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Making economic sense of travel and tourism

Prior to the pandemic, travel and tourism (including its direct, indirect and induced impacts) accounted for one in four new jobs created across the world, 10.3 per cent of all jobs (333 million), and 10.3 per cent of global GDP ($9.6 trillion).

Making economic sense of travel and tourism
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Making economic sense of travel and tourism

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Prior to the pandemic, travel and tourism (including its direct, indirect and induced impacts) accounted for one in four new jobs created across the world, 10.3 per cent of all jobs (333 million), and 10.3 per cent of global GDP ($9.6 trillion). Meanwhile, international visitor spending amounted to $1.8 trillion in 2019 (6.8 per cent of total exports).

WTTC's latest annual research shows that following a loss of almost $4.9 trillion in 2020 (-50.4 per cent decline), Travel & Tourism's contribution to GDP increased by $1 trillion (+21.7 per cent rise) in 2021.

In 2019, this segment contributed 10.3 per cent to the global GDP; a share which decreased to 5.3 per cent in 2020 due to ongoing restrictions to mobility. 2021 saw the share increasing to 6.1 per cent. In 2020, 62 million jobs were lost, representing a drop of 18.6 per cent, leaving just 271 million employed across the sector globally, compared to 333 million a year before. Incidentally, 18.2 million jobs were recovered in 2021, representing an increase of 6.7 per cent year-on-year.

Following a 47.4 per cent decrease in 2020, the domestic visitor spending increased by 31.4 per cent in 2021, while because of a decrease of 69.7 per cent in 2020, international visitor spending rose by 3.8 per cent the next year.

However, the future outlook is positive, and the sector is gradually showing resilience and the ability to bounce back. Despite the difficulties the sector has been facing, the projections point to a strong decade of growth. Travel & Tourism GDP is set to grow on an average by 5.8 per cent annually between 2022 and 2032, outpacing growth of the overall economy (2.7 per cent per year). Our research shows that Travel & Tourism GDP could return to 2019 levels by the end of 2023. What is more, the sector is expected to create nearly 126 million new jobs within the next decade. While government support has helped withstand the crisis, swift recovery of the sector will only be possible if leaders and public officials work together and come up with clear and consistent rules. Governments need to focus on co-existing with Covid-19 while enhancing preparedness for future crises, offering safe travel experiences, supporting equitable vaccine distribution and continuing to ease entry to destinations. Looking at a long-term forecast, between 2022 and 2032, Travel & Tourism's contribution to the global economy is expected to grow at an average annual rate of 5.8 per cent which is more than double the 2.7 per cent average estimated for the global economy. In that same period, the sector is perceived to generate 126 million additional jobs.

While projections are positive overall, there are some downside risks to the recovery path. This includes the negative impact of the conflict in Ukraine, supply chain disruptions and rising energy prices that have increased inflationary pressures, in turn reducing disposable incomes in important source markets. In addition, the effects of airspace restrictions and rising oil prices could feed into transport ticket prices, thereby making travel costlier.

Moreover, staff shortage has been identified as one of the key challenges for Travel & Tourism on its path to recovery from Covid-19.

Business travel is a catalyst for growth as it is integral to relationships, investments, supply chains and logistics that support international trade flows. In 2019, nearly $1.3 trillion was spent on business travel around the world; 21 per cent of total Travel & Tourism spending. With projections pointing to a further growth of 41.1 per cent this year and average annual growth of 5.5 per cent between 2022 and 2032, business travel will remain an important part of the travel ecosystem.

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