TOURISM WATCH Quarterly Report: Q2 2024 Published October 2024 SUMMARY As tourism growth rates moderate, value-driven opportunities arise • GLOBAL OVERVIEW (P.1): In the second quarter of 2024, global tourism demand continues to grow at double the rate pre-COVID-19 (8 percent year-on-year), though this is slower than in the previous quarter (19 percent), likely impacted by ongoing economic, geopolitical, and climate events. Forward-looking indicators suggest a moderation of travel in the second half of 2024, while the increasing importance of longer stays presents an opportunity to offer lower carbon footprint and more personalized and quality-driven experiences that cater to travelers seeking sustainable and inclusive options. • REGIONAL OVERVIEW (P.3): Ongoing conflicts are impacting the tourism economy of affected countries, especially in the Middle East. The World Tourism Day theme of “Tourism and Peace” highlighted tourism’s role in fostering peace through valuing and preserving cultural and natural heritage, and nurturing coexistence. In Europe and Central Asia, increasing demand for emerging destinations, coupled with regulatory and capacity improvements, show positive prospects for the region. • SPECIAL POLICY INSERT (P.7): Developing sustainable nature-based tourism can provide jobs to rural areas while providing revenues to support conservation. Africa has a large young population and high youth and rural unemployment. It also has a large asset base and comparative advantage in nature-based tourism. The World Bank Group has a comprehensive set of tools to support and monitor the sustainable development of nature-based tourism and enable private sector development and community engagement. GLOBAL OVERVIEW Between April and June 2024, an estimated 350 million Figure 1. International Tourist Arrivals international tourists traveled globally. This is an 8 percent 180 increase from the same period in 2023, reaching 95 percent of 160 INTERNATIONAL TOURIST ARRIVALS (MILLIONS) 2019 levels (Figure 1). This year-on-year (y/y) growth was slower 140 than Q1 2024, likely affected by ongoing economic and geopo- 120 litical tensions. In comparison, Q1 2024, still rebounding from 100 80 COVID-19, saw a 19 percent increase from the previous year. 60 40 Compared to the pre-pandemic period, in 2024 travelers are 20 spending about one extra day on vacation, particularly to 0 lower-cost destinations, creating opportunities to generate Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec higher local spending (Mastercard). Travelers are also priori- 2019 2023 2024 tizing experiences. Higher load factors than previous years (85 Source: UN Tourism Data Dashboard and Barometer, 2024. percent in June) indicated higher demand for air travel (IATA). Note: 2024 numbers are approximated based on growth numbers from 2019. Global occupancy rates in accommodation establishments of the year, revenue per available room (RevPAR)—an indicator reached 70 percent in June 2024, the same registered levels of hotel performance—saw y/y growth in all regions of between of last year (STR). Europe led performance in occupancy rates 2 to 10 percent (STR). This is likely the result of both increases in Q2 2024, especially Northern Europe. In the first five months in provision of services costs and pent-up demand. Tourism Watch - Quarterly Report: Q2 2024 1 Trade in global services surged in early 2024, fueled by strong Figure 2. Tourism vs. the Broader Economy travel growth (Figure 2). The most complete recent trade data, (Services and Merchandise Trade) from Q1 2024, indicated that trade in services reached levels 140 34 percent higher than pre-pandemic (2019) and 8 percent 120 higher y/y. Forty percent of this y/y change was attributed to INDEX (2019=100) 100 growth in travel services, followed, to a lesser extent, by growth in construction and goods-related services. Merchandise trade 80 showed slight quarterly growth, though trade levels remained 60 2 percent below 2023 y/y.1 40 20 0 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Recovery in travel receipts was widespread in the first 6–7 months of 2024, with some countries exceeding pre-pandemic revenue. For example, in Q2 2024, Albania saw an increase of TRAVEL SERVICES MERCHANDISE 129 percent from Q2 2019 levels, followed by Serbia (125.5 Source: World Trade Organization, 2024. percent) and Pakistan (88 percent) (UN Tourism). Large Note: Figure includes 77 territories which accounted for 88 percent, 89 percent source markets reported an increase in outbound travel and 86 percent of overall trade in goods, services and travel services respectively in 2019. expenditure through July 2024, for example, Germany and the United States saw expenditures rise by 38 percent and 32 percent, respectively. Elevated prices in the travel industry Figure 3. U.S. Consumer Price Index and U.S. boosted demand for travel to countries like Japan and Argentina, whose currency was weaker against the dollar Travel Price Index (Mastercard). 25% 20% Y/Y CHANGE 15% Year-on-year travel inflation—measured by the U.S. Travel Price Index—stabilized around zero in June 2024 (Figure 10% 3). Airfare costs continued to decrease y/y in Q2 2024 at an 5% average rate of 5.6 percent, while food away from home prices 0% went up 4.1 percent. In both cases, growth rates slowed in -5% comparison to previous quarters, signaling a return to normal. Apr-22 Jun-22 Aug-22 Oct-22 Dec-22 Feb-22 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-23 Apr-24 Jun-24 The perceived risk of inflationary pressures on the global tourism industry has slightly declined compared to Q1 2024 (ETC). Broader inflation—measured by the U.S. Consumer Price CONSUMER PRICE INDEX (U.S.) TRAVEL PRICE INDEX (U.S.) Index—remained stable at levels of about 3.2 percent and is Source: U.S. Travel Association and U.S. BLS, 2024. expected to decline (World Bank). Figure 4. Forward-Looking Tourism Indicators Looking ahead, indicators point to a moderation of travel 100 60 toward the end of 2024. In June 2024, the Travel Sentiment Score reached its lowest annual point since January (37 percent 90 50 TRAVEL SENTIMENT SCORE compared to 2019 levels), following a sharp decline in May 80 (Figure 4). Additionally, the UN Confidence Index for May–June 70 INDEX (2019=100) 40 stood below the forecast level for this period (UN Tourism). 60 International air travel demand—as proxied by flight bookings— 50 30 is higher than the previous year but on a downward trend 40 20 since the peak of September 2023 (OAG). Due to climate 30 concerns, travelers are seeking more off-season trips, potentially 20 10 correcting for seasonality effects. Specifically, 8.5 percent 10 of Europeans are changing holiday months due to changing 0 0 climate (ETC). Overall, global inbound visitor arrivals are forecast Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 to grow 16.1 percent in 2024 and 13 percent in 2025 (ETC, Tourism Economics). FLIGHT BOOKINGS TRAVEL SENTIMENT SCORE 1 For additional information on global trade, please refer to the World Bank’s Source: UN Tourism Data Dashboard, OAG Traffic Analyzer and TCI Trade Watch. Research, 2024. Tourism Watch - Quarterly Report: Q2 2024 2 REGIONAL OVERVIEW In Q2 2024, estimated aviation passenger arrivals—a proxy for in comparison to 2019 (18 percent). While the tourism trends in tourism arrivals—increased by 14 percent y/y (Figure economies of countries affected by the current conflict have 5). All regions grew in passenger arrivals compared to the same been severely impacted, these effects have been localized and period in 2023, however Eastern and Southern Africa (AFE) was almost 90 percent of MENA countries achieve y/y positive the only region that achieved higher y/y growth than in Q1 2024, growth. The World Tourism Day 2024 theme of “Tourism and reflecting the post-pandemic recovery deceleration. East Asia Peace” stressed the role of tourism in fostering peace through and the Pacific (EAP) continues to have the fastest y/y growth, valuing and preserving cultural and natural heritage, and though it remains well below pre-pandemic levels (13 percent). nurturing coexistence. UN Secretary General António Guterres stressed the importance of tourism in promoting economic Despite ongoing conflicts in parts of the region, Middle East interdependence, encouraging cooperation and peaceful and North Africa (MENA) overall saw the highest growth development (UN Tourism). Figure 5. Change in Estimated Aviation Passenger Arrivals Across Regions Y/Y Q2 2024 vs. Q2 2019 and vs. Q2 2023 growth 40% 32% 30% 20% 18% Y/Y CHANGE 15% 14% 12% 12% 13% 8% 9% 9% 10% 8% 6% 8% 4% 3% 2% 0% -10% -7% -13% -20% Eastern and Western and East Asia Europe and Latin America Middle East North South World Southern Africa Central Africa and the Pacific Central Asia and the Caribbean and North Africa America Asia Y/Y Q2 2024 VS. Q2 2019 Y/Y Q2 2024 VS. Q2 2023 Source: OAG Traffic Analyzer. Turning to individual economies, in Q2 2024 y/y changes Globally, the destinations with the greatest y/y growth in in estimated aviation passenger arrivals were positive for estimated aviation passenger arrivals were Turkmenistan 87.6 percent of reporting territories (198 out of 226) (Figure (92 percent growth), Niue (91 percent growth), and Anguilla 6). As with the previous quarter, conflicts were the main (90 percent growth). China lost momentum, falling to 7th cause of annual declines in passenger arrivals. In Jordan, air position (60 percent growth compared to 227 percent in the connectivity with source markets was reduced due to the previous quarter). The low- and middle-income destinations cancellation or reduction of routes operated by low-cost with the greatest growth rates in each region were Zimbabwe carriers (Jordan Ministry of Tourism and Antiquities). New for AFE (29 percent growth), Burkina Faso for Western and Caledonia saw negative 14 percent growth in arrivals due to Central Africa (AFW) (28 percent growth), Solomon Islands for conflict. Vanuatu’s slow performance was attributed to Air EAP (61 percent growth), Moldova for ECA (80 percent growth), Vanuatu’s liquidation in May 2024, with these passenger Belize for Latin America and the Caribbean (LCR) (24 percent seats not yet captured by competing airlines. In contrast, growth), Syrian Arab Republic for MENA (47 percent growth) a number of destinations in Europe and Central Asia (ECA) and Bhutan for South Asia (SAR) (34 percent growth).2 Figure show encouraging signs. The increased visitation to lesser- 6 represents y/y changes to estimated aviation passenger known destinations like Montenegro and Albania (57 and arrivals in green (for growth) and red (for reductions). Figures 53 y/y growth, respectively) could help ease congestion in 7–13 feature these y/y changes by region only for low- and Europe’s over-touristed areas. Available international inbound middle-income countries (X-axis), which are the focus of the seats multiplied by 3.4 in Albania between Q2 2019 and Q2 World Bank Group.3 2024. Both Bulgaria and Romania became full Schengen 2 This excludes countries whose tourism contribution to GDP is not reported by the members from March 31, 2024, lifting the air and sea internal World Travel and Tourism Council (WTTC), except for Bhutan. 3 Countries are ordered by the importance of tourism to their economy (tourism’s border controls in the area (EC), which is expected to facilitate contribution to GDP; Y-axis). Note that contribution to GDP has been updated to inbound arrivals. 2023 with respect to previous issues, in which data was from 2019. Tourism Watch - Quarterly Report: Q2 2024 3 Figure 6. Change in Estimated Aviation Passenger Arrivals, Q2 2024 vs Q2 2023 -46% 92% No Data Source: OAG Traffic Analyzer. Note: Incomplete data for Monaco, North Korea, Ukraine, and West Bank and Gaza. This map was produced by the Cartography Unit of the World Bank Group. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Figure 7. Eastern 20 Mauritius and Southern Africa Y/Y Change in Estimated Aviation Passenger Arrivals 15 Lesotho TOURISM % GDP (2023) (Q2 2023–2024) Namibia Botswana 1. Comoros 2. Tanzania 10 1 Madagascar 3. Ethiopia Sudan 2 Rwanda 4. Uganda South Africa Kenya 5. Mozambique Zambia Zimbabwe 6. Eswatini 4 3 7. Malawi 5 76 5 Burundi Source: OAG Traffic Analyzer; Angola WTTC. Congo, Dem. Rep. 0 −40 −20 0 20 40 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS Tourism Watch - Quarterly Report: Q2 2024 4 40 Figure 8. Western and Central Africa Cabo Verde Y/Y Change in Estimated Aviation Passenger Arrivals 30 (Q2 2023–2024) TOURISM % GDP (2023) 1. Senegal 2. Ghana 20 3. Togo 4. Benin Gambia, The 5. Sierra Leone São Tomé and Principe 6. Guinea 10 Mali 7. Congo, Rep. 1 Cameroon Source: OAG Traffic Analyzer; Niger 2 Côte d’Ivoire Ghana Central African WTTC. 4 3 Nigeria 5 6 Sierra Leone Republic 7 Burkina Faso 0 −10 0 10 20 30 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS 40 Figure 9. East Asia and the Pacific Fiji Y/Y Change in Estimated Aviation Passenger Arrivals 30 (Q2 2023–2024) TOURISM % GDP (2023) 1. Tonga 2. Vietnam 20 3. Vanuatu Philippines 4. Indonesia Cambodia Source: OAG Traffic Analyzer; Kiribati WTTC. 10 Thailand Malaysia China 1 2 Lao PDR Mongolia 3 4 Myanmar Papua New Guinea Solomon Islands 0 20 40 60 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS 30 Figure 10. Europe Montenegro and Central Asia Y/Y Change in Estimated Albania Aviation Passenger Arrivals (Q2 2023–2024) Georgia 20 TOURISM % GDP (2023) 1. Serbia 2. Belarus Source: OAG Traffic Analyzer; Armenia WTTC. Kyrgyz Turkiye 10 Republic Bulgaria Moldova Tajikistan Azerbaijan 1 2 Uzbekistan North Russian Federation Macedonia Kazakhstan 0 −20 0 20 40 60 80 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS Tourism Watch - Quarterly Report: Q2 2024 5 Figure 11. Latin 80 America and the Caribbean St. Lucia Y/Y Change in Estimated 60 Aviation Passenger Arrivals (Q2 2023–2024) Grenada TOURISM % GDP (2023) 1. Dominican Republic 2. Mexico 40 3. Honduras St. Vincent and the Grenadines Jamaica 4. Nicaragua Belize 5. Argentina 6. Brazil 20 7. Bolivia Dominica 2 1 El Salvador 8. Guatemala Haiti 34 5 Costa 9. Paraguay Cuba 786 Rica Peru 10. Ecuador 9 11 10 Colombia 0 11. Suriname −40 −20 0 20 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS Source: OAG Traffic Analyzer; WTTC. Jordan Figure 12. Middle 20 East and North Africa Y/Y Change in Estimated 15 Aviation Passenger Arrivals TOURISM % GDP (2023) (Q2 2023–2024) Tunisia Morocco Source: OAG Traffic Analyzer; WTTC. 10 Egypt, Arab Rep. Syrian Arab Republic Lebanon Algeria Iraq 5 Iran, Islamic Rep. Libya 0 0 10 20 30 40 50 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS Figure 13. South 60 Maldives Asia Y/Y Change in Estimated Aviation Passenger Arrivals (Q2 2023–2024) 40 TOURISM % GDP (2023) Source: OAG Traffic Analyzer; WTTC; Tourism Council of Bhutan. 20 Bhutan India Sri Lanka Nepal Pakistan Bangladesh 0 10 20 30 40 PERCENT GROWTH IN ESTIMATED AVIATION PASSENGER ARRIVALS Tourism Watch - Quarterly Report: Q2 2024 6 SPECIAL INSERT Nature-Based Tourism for Livelihoods and Biodiversity in Africa Sustainable nature-based tourism can help create new job tourism economy, directly contributing US$29.3 billion and opportunities and protect at-risk environmental assets. employing 3.6 million people. It is also growing at an annual The Africa continent has the youngest population of any rate of about 3 percent (Global Data; UN Tourism 2023). At major region and faces high youth unemployment, with over the same time, tourism has the potential to fund conserva- 25 percent not in employment, formal education or training (ILO tion efforts and create jobs for women and youth (UN Tourism 2023). Women face significant employment challenges, with 2019; WTO 2019; WTTC 2023), particularly in rural areas over 60 percent of working women remaining in agriculture, that are facing increased out-migration and environmental often engaged in unpaid or poorly remunerated labor (ILO 2016). degradation. Africa has experienced a 65 percent decline in biodiversity since 1970 (WWF 2023), and suffers from the increasing impacts of The World Bank Group has a comprehensive set of tools to climate change. Tourism brings its share of environmental risks, support the sustainable development of nature-based tourism but if well managed can contribute to the revenues needed to and enable private sector development and community engage- protect critical environmental assets. ment. The World Bank is supporting sustainable nature-based tourism and ecotourism4 in Africa through a three-pronged Africa is particularly well-suited for nature-based tourism framework to (i) protect the natural assets, (ii) grow and diver- given its abundant natural assets, world-renowned wildlife, sify the business, sustainably, and (iii) share the benefits with and vibrant communities that reside in or near protected local communities. Table 1 presents actions and resources for areas. Wildlife tourism makes up 36.3 percent of Africa’s each pillar. Table 1. Nature-Based Tourism Development Resources5 PROTECT THE NATURAL ASSET GROW AND DIVERSIFY SHARE THE BENEFITS • Formalize protected areas THE BUSINESS, SUSTAINABLY • Understand and ensure demand for • Increase public investment in • Select the appropriate protected areas for community tourism protected area management nature-based tourism development • Formalize benefit sharing • Build capacity of protected area • Implement standards and certifications arrangements for sustainable managers for sustainable tourism livelihoods • Regularly assess the effects of • Diversify tourism offerings and build • Strengthen income multipliers and visitor spending private sector capacity address financing of community • Develop concession policies in protected tourism ventures areas and collaborative management • Mitigate and compensate for partnerships human–wildlife conflict Operationalizing these approaches involves global, regional, of nature-based tourism through strategies, regulations, and country-specific initiatives. Globally, the World Bank’s attractions, and trainings. Global Challenge Program on Forests for Development, Climate and Biodiversity (GCP-Forests) is expected to support oper- Monitoring impacts and improving data on climate is critical ations by setting a global “wholesale” framework on forests, to make the case for tourism as a motivator of environmental which would benefit the poor through increased green/blue protection. The Protected Area Tourism Local Economy-Wide jobs, ecotourism, and sustainable forest-dependent live- Impact Evaluation “Lite” tool (known as LEWIE-LITE) measures lihoods. In West Africa, the institution has supported the tourism’s impacts on local economies surrounding protected development of a private sector-led West Africa Ecotourism areas. The World Bank’s Country Climate and Development Network (WAEN) to organize sector stakeholders and grow the Reports in Ethiopia and Rwanda highlight nature-based tourism region’s ecotourism market. WAEN has developed ecotourism as key for economic diversification, biodiversity conservation, best practices for the public sector, firms, and attractions, and climate resilience. and launched an online learning series to enhance skills. In Guinea-Bissau, São Tomé and Príncipe, and Cabo Verde, World 4 Ecotourism is defined as “responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education” (TIES 2015). Bank loans and grants are supporting the responsible growth 5 A complete repository of Nature-Based Tourism Tools and Resources is found here. Tourism Watch - Quarterly Report: Q2 2024 7 METHODOLOGICAL NOTES INDEX CONSTRUCTION polarity in web social conversations concerning the travel and tourist destinations (percent of positive comments – percent Estimated Aviation Passenger Arrivals Index: Data on of negative comments). estimated international passenger arrivals landing in a given geography, regardless of flight length, for a given month or GLOSSARY quarter. OAG estimations are based on real bookings data made by travel agencies through global distribution systems Occupancy Rate: Indicator of hotel performance, equal to the (GDS). These estimates are reportedly based on a series of number of hotel rooms sold/room supply. proprietary algorithms that use various external datasets and historical ratios between total passengers and realized GDS Revenue per available room (RevPAR): Measure of hotel perfor- bookings. These arrivals data are rebased as a percentage of mance that shows the revenue generated per room regard- estimated aviation passenger arrivals in the same month or less of if rooms are occupied or not. RevPAR is calculated by quarter of 2019 or 2023, then multiplied by 100. dividing total room revenue by total rooms available. Travel Price Index: The Travel Price Index (TPI) measures Regional Acronyms: AFE (Eastern and Southern Africa), AFW the cost of travel away from home in the United States. It is (Western and Central Africa), EAP (East Asia and Pacific), ECA based on the U.S. Department of Labor price data collected (Europe and Central Asia), LCR (Latin America and the Carib- for the monthly Consumer Price Index (CPI). The TPI is released bean), MNA (Middle East and North Africa), SAR (South Asia). monthly and is directly comparable to the CPI. Travel Receipts vs. Export Revenues from Tourism: Both Travel Sentiment Index: Data comes from TCI Research. The indicators cover expenditures incurred by non-resident visitors index leverages a social media web crawler that monitors global during visits to an economy, which include any prepayment web social conversations shared by the media, consumers, made for those goods and services. The key difference is that companies, citizens, brands, and officials. Data are reported travel export revenues include payments to national carriers as Net Sentiment Scores measuring the balance of sentiment for international transport while travel receipts excludes them. For further information, The Tourism Watch quarterly bulletin series is prepared by the Trade, Investment and Competitiveness (TIC) Markets, Competition and Technology Tourism group of the please contact the team at Finance, Competitiveness and Innovation (FCI) Global Practice. The bulletin has been tourism@worldbank.org prepared by a team led by Alex Pio, Alba Suris, and Paula Bellas, with contributions or visit the Tourism and from Vincent Palmade, Louise Twining-Ward, Shaun Mann, Denisse Pierola, Jessie F. McComb, Jessica Rose Wilson, Wendy Li, and Vanessa Satur, under the Competitiveness website. guidance of Mario Guadamillas. Design by Sharon Fisher. Tourism Watch - Quarterly Report: Q2 2024 8