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Tourism is Back to Pre-Pandemic Levels, but Challenges Remain

World Economic Forum, [email protected]

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• High-income economies in Europe and Asia-Pacific continue to lead the World Economic Forum Travel and Tourism Index, with the United States, Spain and Japan topping the rankings again.
• Despite post-pandemic growth, the global tourism sector still faces complex challenges, with recovery varied by region; only marginal overall score improvements since the 2021 edition.
• Developing economies are making strides – who account for 52 out of 71 economies improving since 2019 – but significant investment is needed to bridge gaps and increase market share.
• Read the report here .

New York, USA, 21 May 2024 – International tourist arrivals and the travel and tourism sector’s contribution to global GDP are expected to return to pre-pandemic levels this year, driven by the lifting of COVID-19-related travel restrictions and strong pent-up demand, as per the new World Economic Forum travel and tourism study, released today.

Topping the 2024 list of economies are the United States, Spain, Japan, France and Australia. The Middle East had the highest recovery rates in international tourist arrivals (20% above the 2019 level), while Europe, Africa and the Americas all showed a strong recovery of around 90% in 2023.

These are some of the top findings of the Travel & Tourism Development Index 2024 (TTDI) , a biennial report published in collaboration with the University of Surrey, which analyses the travel and tourism sectors of 119 countries around a range of factors and policies.

“This year marks a turning point for the travel and tourism sector, which we know has the capacity to unlock growth and serve communities through economic and social transformation,” said Francisco Betti, Head of the Global Industries team at the World Economic Forum. “The TTDI offers a forward-looking window into the current and future state of travel and tourism for leaders to navigate the latest trends in this complex sector and sustainably unlock its potential for communities and countries across the world.”

Post-pandemic recovery

The global tourism industry is expected to recover from the lows of the COVID-19 pandemic and surpass the levels seen before the crisis. This is largely being driven by a significant increase in demand worldwide, which has coincided with more available flights, better international openness, and increased interest and investment in natural and cultural attractions.

However, the global recovery has been mixed. While 71 of the 119 ranked economies increased their scores since 2019, the average index score is just 0.7% above pre-pandemic levels.

Although the sector has moved past the shock of the global health crisis, it continues to deal with other external challenges, from growing macroeconomic, geopolitical and environmental risks, to increased scrutiny of its sustainability practices and the impact of new digital technologies, such as big data and artificial intelligence. In addition, labour shortages are ongoing, and air route capacity, capital investment, productivity and other sector supply factors have not kept up with the increase in demand. This imbalance, worsened by global inflation, has increased prices and service issues.

TTDI 2024 highlights Out of the top 30 index scorers in 2024, 26 are high-income economies, 19 are based in Europe, seven are in Asia-Pacific, three are in the Americas and one (the United Arab Emirates) is in the Middle East and North Africa region (MENA). The top 10 countries in the 2024 edition are the United States, Spain, Japan, France, Australia, Germany, the United Kingdom, China, Italy and Switzerland.

The results highlight that high-income economies generally continue to have more favourable conditions for travel and tourism development. This is helped by conducive business environments, dynamic labour markets, open travel policies, strong transport and tourism infrastructure, and well-developed natural, cultural and non-leisure attractions.

Nevertheless, developing countries have seen some of the greatest improvements in recent years. Among the upper-middle-income economies, China has cemented its ranking in the top 10; major emerging travel and tourism destinations of Indonesia, Brazil and Türkiye have joined China in the top quartile of the rankings. More broadly, low- to upper-middle-income economies account for over 70% of countries that have improved their scores since 2019, while MENA and sub-Saharan Africa are among the most improved regions. Saudi Arabia and the UAE are the only high-income economies to rank among the top 10 most improved economies between 2019 and 2024.

Despite these strides, the TTDI warns that significant investment is needed to close gaps in enabling conditions and market share between developing and high-income countries. One possible pathway to help achieve this would be sustainably leveraging natural and cultural assets – which are less correlated with country income level than other factors – and can offer developing economies an opportunity for tourism-led economic development.

“It’s essential to bridge the divide between differing economies’ ability to build a strong environment for their travel and tourism sector to thrive,” said Iis Tussyadiah, Professor and Head of the School of Hospitality and Tourism Management at the University of Surrey. “The sector has big potential to foster prosperity and mitigate global risks, but that potential can only be fully realized through a strategic and inclusive approach.”

Mitigating future global challenges

According to the World Economic Forum’s 2024 Global Risks Report, the travel and tourism sector faces various complex risks , including geopolitical uncertainties, economic fluctuations, inflation and extreme weather. Balancing growth with sustainability also remains a major problem, due to high seasonality, overcrowding, and a likely return of pre-pandemic emissions levels. The report also analyses persistent concerns about equity and inclusion. While the tourism sector offers a major source of relatively high-wage jobs, particularly in developing countries, gender parity remains a major issue for regions such as MENA and South Asia.

Despite these challenges, the sector can play a significant role in addressing them. To achieve this, decision-makers should prioritize actions such as leveraging tourism for nature conservation efforts; investing in skilled, inclusive and resilient workforces; strategically managing visitor behaviour and infrastructure development; encouraging cultural exchange between visitors and local communities; and using the sector to bridge the digital divide, among other policies.

If managed strategically, the travel and tourism sector – which has historically represented 10% of global GDP and employment – has the potential to emerge as a key contributor to the well-being and prosperity of communities worldwide.

About the Travel and Tourism Development Index 2024

The 2024 edition of the TTDI includes several improvements based on newly available data and recently developed indicators on the environmental and social impact of travel and tourism. The changes made to the 2024 Index limit its comparability to the previously published TTDI 2021. This year's report includes recalculated 2019 and 2021 results, using new adjustments. TTDI 2024 reflects the latest available data at the time of collection – end of 2023. The TTDI is part of the Forum’s broader work with industry communities actively working to build a better future enabled by sustainable, inclusive, and resilient industry ecosystems.

Notes to editors

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A Year Without Travel

How Bad Was 2020 for Tourism? Look at the Numbers.

The dramatic effects of the coronavirus pandemic on the travel industry and beyond are made clear in six charts.

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By Stephen Hiltner and Lalena Fisher

Numbers alone cannot capture the scope of the losses that have mounted in the wake of the coronavirus pandemic. Data sets are crude tools for plumbing the depth of human suffering , or the immensity of our collective grief .

But numbers can help us comprehend the scale of certain losses — particularly in the travel industry , which in 2020 experienced a staggering collapse.

Around the world, international arrivals are estimated to have dropped to 381 million in 2020, down from 1.461 billion in 2019 — a 74 percent decline . In countries whose economies are heavily reliant on tourism , the precipitous drop in visitors was, and remains, devastating.

According to recent figures from the United Nations World Tourism Organization, the decline in international travel in 2020 resulted in an estimated loss of $1.3 trillion in global export revenues. As the agency notes, this figure is more than 11 times the loss that occurred in 2009 as a result of the global economic crisis.

The following charts — which address changes in international arrivals, emissions, air travel, the cruise industry and car travel — offer a broad overview of the effects of the coronavirus pandemic within the travel industry and beyond.

International arrivals in tourism-dependent economies

Macau, a top gambling destination, is highly dependent on travelers, as measured by the share

of its G.D.P. that is generated by tourism. Its international visitor numbers plummeted in 2020:

ARRIVALS IN 2020

The following countries are also among the world’s most dependent on travel, in terms of both their

G.D.P. and their international tourism receipts as a percent of total exports:

U.S. Virgin Islands

The Bahamas

Antigua and Barbuda

Saint Lucia

Cook Islands

0.5 million

Macau, a gambling destination, is dependent on travelers,

as measured by the share of its G.D.P. that is generated by

tourism. Its international visitor numbers plummeted in 2020:

The following countries are also among the world’s most

dependent on travel, in terms of both their G.D.P. and their

international tourism receipts as a percent of total exports:

Before the pandemic, tourism accounted for one out of every 10 jobs around the world. In many places, though, travel plays an even greater role in the local economy.

Consider the Maldives, where in recent years international tourism has accounted for around two-thirds of the country’s G.D.P. , when considering direct and indirect contributions.

As lockdowns fell into place worldwide, international arrivals in the Maldives plunged; from April through September of 2020, they were down 97 percent compared to the same period in 2019. Throughout all of 2020, arrivals were down by more than 67 percent compared with 2019. (Arrival numbers slowly improved after the country reopened in July; the government, eager to promote tourism and mitigate losses, lured travelers with marketing campaigns and even courted influencers with paid junkets .)

Similar developments played out in places such as Macau, Aruba and the Bahamas: shutdowns in February and March, followed by incremental increases later in the year.

The economic effect of travel-related declines has been stunning. In Macau, for example, the G.D.P. contracted by more than 50 percent in 2020.

And the effects could be long-lasting; in some areas, travel is not expected to return to pre-pandemic levels until 2024.

Travelers passing through T.S.A. airport security checkpoints

The pandemic upended commercial aviation. One way to visualize the effect of lockdowns on air travel is to consider the number of passengers screened on a daily basis at Transportation Security Administration checkpoints.

Traveler screenings plunged in March before hitting a low point on April 14, when 87,534 passengers were screened — a 96 percent decline as compared with the same date in 2019.

Numbers have risen relatively steadily since then, though today the screening figures still sit at less than half of what they were a year earlier.

According to the International Air Transport Association, an airline trade group, global passenger traffic in 2020 fell by 65.9 percent as compared to 2019, the largest year-on-year decline in aviation history.

Daily carbon dioxide emissions from aviation

3.0 million metric tons

Another way to visualize the drop-off in air travel last year is to consider the amount of carbon dioxide (CO2) emitted by aircraft around the world.

According to figures from Carbon Monitor , an international initiative that provides estimates of daily CO2 emissions, worldwide emissions from aviation fell by nearly 50 percent last year — to around 500 million metric tons of CO2, down from around 1 billion metric tons in 2019. (Those numbers are expected to rebound, though the timing will depend largely on how long corporate and international travel remain sidelined .)

All told, CO2 emissions from fossil fuels dropped by 2.6 billion metric tons in 2020, a 7 percent reduction from 2019, driven in large part by transportation declines.

Yearly revenues of three of the biggest cruise lines

$20 billion

ROYAL CARIBBEAN

Few industries played as central and public a role in the early months of the coronavirus pandemic as did the major cruise lines — beginning with the outbreak aboard the Diamond Princess .

In a scathing rebuke of the industry issued in July, the Centers for Disease Control and Prevention blamed cruise companies for widespread transmission of the virus, pointing to 99 outbreaks aboard 123 cruise ships in U.S. waters alone.

While precise passenger data for 2020 is not yet available, the publicly disclosed revenues — which include ticket sales and onboard purchases — from three of the largest cruise lines offer a dramatic narrative: strong revenues in the early months of 2020, followed by a steep decline.

Third-quarter revenues for Carnival Corporation, the industry’s biggest player, showed a year-to-year decline of 99.5 percent — to $31 million in 2020, down from $6.5 billion in 2019.

The outlook remains bleak for the early months of 2021: For now, most cruise lines have canceled all sailings into May or June.

Long-distance car travel, before and during the pandemic

Driving trips at least 50 miles from home, with stays of two hours or more, based on a daily index from

mobile location data.

Trips at least 50 miles from home, with stays of two hours

or more, based on a daily index from mobile location data.

Air travel, both international and domestic, was markedly curtailed by the pandemic. But how was car travel affected?

One way to measure the change is to look at the Daily Travel Index compiled by Arrivalist , a company that uses mobile location data to measure consumer road trips of 50 miles or more in all 50 U.S. states.

The figures tell the story of a rebound that’s slightly stronger than that of air travel: a sharp drop in March and April, as state and local restrictions fell into place , followed by a gradual rise to around 80 percent of 2019 levels.

Difference in visits to four popular national parks, 2019 to 2020

1.0 MILLION

GREAT SMOKY

GRAND CANYON

CUYAHOGA VALLEY

YELLOWSTONE

1.0 million

Another way to consider car travel in 2020 — and domestic travel in the U.S. more broadly — is to look at the visitation numbers for America’s national parks.

Over all, national park visitation decreased by 28 percent in 2020 — to 237 million visitors, down from 327.5 million in 2019, largely because of temporary park closures and pandemic-related capacity restrictions.

The caveat, though, is that several parks saw record numbers of visitors in the second half of the year, as a wave of travel-starved tourists began looking for safe and responsible forms of recreation.

Consider the figures for recreational visits at Yellowstone National Park. After a shutdown in April, monthly visitation at the park quickly rose above 2019 levels. The months of September and October of 2020 were both the busiest on record, with numbers in October surpassing the previous monthly record by 43 percent .

Some national parks located near cities served as convenient recreational escapes throughout the pandemic. At Cuyahoga Valley National Park, 2020 numbers exceeded 2019 numbers from March through December. At Great Smoky Mountains National Park, numbers surged after a 46-day closure in the spring and partial closures through August; between June and December, the park saw one million additional visits compared to the same time period in 2019.

Stephen Hiltner is an editor on the Travel desk. You can follow his work on Instagram and Twitter . More about Stephen Hiltner

UN Tourism | Bringing the world closer

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Tourism’s Importance for Growth Highlighted in World Economic Outlook Report

• All Regions
• 10 Nov 2023

Tourism has again been identified as a key driver of economic recovery and growth in a new report by the International Monetary Fund (IMF). With UNWTO data pointing to a return to 95% of pre-pandemic tourist numbers by the end of the year in the best case scenario, the IMF report outlines the positive impact the sector’s rapid recovery will have on certain economies worldwide.

According to the World Economic Outlook (WEO) Report , the global economy will grow an estimated 3.0% in 2023 and 2.9% in 2024. While this is higher than previous forecasts, it is nevertheless below the 3.5% rate of growth recorded in 2022, pointing to the continued impacts of the pandemic and Russia's invasion of Ukraine, and from the cost-of-living crisis.

Tourism key sector for growth

The WEO report analyses economic growth in every global region, connecting performance with key sectors, including tourism. Notably, those economies with "large travel and tourism sectors" show strong economic resilience and robust levels of economic activity. More specifically, countries where tourism represents a high percentage of GDP   have recorded faster recovery from the impacts of the pandemic in comparison to economies where tourism is not a significant sector.

As the report Foreword notes: "Strong demand for services has supported service-oriented economies—including important tourism destinations such as France and Spain".

Looking Ahead

The latest outlook from the IMF comes on the back of UNWTO's most recent analysis of the prospects for tourism, at the global and regional levels. Pending the release of the November 2023 World Tourism Barometer , international tourism is on track to reach 80% to 95% of pre-pandemic levels in 2023. Prospects for September-December 2023 point to continued recovery, driven by the still pent-up demand and increased air connectivity particularly in Asia and the Pacific where recovery is still subdued.

Related links

• Download the News Release on PDF
• UNWTO World Tourism Barometer
• IMF World Economic Outlook

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The Coronavirus Crisis

U.s. travelers are back in the saddle again. but they've adapted to a new reality.

Jaclyn Diaz

Horseback riders head down a trail near June Lake, Calif. As post-pandemic travel increases, people are flocking to outdoor activities and rural areas. George Rose/Getty Images hide caption

Horseback riders head down a trail near June Lake, Calif. As post-pandemic travel increases, people are flocking to outdoor activities and rural areas.

After surging coronavirus cases during the spring scuttled a much-anticipated cruise trip to Montreal, Nate Burglewski and his extended family really wanted to gather this summer — while also staying safe.

The trip had to meet a few requirements: a destination that wasn't too far for elderly relatives in the Midwest, had strict local coronavirus safety measures and offered lots of outdoor activities. Burglewski and his wife live in upstate New York, while other relatives are scattered across the country.

"Everyone is vaccinated and got them as early as we could. With the delta variant, we still decided to be very cautious. We did self-quarantines and all got tested the week before," he says.

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They ended up meeting in Indiana, renting a vacation home and spending a lot of time outside.

"It all worked out," he says.

After losing out on big trips in 2020 because of the pandemic, lots of Americans are making similar decisions — and making up for lost time.

"After more than a year of isolation or being limited to local activities, people showed this pent-up demand for travel," says Larry Yu, a professor of hospitality management at George Washington University.

After more than a year of being cooped up, people are traveling again but are forsaking hotels and international and urban destinations for the great outdoors, perhaps like Silver Lake near the Sierra Nevada mountains in California. George Rose/Getty Images hide caption

After more than a year of being cooped up, people are traveling again but are forsaking hotels and international and urban destinations for the great outdoors, perhaps like Silver Lake near the Sierra Nevada mountains in California.

This strong desire to travel has driven new trends in the industry — some of which may be here to stay. Like Burglewski's family, people are flocking to outdoor activities, rural areas and private vacation rentals and are showing less interest in hotels and international and urban destinations.

And early evidence shows that despite the delta variant and still-high cases of infection in the U.S., Americans are planning to continue to travel from now to the end of the year.

"We fully expect that leisure demand, especially on the weekends, continues to be strong in the fall and winter," says Jan Freitag, director of hospitality analytics in the U.S. for CoStar Group.

After a big drop, the industry shows signs of recovery

It's a big change from the earlier months of the pandemic, when the industry took a massive hit.

In the U.S., travel spending plummeted by nearly $500 billion, according to the U.S. Travel Association . Thousands of jobs were lost as well: 65% of all U.S. jobs lost in 2020 were supported by travel.

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To be sure, pandemic uncertainty is still causing some whiplash for businesses. Just last month, Southwest Airlines and other businesses reported they would pull back this fall.

Still, the U.S. travel sector is bouncing back from its pandemic lows, businesses and experts say. The travel association reports that travel spending is inching back up to 2019 levels. Hotel occupancy this summer recovered to just shy of pre-pandemic numbers: nearly 70% in July this year, compared with 73% during July 2019, according to STR, which provides data and research on the global hospitality industry.

Airline bookings — at least domestically — are also approaching pre-pandemic levels.

The rollout of vaccinations has made a big difference, says Paula Twidale, senior vice president of AAA Travel.

The travel agency has "been experiencing a travel boom all year," she says. "The domestic travel increase has been phenomenal."

Americans are traveling in ways shaped by the pandemic

The Burglewski's family vacation in Nashville, Ind., reflects many of the new realities. Most family members wore masks indoors and stayed outside as much as possible. They hiked and played four square at a nearby playground.

They chose a rental home — with a porch to gather on — over a big hotel.

"We feel like we can control the environment more," Burglewski says.

"Some people in the family still really want to do a cruise," he says, "but others said they don't think they would ever be comfortable doing something like that again."

Nathan Burglewski and members of his extended family made use of a playground near their rental home during a family vacation to Indiana this summer. Nate Burglewski hide caption

Nathan Burglewski and members of his extended family made use of a playground near their rental home during a family vacation to Indiana this summer.

Other Americans were making similar choices over the summer — and in record numbers.

"Vrbo has experienced its best year ever," says Melanie Fish, a company spokeswoman. That makes a lot of sense, she says, because private vacation homes in the U.S. were in high demand during the pandemic.

Families also stayed longer. For instance, Airbnb has seen a rise in families renting properties for three- and four-day weekends. That has been easier because so many companies have delayed returning to the office or have announced flexible workweeks .

Nathan Burglewski and his extended family had some requirements for their rescheduled vacation: a destination that wasn't too far for elderly relatives in the Midwest and offered lots of outdoor activities. They ended up in a rental in Indiana. Nathan Burglewski hide caption

Travelers chose mountains over skyscrapers

Where travelers are going is also changing. Coastal areas have been popular, says Yu, the George Washington professor, with more people taking advantage of kayaking, boating or canoeing activities. And small towns, too. For instance, 42% of the nights booked by families on Airbnb this summer were in rural destinations, up from 32% two years ago.

"There's been big growth in those areas," says Christopher Nulty, Airbnb's public affairs director. Early in the pandemic, he notes, "people were forced to travel to destinations a car ride away and they were able to find that great places exist just a tank of gas away."

Vrbo experienced similar demand for more local travel. Trips of 250 miles or less in July and August increased by over 20% compared with the same time in 2019, according to the company's latest data .

The greater emphasis on nature and outdoor activities is reflected in the popularity of U.S. national parks. Since seeing a major drop-off in visitors in the early months of the pandemic, the National Park Service has experienced a healthy systemwide rebound in 2021.

Yellowstone National Park, for instance, had 921,844 visitors in August 2021, making it the most-visited August on record and outpacing the pre-pandemic total for the same month by 12%, according to the NPS .

Experts predict a busy fall and winter

Though coronavirus cases have been declining and some foreign countries have reopened, U.S. travelers are staying cautious and, for now, close to home.

"The delta variant will continue to put a small damper on corporate demand, but the American consumers are seemingly undeterred," Freitag with CoStar Group says. "And as delta cases decline, we expect that leisure demand will hold."

More than 50% of American adults plan to take a domestic vacation before the end of 2022, according to AAA.

Vrbo's outlook for this fall and winter is also looking good, with "heightened demand" for homes in December compared with in previous years, says Nancy Lien, a company spokeswoman.

"Demand for holiday bookings started picking up as early as July ," she says. "Warmer destinations like the Florida Keys and Naples, Fla., have fewer than 30% of Vrbo homes remaining during Christmas week."

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Ski destinations in the U.S. are a top choice as well. Vrbo reports that demand for popular ski spots in Breckenridge, Colo., and surrounding areas are up.

Among those who will contribute to the continuing travel surge will be Burglewski and his wife.

"We are making up for lost time and taking those trips we've put off," he says.

For Christmas, they'll fly to Florida for a 10-day stay. In the new year, the couple plans to visit Yellowstone for a delayed anniversary trip.

Travel, Tourism & Hospitality

Global tourism industry - statistics & facts

What are the leading global tourism destinations, digitalization of the global tourism industry, how important is sustainable tourism, key insights.

Detailed statistics

Total contribution of travel and tourism to GDP worldwide 2019-2034

Number of international tourist arrivals worldwide 1950-2023

Global leisure travel spend 2019-2023

Editor’s Picks Current statistics on this topic

Leading global travel markets by travel and tourism contribution to GDP 2019-2023

Travel and tourism employment worldwide 2019-2034

Number of international tourist arrivals worldwide 2005-2023, by region

Further recommended statistics

• Basic Statistic Total contribution of travel and tourism to GDP worldwide 2019-2034
• Basic Statistic Travel and tourism: share of global GDP 2019-2034
• Basic Statistic Leading global travel markets by travel and tourism contribution to GDP 2019-2023
• Basic Statistic Global leisure travel spend 2019-2023
• Premium Statistic Global business travel spending 2001-2024
• Premium Statistic Number of international tourist arrivals worldwide 1950-2023
• Basic Statistic Number of international tourist arrivals worldwide 2005-2023, by region
• Basic Statistic Travel and tourism employment worldwide 2019-2034

Total contribution of travel and tourism to gross domestic product (GDP) worldwide in 2019 and 2023, with a forecast for 2024 and 2034 (in trillion U.S. dollars)

Travel and tourism: share of global GDP 2019-2034

Share of travel and tourism's total contribution to GDP worldwide in 2019 and 2023, with a forecast for 2024 and 2034

Total contribution of travel and tourism to GDP in leading travel markets worldwide in 2019 and 2023 (in billion U.S. dollars)

Leisure tourism spending worldwide from 2019 to 2023 (in billion U.S. dollars)

Global business travel spending 2001-2024

Expenditure of business tourists worldwide from 2001 to 2024 (in billion U.S. dollars)

Number of international tourist arrivals worldwide from 1950 to 2023 (in millions)

Number of international tourist arrivals worldwide from 2005 to 2023, by region (in millions)

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Leading hotel companies worldwide as of June 2023, by number of properties

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Number of hotels in the construction pipeline worldwide as of the first quarter of 2024

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Number of hotel rooms in the construction pipeline worldwide as of the first quarter of 2024

Countries with the most hotel construction projects in the pipeline worldwide 2024

Countries with the highest number of hotel construction projects in the pipeline worldwide as of the first quarter of 2024

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Worldwide number of passenger rail users from 2017 to 2023, with a forecast through 2028 (in billion users)

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Number of daily passengers using bus rapid transit (BRT) systems as of April 2023, by region

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Number of users of car rentals worldwide from 2020 to 2029 (in millions)

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Number of users in selected countries in the Car Rentals market in 2023 (in million)

Carbon footprint of international tourism transport worldwide 2005-2030, by type

Transport-related emissions from international tourist arrivals worldwide in 2005 and 2016, with a forecast for 2030, by mode of transport (in million metric tons of carbon dioxide)

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Leading amusement and theme parks worldwide 2023, by attendance (in millions)

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Number of monuments on the UNESCO world heritage list as of September 2023, by type

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Number of Michelin-starred restaurants in selected countries and territories worldwide as of August 2024

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Online travel market size worldwide 2017-2028

Online travel market size worldwide from 2017 to 2023, with a forecast until 2028 (in billion U.S. dollars)

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Estimated desktop vs. mobile revenue of leading online travel agencies (OTAs) worldwide in 2023 (in billion U.S. dollars)

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Number of aggregated downloads of selected leading online travel agency apps worldwide in 2023 (in millions)

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Market cap of leading online travel companies worldwide as of September 2023 (in million U.S. dollars)

Estimated EV/Revenue ratio in the online travel market 2024, by segment

Estimated enterprise value to revenue (EV/Revenue) ratio in the online travel market worldwide as of April 2024, by segment

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Estimated enterprise value to EBITDA (EV/EBITDA) ratio in the online travel market worldwide as of April 2024, by segment

Selected trends

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Distribution of tech investment deals by travel and mobility corporations worldwide between 2018 and 2024, by area of investment

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Share of travelers who used a mobile device to plan or research travel with an AI chatbot worldwide as of October 2023, by country

Global travelers who believe in the importance of green travel 2024

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Airbnb revenue worldwide 2017-2023

Revenue of Airbnb worldwide from 2017 to 2023 (in billion U.S. dollars)

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Travel and tourism revenue worldwide 2020-2029, by segment

Revenue of the travel and tourism market worldwide from 2020 to 2029, by segment (in billion U.S. dollars)

Distribution of sales channels in the travel and tourism market worldwide 2019-2029

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Inbound tourism visitor growth worldwide 2020-2025, by region

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Outbound tourism visitor growth worldwide from 2020 to 2022, with a forecast until 2025, by region

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Six trends shaping new business models in tourism and hospitality

As destinations and source markets have changed, tourism and hospitality companies have evolved too. Six key trends have shaped business models in this sector over the past decade.

About the authors

This article is a collaborative effort by Caroline Tufft , Margaux Constantin , Matteo Pacca , and Ryan Mann , with Ivan Gladstone and Jasperina de Vries, representing views from McKinsey’s Travel, Logistics & Infrastructure practice.

In accommodation, asset-light models like franchising and management have proliferated, though luxury and small-scale brands are opting out. Consolidation has driven economies of scale. Hotels are looking to reclaim their relationship with guests, and almost two decades in, home sharing is charting its own course.

In the experiences space, reinvention is the name of the game. Cruises and theme parks have both focused on attracting new demographics while fine-tuning their revenue management strategies. Experiences remains a highly fragmented, legacy sector, creating massive opportunity for those able to crack the code on aggregation.

By considering the six trends, tourism and hospitality companies can gain insights on business practices for today—and on areas of future opportunity.

Accommodation: New models and value propositions

Large hotel brands have increasingly turned away from hotel ownership, scaling their business through franchising and management instead. The move is paying off. We find there is a 0.84 correlation between a hotel company’s share of franchised properties and its net profit margin.

Not all of hospitality is embracing asset-light model, however. Luxury hotel chains have resisted the trend, largely retaining in-house ownership to control standards. And smaller brands may find that they cannot reach the economies of scale that make the math of a franchise business work—focusing instead on creating distinctive experiences on a smaller scale.

Consolidation set the stage for the past decade. Several hotel brands quickly grew their foothold in key geographies and customer segments through strategic acquisitions, achieving economies of scale along the way.

As major hotels take a breather from a series of substantial acquisitions, further mergers between large hotel brands seem unlikely. However, tuck in acquisitions to target key growth demographics, like the luxury and youth categories, are likely to continue.

Another trend on the horizon is direct booking. Long reliant on online travel agencies, hotels are looking to reclaim their relationships with customers—both to cut down on intermediary booking fees and to learn more about their guests. Hotels are encouraging direct bookings through a variety of levers, ranging from best-rate guarantees to higher reward-earnings rates and improved mobile applications. 1 For example, Hyatt offers a best-rate guarantee for booking on hyatt.com and Marriott International is growing direct bookings. For more, see “Marriott sees record direct bookings at its hotels,” Skift, May 4, 2022.

Home sharing is here to stay. The segment has grown from 10 to 14 percent of booking value between 2017 and 2023, experiencing ups and downs in profitability along the way.

Recently, home sharing has positioned itself as more than a stand-in for traditional hotels. Airbnb’s recent advertising campaign “Get an Airbnb” leaned into the differences of home sharing from other hospitality offerings, emphasizing the space and privacy that renting a house can offer. 1 Samantha Shankman, “‘Get an Airbnb’ campaign challenges hotels,” Skift, August 30, 2023.

Home-sharing companies have also become a key distribution channel for smaller hotels, as they can offer more control over inventory and lower fees than other channels. In 2019, Airbnb reported a 152 percent increase in the number of rooms available for booking through its platform in boutique hotels, bed and breakfasts, and resorts. 2 “More hotels are using Airbnb,” Airbnb news release, January 16, 2019.

Experience providers: New segments and revenue streams

Cruises may only account for 2 percent of the overall travel and tourism market, but they have achieved 6 percent yearly revenue growth in the past decade. 1 McKinsey analysis of publicly listed tourism and hospitality companies’ Form 10-Ks. Attracting new travelers and providing new experiences have been key growth strategies.

Luxury hotels are capturing the new-to-cruising segment with the launch of yacht brands, purposefully positioned as a distinct experience from traditional cruises. Meanwhile, millennials are challenging stereotypes about cruising: of all cruise passengers, they are the demographic most likely to say they plan to cruise again (88 percent). 2 State of the cruise industry 2023: September 2023 update, CLIA, September 2023.

In parallel, cruises have fine-tuned their profitability through economies of scale and new revenue streams. Megaships have become the new normal, as ships with over 3,000 berths have grown from 27 to 47 percent of the global cruise fleet since 2015. Ancillary purchases such as onshore excursions and onboard casinos have also become a major source of growth, now accounting for 30 percent of revenue on average. 3 Calculated using the weighted average based on 2023 Form 10-Ks statements of publicly listed cruise companies.

Theme park attendance has grown 3 percent a year over the past decade, as theme park providers capitalize on new demographics and refine their revenue management strategies. 1 Global attraction attendance report , joint report from AECOM and Themed Entertainment Association, 2019.

Two new groups of visitors in particular are powering growth. First, the Asia–Pacific region accounted for much of the growth in theme park attendance in the past decade: of the total number of new visitors between 2013 and 2018, 57 percent were from Asia. Second, millennials are heading to parks in greater numbers, and not just for their children. A similar proportion of millennial parents (78%) and millennial nonparents (75%) say they are interested in going to a theme park. 2 Morning Consult survey, 2,201 participants, June 14–19, 2018.

To increase value from growing attendance, theme parks have become increasingly sophisticated in the field of revenue management. Demand-based pricing, tiered annual passes, and skip-the-line fees are all poised to go from pioneering to widespread practices.

Experiences are increasingly important to travelers, but the segment remains a highly fragmented space. Operators of activities ranging from walking tours to snorkeling outings tend to be small businesses with a limited digital presence.

This has created an opportunity for tech-forward companies to help travelers discover and book experiences. Destination marketing organizations have long played a role in this. For instance, VisitScotland helps visitors discover interesting activities like attending Harry Potter filming locations and whiskey tastings.

Several private companies that offer online discovery and booking platforms for travel activities, like Viator, GetYourGuide, and Klook, have achieved considerable growth in the US, European, and Asian markets. 1 Yeoh Siew Hoon, “GetYourGuide gets into pole position to win in $250b experiences market,” WIT, September 20, 2023. GetYourGuide grew its revenue fourfold between 2022 and 2023, Viator revenue was up 49 percent for the same time period, and Klook reported twice as many new customers in 2023 as in 2019. 2 “Klook completes US$210 million funding, embarks on a new era of profitable growth,” Klook news release, December 6, 2023; Mitra Sorrells, “With speculation of a sale in the air, Tripadvisor reports record revenue driven—again—by Viator,“ Phocus Wire, February 14, 2024.

Looking forward: Strategies to stay ahead of the curve

Where does this leave tourism and hospitality companies? Companies in any given sector tend to follow a power law curve : a small share of companies account for an outsize portion of both profits and losses. The tourism and hospitality sector is no different.

Over the past decade, publicly listed accommodation and experience providers grew revenue at 3 percent and 4 percent, respectively, roughly in line with global GDP growth. Accommodation providers increased their profits by five percentage points, while experience providers remained at an 18 percent average profit margin.

As stakeholders gear up for the next decade, there are things that businesses across the sector can do to sustain their hard-won growth—and profits. Moving forward, three strategies in particular can help tourism and hospitality companies stay on the leading edge of innovation.

Unbundle offerings

Hotel and experience providers can take a page from the airline playbook by unbundling rates and letting consumers pay for the exact experience they want. For example, at the time of booking, hotels can present guests with an individually priced bundle for a room on a higher floor, including breakfast and free parking—features that the guest’s past behavior suggests they would particularly value. Ensuring that guests can find their ideal room can lead both to increased revenue and increased satisfaction. A major hotel brand reported that guests chose to spend an additional $22 per night, on average, to customize their hotel room to their liking. 1 “IHG Hotels & Resorts revolutionizes booking experience through next-gen cloud solutions,” InterContinental Hotels news release, September 12, 2023.

Cross-sell exclusive experiences

For accommodation and transportation companies, partnering with experience providers to cross-sell a full journey provides an opportunity to tap into a growing area of traveler spending—and a chance to deepen the relationship with customers as a vacation creator. For example, airlines can partner with museums to offer discounted rates if booked at the time of the flight, or hotels can partner with a historical site nearby to offer early-hours admission. For uptake rates to become significant, the partnership needs to add value beyond mere cross-selling. Offering features like insurance or an option to buy now and pay later is one way to add value; creating a distinctive experience like a combined train and historic hotel journey is another.

Embrace a data-powered strategy

Tourism and hospitality entities individually hold a treasure trove of untapped data. Take Paris: hotels may see a surge in bookings for the “shoulder season.” Experience aggregator platforms might see that street food tours have attracted rising interest. Social media might reveal that a particular neighborhood is exploding in popularity. What special guest experiences could be created by combining these insights? Stakeholders can unlock new revenue streams by thinking through what data they hold that can be of value to others. More broadly speaking, combining multiple sources of data can help guide a strategy of unbundling and cross-selling to create more gratifying and pertinent experiences for travelers around the world. Embracing data isn’t just smart—it’s the future of travel.

Caroline Tufft is a senior partner in McKinsey’s London office, Margaux Constantin is a partner in the Dubai office, Matteo Pacca is a senior partner in the Paris office, Ryan Mann is a partner in the Chicago office, Ivan Gladstone is an associate partner in the Riyadh office, and Jasperina de Vries is an associate partner in the Amsterdam office.

The authors wish to thank Abdulhadi Alghamdi, Alessandra Powell, Alex Dichter, Cedric Tsai, Diane Vu, Elisa Wallwitz, Lily Miller, Maggie Coffey, Nadya Snezhkova, Nick Meronyk, Paulina Baum, Peimin Suo, Rebecca Stone, Sarah Fellay, Sarah Sahel, Sophia Wang, Steffen Fuchs, Steffen Köpke, Steve Saxon, and Urs Binggeli for their contributions to this article. The authors also wish to thank Mabrian for providing data.

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A global Catholic conference that only happens once every four years went ahead this month in Quito, but under the shadow of an internal war on drug traffickers attendance was 25% lower than planned.

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Ecuador’s war on brutal drug gangs hits its tourism industry Back to video

“Out of 16,000 people originally expected, 4,000 decided to skip it for security reasons — including the Pope,” said Diego Vivero, president of Ecuador’s restaurant association. “The damage is huge.”

It’s the latest crisis to hit an industry that, according to the World Bank, is one of the struggling South American nation’s top three top potential moneymakers, along with agriculture and mining.

Ecuador offers more than enough to make it an international travel magnet, from Andean glaciers to tropical beaches and rainforests to the fabled Galapagos Islands. It also uses the dollar, eliminating the exchange-rate risk to travelers from the US, its main market.

Yet crises have undermined its ability to attract foreign visitors time and again. From a deadly earthquake nearly a decade ago to a brazen, televised hostage-taking this year that prompted President Daniel Noboa to crack down, Ecuador’s tour operators can’t catch a break.

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The crime situation made global news in August 2023 when a presidential candidate was gunned down just two weeks before the vote. The homicide rate soared to 46.5 people per 100,000 in 2024, an eightfold surge from 2018.

Then on Jan. 9, a group of armed thugs took over a TV set in Guayaquil, menacing staff at gunpoint during a live broadcast. Noboa, who had taken office six weeks earlier, declared a nationwide state of emergency and labeled almost two dozen narco gangs as terrorist organizations.

“Overnight, after what happened at TC Television, we said we’re going to attack, give ‘em lead, without thinking of the repercussions on foreign travel,” said Fausto Rodriguez, a Galapagos-based travel entrepreneur. Overseas customers, he added, “don’t want to get caught in the crossfire.”

The fear has led to sharply fewer visitors, according to people in the travel industry.

Occupation at the Mantaraya Lodge near the beach town of Puerto Lopez “has been awful this year,” said Raul Garcia, head of the tourism chamber in Pichincha province who owns the lodge as well as two ships that ply rivers in the Amazon.

“Without our good 2023, we would be in really bad shape,” said Franziska Mueller, head of Quito-based adventure travel agency Latitud 0.

Visitors are even avoiding the traditionally safe Galapagos Islands because they’re afraid of the obligatory stopovers in mainland Ecuador, Rodriguez said. Some cruise lines have also shifted their itineraries to avoid arrivals via Guayaquil.

Noboa’s team is standing by its strategy. The declaration of internal war “was a brave decision by the government and a necessary decision,” Tourism Minister Mateo Estrella said Monday in a telephone interview, conceding it did have a negative impact on Ecuador’s appeal as a tourist destination. “That image has to be rebuilt bit by bit with time, with effort.”

There are also signs the crisis may have hit bottom. Bookings plunged by 22% in January but gradually recovered, with Estrella currently projecting about a 10% hit overall. “Tourists haven’t stopped coming to the country,” he said.

Tour operators in other Latin American destinations like Colombia and Mexico have learned over years how to deal with security issues, while in Ecuador it’s a new situation that “obviously awakens more mixed feelings.” The government will increase its budget for international travel marketing, the minister added.

Concerns about violence are only the latest in a string of challenges the travel industry has faced.

In 2016, a major earthquake killed hundreds and inflicted billions of dollars in damage on Ecuador’s beach towns. Indigenous protests that ruined travel plans and undermined the nation’s image bookended the Covid-19 pandemic. And then in 2022, worsening security led the Ecuadorian soccer federation to decline hosting the Copa America — one of the sport’s top international competitions — so it wound up being held in the US this year.

‘Certain Provinces’

Despite its potential, tourism in Ecuador accounts for just 2.9% of gross domestic product, with annual receipts of $1.1 billion as arrivals remain below pre-pandemic levels, according to the World Bank. There are, however, signs the worst is over.

Homicides have dropped 17% on the year as of Sept. 1, according to the interior ministry. And violence has shifted to “certain provinces to where the criminals have retreated, and this has required a priority attention,” General César Zapata, head of the national police, said last month. Many of these areas, particularly the agricultural heartland and urban slums of the Pacific Coast lowlands, are hardly focal points of travel, leaving most tourist destinations much safer.

For all the violence, the State Department ranks Ecuador as “Level Two” — the same as Brazil and safer than “Level-Three” Colombia, where tourism is booming despite a US recommendation to “reconsider travel.”

Ecuador’s government and private sector need to improve messaging to get that point across internationally, as well as work together like the Peruvian travel industry did when it was rocked by violence in 2023, according to Garcia.

Adventure tourism hub Baños and UNESCO World Heritage city Cuenca remain buzzy with new scenic glass walkways, hotels and restaurants. The latter is slated to host the Ibero-American Summit in November, while Quito will welcome techno music fans as part of the international Road to Ultra rave series that same month.

Contingency plans for the event are being drawn up with police, military and local officials “so we’re ready for anything that might happen,” said Sebastian Egas, general manager of organizer FTC Live.

Elsewhere in the capital, tourism is carrying on. “Guests have been surprised that it’s possible to walk in the streets and sit down at a restaurant,” Mueller said. “They had read that there’s constant shooting.”

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