conditions and protocols for, border reopening. Since that announcement, Greece’s disease incidence has remained steady and there have been no changes to the announced protocols. The result: our joint research with trivago shows that Greece is now among the top five summer destinations for German travelers for the first time. In July and August, Greece will reach inbound airline ticketing levels that are approximately 50 percent of that achieved in the same period last year. This exceeds the rate in most other European summer destinations, including Croatia (35 percent), Portugal (around 30 percent), and Spain (around 40 percent). 6 In contrast, some destinations that have had inconsistent communications around the time frame of reopening have shown net cancellations of flights for June and July. Even for the high seasons toward the end of the year, inbound air travel ticketing barely reaches 30 percent of 2019 volumes.
Digital solutions can be an effective tool to bridge communication and to create consistency on protocols between governments and the private sector. In China, the health QR code system, which reflects past travel history and contact with infected people, is being widely used during the reopening stage. Travelers have to show their green, government-issued QR code before entering airports, hotels, and attractions. The code is also required for preflight check-in and, at certain destination airports, after landing.
4. Enabling a digital and analytics transformation within the tourism sector
Data sources and forecasts have shifted, and proliferated, in the crisis. Last year’s demand prediction models are no longer relevant, leaving many destinations struggling to understand how demand will evolve, and therefore how to manage supply. Uncertainty over the speed and shape of the recovery means that segmentation and marketing budgets, historically reassessed every few years, now need to be updated every few months. The tourism sector needs to undergo an analytics transformation to enable the coordination of marketing budgets, sector promotions, and calendars of events, and to ensure that products are marketed to the right population segment at the right time.
Governments have an opportunity to reimagine their roles in providing data infrastructure and capabilities to the tourism sector, and to investigate new and innovative operating models. This was already underway in some destinations before COVID-19. Singapore, for example, made heavy investments in its data and analytics stack over the past decade through the Singapore Tourism Analytics Network (STAN), which provided tourism players with visitor arrival statistics, passenger profiling, spending data, revenue data, and extensive customer-experience surveys. During the COVID-19 pandemic, real-time data on leading travel indicators and “nowcasts” (forecasts for the coming weeks and months) could be invaluable to inform the decisions of both public-sector and private-sector entities.
This analytics transformation will also help to address the digital gap that was evident in tourism even before the crisis. Digital services are vital for travelers: in 2019, more than 40 percent of US travelers used mobile devices to book their trips. 7 In Europe and the United States, as many as 60 percent of travel bookings are digital, and online travel agents can have a market share as high as 50 percent, particularly for smaller independent hotels. 8 COVID-19 is likely to accelerate the shift to digital as travelers look for flexibility and booking lead times shorten: more than 90 percent of recent trips in Chinawere booked within seven days of the trip itself. Many tourism businesses have struggled to keep pace with changing consumer preferences around digital. In particular, many tourism SMEs have not been fully able to integrate new digital capabilities in the way that larger businesses have, with barriers including language issues, and low levels of digital fluency. The commission rates on existing platforms, which range from 10 percent for larger hotel brands to 25 percent for independent hotels, also make it difficult for SMEs to compete in the digital space.
Governments are well-positioned to overcome the digital gap within the sector and to level the playing field for SMEs. The Tourism Exchange Australia (TXA) platform, which was created by the Australian government, is an example of enabling at scale. It acts as a matchmaker, connecting suppliers with distributors and intermediaries to create packages attractive to a specific segment of tourists, then uses tourist engagement to provide further analytical insights to travel intermediaries (Exhibit 3). This mechanism allows online travel agents to diversify their offerings by providing more experiences away from the beaten track, which both adds to Australia’s destination attractiveness, and gives small suppliers better access to customers.
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Governments that seize the opportunity to reimagine tourism operations and oversight will be well positioned to steer their national tourism industries safely into—and set them up to thrive within—the next normal.
Some 30% say economic concerns will “greatly” impact their travels in 2023, up seven points since late August 2022. Global tourism in 2023 is predicted to reach approximately 80% to 95% of 2019 levels. International tourist arrivals are recovering fastest in the Middle East and Europe.
The tourist of tomorrow will be better informed, have wider choice and be able to purchase holidays on demand, helped by technology such as the Internet, video on demand and online booking. Tourists' growing awareness of social and environmental issues leads to a conflict between conscience and the desire to travel.
The global travel and tourism sector's post-pandemic recovery is gaining pace as the world's pent-up desire for travel rekindles. The difference in international tourist arrivals in January 2021 and a similar period in January 2022 was as much as the growth in all of 2021.
Tourism Impacts. Tourism can generate positive or negative impacts under three main categories: economic, social, and environmental. These impacts are analyzed using data gathered by businesses, governments, and industry organizations.
Travel and tourism industry is becoming futuristic by inculcating new travel trends in its ecosystem making it more feasible for the public. Every other thing is done through online mediums, people prefer using contactless methods.
It shows that: Overall, international arrivals reached 80% of pre-pandemic levels in the first quarter of 2023. An estimated 235 million tourists travelled internationally in the first three months, more than double the same period of 2022. Tourism has continued to show its resilience.
A hundred years from now, airlines will very likely be operating a fleet of not just passenger aircraft, aerial taxis, and space planes – but also of airships. We think of the future through the lens of Moore's Law – that things will only go faster or higher.
By the year 2040, international travel will be a faster, easier and more ecologically sustainable activity than ever before, according to a report commissioned by Allianz Partners to help prepare for the travel-related needs of their customers in the future.
New travel formats like eco-tourism, solo travel, e-tourism, micro-adventures, and life-long travel are emerging to meet increasingly fragmented and personalised needs. Players in the industry continue to push the boundaries by exploring new relationships with time, space, and purpose.
Opportunities to look towards the future will abound, and convergence of sustainability and hygiene will be a potential area of innovation and change. Sustainability was also a pressing topic in the hospitality industry before the pandemic, and it will likely come back following the reopening of borders and travel.
The report estimates the average annual growth rate of the global economy will be 2.7% from 2022 to 2032. Yet, during the same period, tourism's contribution to the global economy is expected to grow at an average annual rate of 5.8%, according to the report.
Tourism puts enormous stress on local land use, and can lead to soil erosion, increased pollution, natural habitat loss, and more pressure on endangered species. These effects can gradually destroy the environmental resources on which tourism itself depends.
There are number of benefits for the host community as a result of tourism. This includes economic benefits such as opportunities for local businesses which allows for increased trade among the increased number of visitors and then develops a variety of local businesses.
Negative social impacts also include increased crime in the area, such as prostitution, illegal gambling and drug dealing and robbery. Very often, this is not related to local people, but occurs as a result of criminal gangs moving into the area to exploit tourists and sometimes local people as well.
There will be more guest-oriented designs, a lobby that is ever changing, creative, innovative. Hotels will think differently, be healthier and offer immediate satisfaction. Hotels will be a guest experience that touches all of the senses.”
International tourist arrivals worldwide are expected to increase by 3.3% a year from 2010 to 2030 to reach 1.4 billion by 2020 and 1.8 billion by 2030. A dynamic world economy creates the economic basis for continued growth in domestic and international tourism worldwide.
Description: The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023.
Maximising the Benefits of Sustainable Tourism in 2023
To achieve this, businesses should focus on minimising their environmental impact, promoting responsible tourism practices, and supporting local communities by providing training, education, and job opportunities.
Tourism 2025 is a framework to unite New Zealand's large and diverse tourism industry and ignite strong, aspirational economic growth. The objective is to create $41 Billion of Total Tourism Revenue in 2025 by improving the competitiveness of New Zealand Tourism.
You are NEVER too old to travel. Because getting old IS just a number. There are, however, plenty of other things that enter the equation that come hand in hand with age. It is THESE things that you should take into account before you buy that plane ticket.
Except under the most aggressive mitigation scenario studied, global average temperature is expected to warm at least twice as much in the next 100 years as it has during the last 100 years. Ground-level air temperatures are expected to continue to warm more rapidly over land than oceans.
The report warns that, by 2040, global temperatures are expected to rise 1.5 degrees Celsius above pre-industrial levels, meaning that most people alive today will see the dramatic effects of climate change within their lifetime.
According to a US report, the sea level will increase by 2050. Due to which many cities and islands situated on the shores of the sea will get absorbed in the water. By 2050, 50% of jobs will also be lost because robots will be doing most of the work at that time. Let us tell you that 2050 will be a challenge to death.
Without tourism, not only do the hotel, restaurant and, in general, all industries related to hotel activities stop, but also the aviation industry disappears completely, the automobile industry is reduced by half, the shipyards specialized in cruise ships are ruined, the building is severely affected.
Airfare. In May 2022, airfares hit a record high. But airfares are dropping, with April 2023 prices down 14.6% from those May highs. While April 2023 airfares are 2.7% higher than what they were last month in March, they're actually slightly lower (down 0.9%) from what they were in April 2022.
There may be hope on the horizon, though. “In 2023, we expect that [trend] to reverse and year-over-year fares to fall,” Keyes said, pointing to Federal Reserve data indicating recent, modest drops in airfare—a shift that comes as airlines have begun to add more flights, fueling competition.
The U.S. Travel Foundation predicts that travel spending will increase in 2023 compared to 2022 — in fact, they anticipate that spending will exceed pre-pandemic levels. These motivated travelers are ready to get to a new destination, and they aren't going to be afraid to spend money once they arrive.
The biggest trends coming for the hospitality industry are sustainability, global perspective, finding balance with new lodging options, and growing demand.
The increasing number of people who retire early is beneficial for the tourism and hospitality industry because these people use their time to travel and see the world; Longer life span. The average individual can now expect to live beyond the age of 70 and many will live longer.
It's the global luxury travel market. As shown by a thorough study from ADROIT market research, the luxury travel market is projected to become the world's fastest growing travel sector. It is expected to grow by 7.4% between 2019 and 2025, reaching 354.7 USD billion in value by the first months of 2026.
The U.S. travel and tourism industry generated $1.9 trillion in economic output; supporting 9.5 million American jobs and accounted for 2.9% of U.S. GDP. At 14.5% of international travel spending globally, international travelers spend more in the United States than any other country.
The conflicts that affect tourism development may be various. These are primarily: natural disasters and catastrophes, terrorism, wars, economic crises, epidemics. These events can have a different impact on tourism, different duration, different effects and uneven spatial influence.
However, the sensitivity of the tourism industry and the uncertainty of tourism risks have made the tourism industry extremely vulnerable to various risks. Risks such as terrorist attacks, political unrest, economic downturns, biosecurity threats and natural disasters can all hit tourism hard.
Worldwide, 44 countries rely on the travel and tourism industry for more than 15% of their total share of employment. Unsurprisingly, many of the countries suffering the most economic damage are island nations.
It creates jobs, strengthens the local economy, contributes to local infrastructure development and can help to conserve the natural environment and cultural assets and traditions, and to reduce poverty and inequality.
There are many social benefits of tourism, demonstrating positive social impacts. These might include; preserving the local culture and heritage; strengthening communities; provision of social services; commercialisation of culture and art; revitalisation of customs and art forms and the preservation of heritage.
Most of the common positive impacts of tourism on culture include increasing cross cultural interaction; understanding, maintaining and keeping local culture, arts, crafts and traditions; empowering host communities; and strengthening cultural values.
OECD Tourism Trends and Policies 2022 says many countries saw a strong rebound in tourism in 2022 on the back of pent-up demand, household savings and travel vouchers. However, international tourism is now not expected to recover until 2024 or 2025, or even later.
By 2030, there could be 1.8 billion tourists – just over one in five persons in the world – travelling around the globe, the United Nations World Tourism Organization (UNWTO) has said.
Despite the challenges that came with traveling last year, Americans still intend to travel in 2023. A resounding 87% of survey respondents expect to travel at least as much as they did in the prior year, with 49% selecting that they expect to travel more.
When narrow roads become jammed with tourist vehicles, that is overtourism. When wildlife is scared away, when tourists cannot view landmarks because of the crowds, when fragile environments become degraded – these are all signs of overtourism.
Also, in 2019, nearly 80 million international travelers visited the United States and contributed nearly $240 billion to the U.S. economy, making the United States the global leader in revenue from international travel and tourism.
According to the World Tourism Organization, there are four main sources of risks in tourism (UNWTO, 2015) [17]: (1)Tourism sector and the related commercial sources (disrespect of contracts, frauds, insufficient level of hygiene and sanitary protection, fire, earthquake); (2)Human and institutional environment outside ...
While countries are advocating for less air travel, this trend will allow people to travel less but better. According to Evolve's 2022 travel forecasts, the average trip will likely be longer in length (5-7 nights in 2022, compared to an average of 3.8 nights in both 2020 and 2021).
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