With the strong recovery in 2022, regions in the world are resuming tourism as international traffic increases. International tourism is expected to keep recovering in 2023. However, tourists will consider spending less and choose a close destination in the current economic impacts and challenges.

The recovery of regions

According to UNWTO latest data in the “World Tourism Barometer” report, more than 900 million people traveled overseas in 2022, twice over 2021. Although it is just 63% compared to 2019, in general this is a positive signal of recovery. All regions recorded a rebound in international arrivals, especially the Middle East (up 83%) and Europe (up 80%). In contrast, the Asia-Pacific region was the slowest to recover, reaching only 23% as countries in this region lifted COVID-19 restrictions recently. In addition, it was also somewhat affected without China, the large market which closed to implement the zero-COVID policy in a long time.

The tourism industry keeps recovering in 2023

International tourism is forecasted to continue to recover in 2023 due to prolonged pent-up demand, especially in Asia Pacific.

Based on UNWTO scenarios, the number of international tourists this year could reach between 80% and 95% of pre-pandemic levels. The Middle East and Europe are expected to reach or exceed pre-pandemic levels, following a strong recovery in 2022. In the Asia-Pacific, the opening of source markets will underpin the recovery in 2023. Most notable is the lifting of COVID-19 restrictions in China, the largest outbound travel market before the pandemic. Overall, this is good news for Asian destinations. Nevertheless, lately, the Ministry of Culture and Tourism of the People’s Republic of China announced that it would initially allow the reopening of tours to 20 countries, including Southeast Asian countries such as Thailand and Indonesia. So the full return of this market will be slower than initially forecast.

 

Challenges remain

Economic, health concerns as well as geopolitical tensions will affect the recovery of international tourism. According to surveys from experts, economic challenges such as inflation, interest rate hikes, and concerns about recession will have a great impact on the tourism industry. That’s why tourists will consider their spending for travel.

Outbox’s latest survey of some markets in Northeast Asia also shows that travelers will consider the cost and length of trips due to financial and health concerns. They also prioritize choosing closer destinations to save costs and reduce health risks. Moreover, geopolitical tensions, health issues related to COVID-19 and workforce shortages are also factors affecting the recovery of international tourism in the coming time.

International tourism continued its recovery in January 2022, with a much better performance compared to the weak start to 2021. However, the Russian invasion of Ukraine adds pressure to existing economic uncertainties, coupled with many Covid-related travel restrictions still in place. Overall confidence could be affected and hamper the recovery of tourism.

Based on the latest available data, global international tourist arrivals more than doubled (+130%) in January 2022 compared to 2021 – the 18 million more visitors recorded worldwide in the first month of this year equals the total increase for the whole of 2021.

While these figures confirm the positive trend already underway last year, the pace of recovery in January was impacted by the emergences of the Omicron variant and the re-introduction of travel restrictions in several destinations. Following the 71% decline of 2021, international arrivals in January 2022 remained 67% below pre-pandemic levels.

1. Europe and Americas perform strongest

All regions enjoyed a significant rebound in January 2022, though from low levels recorded at the start of 2021. Europe (+199%) and the Americas (+97%) continued to post the strongest results, with international arrivals still around half pre-pandemic levels (-53% and -52%, respectively).

The Middle East (+89%) and Africa (+51%) also saw growth in January 2022 over 2021, but these regions saw a drop of 63% and 69% respectively compared to 2019. While Asia and the Pacific recorded a 44% year-on-year increase, several destinations remained closed to non-essential travel resulting in the largest decrease in international arrivals over 2019 (-93%).

2. Prospects for recovery

After the unprecedented drop of 2020 and 2021, international tourism is expected to continue its gradual recovery in 2022. As of 24 March, 12 destinations had no COVID-19 related restrictions in place and an increasing number of destinations were easing or lifting travel restrictions, which contributes to unleashing pent-up demand.

The war in Ukraine poses new challenges to the global economic environment and risks hampering the return of confidence in global travel. The US and the Asian source markets, which have started to open up, could be particularly impacted especially regarding travel to Europe, as these markets are historically more risk averse.

The shutdown of Ukrainian and Russian airspace, as well as the ban on Russian carriers by many European countries is affecting intra-European travel. It is also causing detours in long-haul flights between Europe and East Asia, which translates into longer flights and higher costs. Russia and Ukraine accounted for a combined 3% of global spending on international tourism in 2020 and at least US$ 14 billion in global tourism receipts could be lost if the conflict is prolonged. The importance of both markets is significant for neighbouring countries, but also for European sun and sea destinations. The Russian market also gained significant weight during the pandemic for long haul destinations such as Maldives, Seychelles or Sri Lanka. As destinations Russia and Ukraine accounted for 4% of all international arrivals in Europe but only 1% of Europe’s international tourism receipts in 2020.

3. Economic uncertainty and pressures

Even though it is too early to assess the impact, air travel searches and bookings across various channels showed a slowdown the week after the invasion but started to rebound in early March.

It is certain that the offensive will add further pressure to already challenging economic conditions, undermining consumer confidence and raising investment uncertainty. The Organisation for Economic Co-operation and Development (OECD) estimates global economic growth could be more than 1% lower this year than previously projected, while inflation, already high at the start of the year, could be at least a further 2.5% higher. The recent spike in oil prices (Brent reached its highest levels in 10 years), and rising inflation are making accommodation and transport services more expensive, adding extra pressure on businesses, consumer purchasing power and savings, UNWTO notes.

This forecast is in line with the analysis on the potential consequences of the conflict on global economic recovery and growth by the United Nations Conference on Trade and Development (UNCTAD), which has also downgraded its projection for world economic growth in 2022 from 3.6% to 2.6% and warned that developing countries will be most vulnerable to the slowdown.

Source: The World Tourism Organization (UNWTO)