When evaluating tourism trends, the first challenges to be taken into account are the nature of the data and the definition of the sector. By international classification standards (as elaborated by the International Organization for Standardization), tourism is not reported as a specific sector in national accounts. This is because tourism spending is not classified as such in the broader definition of “household consumption expenditures” (the demand side of the accounts), while on the supply side, tourism activities are classified across “hotel, restoration, café/catering”, “transport services” and other sectors,[1] with no differentiation between tourism expenditure/production and leisure or business (or other) purposes. For this reason, international statistic institutions have established methodologies for tourism satellite accounts, which allow us to describe the trends of “true” tourism activities.[2]
Recent global trend of tourist arrivals
Based on official tourism data gathered by the UN and other sources, the global tourism sector is finally experiencing a strong rebound towards pre-pandemic levels. While in 2023 global tourism activity recorded a spectacular increase of 23.2% from 2022 levels, it still remained well below the 2019 level. In the first seven months of 2024, the gap with the same pre-pandemic period in 2019 narrowed to just 4%. Around 790 million tourists travelled internationally in the first seven months of 2024, about 11% more than in the same period in 2023.[3] According to Oxford Economics estimates, 2024 will mark the first year of global recovery, with inbound arrivals at 1.5% above pre-pandemic levels.
After a long period of travel restrictions, consumers continue to enjoy travel despite sluggish economic and real income growth, and elevated interest rates. The recent rate cuts by the ECB and the Fed, as well as lower inflation, should reduce pressure on incomes in H2 this year, and into the next. Higher real disposable incomes in most advanced and emerging economies will set the stage for an additional increase of tourism activity.
The ongoing rebound comes despite several geopolitical challenges, including the Israel-Palestine-Lebanon-Iran and the Ukraine-Russia conflicts/sanctions. However, increased air connectivity supports the recovery in international travel and tourism.
Measuring tourism in terms of international arrivals, the Middle East is the area showing the strongest growth in the last few years, with the number of incoming tourists climbing to 26% above 2019 levels in the first seven months of 2024. The countries in the region showing the strongest performance versus 2019 are Qatar (+147%) and Saudi Arabia (+73%). Europe and the Americas recovered 99% and 97% of their pre-pandemic arrivals respectively during these seven months, while Asia and the Pacific are still at 18% less than their pre-pandemic tourist numbers.[4]
Europe remains the most attractive destination, with an estimated 410 million international tourists and a recovery of 99% of pre-pandemic arrivals in the first seven months of the year – despite the ongoing conflict in Ukraine which continues to constrain recovery in the entire Eastern European sub-region. Among the larger destinations, Greece recorded 24% more arrivals, Portugal 18%, Denmark 16%, Turkey 15% and Spain 11%. Continued prioritization of cost-effectiveness and “authentic” destinations bode well for a variety of destinations across the wider region. The Olympics and the UEFA Euros also supported growth over the summer. Europe overall is forecast to reach 3% above 2019 levels this year.[5]
North America looks to just fall short of pre-pandemic arrivals this year, following a weaker than expected start to 2024. Mexico continues to lead recovery of arrivals in the region but arrivals in US and Canada are still below 2019 as the lagged impact of inflation and higher interest rates pass through.
Asia-Pacific continues to lag behind in the global rate of travel recovery, still falling shy of pre-pandemic volumes for the full year. Despite northeast Asia being the slowest recovering sub-region in Asia-Pacific, Japan continues to have a stellar year, with visitor volumes expected to be more than 2019 levels, in large part due to the weak Yen making Japan more affordable. Another bright spot in the region is Vietnam, which has enjoyed a strong start to the year, with a robust rebound in travel from China, supported by broader changes in visa policy.
Recent global trends in tourism spending
Similar outcomes come from analyzing tourism by the amount of money spent by foreigners when visiting for leisure purposes. The fall in revenues due to pandemic-related travel restrictions was dramatic everywhere in the world, bringing the global tourism business in US dollars basically back to the levels recorded 20 years earlier.
Following a rapid surge in tourism revenues from abroad in recent years, the estimates by Oxford Economics indicate that all regions will see an increase with respect to 2019 (see graph), with the exception of the Asia-Pacific area, which will return to 2019 levels. While, over the period, the growth in North American tourism revenues in nominal US dollars is slightly lower than domestic inflation (i.e. slightly negative in real terms), a strong increase can be noted for the performance of Europe, with an expected 27.8% increase in revenues between 2019 and 2024. Such performance is only partially explained by the cumulated impact of inflation over the last few years and compares positively with a growth of 3% in tourist arrivals and 8.5% in tourist holiday nights. This outlines two aspects: firstly, the increasing competitiveness of European destinations, with tourists staying longer (8.5% increase versus 2019); and secondly, the ability of the European tourism industry to charge higher prices while facing increasing competition from other destinations and from domestic short-term rentals.
Key drivers and potential risks
Tourism development is positively related to economic growth.[6] Tourism expenditure is a form of export that can contribute to improving a country’s balance of payments, favor employment and generate additional tax revenues,[7] especially (but not only) in small open economies.
As highlighted above, recent tourism performance across most countries and regions reports a rebound in global tourism demand. The first and most important engine behind the global tourism recovery has been the rebound of economic activity after the COVID-19 pandemic. Large policy intervention in defense of employment and household purchasing power, as well as the anti-inflation restrictive monetary policies adopted by all the major central banks after the Russian invasion of Ukraine, have certainly played a crucial role in the recovery of incomes and of the tourism sector. Other key drivers have been the growing global air route connectivity, improved international openness, and increased investment (including aggressive marketing) in tourism-generating natural and cultural resources. However, harnessing such resources requires comprehensive management, promotion and protection strategies, alongside investment in robust infrastructure and ICT readiness, the latter being a feature that has grown to become a crucial competitive advantage over the last few years.
While recent developments and short-term expectations are quite encouraging for the global tourism sector, some factors may cloud the medium- to long-term perspective. Tourism is characterized by low labor productivity, a feature that does not bode well for its prospects in the medium to long term, once the rebound has completed its cycle. Labor shortages and skill mismatch are ongoing in several countries, while overall productivity and capital investment in reception facilities have not kept up with demand. The resulting supply and demand imbalance, combined with broad inflationary pressure, has led to tourism service supply disruptions and to significantly higher prices in real terms.
Unlike the manufacturing industry, which can improve productivity by introducing new technology into the production process, productivity improvement in the tourism sector has so far been more related to those service innovations that improve the experiences of tourists. Easy international access, efficiency of local public transport, high quality of accommodation and high value-added multi-offer resorts, multi-language personnel, variety of experiences to offer in one stay (combining sport, natural and artistic locations) are some of the main requirements for a competitive tourism sector.
Some productivity improvement can likely be expected by robotization of some reception functions in hotels and restaurants. At the same time, the adoption of artificial intelligence in marketing, accounting and optimization of the supply chain can support productivity improvements in the coming several years. In this regard, the US appears to have a competitive advantage, given the amount of investment flowing into AI from major high-tech firms in conjunction with the major US academic institutions.
Footnotes:
[1] For more details, see UN, “Tourism Satellite Account: Recommended Methodological Framework” 2008.
[2] In this article, data are sourced from UN World Tourism Organisation and Oxford Economics (the main global supplier of analysis and forecasts to Tourism entities, such as World Travel and Tourism Council and European Tourism Council, among others)
[3] World Tourism Barometer, UN Tourism, September 2024.
[4] UN World Tourism Barometer, September 2024
[5] Global Highlights and Risks, Global Travel Service, Oxford Economics,
[6] “Has the tourism-led growth hypothesis been validated? A literature review, Brida, Cortes-Jimenez, & Pulina, 2016
[7] “Tourism and economic growth: A review of empirical literature”, María del Pablo-Romero & José Molina, 2013