How is the travel and tourism industry recovering?

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  • The World Economic Forum has published its inaugural report Travel and Tourism Development Index.
  • It focuses on the growing role of sustainability and resilience in the growth of travel and tourism.
  • The sector’s recovery is uneven and tourist arrivals in January 2022 were still 67% below 2019 levels, according to the World Tourism Organization.
  • Here are some key findings from the index on how the sector can build back better.

In 2018, international tourism increased for the ninth consecutive year. Tourist arrivals reached 1.4 billion and generated $1.7 trillion in export earnings, according to the World Tourism Organization (UNWTO).

Travel and tourism: post-pandemic

The picture was very different two years later, as COVID-19 lockdowns hit the travel and tourism (T&T) sector hard. In 2020 alone, it suffered losses of $4.5 trillion and 62 million jobs, impacting the standard of living and well-being of communities around the world.

While the rollout of COVID-19 vaccines and the easing of restrictions means that a recovery has now begun, it is proving gradual and uneven largely due to variations in vaccine distribution and because of Omicron and of its BA.2 sub-variant. And customers are not only more cautious about health, but also about the impact of travel on the environment and local communities.

International tourist arrivals increased by 18 million in January 2022 compared to the previous year. This equals the increase for the whole of 2021 compared to 2020, but January’s figures were still 67% lower than the same month in 2019, according to the UNWTO.

How international travel and tourism has declined due to COVID-19.

How international travel and tourism has declined due to COVID-19.

Image: World Tourism Organization

The war in Ukraine added to the instability and economic disruption of the sector. Against this backdrop, the World Economic Forum’s first Travel and Tourism Development Index reflects the growing role of sustainability and resilience in the growth of T&T, as well as the sector’s role in economic and social development more broadly.

The TTDI assesses and measures “the set of factors and policies that enable the sustainable and resilient development of the T&T sector, which in turn contributes to the development of a country”. The TTDI is a direct evolution of the long-term Travel & Tourism Competitiveness Index (TTCI), with the change reflecting the index’s increased coverage of T&T development concepts, including the impact of sustainability and of resilience on T&T’s growth and is designed to highlight the sector’s role in broader economic and social development as well as the need for collaboration among T&T stakeholders to mitigate the impact of the pandemic, support the recovery and face future challenges and risks. Some of the most notable differences in framework and methodology between the TTCI and the TTDI include the additions of new pillars, including non-leisure resources, resilience and socio-economic conditions, and pressure and impact of request from T&T. Please see technical notes and methodology. to learn more about the index and the differences between the TTCI and the TTDI.

The 2021 Travel and Tourism Development Index

The index covers 117 economies, which accounted for around 96% of direct global T&T GDP in 2020. It measures factors and policies that will enable sustainable and resilient development of the sector.

These include everything from business, safety and health conditions, to infrastructure and natural resources, to environmental, socio-economic and demand pressures.

“As the sector slowly recovers, it will be crucial that lessons are learned from recent and current crises and that steps are taken to embed long-term inclusivity, sustainability and resilience in the travel and tourism sector. as it faces ever-changing challenges and risks,” says the publication, a collaboration between many industry players.

The index consists of five sub-indices, 17 pillars and 112 individual indicators, distributed among the different pillars, as shown below.

The Travel and Tourism Development Index is based on 17 pillars.

Image: World Economic Forum

On average, the scores only increased by 0.1% between 2019 and 2021, reflecting the difficult situation facing the sector. Only 39 of the 117 economies covered by the index improved by more than 1.0%, while 27 fell by more than 1.0%.

Nine of the top 10 countries are high-income economies in Europe or Asia-Pacific. Japan tops the list, followed by the United States, followed by Spain, France, Germany, Switzerland, Australia, United Kingdom and Singapore. Italy completes the top 10, rising from 12th place in 2019.

Viet Nam saw the biggest improvement in score, rising 4.7% from 60th to 52nd on the overall index. Indonesia made the biggest ranking improvement, increasing its score by 3.4% from 44th to 32nd, while Saudi Arabia made the second biggest ranking improvement, rising from 33rd to the 43rd, its score having increased by 2.3%.

Rebuilding travel and tourism for a sustainable and resilient future

Here are some of the main conclusions of the publication:

1. The need for travel and tourism development has never been greater

The sector is a major driver of economic development, global connectivity and the livelihoods of some of the most vulnerable populations and businesses hard hit by the pandemic. In 2019, T&T’s direct, indirect and induced GDP accounted for approximately 10% of global GDP. For many emerging economies, T&T is a major source of export earnings, foreign exchange earnings and investment. Research has shown that growing T&Ts can support social progress and create opportunity and well-being for communities. It will therefore be essential to support the development and recovery of travel and tourism.

2. Changing demand dynamics have created opportunities and a need for adaptation

In the shorter term, challenges such as reduced capacity, geopolitical tensions and labor shortages are slowing the recovery. However, opportunities have been created in markets such as domestic and nature-based tourism, the rise of digital nomads and bleisure travel – the addition of leisure activities to business travel. Many countries have provided incentives to boost domestic tourism. For example, Singapore, South Korea, Japan, and Hong Kong SAR, China have programs in place that offer discounts, vouchers, and subsidies for domestic travel. Trends towards more rural and nature-based tourism provide opportunities for less developed economies to harness the benefits of travel and tourism as the distribution and quality of natural assets are less tied to economic development performance, natural resources being one of the few pillars where non-high-income economies typically outperform high-income countries. The adaptability of the players in the travel and tourism sector under these conditions highlights its capacity for adaptation and flexibility.

3. Development strategies can be used to help the sector build back better

Amid current challenges, changing demand dynamics and future opportunities and risks, a more inclusive, sustainable and resilient travel and tourism sector can be – and must be – built, the publication states. But this requires thoughtful and effective reflection. It also requires leveraging development drivers and strategies. This can be done by: restoring and accelerating international openness and consumer confidence through, for example, improved health and safety; create favorable and inclusive working, business and socio-economic conditions; focus more on environmental sustainability; strengthen management of tourism demand and impact; and investing in digital technology.

A Note on Methodology

Most of the Travel and Tourism Development Index (TTDI) data is statistical data from international organizations, the rest is based on survey data from the annual Economic Forum Leaders Opinion Survey which is used to measure concepts of a qualitative nature or for which internationally comparable statistics are not available for a sufficient number of countries. The index is an update of the Travel and Tourism Competitiveness Index (TTCI), but due to the change in methodology, framework and other differences, the TTDI 2021 should not be compared to the TTCI 2019. To help address this issue, the 2019 results have been recalculated using the new TTDI framework, methodology and indicators. Therefore, all score and ranking comparisons throughout this report are between the 2019 results and the 2021 TTDI results. TTDI 2021 data was collected before the war in Ukraine.


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