Many an economy has been built off the back of the tourism sector and it is a massive global generator of income and jobs. But despite that it sometimes struggles to be taken seriously as an economic engine.
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While it is true that healthy economies are well diversified and no country – no matter its touristic appeal – should rely solely or even primarily on tourism as a revenue earner, the tourism sector can serve as a strong pillar of growth for countries of all economic stripes. The spillover effects on other sectors – construction, transport, infrastructure, food and beverages and general services as well as technology and start-ups – mean tourism by its nature assists in diversification efforts if utilised properly. With tourist numbers rising steadily in recent years, there has never been a greater opportunity to harness the economic potential of hospitality and tourism.
According to the UN World Tourism Organization (UNWTO), international tourist arrivals increased by 7% between 2016 and 2017, to reach 1.3 billion. This compares with just over 1 billion in 2013. Advanced economies still attract more tourists than emerging economies (55% versus 45%, respectively). Europe remains the world’s leading tourist magnet, seeing 672 million arrivals in 2017, more than twice the second most popular world region, Asia-Pacific, and 10 times that of Africa or the Middle East.
But tourist traffic is on the rise in developing countries, with international tourism arrivals to these economies increasing from 507 million in 2013 to 597 million in 2017, according to the UNWTO. A continuation of this trend should mean more receipts and revenues, more jobs, and more inward investment to support the growing tourism sector.
Crossborder greenfield investment in the sector has not kept pace with the growth of international tourist numbers. FDI projects and capital investment volumes in hotels and tourism actually decreased from 2013 to 2017, according to greenfield investment monitor fDi Markets, although the main dip happened between 2013 and 2014 and a rebound started thereafter. The estimated number of jobs created by FDI in tourism also recovered last year, to 60,306.
More investment is clearly needed to keep up with the steady march of tourists around the world, and to maximise the economic opportunities that this fast-growing sector presents. Governments have a responsibility to make their countries’ investment environments as conducive to tourism investment as possible and to actively court the necessary investment that would serve their broader tourism strategies, as well as to balance the needs of the industry with the protection of natural assets. Though it requires careful work, the business of holidays can pay large dividends for companies and countries alike.