Investment in the travel and tourism sector hit $856 billion last year but still remained 22.5% short of pre-Covid 2019 levels, new research reveals.
The total for 2022 was up 11.1% from the previous year and 53% higher than it was in pandemic-hit 2020, according to a new global trends report from the World Travel & Tourism Council.
The economic impact study signalled a “strong return to growth” spurred by the global phenomenon of pent-up demand following global lockdowns.
WTTC forecasts 11.5% growth in investment this year to reach $955 billion, with a return to pre-pandemic levels not anticipated until 2025.
By 2033, WTTC forecasts a “promising” 6.1% average annual growth globally, with the strongest growth rates projected to be in Asia-Pacific and the Caribbean.
The global hike in interest rates creates challenges for future investment. With central banks increasing interest rates to combat rising inflation, the cost of borrowing and products increases.
Higher interest rates could present a risk to future investment in the sector so the WTTC pointed out that it is “crucial” that the public and private sectors work together to innovate to ensure the continual strengthening of the sector.
Investment grew steadily at a compound annual growth rate of 4.3%, from $754.6 billion in 2010 to $1.1 trillion in 2019, or 4.5% of all economy-wide investment, the study conducted with Oxford Economics found.
But Covid-19 hit hard, leading to a 24% decline in 2020 and a further 8% in 2021. However, 2022 marked a turning point.
Investment last year 161% higher than in 2000 in regions like Asia-Pacific and Africa, while Europe and the Middle East saw more “restrained” growth.
In these regions, the pandemic has undone much of the significant growth achieved in the last two decades, although investment in 2022 stayed above the levels seen in 2000.
The US led the top 10 markets in terms of absolute investment in the sector in 2022 with $213 billion, showing a sector ready to thrive once again.
China came second with a $146 billion investment, with Saudi Arabia rounding out the top three with total investment of $42 billion in the same year.
Island destinations lead the top spots for travel and tourism investment as a total percentage share of their economies in 2022. The US Virgin Islands lead the way, channelling 35% of total economic investment into the sector, followed closely by Antigua & Barbuda at 34% and Aruba at almost 32%.
Private investment in new aircraft, hotels, and car fleets is essential for boosting the sector’s capacity. Public investment complements this growth, and together the combined investments create a powerful synergy.
The ripple effect is more jobs, bigger economies, and stronger communities.
WTTC president and chief executive Julia Simpson said: “Investment in travel and tourism is not just a numbers game; it is the heartbeat of global connectivity and economic revival. Despite the setbacks from the pandemic, 2022’s growth is a promising sign of what’s to come.
“Investment in travel and tourism is integral to the world’s recovery and growth. The sector’s resilience and potential for innovation continues to drive us forward. We remain confident, yet vigilant, in our pursuit of a brighter, more connected global future.”