The pandemic has battered the global tourism industry, with investment and job creation declining significantly in 2020, according to a report published today by fDi Intelligence, in association with the UN World Tourism Organization (UNWTO).

UNWTO figures outlined in the report show that international arrivals in 2020 dropped by 73% from the previous year, precipitating an estimated $1.3tn loss in export revenues and threatening up to 120 million direct jobs. 

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No country was spared from the decline in tourism activity and related investment as global investors put plans on hold in 2020, following a lack of traveller confidence and evolving movement restrictions.

Foreign direct investment (FDI) projects announced in the tourism cluster last year declined by 63% from the record highs seen in 2019, according to fDi Markets figures cited in the report. Job creation and capital expenditure (capex) both declined by more than 70% in the same period.

Western Europe attracted the highest number of tourism FDI projects in 2020, with 85 announcements, and was also the leading source region for investment, accounting for around half of projects and $5.2bn of capital investment.

Meanwhile, Asia-Pacific was the top destination for tourism FDI by capital investment, with $5bn-worth of projects tracked, although this represented a 79% decline from the previous year.

Accommodation remained the largest subsector of tourism FDI, generating more than 29,870 jobs in 2020. This was just 10% of the 298,000 jobs created by companies in the subsector since 2016.

Domestic tourism recovery

As Covid-19 vaccination programs continue worldwide, albeit unequally between developed and developing nations, domestic tourism has proven more resilient than its international counterpart.

Preliminary UNWTO data quoted in the report shows that international tourist arrivals were down by 82.7% in the first quarter of 2021, compared with the same period of 2020. Domestic tourism is expected to recover to 2019 levels in summer 2021, according to the OECD.

China, where restriction-free domestic travel has recovered strongly, attracted more foreign tourism investment in 2020 than any other country, raking in projects valued at $2.4bn. 

In the five-year period up to 2020 analysed in the report, the US was the largest recipient of tourism FDI with 159 projects, followed by the UK (151) and Germany (130).

Between 2019 and 2020, Latin America and the Caribbean saw the largest year-on-year decline (63%) in tourism capital investment since fDi Markets began recording data in 2003. 

In the Middle East and Africa, capex plummeted by 82% to $1.6bn in the same period, with approximately 14,600 fewer jobs created in the sector through FDI.

UNWTO secretary general Zurab Pololikashvili, who wrote an opinion article for the report, believes the industry will change dramatically as a result of the fallout.

“The crisis has accelerated digitisation in the tourism value chain, and amplified the adoption of new technologies, while highlighting opportunities for decarbonisation of the sector enhanced by green investments,” wrote Mr Pololikashvili.

The report also explores the role of software booking platforms in restoring travel confidence and the pandemic’s impact on the meetings, incentives, conferences and exhibitions (Mice) sector.

Booking.com chief executive Glenn Fogel recently argued that more clarity on regulations is needed for global travel and tourism to recover.

“If governments around the world came together to set forth specific guidance to promote safe travel, restrictions could be lifted and travellers would regain confidence,” he wrote for fDi.

Download the report

Click here to download a PDF of the Tourism Investment Report 2021