The travel and tourism industry, despite facing significant economic uncertainties, is showing signs of returning to its former growth trends. Experts express cautious optimism, backed by data-driven insights.
At the recent Resilience and Innovation Summit in Sarajevo, industry leaders discussed the factors contributing to this optimistic outlook, highlighting the recovery in international travel and anticipated growth. This article delves into the key insights and projections shared during the summit.
Economic Outlook for Travel and Tourism
The industry remains cautiously optimistic regarding the global outlook for travel and tourism despite significant economic uncertainty. David Goodger, managing director for Europe of Tourism Economics, stated at the Resilience and Innovation Summit in Sarajevo, “Travel is returning to normal trends.” He noted that international travel nearly recovered to 2019 levels in 2023, with expectations to fully recover and return to previous growth trends by 2024.
Factors Influencing Growth
Goodger attributes the positive outlook to steady growth in incomes and spending in major source markets, with inflation now under control. However, he also highlighted numerous risks, including interest rate fluctuations, geopolitical tensions, and economic uncertainties. These risks could potentially stall growth and keep interest rates high, affecting people’s budgets and discretionary spending.
Consumer Spending Trends
On average, consumers in advanced economies allocate about 8% of their discretionary income on leisure travel. This percentage dropped significantly during the pandemic but rebounded last year, with indicators suggesting it could exceed 8% this year.
The key markets driving growth in international overnights in Europe include Germany, the UK, and the US. Goodger pointed out that despite concerns about accommodation and flight costs, there are discussions around ‘overtourism’ again, indicating a return of tourists to popular hotspots and potential overcrowding issues.
In contrast, leisure travel spending recovery in developing markets is slower. Goodger remains optimistic, expecting a recovery within the year. He acknowledged a gap in international travel volume to Southeast Europe compared to the pre-pandemic period but anticipates a gradual recovery.
Regional Insights
International tourism to Bosnia and Herzegovina is forecasted to grow by 11% this year. Nevertheless, the country attracts only a small fraction (1%) of international visitors to the region. Greece commands a significantly larger share at 40%, followed by Croatia and Bulgaria at 20% and 10%, respectively.
Goodger reported that Southeast Europe experienced about 10% annual growth in international travel from 2015 to 2019. However, there is caution about achieving similar growth rates moving forward. Countries in the region are looking to balance recovery efforts with sustainable tourism practices to avoid long-term issues associated with overtourism.
Challenges and Risks
Goodger outlined several challenges, including economic pressures and geopolitical risks, that could impact the recovery trajectory. While inflation control and steady income growth provide optimism, factors such as interest rates and regional conflicts introduce a level of unpredictability.
He highlighted that consumer spending on travel prioritises even amidst budget constraints, emphasising the significance of travel in discretionary spending. Yet, the industry must navigate these challenges cautiously to ensure sustainable long-term growth.
Future Outlook
The future of travel and tourism appears bright, with expected steady growth in international travel and recovery to pre-pandemic levels. However, the industry must remain vigilant of potential risks that could hinder progress.
Goodger concluded that despite the uncertainties, the fundamentals for growth in the travel and tourism sector remain strong. Stakeholders are advised to keep an eye on economic indicators and geopolitical developments to adapt strategies accordingly.
Conclusion
The travel and tourism industry is on a promising path to recovery, with growth expected to return to pre-pandemic trends by 2024. However, stakeholders must remain cautious of economic and geopolitical risks that could affect this trajectory. The industry’s resilience, coupled with strategic adaptation, will be essential in overcoming these challenges and achieving sustained growth.
The travel and tourism industry’s recovery trajectory remains positive, with expectations to return to pre-pandemic growth levels by 2024. This optimistic outlook is underpinned by steady income growth and controlled inflation in major markets.
Despite the uncertainties posed by various economic and geopolitical risks, the sector is poised for a rebound. Strategic adaptations and vigilance will be crucial in navigating these challenges, ensuring long-term, sustainable growth.
