Travel and tourism are expected to grow at a rate of about $1 trillion due to capital investment

The latest report from the World Travel & Tourism Council (WTTC), titled "Travel & Tourism Economic Impact 2023 Global Trends," paints a positive picture of the industry's recovery from pandemic setbacks, showcasing a robust return to growth in investment. Between 2010 and 2019, the Travel & Tourism sector experienced steady investment growth, with a compound annual growth rate (CAGR) of 4.3%. The investment rose from $754.6 billion in 2010 to $1.1 trillion in 2019, constituting 4.5% of all economy-wide investment. However, the COVID-19 pandemic led to a significant setback, resulting in a 24% decline in 2020 and an additional 8% in 2021.

Fortunately, 2022 marked a turning point in the industry's fortunes. Fuelled by pent-up demand on a global scale, Travel & Tourism investment surged to $856 billion, marking an 11.1% increase from the previous year. While still 22.5% below 2019 levels, this figure represented a substantial 53% growth compared to the year 2000. Notably, certain regions experienced remarkable growth, with Asia-Pacific and Africa seeing a 161% increase in investment compared to 2000. In contrast, Europe and the Middle East displayed more modest growth, struggling to regain the momentum achieved over the past two decades due to the pandemic. Despite challenges, Travel & Tourism investment in these regions in 2022 remained above 2000 levels.

In terms of absolute investment in 2022, the United States led the top ten markets with $213 billion, indicating a sector poised for a thriving comeback. China followed closely with a $146 billion investment, while Saudi Arabia secured the third spot with a total investment of $42 billion in the same year. Island destinations emerged as leaders in Travel & Tourism investment as a percentage share of their economies in 2022. The US Virgin Islands took the lead, channelling 35% of total economic investment into the sector, followed closely by Antigua & Barbuda at 34%, and Aruba at almost 32%.

Recognizing the importance of private investment in areas such as new aircraft, hotels, and car fleets, the report emphasizes the complementary role of public investment. Together, these combined investments generate a powerful synergy, leading to job creation, economic growth, and resilient communities. Looking ahead, WTTC forecasts a robust 11.5% growth in investment for 2023, amounting to $955 billion, with a return to pre-pandemic levels expected by 2025. The long-term outlook predicts a promising 6.1% average annual growth globally by 2033, with Asia-Pacific and the Caribbean projected to experience the strongest annualized growth rates. However, challenges loom on the horizon, particularly with the global increase in interest rates. As central banks raise interest rates to counter rising inflation, the cost of borrowing and products is set to rise. This poses a potential risk to future investment in the sector, underscoring the importance of collaboration between the public and private sectors to innovate and ensure the continual strengthening of this vital industry.