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Towards resilience and sustainability: Travel and tourism development recovery

The travel and tourism sector is slowly beginning to recover. Image:  Unsplash/Eva Darron

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• The World Economic Forum has published its inaugural Travel and Tourism Development Index .
• It focuses on the growing role of sustainability and resilience in travel and tourism growth.
• Recovery for the sector is uneven and tourist arrivals in January 2022 were still 67% below 2019 levels, according to the World Tourism Organization.
• Here are some key findings from the index on how the sector can build back better.

In 2018, international tourism grew for the ninth consecutive year. Tourist arrivals reached 1.4 billion and generated $1.7 trillion in export earnings, according to the World Tourism Organization (UNWTO).

Travel and tourism: post-pandemic

The picture looked very different two years later, as COVID-19 lockdowns hit the travel and tourism (T&T) sector hard. In 2020 alone, it faced losses of $4.5 trillion and 62 million jobs , impacting the living standards and well-being of communities across the globe.

While the roll-out of COVID-19 vaccines and easing of restrictions means a recovery has now started, it’s proving gradual and uneven largely due to variations in vaccine distribution, and because of Omicron and its BA.2 subvariant. And customers are not only being more cautious when it comes to health, but also around the impact of travel on the environment and local communities.

International tourist arrivals rose by 18 million in January 2022 compared with a year earlier. This equals the increase for the whole of 2021 from 2020, but January’s numbers were still 67% below the same month in 2019, according to the UNWTO.

The war in Ukraine has added to instability and economic disruption for the sector. Against this backdrop, the World Economic Forum’s inaugural Travel and Tourism Development Index reflects the growing role of sustainability and resilience in T&T growth, as well as the sector’s role in economic and social development more broadly.

The TTDI benchmarks and measures “the set of factors and policies that enable the sustainable and resilient development of the T&T sector, which in turn contributes to the development of a country”. The TTDI is a direct evolution of the long-running Travel and Tourism Competitiveness Index (TTCI), with the change reflecting the index’s increased coverage of T&T development concepts, including sustainability and resilience impact on T&T growth and is designed to highlight the sector’s role in broader economic and social development as well as the need for T&T stakeholder collaboration to mitigate the impact of the pandemic, bolster the recovery and deal with future challenges and risks. Some of the most notable framework and methodology differences between the TTCI and TTDI include the additions of new pillars, including Non-Leisure Resources, Socioeconomic Resilience and Conditions, and T&T Demand Pressure and Impact. Please see the Technical notes and methodology. section to learn more about the index and the differences between the TTCI and TTDI.

The Travel and Tourism Development Index 2021

The index covers 117 economies, which accounted for around 96% of the world’s direct T&T GDP in 2020. It measures the factors and policies that will enable sustainable and resilient development of the sector.

These include everything from business, safety and health conditions, to infrastructure and natural resources, environmental, socioeconomic and demand pressures.

“As the sector slowly recovers, it will be crucial that lessons are learned from recent and current crises and that steps are taken to embed long-term inclusivity, sustainability and resilience into the travel and tourism sector as it faces evolving challenges and risks,” says the publication, a collaboration between many of the sector’s stakeholders.

The index consists of five subindexes, 17 pillars and 112 individual indicators, distributed among the different pillars, as shown below.

On average, scores increased by just 0.1% between 2019 and 2021, reflecting the difficult situation facing the sector. Only 39 out of 117 economies covered by the index improved by more than 1.0%, while 27 declined by over 1.0%.

Nine of the top 10 scoring countries are high-income economies in Europe or Asia-Pacific. Japan tops the ranking, with the United States in second, followed by Spain, France, Germany, Switzerland, Australia, the United Kingdom and Singapore. Italy completes the top 10, moving up from 12th in 2019.

Viet Nam experienced the greatest improvement in score, with a rise of 4.7% lifting it from 60th to 52nd on the overall index. Indonesia achieved the greatest improvement in rank, increasing its score by 3.4% to climb from 44th to 32nd, while Saudi Arabia achieved the second greatest improvement in rank, moving up to 33rd from 43rd as its score rose by 2.3%.

Rebuilding travel and tourism for a sustainable and resilient future

Here are some of the key findings from the publication:

1. The need for travel and tourism development has never been greater

The sector is a major driver of economic development, global connectivity and the livelihood of some of the populations and businesses most vulnerable to, and hard hit by, the pandemic. In 2019, T&T’s direct, indirect and induced GDP accounted for about 10% of global GDP . For many emerging economies, T&T is a major source of export revenue, foreign exchange earnings and investment. Research has shown that T&T growth can support social progress and create opportunities and well-being for communities, so supporting travel and tourism development and recovery will be critical.

2. Shifting demand dynamics have created opportunities and a need for adaptation

In the shorter term, challenges such as reduced capacity, geopolitical tensions and labour shortages are slowing recovery. However, opportunities have been created in markets such as domestic and nature-based tourism, the rise of digital nomads and “bleisure” travel – the addition of leisure activities to business travel. Many countries have provided incentives to boost domestic tourism. For example, Singapore, South Korea, Japan and Hong Kong SAR, China, have rolled out programmes that provide discounts, coupons and subsidies for domestic travel. The trends towards more rural and nature-based tourism offer an opportunity for less-developed economies to harness the benefits of travel and tourism given that the distribution and quality of natural assets are less tied to performance in economic development, with natural resources being one of the few pillars where non-high income economies typically outperform high-income countries. The travel and tourism sector stakeholders’ ability to adapt under these conditions highlights its capacity for adaptation and flexibility.

3. Development strategies can be employed to help the sector build back better

Amid the current challenges, shifting demand dynamics and future opportunities and risks, a more inclusive, sustainable and resilient travel and tourism sector can be – and needs to be – built, says the publication. But this calls for thoughtful and effective consideration. It also requires leveraging development drivers and strategies. This can be done by: restoring and accelerating international openness and consumer confidence through, for example, improved health and security; building favourable and inclusive labour, business and socioeconomic conditions; focusing more on environmental sustainability; strengthening the management of tourism demand and impact; and investing in digital technology.

A note on the methodology

Most of the dataset for the Travel & Tourism Development Index (TTDI) is statistical data from international organizations, with the remainder based on survey data from the World Economic Forum’s annual Executive Opinion Survey, which is used to measure concepts that are qualitative in nature or for which internationally comparable statistics are not available for enough countries. The index is an update of the Travel & Tourism Competitiveness Index (TTCI), but due to the altered methodology, framework and other differences, the 2021 TTDI should not be compared to the 2019 TTCI. To help address this, the 2019 results were recalculated using the new framework, methodology and indicators of the TTDI. Therefore, all comparisons in score and rank throughout this report are between the 2019 results and the 2021 results of the TTDI. Data for the TTDI 2021 was collected before the war in Ukraine.

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Fact sheet: 2022 national travel and tourism strategy, office of public affairs.

The 2022 National Travel and Tourism Strategy was released on June 6, 2022, by U.S. Secretary of Commerce Gina M. Raimondo on behalf of the Tourism Policy Council (TPC). The new strategy focuses the full efforts of the federal government to promote the United States as a premier destination grounded in the breadth and diversity of our communities, and to foster a sector that drives economic growth, creates good jobs, and bolsters conservation and sustainability. Drawing on engagement and capabilities from across the federal government, the strategy aims to support broad-based economic growth in travel and tourism across the United States, its territories, and the District of Columbia.

The federal government will work to implement the strategy under the leadership of the TPC and in partnership with the private sector, aiming toward an ambitious five-year goal of increasing American jobs by attracting and welcoming 90 million international visitors, who we estimate will spend $279 billion, annually by 2027.

The new National Travel and Tourism Strategy supports growth and competitiveness for an industry that, prior to the COVID-19 pandemic, generated $1.9 trillion in economic output and supported 9.5 million American jobs. Also, in 2019, nearly 80 million international travelers visited the United States and contributed nearly $240 billion to the U.S. economy, making the United States the global leader in revenue from international travel and tourism. As the top services export for the United States that year, travel and tourism generated a $53.4 billion trade surplus and supported 1 million jobs in the United States.

The strategy follows a four-point approach:

• Promoting the United States as a Travel Destination Goal : Leverage existing programs and assets to promote the United States to international visitors and broaden marketing efforts to encourage visitation to underserved communities.
• Facilitating Travel to and Within the United States Goal : Reduce barriers to trade in travel services and make it safer and more efficient for visitors to enter and travel within the United States.
• Ensuring Diverse, Inclusive, and Accessible Tourism Experiences Goal : Extend the benefits of travel and tourism by supporting the development of diverse tourism products, focusing on under-served communities and populations. Address the financial and workplace needs of travel and tourism businesses, supporting destination communities as they grow their tourism economies. Deliver world-class experiences and customer service at federal lands and waters that showcase the nation’s assets while protecting them for future generations.
• Fostering Resilient and Sustainable Travel and Tourism Goal : Reduce travel and tourism’s contributions to climate change and build a travel and tourism sector that is resilient to natural disasters, public health threats, and the impacts of climate change. Build a sustainable sector that integrates protecting natural resources, supporting the tourism economy, and ensuring equitable development.

Travel and Tourism Fast Facts

• The travel and tourism industry supported 9.5 million American jobs through $1.9 trillion of economic activity in 2019. In fact, 1 in every 20 jobs in the United States was either directly or indirectly supported by travel and tourism. These jobs can be found in industries like lodging, food services, arts, entertainment, recreation, transportation, and education.
• Travel and tourism was the top services export for the United States in 2019, generating a $53.4 billion trade surplus.
• The travel and tourism industry was one of the U.S. business sectors hardest hit by the COVID-19 pandemic and subsequent health and travel restrictions, with travel exports decreasing nearly 65% from 2019 to 2020. 
• The decline in travel and tourism contributed heavily to unemployment; leisure and hospitality lost 8.2 million jobs between February and April 2020 alone, accounting for 37% of the decline in overall nonfarm employment during that time. 
• By 2021, the rollout of vaccines and lifting of international and domestic restrictions allowed travel and tourism to begin its recovery. International arrivals to the United States grew to 22.1 million in 2021, up from 19.2 million in 2020. Spending by international visitors also grew, reaching $81.0 billion, or 34 percent of 2019’s total.

More about the Tourism Policy Council and the 2022 National Travel and Tourism Strategy

Created by Congress and chaired by Secretary Raimondo, the Tourism Policy Council (TPC) is the interagency council charged with coordinating national policies and programs relating to travel and tourism. At the direction of Secretary Raimondo, the TPC created a new five-year strategy to focus U.S. government efforts in support of the travel and tourism sector which has been deeply and disproportionately affected by the COVID-19 pandemic.

Read the full strategy here

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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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Coronavirus faq: what's the advice about traveling in the delta variant era.

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.

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The State of the Travel Industry in 2023: Current Trends and Future Outlook

Kentucky chamber ceo: we must protect the free enterprise system, how franchising can help fuel the american dream, microsoft president: responsible ai development can drive innovation, suzanne clark's 2024 state of american business remarks, rhythms of success: the free enterprise tune of a small business.

January 12, 2023

Featured Guest

Tony Capuano CEO, Marriott International, Inc.

Chip Rogers President & CEO, American Hotel & Lodging Association (AHLA)

As COVID-19 restrictions have continued to ease, the travel and hospitality industries have seen a resurgence in customers. Companies like Marriott have seen percentage increases in revenue and rate, even topping pre-pandemic levels.

During the U.S. Chamber of Commerce’s 2023 State of American Business event, Chip Rogers, President and CEO of the American Hotel and Lodging Association , and Tony Capuano, CEO of Marriott International, Inc. , sat down for a fireside chat. Read on for their insights on the post-COVID state of the travel industry, a shifting customer base, and the outlook for 2023 and beyond.

2022 Demonstrated the Power and Resilience of Travel

After declines amid the pandemic, 2022 brought about a positive recovery for the travel industry.

“[2022] reminded us of the power and resilience of travel,” said Capuano. “If you look at the forward bookings through the holiday season, [you’ll see] really strong and compelling numbers … so we’re really encouraged.”

“The only caveat I would give you about that optimism is, as you know, the booking windows are much shorter than we’ve seen them in a pre-pandemic world,” he added. “So those trends can change more quickly than we’re accustomed to."

The ‘Regular’ Customer Segments Are Shifting

At the start of pandemic recovery, industry leaders believed leisure travel would lead travel recovery, with business travel closely behind and group travel at a distant third, according to Capuano. While some of those predictions have held, others have shifted.

“Leisure [travel] continues to be exceedingly strong, and group [travel] has surprised to the upside,” he explained. “Business travel is perhaps the tortoise in this ‘Tortoise and the Hare,’ slow-and-steady recovery.”

However, Capuano noted customer segments are becoming less and less strictly defined.

“[There’s] this trend we've seen emerge over the pandemic of blended trip purpose … [where] more and more folks are combining leisure and business travel,” he said. “If this has staying power, I think it’s absolutely a game changer, as we get back to normal business travel and hopefully maintain that leisure travel.”

To accommodate this shifting demand, Marriott has focused on expanding offerings to accommodate both the business and leisure sides of travelers’ trips.

“[We’ve had] a very big focus on [expanding bandwidth], so that if [we’ve] got 300 rooms full of guests on Zoom calls simultaneously, we’ve got the bandwidth to cover it,” Capuano added. “[We’re also] being more thoughtful about fitness, leisure, and food and beverage offerings — and having the flexibility to pivot those offerings as somebody sheds their business suit on Thursday and changes into shorts and flip flops for the weekend.”

2023 Offers Hope for Continued Growth in the Travel and Hospitality Sectors

As the travel and hospitality sectors continue to grow and shift in the post-pandemic era, Capuano shared reasons for optimism in 2023.

“Number one, it's our people,” he emphasized. “When you see their passion, their enthusiasm, their resilience, their creativity, and just how joyful they are to have their hotels full again … it's hard not to be filled with optimism.”

“If you look at how far the industry has come over the last few years,” Capuano continued, “any lingering doubts folks may have had about the resilience of travel — and about the passion that the general public has to explore cities and countries — it's hard not to be excited about the future of our industry.”

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Travel and tourism satellite account for 2017-2021.

The travel and tourism industry—as measured by the real output of goods and services sold directly to visitors—increased 64.4 percent in 2021 after decreasing 50.7 percent in 2020, according to the most recent statistics from BEA’s Travel and Tourism Satellite Account.

Data & Articles

• U.S. Travel and Tourism Satellite Account for 2017–2021 By Sarah Osborne - Survey of Current Business February 2023
• "U.S. Travel and Tourism Satellite Account for 2015–2019" By Sarah Osborne - Survey of Current Business December 2020
• "U.S. Travel and Tourism Satellite Account for 2015-2017" By Sarah Osborne and Seth Markowitz - Survey of Current Business June 2018
• Tourism Satellite Accounts 1998-2019
• Tourism Satellite Accounts Data Sheets A complete set of detailed annual statistics for 2017-2021 is coming soon -->
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Measures how much tourists spend and the prices they pay for lodging, airfare, souvenirs, and other travel-related items. These statistics also provide a snapshot of employment in the travel and tourism industries.

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Travel Industry Takes Crucial First Step Toward Combating Climate Change

More than 300 travel companies, tourism boards and countries have signed the Glasgow Declaration on Climate Action in Tourism, the first step for a shared road map to cut carbon emissions.

By Ceylan Yeginsu

The travel industry has reached a turning point.

As thousands of scientists, government officials and business leaders met in Glasgow over the past two weeks for the pivotal United Nations climate conference , hundreds of members of the trillion-dollar tourism industry came together and made the first commitment toward a shared road map to cut carbon emissions in half by 2030 and reach “net zero” by 2050.

More than 300 global travel stakeholders, including tour operators, tourism boards and hotel chains, have signed the Glasgow Declaration on Climate Action in Tourism, requiring them to submit a concrete and transparent plan within 12 months. While the details have yet to be put forward, the companies and countries that signed on, from Germany railway company Deutsche Bahn AG to the country of Panama, will be expected to disclose their carbon emissions and offer clear strategies for how to reduce them. The process is being spearheaded by the U.N. World Tourism Organization and the World Travel & Tourism Council, two industry bodies that have previously sparred on climate matters.

“This is undoubtedly the biggest climate commitment our industry has come together for,” said Jeremy Smith, the co-founder of Tourism Declares a Climate Emergency , an initiative that supports climate action and provided the framework for the Glasgow Declaration.

“Our initiative launched two years ago because the industry had no collective plan, and we did well getting over 400 tourism organizations on board without funding,” he said. “But the Glasgow Declaration builds on our work. It’s the coming together of major players in our sector and it’s owned by everyone who has signed it, establishing collective responsibility.”

The travel industry is a large contributor to global carbon emissions, with a footprint estimated between 8 and 11 percent of total greenhouse gases, according to the World Travel & Tourism Council, or W.T.T.C . Aviation alone represents around 17 percent of total travel carbon emissions. Each year, a growing number of destinations and communities heavily dependent on tourism — countries like Thailand, India and Madagascar — are hit hard by the impacts of climate change, in the form of rising sea levels, drought, wildfires, deforestation and biodiversity loss.

The pandemic spotlighted the adverse impact of industry growth and overtourism on Venice, Bali and other popular destinations, forcing some places to take stock and pivot toward more sustainable and environmentally friendly business models. Yet with most operators and destinations reeling from the industry shutdown last year, it is unclear how many of those plans will be prioritized over the need for fast recovery.

“We need a cultural change and we need to move beyond the traditional growth-oriented mind-sets to see a more sustainable, responsible and climate-neutral tourism ecosystem,” said Patrick Child, deputy director general of environment at the European Commission.

52 Places to Love in 2021

We asked readers to tell us about the spots that have delighted, inspired and comforted them in a dark year. Here, 52 of the more than 2,000 suggestions we received, to remind us that the world still awaits.

‘A lot of apathy’

The declaration has four main targets: measurement, requiring companies to disclose all travel- and tourism-related emissions; decarbonization, by setting targets aligned with climate science; regeneration, to restore and protect natural ecosystems; and collaboration, to ensure best practices are shared and financing is available to follow through.

A recent analysis by the W.T.T.C. of 250 travel businesses found that only 42 percent had publicly announced climate targets and many of them were not based on the latest science. The council last week published a road map for different industries within travel, providing concrete guidance on how to reach “net zero” targets by 2050.

“There has been a lot of apathy, with some people not quite sure about what they need to do and how to do it, or some thinking they are not significant enough, and that’s why it’s really important for larger organizations to show the way,” said Darrell Wade, the co-founder and chairman of Intrepid Travel , the only global tour company with a climate target verified by the Science Based Targets initiative , which promotes best practices in emissions reductions in line with climate science.

Joining Deutsche Bahn and Panama in signing the Glasgow Declaration are big companies like Accor, Skyscanner, The Travel Corporation and Iberostar Group , as well as countries that are already affected by climate change, including Norway and Barbados. Signatories hope that more destinations will participate in the coming weeks.

Throughout his experience in the Tourism Declares a Climate Emergency initiative, Mr. Smith found it easier to get smaller, more agile companies and smaller countries involved. When it came to larger companies, there were more barriers and obstacles, he said.

“When you reach a destination, or even a city, it becomes even harder because there are multiple different players with different interests at the scale of a country,” he said. “It takes time.”

Panama, one of only three carbon-negative countries in the world (meaning that it absorbs more carbon emissions than it emits), has taken a lead role in establishing initiatives for economic growth in tourism, which also benefit and preserve local communities and resources.

“Our main plan for our sustainable tourism market is to empower local communities, particularly Indigenous people, so that they can generate an income through tourism that allows them to preserve their ancestral way of life, allowing them to sustainably manage their natural resources like forests and coral reefs,” said Ivan Eskildsen, Panama’s tourism minister.

He pointed to an example of a trail that was built in a national park that was designed to involve local communities in the active management of the area. “Over 30 percent of our land and sea are preserved national parks, so it’s humanly impossible to supervise all these areas,” he said. “The community can benefit economically from these areas and will also be prone to stay and take care of it instead of only coming there for short-term income.”

Visit Scotland, that country’s national tourism organization, which helped draft the declaration, has also taken a lead role. The organization has reduced its own carbon emission by 74 percent since 2008, and more than 850 local businesses have been given green tourism awards for their sustainability efforts.

Challenges persist

While the Glasgow Declaration has garnered great momentum and established common objectives, challenges lie ahead, especially when it comes to setting a global standard for reporting emissions figures for such a wide range of sectors within the industry, from tour operators to destinations, and airlines to cruise ships.

Signatories are expected to hold each other accountable and set common standards throughout international supply chains. Once action plans have been submitted within the next year, a reporting framework will be necessary. Anyone who fails to submit a road map within that time frame will be removed from the declaration.

“It is really important to bring value chains together,” said Catherine Dolton, the chief sustainability officer at IHG Hotels and Resorts. “Hotel developers, hotel owners, investors, franchisees, as well as the operators, are all impacting sustainability at different stages of the hotel life cycle.”

Visibly absent from the list of signatories were members of the cruise industry. The sector made a separate pledge to pursue carbon-neutral cruising by 2050 and reduce emissions 40 percent by 2030 in an annual environmental report, published last week by the industry trade group, Cruise Line International Association. While the report makes detailed commitments to reducing the cruise industry’s carbon footprint using new technology and alternative fuels, it does not address other environmental issues such as discharge of waste.

“Despite technical advances and some surveillance programs, cruising remains a major source of air, water (fresh and marine) and land pollution affecting fragile habitats, areas and species, and a potential source of physical and mental human health risks,” according to a recent report by the Marine Pollution Bulletin Journal.

Though there was some disappointment about the limited participation of some industries in the pledge, the overall sentiment was one of optimism and a belief that the declaration would lead to real change and less “greenwashing,” a term used to describe companies that try to portray themselves as more environmentally minded than they actually are.

“I’ve long been quite pessimistic about travel and tourism’s approach toward climate change,” said Mr. Wade of Intrepid Travel, which recently published a tool kit, available online, to help travel businesses measure and reduce their carbon emissions. “But now I’m really very optimistic because there is broad-level support from the industry to actually reduce emissions, and it’s the first time I’ve seen real concrete commitments from industry and governments.”

Follow New York Times Travel on Instagram , Twitter and Facebook . And sign up for our weekly Travel Dispatch newsletter to receive expert tips on traveling smarter and inspiration for your next vacation. Dreaming up a future getaway or just armchair traveling? Check out our 52 Places list for 2021 .

Ceylan Yeginsu is a London-based reporter. She joined The Times in 2013, and was previously a correspondent in Turkey covering politics, the migrant crisis, the Kurdish conflict, and the rise of Islamic State extremism in Syria and the region. More about Ceylan Yeginsu

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MONTHLY INSIGHTS March 04, 2024

U.S. Travel has temporarily paused our monthly data newsletter, however, the latest travel data is still available via the U.S. Travel Insights Dashboard . This dashboard is updated each month (member login required).

The U.S. Travel Insights Dashboard , developed in collaboration with Tourism Economics, is supported by more than 20 data sources. The dashboard is the most comprehensive and centralized source for high-frequency intelligence on the U.S. travel industry, tracking industry performance, travel volumes and predictive indicators of recovery including air and lodging forecasts, DMO website traffic, convention and group trends, travel spending and losses, traveler sentiment, among others to measure the health of the industry.

Key Highlights January 2024:

• Travel appetite started the year on a softer note, but overall growth continued. Air passenger growth remained positive, up 6% versus the prior year but lower than the double-digit growth seen through 2023. Foreign visits remained strong, up 24% YoY.
• Hotel room demand continued a trend of slight contraction falling 1% versus the prior year, while short-term rental demand grew 1%, a lower rate than 2023.
• A particular bright spot was that group room demand within the top 25 markets displayed solid growth of 9% relative to the prior year.
• The outlook for the economy remains fairly optimistic due to the strength of the labor market, looser financial conditions and healthy household and nonfinancial corporate balance sheets. This has filtered through to slightly higher consumer sentiment in February.
• Sentiment is also growing for upcoming leisure travel in 2024. The share of travelers reporting having travel plans within the next six months increased to 93% in January from 92% in December, according to Longwoods International’s monthly survey.
• Travel price inflation (TPI) fell slightly in January as a result of falling transportation prices. Sticky services inflation should see relief from decelerating wage growth. However, upside risks stem from rising healthcare costs, supply chain disruptions and slowing labor supply. Source: U.S. Travel Association and Tourism Economics

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Travel & Tourism Industry

International travel plays a critical role in the US economy. Prior to the COVID-19 pandemic, in 2019, international visitors spent $233.5 billion experiencing the United States; injecting nearly $640 million a day into the U.S. economy. The U.S. travel and tourism industry generated $1.9 trillion in economic output; supporting 9.5 million American jobs and accounted for 2.9% of U.S. GDP. At 14.5% of international travel spending globally, international travelers spend more in the United States than any other country. As recovery efforts continue, the International Trade Administration actively supports the industry via the twin pillars of the National Travel and Tourism Office (NTTO) and the U.S. Commercial Service . Working together, we provide a range of data and related products to support the international outreach and promotion efforts of U.S. destinations and attractions. With over 100 offices throughout the United States and in 75 countries around the world, we are where you are and where you want to be.

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As Taiwan recovers from the Covid-19 impact on the tourism industry, Taiwan travelers and the U.S. tourism exports to Taiwan has reached its peak since 2020. 

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25 Hotel Industry Statistics [2023]: Hotel Rate Trends And Market Data

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Research Summary. The hotel industry not only reaches across the globe but also spans a wide cross-section of options ranging from budget motels to luxury resorts, making it an interesting field to study. Here are the key statistics on the hotel industry:

There are at least 187,000 hotels in the world as of 2023.

There are an estimated 17.5 million guestrooms in the world.

The global hospitality industry is worth over $4.548 trillion as of 2022.

There are about 1.6 million people employed by the U.S.’s accommodation industry.

The global travel and tourism industry was worth $4.671 trillion in 2020 , down from its $9.17 trillion value in 2019.

The average U.S. hotel occupancy rate is 64.2% as of February 2023.

Hotel Industry Statistics by Consumer Preferences

78% of millennials would rather spend their money on experiences than on things.

Hotels with a significant number of high-quality photos on their websites see a 15% increase in conversion rates.

This is compared to hotels that use few and/or low-quality photos. Including good photos of hotel rooms and amenities helps travelers know what they’re getting into and better imagine themselves there.

TripAdvisor shared that the number of photos a hotel has on its TripAdvisor profile has the most impact on traveler engagement with the listing.

More specifically, properties with at least one photo see a 138% increase in engagement and are 225% more likely to receive a booking inquiry, and those with over 100 photos see a 151% increase in engagement and are 283% more likely to receive a booking inquiry.

Europe has the highest hotel occupancy rate of any region in the world.

As of 2019, European hotels have an occupancy rate of 72.2%, meaning an average of 72.2% of all hotel rooms are occupied.

US Hotel Industry Statistics

There are 90,562 hotel and motel businesses in the U.S.

This number is a 0.4% increase from 2021, which is on trend with the average annual growth rate of 0.4% that this industry has seen from 2017 to 2022.

There are approximately 5.29 million hotel rooms in the U.S.

The U.S. hotel and motel industry is worth $177.6 billion.

This industry is predicted to grow by 33.6% throughout 2022 as it continues to recover from the COVID-19 pandemic, although it’s seen an average annual decline of 2.4% from 2017 to 2022.

The U.S. tourism industry was valued at $545.11 billion in 2020.

In 2020, U.S. hotels had an average occupancy rate of 44%.

Hotel Industry Statistics by Employment

The U.S.’s accommodation industry employs about 1.6 million people.

In Q1 2019, there were 1.352 million gross job gains in the U.S. leisure and hospitality sector.

Here are data points for each quarter from Q1 2019 through Q2 2021.

In Q1 of 2019, there were 1.22 million gross job losses in the U.S. leisure and hospitality industry.

Here are the numbers for each quarter following that through Q2 2021:

The average employee of the U.S. leisure and hospitality industry makes $19.44 an hour.

32% of U.S. leisure and hospitality industry employees have access to employer-sponsored health care.

43% get paid vacation from their employers, and 50% receive paid sick leave .

Hotel Industry Trends and Projections

In 2019, the global hotels and resorts market was worth over $1.5 trillion.

This was just before the COVID-19 pandemic caused widespread lockdowns in 2020, and it was the pinnacle of seven years of nearly continuous growth.

From 2021 to 2025, the global hotel and travel accommodation industry is projected to have a CAGR of 7%.

This will result in a market value of $1.05 trillion in 2025. In 2020, the global hotel and travel accommodation market was worth $673.02 billion, and it grew to $801.9 billion in 2021, which is a CAGR of 19.1%.

In 2020, travel and tourism contributed $4.671 trillion to the global GDP.

While this is a significant amount of money, it is also a significant decrease from the $9.17 trillion it contributed in 2019. This is a result of the 2020 COVID-19 lockdowns that significantly reduced the amount of travel in the world.

From 2008 to 2018, the number of hotels around the world has increased by nearly 14,300.

Hotel Industry Statistics FAQ

What is the growth rate of the hotel industry?

The growth rate of the hotel industry is 19.1%. This was the CAGR from 2020 to 2021 as the global hotel industry reopened after the COVID-19 pandemic lockdowns began to lift.

What are the four segments of the hospitality industry?

The four segments of the hospitality industry are Food and Beverage, Accommodation (also referred to as Lodging), Travel and Tourism, and Entertainment and Recreation.

You don’t necessarily have to be traveling to enjoy the hospitality industry’s offerings. The Food and Beverage sector, for example, includes restaurants , bowling alley food, and concessions stands, not just hotel restaurants. As a result, this is the largest sector of the hospitality industry.

The Accommodation or Lodging sector includes hotels, campgrounds, rental homes, and any other facility that gives people a place to sleep. This includes resorts, motels, and hostels all alike.

The Travel and Tourism sector covers the actual act of traveling via airlines, cruise ships, trains, taxis, and more. Whether you’re traveling for leisure or business, chances are you’ll utilize at least one of travel and tourism’s offerings on a trip.

The last sector of the hospitality industry is Entertainment and Recreation. This sector is made up of all the activities that people do just for the enjoyment of it. These include:

Swimming pools

Spectator sports

Movie theaters

Participatory sports (e.g., scuba diving, golf, tennis)

Amusement parks

How many American hospitality workers were fired or laid off in 2020?

10.65 million American hospitality workers were fired or laid off in 2020. While About 1.2 to 1.4 million people in this industry lost their jobs each quarter throughout 2019, 1.695 found themselves unemployed in Q1 2020, and a whopping 6.331 million were suddenly unemployed in Q2 2020 due to the COVID-19 pandemic lockdowns.

Is the hotel industry recovering?

Yes, the hotel industry is recovering. The global hotel and travel accommodation industry is expected to have a CAGR of 7% from 2021 to 2025.

What are the latest trends in the hotel industry?

The latest trends in the hotel industry are high-tech, green facilities, alternative accommodation options, and incorporating experiences into hotel stays.

Hotels are beginning to implement more and more smart technology, whether it’s a keyless entry or turning on the AC with an app. In addition, many hotels are looking for ways to reduce their carbon footprint by conserving water, reducing single-use plastics, and earning their LEED certifications.

Another hotel industry trend is that travelers (especially millennials) are looking more toward alternative accommodation options, whether that’s a rental house or villa, a mobile home, or hotels with a personality that reflect the local culture rather than standardized branding.

Hotels are responding to this by focusing on opening boutique hotels and facilities that bring unique elements to their decor, amenities, and even floor plans.

The hotel industry is a major player in the global and U.S. economies. In 2022, the global hotel industry was worth more than $4.548 trillion and is projected to see a CAGR of 7% from 2021 to 2025. In the U.S. alone, the hotel and motel industry is worth $177.6 billion, and the tourism industry is worth $545.11 billion.

Lockdowns in response to the COVID-19 pandemic in 2020 significantly impacted this industry. The worldwide travel and tourism industry contributed $4.671 trillion to the global GDP in 2020, which is just over half the amount it contributed in 2019 ($9.17 trillion).

In the U.S., over seven million leisure and hospitality industry employees lost their jobs during the first six months of 2020, compared to the just over five million that found themselves unemployed throughout all of 2019. Hotel occupancy rates also dropped by 33.3% from 2019 to 2020.

Eventbrite. “ Millennials: Fueling the Experience Economy. ” Accessed on February 16, 2022.

Medium . “ The Importance of Imagery on Hotel Websites. ” Accessed on February 16, 2022.

Frederic Gonzalo. “ Photos Impact Bookings More Than Reviews. ” Accessed on February 16, 2022.

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IBISWorld. “ Hotels & Motels in the U.S. – Market Size 2005-2027. ” Accessed on February 16, 2022.

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Abby is a writer who is passionate about the power of story. Whether it’s communicating complicated topics in a clear way or helping readers connect with another person or place from the comfort of their couch. Abby attended Oral Roberts University in Tulsa, Oklahoma, where she earned a degree in writing with concentrations in journalism and business.

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Regenerative tourism: reinforcing the bond between locals, visitors and the destinations they love

Hot on the heels of Earth Day, we’re back with the second instalment of our two-part series on sustainability within the travel industry. In our earlier blog , we explored how the needs and desires of destinations and travellers have come to shape the very concept of sustainability. Likewise, we considered how this has resulted in a kind of empowerment among destinations, who are now taking an active role in helping engaged visitors to embrace more positive behaviours as they enjoy and explore a new place. 

And now — whether you want to think of it as a shift, a twist, or just another turn in the story that is sustainability —  we spin things yet again to take in this expansive topic from a different perspective: that of local residents. After all, in any destination, resident sentiment can be considered as a kind of barometer of the impact — positive or negative — that tourism is having on a given area. But how is this connected to sustainability? By the concept of regenerative tourism and the power that it has to connect and enhance the lives of visitors and residents and the very places that both groups share and enjoy.

The Challenge at the Heart of Regenerative Tourism

Like any other complex idea, sustainability in travel comes with its own set of jargon, which is why it’s worth being specific about the difference between sustainable tourism and regenerative tourism. Let’s be clear: both are positive concepts, but while sustainable tourism is about minimising the impact of travel and tourism on a place, regenerative tourism takes things one step further — enabling visitors to improve that same place, thereby leaving it in a better condition than they found it. Essentially, regenerative tourism is all about giving back. 

At the heart of the present conversation around regenerative tourism there lies a challenge, one that many destinations are now grappling with: the urgent necessity to strike a balance between the benefits of tourism and the drive to meet the needs — sometimes, at the most basic level — of those who live in areas of high tourism. Right now, this problem is probably best exemplified by the well-publicised issues concerning housing and accommodation (or a lack thereof) playing out in destinations as diverse as Malaga , Devon , Cornwall , Cape Town , Florence , Lisbon , and beyond. This is a situation that, in many areas, is fuelling resident resentment not just against tourists, but against the travel and tourism industry in the widest possible sense.

In the Real World: Using Engaged Visitors to Make a True Impact

While housing and accommodation — with regard to the struggles that many places are now facing to ensure adequate provision of this resource both for locals and visitors alike — is now regularly in the headlines, it’s only one example of the friction that can occur between residents and tourists within any given destination. From a resident’s perspective, other things — like overcrowding and even anti-social behaviour such as littering — can all too easily turn the local mindset against tourists and tourism. But by making an effort to embrace regenerative tourism, destinations utilise their visitors to create a positive impact on a place and, even better, help to create a positive impression on local residents, thus enabling them to see the value of tourism within their area.

When it comes to regenerative tourism, certain destinations are making tangible strides to offer travellers the opportunity to use their visits to make a positive impression both on the places and people they interact with during their travels. If you read our earlier blog, you’ll note that some of the destinations we are about to mention were also highlighted for their endeavours in terms of embracing sustainability over time. It’s hardly surprising, then, that these same places are building on that platform and using regenerative tourism to their advantage. 

For example, at Visit Bristol , visitors are positively encouraged to take part in picking up litter around the city's harbour area or to lend a hand at one of its urban gardens. Visit Norway has a slightly different take on the regenerative vibe, offering up itinerary suggestions for exploring less busy cities and towns, thus boosting the socio-economic impact for these areas while lessening the impact of over-tourism in places like Oslo and Bergen. And speaking of Bergen, it has recently partnered with Green Warriors of Norway , an organisation that is working to connect visitors with activities — like beach clean-ups or litter picking — that positively contribute to a designated area within the city. 

So whether you think of regenerative tourism as a shift, a twist, or just another turn in the story of sustainability, it’s clear that it has a true and tangible part to play in connecting visitors with destinations and, likewise, in reinforcing tourism’s potential for good among locals and residents around the world. 

This short blog barely scratches the surface of this vast topic, so if you want to learn more, join us for our webinar on May 9th for deeper insights and a more thorough discussion on regenerative tourism.

Jackie Reddy

As the content specialist for Simpleview’s EMEA marketing team, Jackie researches and writes engaging copy — including articles and case studies — for a whole host of European destinations. She loves talking to clients directly to tease out the issues and themes that matter to them, enabling her to craft content that truly represents their destinations.

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Prince Harry Talks The Travel Industry & Responsible Tourism: ‘Do Better’

T he Duke of Sussex has made comments on the travel industry and how he sees it moving forward. The prince is an adventurous international traveler and comes from one of the most traveled places in the world. Due to this and his global influence, his comments hit hard on the public. From sustainable travel to respecting communities abroad, Prince Harry sheds some light on the travel industry. Learn more about Prince Harry’s initiative and the civic responsibility that travelers have to the global travel industry. 

On The Travel Industry & Responsible Tourism

At the annual general meeting of Travalyst, Prince Harry (virtually) made clear statements about the reality of the travel industry. Travalyst is a non-profit initiative he launched in 2019. The organization focuses on making the travel industry more sustainable. In tandem with big names in the travel industry, Travalyst encourages travelers to take trips responsibly and respect communities abroad. Some of the organizations that Travalyst has formed a coalition with include Tripadvisor, Visa, Google, Expedia Group and Booking.com.  

So, the Travalyst meeting was an ideal place to further the global discussion on the wellbeing of the travel industry. Especially since the two day meeting brought together industry experts and some of the biggest brands in travel. Prince Harry spoke on the successes of Travalyst, like vetting sustainability certifications for accommodation providers. The organization plans to share the list of certified providers to the public. This resource will help bring attention to places that are trying to prioritize sustainability. 

Travalyst also supports programs that make other types of strides to improve society and as a result, the tourism industry. For example, Invisible Cities is one organization that Travalyst supports. It is striving to train those that have been impacted by homelessness to be tour guides in their city. But another part of the address focused on how travelers can preserve and improve travel and tourism. 

Pince Harry made comments on how the travel industry should, in general, support those that keep it going. He says that the industry needs to “do better” as a whole. But he particularly notes that the industry needs to improve efforts for travel sustainably. In his words, “Travel and tourism relies on destinations, held together by communities, without which we have nowhere to travel to. Communities are the beating heart of travel, and we must do better by the people who are the custodians of the places we visit.” 

Sustainable Travel

The responsibility of sustainable tourism, in part, falls on travelers. Especially since communities abroad are directly impacted by tourist activity and the overall tourism industry. This makes it is incredibly important for travelers to consider their footprint. But with the progression of climate change, travelers are starting to take sustainability more seriously in many ways. So things like making eco-friendly consumer decisions, traveling to immerse themselves in local culture and having a positive impact on the communities in their travel destination have become more important. To create a world where restorative tourism is a reality, first it is critical to spread awareness and make tangible change. Even though Prince Harry is a very influential person and therefore can gain a lot of attention for the cause, everyday people and those that travel can make a significant impact on the travel industry.

What AI means for travel—now and in the future

“Revenge travel.” It’s what a lot of people are doing these days—hitting the runways in big numbers to make up for travel time lost during the pandemic. On this episode of The McKinsey Podcast , McKinsey partners Alex Cosmas and Vik Krishnan join global editorial director Lucia Rahilly to discuss a new report on travel in the age of AI : what the technology’s promise and pitfalls are and what it may mean for the travel industry overall.

This transcript has been edited for clarity and length.

The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.

The promise of AI

Lucia Rahilly: Much of the research for the report drew from interviews with executives at 17 companies across five types of travel businesses. One of those executives is Luca Zambello, CEO of Jurny—an AI-fueled hospitality platform. He says AI will be the new normal.

Luca Zambello: We’re at the very beginning of the hockey stick. Economically, we are at the start of what is potentially the biggest technology disruption that humanity has ever seen.

Lucia Rahilly: So everyone is talking about the disruptive juggernaut that is AI, and particularly gen AI [generative AI]. At a super-high level, and acknowledging that we’re still in early days, what do we expect this to mean for the travel industry in particular?

Vik Krishnan: The travel industry is unquestionably going to be significantly disrupted by AI. Whether it’s gen AI or other forms of AI that have been around for some time remains to be seen. It’s quite clear that if you work through the customer journey and the process of trying to understand where you want to go, where you want to stay, what are the things you want to see, how you want to plan your day-by-day itinerary, gen AI significantly eases the process of travel discovery.

If you then step into what this means for travel suppliers, which includes airlines and hotels and cruises and car rentals and rideshare providers, the promise of AI is very much to help them deliver on the promises, both explicit and implicit, that they make to their customers.

Gen AI significantly eases the process of travel discovery.

What I mean by that is, very often, the expectations of travel are that your flight is on time, your bags get delivered to you safely, you then get to your hotel, your hotel room is available to check into when you get there, and you have a room that provides exactly what you asked for. That baseline expectation is one that many travel companies have historically struggled to meet.

What AI can do is help airlines ensure that planes are on time. It can help hotels ensure that what they deliver in terms of staffing and the product promise is consistent with what they advertise in their marketing and branding strategies.

Alex Cosmas: Not only is travel and hospitality the world’s largest sector, but it’s actually the most intimate sector. That means the answer for each of us to what a good experience looks like—whether I’m traveling for leisure or for business—is, by definition, fundamentally different. And the promise of AI has been to take the pattern of history, take the pattern of millions, and boil that down to the individual response that is relevant to me as a segment of one.

Nowhere is that promise needed more than in travel, where the experience should be a segment of one. That’s what makes it magical. To be clear, AI is already being applied in the travel sector in spades—specifically, in the operation of schedule assets and the optimized allocation of rooms and crews. That’s been true for decades, and it’s only getting better.

But the customer-facing applications of AI are only now really becoming next-generation. And for the most part, in travel, the best AI applications will largely be opaque to customers, because they’ll still be delivered through the mediums that customers prefer: often through humans, through the front line, through desk agents, through guest agents.

AI is already being applied in the travel sector in spades—specifically, in the operation of schedule assets and the optimized allocation of rooms and crews.

That’s ideally the promise. But the starting point is to say we can’t suddenly expect that customers will prefer to interact through more digital channels than they have in the past. Travel is a very human-centric business. And so the best AI, the best models, will be delivered through traditional channels.

How AI can change travel—for the better

Lucia Rahilly: What kind of value might come from using gen AI in the travel industry?

Alex Cosmas: Our latest estimates suggest that gen AI alone, across sectors, is bound to unlock $2 trillion to $4 trillion of incremental value.

Lucia Rahilly: Wow.

Alex Cosmas: Therefore, not surprisingly, capital is chasing the disruptive sector of AI.

Lucia Rahilly: What are some good examples of products that customers might expect to be using or that might be in the background enhancing customers’ experiences in the future?

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Vik Krishnan: Imagine the last time any of you tried to book a trip. You probably started on a search engine such as Google, or you started at an online travel agent such as Expedia, or you started at an actual supplier website if you had some certainty on what airline you wanted to fly or which hotel you wanted to stay at. You probably started with a little box where you put in your destination, you put in your approximate dates, and then you had the search engine present to you a series of results that may or may not have met your needs.

What we’re imagining in a future with gen AI or AI in general is that you start with something much more free-form and say, for example, “I’m looking to plan a trip with my family to New Orleans for a week in October. Can you help me find a hotel that has a pool for my seven-year-old and is within walking distance of the French Quarter?”

Wouldn’t that experience be much easier in terms of trying to figure out where you want to stay and what you want to do, as opposed to getting a list of a thousand hotels in an order that may or may not meet your specific preferences and what you actually want out of that trip? It is one of the most obvious examples wherein customers can see a real difference in what gen AI can do to help them with the travel discovery process.

Alex Cosmas: The other application of AI that I’m excited about is this: every customer gives tells. They drop digital breadcrumbs of things they like and don’t like when they bounce off of the page of a dot-com when they’re shopping; when they abandon a cart; when they return less frequently to search; when they arrive on a page only to check a single itinerary on a single day, on a single fare, rather than browsing for 20 minutes.

All of these are small tells that we as consumers provide travel brands. And so the ability to record, “I actually know what Alex is keen on in general and frankly less keen on and less likely to convert on,” and turn that into relevant offers is really important.

AI is only part of the answer

Lucia Rahilly: Where are we in terms of companies really embracing the use of this next-gen AI and other related technologies?

Alex Cosmas: We’re pretty far down the path of companies both embracing traditional AI and experimenting with gen AI. Very few of the airlines, hotels, cruise lines, and suppliers that I’ve interacted with are not already embracing deployment and actively experimenting with advanced tech. It’s only going to grow.

But there is risk. More is not always better. Faster is not always better. There’s a bit of, let’s say, a cautionary tale that we’ve learned from other sectors, which is that first off, AI is only part of the answer.

I like to say it doesn’t matter if you got the answer right if you got the delivery wrong.

The digital-delivery mechanism is how I go about delivering the answer: a mobile app, a push notification, an e-commerce experience, a kiosk, digital signage, or data just given to the front line. Those mechanisms are as equally important as or, I’d argue, even more important than the predictive and gen AI models behind them.

Vik Krishnan: To build on Alex’s point about getting the delivery wrong, many of you listening have probably been on an airplane in the last year. How many times have you experienced the outcome of landing, pulling toward the gate, stopping short on the tarmac somewhere, and it turns out the gate’s not available yet. Therefore, you have to wait for the other aircraft to taxi out, so your plane can then pull into the gate.

The reality is that putting together an operational execution plan involves data from so many different sources that aren’t necessarily pulled together in a large model. So it doesn’t necessarily enable or unlock this type of orchestration. And this is where AI can be enormously helpful.

There are companies out there that try to understand turning an aircraft, which is the process of essentially getting it from arrival to departure for the next flight. That involves actions both above the wing—for example, getting passengers off and onto the plane, getting the aircraft catered—and below the wing—for example, getting bags on and off the plane.

It involves refueling aircraft. It involves a number of other maintenance-related and ground-handling-related activities that many consumers don’t see. All of that is an extremely delicately orchestrated ballet that happens at an airport every single day, while involving multiple third parties and several different suppliers. It involves a fuel provider. It involves a ground handler. In some instances, it involves a different gate agent than the airline itself. That orchestration requires data and communication of very, very large volumes of information.

There are companies out there that are now saying, “We can actually identify when, during an aircraft turn, something didn’t happen according to schedule.” In other words, that catering truck didn’t pull in three minutes after arrival as it was expected to, which induced a delay. And that delay then allowed for a replanning of the entire turn process, so as to deliver an on-time departure. AI has an extremely large role to play in helping deliver on that promise in a way that suppliers have historically struggled to.

Don’t be AI stranger

Lucia Rahilly: In order to deliver on that process, understanding the data is critical. Here’s Ella Alkalay Schreiber, the GM of fintech at Hopper.

Ella Alkalay Schreiber: Machine learning is important, gen AI is important, predictive AI is important—but the actual challenge is to understand the data, ask the right questions, read prediction versus actual, and do this in a timely manner. The actual challenge is the human thinking, the common sense.

Lucia Rahilly: “Know your customer” is really a business axiom at this point. What does understanding your customers mean specifically for the travel industry?

Alex Cosmas: It means a few things. AI models learn the same way humans learn. It’s a test-and-learn process. I ask a question. I observe a behavior. That reinforces either my false or positive conception of who you are and what makes you tick. If you can’t measure cause and effect precisely, then avoid running an experiment entirely.

This is what our general advice is to our clients. I’d rather they experiment correctly on something small than swing for the fences and have no idea where the ball lands. That’s particularly true in microexperiments, where I have individual customers, where I provide individual treatments, but I have to be able to measure the response. If you can’t measure it, don’t bother. Focus your energy and resources on a different experiment.

This is what our general advice is to our clients. I’d rather they experiment correctly on something small than swing for the fences and have no idea where the ball lands.

If a brand, for example, doesn’t have the digital tech to be able to send a tailored offer to me as an individual, then you don’t really need to know my personal willingness to pay. In that case, stick to the microsegment or the macrosegment and take action that way. If you can’t send a personalized message without making it feel generic, then don’t.

Vik Krishnan: The experience of hyper-personalization has to feel authentic. So in other words, a flight attendant coming up to you and saying, “Hey, I know you normally like a Diet Coke with a slice of lime. Is that what you’d like this time?” is different from presuming what your preferred drink might be. That might be an example of how AI actually delivers on hyper-personalization, but with a bit of a human touch so it doesn’t appear creepy.

Lucia Rahilly: Both of you are deep in this industry. Any examples that come to mind of companies that are really doing AI right? And if so, how?

Vik Krishnan: Hotels that actually understand or acknowledge your past history of staying at that specific property—that’s quite a personal touch I really appreciate. But the reality is many hotels struggle to even understand basic facts such as the frequency, duration, and purpose of a recent stay. Many hotels don’t easily make that type of information available to their frontline staff. And so empowering those employees to use that information to deliver a hyper-personalized greeting or experience is a good example of companies using AI well.

Alex Cosmas: If done right, the frontline workforce should look and feel like superheroes powered by AI. There’s a luxury fashion retailer that arms its sales associates with iPads to link shoppers to the styles and the sizes they searched for online. That’s pretty cool. Now, augment that with the propensity models in the background that give the agent a steer to what a customer wants, and suddenly they appear clairvoyant. Think about that application in travel. There are far more interactions on average in a travel journey.

So as consumers, how do we preserve the magic of travel, which is more about heads-up time and being immersed in our surroundings, rather than about heads-down time and researching on a device? It means more agents who surprise and delight; say, “Welcome back”; say, “Happy birthday”; know you arrived earlier than planned; and swap the room preemptively so you could get in and get on your way. And that’s what we call knowing your customers like you know your friends.

I’ll share one example. When I check into a hotel, I really don’t like the kiosk and the app check-in. But I love it for checking out. For other customers, the complete inverse is true. My hotel can know that. It certainly knows how I check in and check out. It should act on that or understand the why, just as you understand your friends. This is the test-and-learn experiment that we talked about earlier and that most suppliers can begin right now.

AI and talent: What’s next?

Lucia Rahilly: Alex, that makes a very nice segue to Christiaan Hen, chief customer officer at Assaia, talking about frontline talent using AI as an assistant.

Christiaan Hen: Sometimes, people say automation might be a risk to people’s jobs, but that’s not the case here, because there are not going to be enough people to do these jobs in the first place. I like to see it as we’re equipping people with the right tools to do their jobs in a better way to accommodate for the additional workload that is coming.

Lucia Rahilly: This clip invokes the palpable fear that AI and automation will eliminate people’s jobs. We hear that time and again. How do you see these advanced technologies changing things for the front line in the travel industry?

Vik Krishnan: I see technology helping frontline employees do a better job more than I see it eliminating those jobs. We don’t necessarily see, for example, AI reducing flight attendant staffing any time soon, because those flight attendants are on the airplane to provide primarily for your safety, followed by the guest experience.

We see AI in many instances allowing those flight attendants to deliver a better customer experience, because they know that passenger in seat number 17C better as a result of the information provided to them. But it’s not replacing their jobs.

In certain pockets of the economy, technology and AI will end up replacing people. The reality in travel, though, is that the quality of the guest or passenger experience for so many people is tied to human interaction. Consequently, we don’t necessarily see a large-scale replacement of people here by technology and AI.

Alex Cosmas: Let’s look at the facts for a moment. Post-COVID-19, the travel sector employs 12 percent fewer staff than pre-COVID-19. And that’s not necessarily by choice. It is hard to find folks with the hospitality gene who genuinely want to deliver for guests, engage with them, and serve at the highest level day in and day out.

That’s part of the reason we see a smaller workforce in travel today than we have in the past. It takes twice as long, an average of five to six weeks, to fill roles as it did before the pandemic. Those with that hospitality gene would love nothing more than spending less time fixing broken itineraries, fixing issues that frankly could be automated. They’d rather spend their energy serving, which is what travel and hospitality is all about.

It should be a net-positive growth. The travel sector itself should grow as a result, creating jobs. We estimate the travel sector to grow at roughly 6 percent over the next decade, which is twice the rate of the overall economy.

Lucia Rahilly: Could AI and related technologies help with training folks who don’t come by that gene naturally but could be trained to fill those roles more efficiently?

Alex Cosmas: Absolutely. We’re already seeing applications of virtual reality, augmented reality, and AI coming together to offer more efficient ways to enhance and accelerate employee training, because you can throw live, immersive scenarios in front of employees at a higher clip than they would get organically on the job.

Oftentimes, the same is true not just of the front line but also of training corporate and call center employees. AI can learn from the patterns of thousands upon thousands of call-ins and transcripts—which no single human can ever be expected to go through—boil them down to the top ten core issues and suggest outcomes that seem to resolve 70 percent of situations. That’s the power of AI in training.

Lucia Rahilly: Alex, you mentioned virtual reality. Would travel drop if you could experience Bhutan from your sofa rather than actually having to take an arduous flight?

Alex Cosmas: Here’s my honest read on it. We’ve been able to visit Bhutan virtually for over a decade through YouTube and through National Geographic . And yet, travel is at an all-time high. And it’s because we all, as social animals, continue to enjoy experiencing new things, meeting new people, hearing new stories, and being inspired by a new site’s history and cuisine.

The numbers also suggest that we are in an unprecedented growth phase for travel. We are also in a phase where, over the past 15 years, customer satisfaction has steadily grown, despite how much we all like to beat up on our travel suppliers.

Consumers are admitting that the area they want to splurge on in the next year is travel and hospitality, such as experiences and restaurants. So they’re giving us that gift of their wallets and their trust. We have to deliver on that expectation as a sector. Gen AI, traditional AI, augmented reality, virtual reality, and digital technologies are going to help us deliver on the promise.

Alex Cosmas is a partner in McKinsey’s New York office. Vik Krishnan is a partner in the Bay Area office. Lucia Rahilly is the global editorial director and deputy publisher of McKinsey Global Publishing and is based in the New York office.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

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Amsterdam blocks construction of new hotels to fight overtourism

Dutch officials are trying to limit the number of tourists flooding amsterdam.

In another attempt to crack down on overtourism, officials in Amsterdam are banning the construction of new hotels in the Dutch capital.

The policy, announced Wednesday, only permits new hotels in a one-in, one-out system, meaning a new hotel can be built only if another closes. New hotels may not exceed the bed count of the previous hotels and must be “better,” per the city’s release, with more modern and sustainable features.

“Amsterdam says ‘no’ to new hotels,” reads a translated statement from city officials. “We want to make and keep the city livable for residents and visitors.”

The effort follows initiatives in Amsterdam to limit the influx of tourists into the city, a destination known for its tolerant drug policies, sex industry and liberated party scene.

In Amsterdam, people are not prosecuted for buying up to 5 grams of cannabis, which can be purchased in coffee shops. For years, city officials have been trying to rein in hordes of “nuisance” tourists, or those who are attracted to the city by the promise of a night of debauchery.

The city council recently implemented the “ tourism in balance in Amsterdam ” policy, which set a maximum number of overnight stays and day visits in the city, capping the annual visitor count at 20 million people per year. Wednesday’s guidance re-ups that regulation; the number of hotel nights in 2023 was 20,665,000, according to the city.

“We are now taking more measures to ensure that the number of hotel stays does not increase even further,” the city’s statement read.

Last year, seeking to curb the rowdy crowds of the Red Light District and offer residents a better night’s sleep, the city cracked down on public pot smoking in the streets and limited the hours of operation for certain restaurants and sex establishments.

Amsterdam also launched a “ Stay Away ” campaign, directly targeting British men between the ages of 18 to 35. The demographic frequents the city for “stag,” or bachelor, parties, which residents say are disruptive .

Also in 2023, city officials adopted a proposal to relocate a cruise ship terminal . In addition to addressing pollution concerns, the move sought to prevent crowds of tourists from flooding the city’s center upon docking.

It’s unclear how the city plans to enforce the new hotel construction policy; according to the release, new hotels already under construction may continue. That includes 26 hotels with existing rights.

Colleen Grablick is a writer based in D.C. Follow her on X: @colleengrablick .

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Klook Plans Partnership with Thailand as the Country Skyrockets in Popularity

Jesse Chase-Lubitz , Skift

April 25th, 2024 at 2:33 PM EDT

Thailand remains a strong destination post Covid. Tour operators are flocking to the country and playing a significant role in how travel evolves.

Jesse Chase-Lubitz

Klook, a leading platform for travel experiences in Asia, signed a letter of intent with the Tourism Authority of Thailand to boost experiences in the country. The company is hoping to double the number of bookings it has for tourism packages to Thailand this year.

Klook says it is focusing on events, from Muay Thai matches to music festivals to Michelin visits and river cruises. The collaboration should have a particular impact on ticketing, as it allows the company to offer an integrated booking experience to major festivals and top attractions. 

Klook is also planning to promote the less obvious attractions and support small to medium operators by providing digitalization tools that can bring offerings online and showcase them to a global audience. 

Thailand Gaining in Popularity

Thailand is a long-time travel favorite and it bounced back strong after COVID. Klook says the country has had a 44% growth in foreign tourist arrivals over the past year and a Travel Pulse survey shows that travelers are looking to increase their target budgets for Thailand in 2024 by up to 50%. 

The Tourism Authority of Thailand conducted its own survey echoing these results . They found that tourists are spending more on luxury accommodations despite higher airfares and that the use of online platforms for travel arrangements is rising, with tour operators “still playing a significant role.”

Other tour operators, such as EF World Journeys, which offers educational tours, say Thailand is a growing favorite for North American travelers and that it remains one of the top three most popular destinations in Asia. 

“Year-to-date, EF Go Ahead Tours has realized nearly 60% year-over-year growth in bookings to Thailand, adding several new tour offerings in the country to meet the demand in the region,” says Heidi Durflinger, President of EF World Journeys which operates two of their offerings.

“Based on our trending destinations data, which is based on thousands of demand indicators amongst younger adult travelers (18-35), tours in Thailand have been a consistent top 5 destination for bookings during Spring Break, but we are also seeing strong demand for Thailand from travelers seeking international beach vacations all year round,” said Heather Leisman, President, EF Ultimate Break.

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Tags: Klook , thailand , tourism

Photo credit: Klook & Thailand Tourism Authority Tuk Tuk at Wat Ratchanadda and the Loha Prasat, Buddhist temples in Bangkok. Source: Klook