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5 Mega Challenges Facing the Global Travel and Tourism Industry

The global travel and tourism industry sits smack in the eye of a perfect storm. On the one hand, demand is up. Planes are packed. Our wanderlust is lustier than ever. On the other hand, rising inflation, lagging infrastructure, geopolitical uncertainty, staffing shortages, and COVID’s lingering impact have all converged into the stuff of nightmares — for travelers and the travel industry alike.

As researchers and advisors to global tourism boards and brands across the travel and tourism ecosystem, we are seeing some of these challenges hit certain players harder than others. On the bright side, recovery is on the horizon. But some geographies and industry sectors will face steeper challenges as five major headwinds converge upon them. We’re seeing opportunities for brands to get ahead of the storm and put the wind at their back.

These are the top five challenges facing the travel and tourism industry today, along with our perspective on navigating the way forward.

Travel Insight #1: Inflation means trade-offs and discretionary travel may lose out

Just when tourism was on the rebound, rising inflation came nipping at the heels of a travel boom. Escalent’s forthcoming 2022 Holiday Shopping & Travel Study revealed only 42% of consumers feel confident they’ll achieve their 2022 holiday travel plans (down 24 percentage points from 2021), and 49% of consumers are uncertain their holiday plans will be achieved (up 23 percentage points from 2021).

For the travel and tourism industry, inflation is a huge concern since it drives up product prices and affects consumers’ willingness to spend on discretionary travel. According to Euromonitor, 63% of travel executives said inflation was having a moderate to extensive impact on their businesses. Subsequently, over half of global travel companies acted in kind, by raising all or some of their prices. This was even higher in the Americas, where 59% of the companies raised all or some of their prices. Meanwhile, 44% of businesses accepted that they would suffer from having a lower profit margin by absorbing the inflationary costs rather than passing them on to their consumers to limit impact on their travel plans.

During inflationary times, it is common to see brands cut back on their marketing and advertising spend. While this reduces costs short term, it can be a setback to building long-term brand trust. In times of uncertainty, consumers tend to gravitate towards certainty, something a trusted brand can confer. And a destination is a brand. The more trust you can build amid uncertainty, the better.

Travel Insight #2: The ripple effects of geopolitical disruption

Geopolitical instability is also a key concern for the travel and tourism industry. The outlook for global travel and tourism for inbound spending is expected to be at 45% of 2019 levels, according to Euromonitor’s travel forecast model. The war in Ukraine is estimated to have caused a $7 billion decline in global inbound tourism, while Russian outbound tourism has all but collapsed under economic sanctions, airspace closures and flight bans. The loss of big-spending Russian visitors will impact travel destinations globally, but especially in Europe, the Caribbean and Turkey.

What happens when your high-value source market can’t travel? The ripple effects of geopolitical disruption are felt across regional clusters, forcing travel and tourism entities to rethink their source markets and reset their tourism marketing and targeting strategy.

Travel Insight #3: The travel and tourism infrastructure is in trouble

The pent-up travel demand is causing additional strain on the existing infrastructure, particularly for the airline sector. Problems with safety protocols and compliance with new national and international health standards are predicted to be made worse by capacity constraints when the industry recovers. This is expected to result in (even) longer lines, (more) crowded terminals and operational bottlenecks.

Social distancing measures have been lifted in many countries, including the US. But measures are still in place in many airports around the world, thus reducing airport capacity. Airports that operated close to their saturation capacity before the COVID crisis can expect to reach their maximum saturation capacity at just 60%–75% of their pre-COVID peaks.

According to ACI World, as air transport demand recovers, passenger demand will put more pressure on existing airport infrastructures. This may have socio-economic consequences, if not addressed in time. If long-term capacity constraints are not addressed through capital investments, it is estimated to lead to a reduction of up to 5.1 billion passengers globally, by 2040. For every million passengers that airports cannot accommodate due to airport capacity constraints in 2040, there would be 10,500 fewer jobs and 346 million USD less in GDP contribution from the industry.

Airports are often the “first impression” of a destination. A traveler’s airport experience sets the stage for the rest of the journey. When greeted with chaos and delays, even the most intrepid traveler can sour on the experience. Recently the US has made modest steps towards infrastructure improvement, including the Infrastructure Investment Act passed in November 2021, which includes spending for airports. While its impact will not be immediately felt, many travel associations have applauded the passing of this long overdue legislation.

Travel Insight #4: There’s no quick fix for the staffing shortage

If you’ve stepped foot in an airport this summer, you already know. The travel industry is facing a severe staffing challenge, particularly for customer-facing roles at hotels and airlines. Industry CEOs acknowledge that they are struggling to add staff to meet demand.

Airlines, in particular, are struggling to fill staffing requirements. Boeing’s 2021 Pilot and Technician Outlook voices concern that many airline workers who were furloughed during COVID may have left the industry permanently. The commercial airline industry needs 612,000 new pilots, 626,000 new maintenance technicians and 886,000 new cabin crew members over the next 20 years. Hotels and hospitality are also struggling, making it harder to deliver on guests’ expectations. Many hotels are shifting housekeeping services to a by-request-only model and some are cutting back on food and beverage amenities, including room service and restaurants.

What’s the precautionary tale to take away from this staffing mess? It can take decades to build brand trust, and one canceled flight, one bad stay, to destroy it. How people experience your brand — no matter if it’s in the best of times or the worst of times — stays with them. Travelers expect consistency from major brands. It will take time and investment for many airline and hospitality brands to rebuild trust in the quality and consistency of their brand experience.

Travel Insight #5: COVID is with us for the long haul

COVID travel restrictions are still impacting many elements of world tourism, with countries like China continuing to impose stringent restrictions and quarantines on visitors as well as Chinese outbound travelers.

In Asia Pacific, 83% of travel businesses report that ongoing COVID restrictions continue to have a moderate to extensive impact. This compares with 59% in Western Europe, according to Euromonitor. Although less, compared to 2021 levels, COVID concerns among travelers persist. Ongoing concerns, including new variants, affect the travel decisions of 55% of travelers, according to another recent study. Travelers are planning their trips cautiously, and nearly 70% are avoiding certain destinations, with 56% preferring close destinations and 56% avoiding crowded places.

Just as sanctions have grounded Russian travelers, COVID restrictions are keeping Chinese travelers homebound. Popular destinations for Chinese tourists such as Japan, Thailand, Singapore and Australia continue losing out on billions in tourism revenue. And countries with strict quarantine requirements like Japan continue to struggle. Between June 10 and July 10 this year, Japan hosted only 1,500 international tourists, according to data from Japan’s Immigration Services Agency. That’s down 95% from the same period in 2019. Who wants to spend half their holiday in quarantine? Destinations like Japan have focused on promoting domestic travel, but with COVID with us for the long haul, doubling down on domestic travel marketing and promotions is not a sustainable strategy.

Turn disruption into opportunity with tourism industry research and consulting

Escalent specializes in travel and tourism market research, traveler behavior, tourism investment strategy and consultative support across the travel and tourism ecosystem. Learn more about our Travel & Tourism practice and let us help you ride out the storm and go forth with confidence.

SOURCES CITED

(forthcoming) Escalent 2022 Holiday Shopping and Travel Study Please contact us if you would like to be notified when the report is available. View press release .

Voice of the Industry: Travel Survey, Facing New Challenges, Euromonitor, May 2022

Travel: Quarterly Statement Q1 2022, Euromonitor, May 2022

Holiday Barometer among Europeans, North Americans, Asians & Oceanians, Ipsos, June 2022

Japan is open to travel. So why aren’t tourists coming back? CNN, July 31, 2022

Deloitte travel outlook, The winding path to recovery 2022

Half of US Hospitality Workers Won’t Return in Job Crunch, Bloomberg, July 2021

Staff Shortages: World Travel & Tourism Council Travel Survey, May 2022

Related Industry: Travel & Tourism

Related Solution: Brand Positioning , Customer Experience Management , Market Assessment

Related Expertise: Secondary Research

Vivek leads Escalent’s Travel & Tourism practice where he works with tourism boards, airlines, hotels and hospitality brands across the globe, including in China, Africa, Southeast Asia, and the Middle East. A featured thought leader at global travel and tourism forums such as ITB, TTRA, and PCMA, his expertise spans the Travel & Tourism value chain. Vivek is an experienced business executive with expertise in various business elements including operations, business development and P&L management. A seasoned insights leader, he advises clients on market assessment  and entry strategy, market sizing and growth strategies. An engineer by training, he holds an MBA in Strategy & Marketing from the Indian Institute of Management. Vivek has a keen interest in human psychology and believes that a transparent, win-all proposition is the key to creating a sustainable people-centric business.

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Five big challenges facing the travel and tourism industry in 2024

Will Chinese tourists look inwards or finally outwards in 2024? Could an unprecedented number of elections globally influence who travels and when? Can Paris make a permanent gain out of the Olympics and will conflict continue to derail some tourism economies?

Amid it all, could Gen Z change the shape of tourism by asserting an environmentally consciousness about travel decisions?As investors and developers piece together the global influences that will shape the hospitality real estate market in 2024, we pick out five defining macro-themes for the year ahead.

Visas: China looks outward and inward

It is nearly a year since China fully reopened its borders to foreign visitors, and almost a year since Beijing withdrew advice warning against overseas travel. Yet travel to and from China has not recovered to pre-pandemic levels, though domestic travel has surged.

“If you use 2019 as a benchmark, travel and tourism contributed 11.6% to the Chinese economy,” says Julia Simpson, president and chief executive of the World Travel & Tourism Council (WTTC).In that year, the travel and tourism industry employed 82 million people in China and was valued at $1.8 trillion, while recent analysis released by WTTC and Oxford Economics shows a dip to a 7.9% contribution in 2023, employing about 74 million people and worth $1.48 trillion.

Yet, with the hold-up of issuing new visas an ongoing issue, inward traffic is becoming a major factor."This data clearly shows the appetite to travel remains incredibly strong. Chinese travellers want to explore the world once again and international travellers are eager to return,” says Simpson.

According to data published in January by travel booking site Trip.com, the top five international destinations for Chinese tourists in 2023 were: Thailand; Japan; South Korea; Singapore and Malaysia.China recently entered into a reciprocal agreement with Thailand for permanent waiver of visa requirements for citizens of the two countries from March 2024 and previously implemented visa-free travel for five European countries (France, Germany, Italy, The Netherlands and Spain) and Malaysia, allowing ordinary passport holders to stay in China for up to 15 days without a visa. China has also streamlined entry regulations for US citizens.

Impact: The great Chinese exodus is yet to materialise and it may be a year when inward and inter-continental travel continues to dominate, boosting the Chinese travel economy.

Elections: The year of the vote

More than two billion people across 50 countries are expected to go the polls this year, accounting for countries that are home to nearly half the world’s population – a scale that has never happened in a single year before.

Among the polls are seven out of the world’s 10 most populous nations: Bangladesh kicked off the election calendar on January 7; plus India, the United States, Indonesia, Pakistan, Russia and Mexico.

While the impact should be contained around the election period, data on previous US elections suggest that the industry can expect a lag around crucial polling.US-based travel agency consortium Virtuoso, which has around 2,300 company partners, sold $30 billion worth of transactions in 2019. Evaluating the impact of the last three American presidential elections on travel bookings, Virtuoso’s VP global public relations Misty Belles found that the company’s usual double-digit growth was curtailed to roughly 3% in election years, with over $4 billion in projected missed revenue for the previous election in 2020.

No matter why travel dips during election cycles, the impact doesn’t end on results day, she says. Lags in spending continue through the ‘lame duck’ period of the outgoing President and the early days of a new administration, regardless of who resides in the White House. After the first 100 days of a new presidential term, travellers typically set their sights on summer vacations.

Impact: With an unprecedented number of people heading to the polls and the likelihood of some tight elections, the effect on travel is unpredictable but could cause an autumn lag in the UK and US.

Sports events: Everything to play for

This summer’s football Euros and impending African Cup of Nations will add to the global sports calendar in 2024 but of course the big one is the Paris Olympics. Hosting major events is expensive but potentially hugely profitable, with an extra three million people expected in Paris, increasing tourism spending by up to €4 billion according to market research provider Euromonitor International. 

Alexander Göransson, senior consultant at Euromonitor International, points out that the Games are expected to attract 15 million spectators, including locals and domestic day trippers.  

Göransson says that experience from previous Games shows that Olympic visitors spend more than regular visitors and that accommodation providers will be the main winners, although high prices may put people off. “There is a lot being written about hoteliers significantly hiking their prices during the Paris Olympics, typically by an order of three relative to August 2023 and summer 2024 before and after the games. This is also in line with some checks on booking platforms for like-for-like hotels. The average rate is currently reported to be €699 during the games versus €169 in August 2023,” Göransson says.

However, he notes that only 1.5 million tickets have been sold to non-French residents, circa 10% of the total.

“In the context of hotels this will be interesting as given the vast majority of visitors will be from France, there will be more daytrips, but more importantly a lot of French visitors will have friends and relatives in Paris who they can stay with, which given the Olympic mark-ups is likely,” he adds. “I would not rule out that there may be some last-minute price cutting. When the games were in London price increases were more modest, where prices less than doubled.”

Impact: Euromonitor International expects a steady increase in inbound visitors to France and its capital city from 2025. 

Conflict: Contained but major regional impacts

The war in Ukraine and the ongoing operations in Gaza by Israel have had little impact on global travel, but have hit the regions and those around them heavily. That is likely to be the ongoing story of 2024.

Following last summer’s strong tourism demand, international tourist arrivals to Europe are only 3.2% below 2019 levels, and nights are down by 1.3% for the January-September period, according to the most recent European Travel Commission (ETC) figures.

However, while Southern European and Mediterranean destinations, notably Serbia (+15%), Montenegro (+14%), Portugal (+11%), Turkey (+8%), Malta, and Greece (both +7%) have benefitted, among Eastern European countries neighbouring Russia and Ukraine, and those that are normally reliant on Russian travellers, have registered the sharpest declines: Estonia (-27%), Latvia (-30%), and Lithuania (-33%).While the number of tourists visiting Israel rose in 2023 compared with 2022, visitor numbers plunged in October after the Hamas attacks and remained low for the rest of the year, the Israeli Tourism Ministry said.

Overall in 2023, 3 million tourists entered Israel, up from 2.7 million in 2022, but December was the worst month with just 52,800 tourists, compared with typically over 300,000 per month. S&P Global Ratings believes Lebanon, Egypt, and Jordan are most exposed, due to their geographic proximity and the potential for some aspects of the conflict to expand across their borders. Last year, tourism contributed 26% of Lebanon's current account receipts. For Jordan and Egypt, the figure was 21% and 12%, and for Israel, 3%.

Impact: While conflicts seem not to have dissuaded travellers generally, those countries heavily impacted already are unlikely to see any change.

Sustainability: Travellers demand eco-options

Nothing new in the rise of sustainability but analyst Mintel believes that in 2024 travel brands can tap into the sustainable accommodation sector by promoting a range of differing cost options.

A number of operators are promoting more sustainable choices for consumers, by unveiling ‘sustainable holiday’ tabs in which travellers can browse through a range of different hotel options, all accredited by the Global Sustainable Tourism Council (GSTC). 

Mintel says that it is imperative for travel brands to step up and take accountability for their environmental impact, particularly as issues surrounding sustainability permeate into every aspect of daily lives.

“Based on the success of the food industry’s nutrition traffic light system, consumers want brands to use a similar system that makes it easy to understand the environmental impact of the products they’re thinking of buying and helps them make more sustainable choices,” says Richard Cope, senior trends consultant, Mintel Consulting.

Travel platform Booking.com also notes that “sweltering conditions” are accelerating a rise in travellers chasing cooler climes to travel to. In a UK survey, 42% reported that climate change will impact the way they plan their holiday in 2024, while 43% said that as temperatures soar close to home, they will use their holiday to cool down elsewhere.

In 2024, in exchange for contributing to conservation efforts, sustainable itineraries will give travellers exclusive access to the places that they are helping preserve, Booking.com speculates, while sustainable travel apps will offer rewards such as experiences with locals in off-the-beaten-path areas or visiting remote locations that tourists otherwise have limited access to.

Impact: From ESG and real estate to the consumer mind-set, sustainability

5 challenges Deloitte says faces the travel industry in 2023

by Kathakali Nandi

January 18, 2023 - Categories: Hotels: News, HotelsLife: News,

The travel industry saw performance and demand improving steadily throughout 2021 and 2022. As the pandemic conditions eased, pent-up leisure demand helped hotels and airlines recover some losses.   

According to revealed Deloitte’s latest Travel Industry Outlook , hotels have been able to achieve rates and RevPAR above 2019 levels and U.S. air travel volume has reached at least 80% of 2019 levels every day from July 5 through November 30, 2022, driven by constrained capacity and increased fares. The report is based on Deloitte’s ongoing consumer research, including from Deloitte’s State of the Consumer Tracker.   

Despite the recovery, the travel and tourism industry is expected to face new challenges in 2023, after years of pandemic-related setbacks, according to the study. Although health concerns have subsided, new pressures have emerged, including a labor shortage, concerns about climate change, and the possibility that corporate travel will never return to pre-pandemic levels.

“If 2022 was the year of welcomed pent-up demand, 2023 will be a year of coming to grips with some complicated realities facing travel. The year ahead in travel will be defined by the basics — product, performance and price — in the context of economies and societies reshaping themselves on the way of a once-in-a-generation crisis,” the study said.   

Key findings of the report include:  

• Leisure demand faces a murky outlook: After a prolonged steady rise, the intent to book travel was flat or down across all travel segments. YOY demand for leisure travel at the end of 2022 was flat YOY. After increasing in the summer, Americans’ desire to travel during the winter holidays has decreased. The September softening in demand could be the start of a long-term trend of consumer belt-tightening. The outlook for leisure travel in 2023 remains bleak, whether due to rising consumer financial concerns or simply a desire for many to avoid peak travel dates.
• Challenges in staffing and supply chain will undermine experience: The travel experience has been impacted, especially as companies struggle to keep up amid staffing shortages, technology issues and ongoing supply chain challenges. As travelers demand better experiences and prices remain high, these issues could begin to hurt overall business performance for the industry. While many travelers might opt to travel less or not at all, many are expected to adjust their trips, compromising their budget.   
• Corporate’s new normal: Corporate travel will face cost-related challenges. With high airfares and many businesses finding growth harder to come by, there might be some expense-related curbing of trips. Corporate travel is expected to see major gains, primarily contributed by key corporate and industry events scheduled for the year. One-quarter (25%) of business travelers now point to conferences, exhibitions, or tradeshows as their primary reason for travel .   
• Sustainability is important but has fewer options: Travelers are eager for more transparency through sustainability reporting, especially as 68% of consumers consider climate change an emergency. And travel suppliers do have sustainability much higher on their agendas than before, Deloitte found, creating opportunities to meet those demands.  
• “Laptop lugging” trend will grow: The pandemic-induced shift in work patterns has allowed for greater flexibility in the workplace and among people. Approximately half of all employed Americans can work remotely, and the number of days they prefer to do so has increased (from 3.2 days per week in Nov. 2021 to 3.9 days in Nov. 2022). As a result, “laptop lugging” – the trend of leisure travelers extending trips due to the ability to work from anywhere – is expected to grow further, allowing travel providers to cater to this new market of travelers.

The weakening of financial confidence has threatened travel growth in the last few months of 2022, with the intent to travel becoming unsteady in September after a year and a half of steady growth.  

Despite this, performance indicators in the hotel and airline industries have stayed strong. Overall, the travel sector is shifting to a year that will need repositioning and recalibration. 

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HOTELS News and Views

Hotels week in review, hotels magazine.

The future of tourism: Bridging the labor gap, enhancing customer experience

As travel resumes and builds momentum, it’s becoming clear that tourism is resilient—there is an enduring desire to travel. Against all odds, international tourism rebounded in 2022: visitor numbers to Europe and the Middle East climbed to around 80 percent of 2019 levels, and the Americas recovered about 65 percent of prepandemic visitors 1 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. —a number made more significant because it was reached without travelers from China, which had the world’s largest outbound travel market before the pandemic. 2 “ Outlook for China tourism 2023: Light at the end of the tunnel ,” McKinsey, May 9, 2023.

Recovery and growth are likely to continue. According to estimates from the World Tourism Organization (UNWTO) for 2023, international tourist arrivals could reach 80 to 95 percent of prepandemic levels depending on the extent of the economic slowdown, travel recovery in Asia–Pacific, and geopolitical tensions, among other factors. 3 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. Similarly, the World Travel & Tourism Council (WTTC) forecasts that by the end of 2023, nearly half of the 185 countries in which the organization conducts research will have either recovered to prepandemic levels or be within 95 percent of full recovery. 4 “Global travel and tourism catapults into 2023 says WTTC,” World Travel & Tourism Council (WTTC), April 26, 2023.

Longer-term forecasts also point to optimism for the decade ahead. Travel and tourism GDP is predicted to grow, on average, at 5.8 percent a year between 2022 and 2032, outpacing the growth of the overall economy at an expected 2.7 percent a year. 5 Travel & Tourism economic impact 2022 , WTTC, August 2022.

So, is it all systems go for travel and tourism? Not really. The industry continues to face a prolonged and widespread labor shortage. After losing 62 million travel and tourism jobs in 2020, labor supply and demand remain out of balance. 6 “WTTC research reveals Travel & Tourism’s slow recovery is hitting jobs and growth worldwide,” World Travel & Tourism Council, October 6, 2021. Today, in the European Union, 11 percent of tourism jobs are likely to go unfilled; in the United States, that figure is 7 percent. 7 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022.

There has been an exodus of tourism staff, particularly from customer-facing roles, to other sectors, and there is no sign that the industry will be able to bring all these people back. 8 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022. Hotels, restaurants, cruises, airports, and airlines face staff shortages that can translate into operational, reputational, and financial difficulties. If unaddressed, these shortages may constrain the industry’s growth trajectory.

The current labor shortage may have its roots in factors related to the nature of work in the industry. Chronic workplace challenges, coupled with the effects of COVID-19, have culminated in an industry struggling to rebuild its workforce. Generally, tourism-related jobs are largely informal, partly due to high seasonality and weak regulation. And conditions such as excessively long working hours, low wages, a high turnover rate, and a lack of social protection tend to be most pronounced in an informal economy. Additionally, shift work, night work, and temporary or part-time employment are common in tourism.

The industry may need to revisit some fundamentals to build a far more sustainable future: either make the industry more attractive to talent (and put conditions in place to retain staff for longer periods) or improve products, services, and processes so that they complement existing staffing needs or solve existing pain points.

One solution could be to build a workforce with the mix of digital and interpersonal skills needed to keep up with travelers’ fast-changing requirements. The industry could make the most of available technology to provide customers with a digitally enhanced experience, resolve staff shortages, and improve working conditions.

Would you like to learn more about our Travel, Logistics & Infrastructure Practice ?

Complementing concierges with chatbots.

The pace of technological change has redefined customer expectations. Technology-driven services are often at customers’ fingertips, with no queues or waiting times. By contrast, the airport and airline disruption widely reported in the press over the summer of 2022 points to customers not receiving this same level of digital innovation when traveling.

Imagine the following travel experience: it’s 2035 and you start your long-awaited honeymoon to a tropical island. A virtual tour operator and a destination travel specialist booked your trip for you; you connected via videoconference to make your plans. Your itinerary was chosen with the support of generative AI , which analyzed your preferences, recommended personalized travel packages, and made real-time adjustments based on your feedback.

Before leaving home, you check in online and QR code your luggage. You travel to the airport by self-driving cab. After dropping off your luggage at the self-service counter, you pass through security and the biometric check. You access the premier lounge with the QR code on the airline’s loyalty card and help yourself to a glass of wine and a sandwich. After your flight, a prebooked, self-driving cab takes you to the resort. No need to check in—that was completed online ahead of time (including picking your room and making sure that the hotel’s virtual concierge arranged for red roses and a bottle of champagne to be delivered).

While your luggage is brought to the room by a baggage robot, your personal digital concierge presents the honeymoon itinerary with all the requested bookings. For the romantic dinner on the first night, you order your food via the restaurant app on the table and settle the bill likewise. So far, you’ve had very little human interaction. But at dinner, the sommelier chats with you in person about the wine. The next day, your sightseeing is made easier by the hotel app and digital guide—and you don’t get lost! With the aid of holographic technology, the virtual tour guide brings historical figures to life and takes your sightseeing experience to a whole new level. Then, as arranged, a local citizen meets you and takes you to their home to enjoy a local family dinner. The trip is seamless, there are no holdups or snags.

This scenario features less human interaction than a traditional trip—but it flows smoothly due to the underlying technology. The human interactions that do take place are authentic, meaningful, and add a special touch to the experience. This may be a far-fetched example, but the essence of the scenario is clear: use technology to ease typical travel pain points such as queues, misunderstandings, or misinformation, and elevate the quality of human interaction.

Travel with less human interaction may be considered a disruptive idea, as many travelers rely on and enjoy the human connection, the “service with a smile.” This will always be the case, but perhaps the time is right to think about bringing a digital experience into the mix. The industry may not need to depend exclusively on human beings to serve its customers. Perhaps the future of travel is physical, but digitally enhanced (and with a smile!).

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Digital solutions are on the rise and can help bridge the labor gap

Digital innovation is improving customer experience across multiple industries. Car-sharing apps have overcome service-counter waiting times and endless paperwork that travelers traditionally had to cope with when renting a car. The same applies to time-consuming hotel check-in, check-out, and payment processes that can annoy weary customers. These pain points can be removed. For instance, in China, the Huazhu Hotels Group installed self-check-in kiosks that enable guests to check in or out in under 30 seconds. 9 “Huazhu Group targets lifestyle market opportunities,” ChinaTravelNews, May 27, 2021.

Technology meets hospitality

In 2019, Alibaba opened its FlyZoo Hotel in Huangzhou, described as a “290-room ultra-modern boutique, where technology meets hospitality.” 1 “Chinese e-commerce giant Alibaba has a hotel run almost entirely by robots that can serve food and fetch toiletries—take a look inside,” Business Insider, October 21, 2019; “FlyZoo Hotel: The hotel of the future or just more technology hype?,” Hotel Technology News, March 2019. The hotel was the first of its kind that instead of relying on traditional check-in and key card processes, allowed guests to manage reservations and make payments entirely from a mobile app, to check-in using self-service kiosks, and enter their rooms using facial-recognition technology.

The hotel is run almost entirely by robots that serve food and fetch toiletries and other sundries as needed. Each guest room has a voice-activated smart assistant to help guests with a variety of tasks, from adjusting the temperature, lights, curtains, and the TV to playing music and answering simple questions about the hotel and surroundings.

The hotel was developed by the company’s online travel platform, Fliggy, in tandem with Alibaba’s AI Labs and Alibaba Cloud technology with the goal of “leveraging cutting-edge tech to help transform the hospitality industry, one that keeps the sector current with the digital era we’re living in,” according to the company.

Adoption of some digitally enhanced services was accelerated during the pandemic in the quest for safer, contactless solutions. During the Winter Olympics in Beijing, a restaurant designed to keep physical contact to a minimum used a track system on the ceiling to deliver meals directly from the kitchen to the table. 10 “This Beijing Winter Games restaurant uses ceiling-based tracks,” Trendhunter, January 26, 2022. Customers around the world have become familiar with restaurants using apps to display menus, take orders, and accept payment, as well as hotels using robots to deliver luggage and room service (see sidebar “Technology meets hospitality”). Similarly, theme parks, cinemas, stadiums, and concert halls are deploying digital solutions such as facial recognition to optimize entrance control. Shanghai Disneyland, for example, offers annual pass holders the option to choose facial recognition to facilitate park entry. 11 “Facial recognition park entry,” Shanghai Disney Resort website.

Automation and digitization can also free up staff from attending to repetitive functions that could be handled more efficiently via an app and instead reserve the human touch for roles where staff can add the most value. For instance, technology can help customer-facing staff to provide a more personalized service. By accessing data analytics, frontline staff can have guests’ details and preferences at their fingertips. A trainee can become an experienced concierge in a short time, with the help of technology.

Apps and in-room tech: Unused market potential

According to Skift Research calculations, total revenue generated by guest apps and in-room technology in 2019 was approximately $293 million, including proprietary apps by hotel brands as well as third-party vendors. 1 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. The relatively low market penetration rate of this kind of tech points to around $2.4 billion in untapped revenue potential (exhibit).

Even though guest-facing technology is available—the kind that can facilitate contactless interactions and offer travelers convenience and personalized service—the industry is only beginning to explore its potential. A report by Skift Research shows that the hotel industry, in particular, has not tapped into tech’s potential. Only 11 percent of hotels and 25 percent of hotel rooms worldwide are supported by a hotel app or use in-room technology, and only 3 percent of hotels offer keyless entry. 12 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. Of the five types of technology examined (guest apps and in-room tech; virtual concierge; guest messaging and chatbots; digital check-in and kiosks; and keyless entry), all have relatively low market-penetration rates (see sidebar “Apps and in-room tech: Unused market potential”).

While apps, digitization, and new technology may be the answer to offering better customer experience, there is also the possibility that tourism may face competition from technological advances, particularly virtual experiences. Museums, attractions, and historical sites can be made interactive and, in some cases, more lifelike, through AR/VR technology that can enhance the physical travel experience by reconstructing historical places or events.

Up until now, tourism, arguably, was one of a few sectors that could not easily be replaced by tech. It was not possible to replicate the physical experience of traveling to another place. With the emerging metaverse , this might change. Travelers could potentially enjoy an event or experience from their sofa without any logistical snags, and without the commitment to traveling to another country for any length of time. For example, Google offers virtual tours of the Pyramids of Meroë in Sudan via an immersive online experience available in a range of languages. 13 Mariam Khaled Dabboussi, “Step into the Meroë pyramids with Google,” Google, May 17, 2022. And a crypto banking group, The BCB Group, has created a metaverse city that includes representations of some of the most visited destinations in the world, such as the Great Wall of China and the Statue of Liberty. According to BCB, the total cost of flights, transfers, and entry for all these landmarks would come to $7,600—while a virtual trip would cost just over $2. 14 “What impact can the Metaverse have on the travel industry?,” Middle East Economy, July 29, 2022.

The metaverse holds potential for business travel, too—the meeting, incentives, conferences, and exhibitions (MICE) sector in particular. Participants could take part in activities in the same immersive space while connecting from anywhere, dramatically reducing travel, venue, catering, and other costs. 15 “ Tourism in the metaverse: Can travel go virtual? ,” McKinsey, May 4, 2023.

The allure and convenience of such digital experiences make offering seamless, customer-centric travel and tourism in the real world all the more pressing.

Three innovations to solve hotel staffing shortages

Is the future contactless.

Given the advances in technology, and the many digital innovations and applications that already exist, there is potential for businesses across the travel and tourism spectrum to cope with labor shortages while improving customer experience. Process automation and digitization can also add to process efficiency. Taken together, a combination of outsourcing, remote work, and digital solutions can help to retain existing staff and reduce dependency on roles that employers are struggling to fill (exhibit).

Depending on the customer service approach and direct contact need, we estimate that the travel and tourism industry would be able to cope with a structural labor shortage of around 10 to 15 percent in the long run by operating more flexibly and increasing digital and automated efficiency—while offering the remaining staff an improved total work package.

Outsourcing and remote work could also help resolve the labor shortage

While COVID-19 pushed organizations in a wide variety of sectors to embrace remote work, there are many hospitality roles that rely on direct physical services that cannot be performed remotely, such as laundry, cleaning, maintenance, and facility management. If faced with staff shortages, these roles could be outsourced to third-party professional service providers, and existing staff could be reskilled to take up new positions.

In McKinsey’s experience, the total service cost of this type of work in a typical hotel can make up 10 percent of total operating costs. Most often, these roles are not guest facing. A professional and digital-based solution might become an integrated part of a third-party service for hotels looking to outsource this type of work.

One of the lessons learned in the aftermath of COVID-19 is that many tourism employees moved to similar positions in other sectors because they were disillusioned by working conditions in the industry . Specialist multisector companies have been able to shuffle their staff away from tourism to other sectors that offer steady employment or more regular working hours compared with the long hours and seasonal nature of work in tourism.

The remaining travel and tourism staff may be looking for more flexibility or the option to work from home. This can be an effective solution for retaining employees. For example, a travel agent with specific destination expertise could work from home or be consulted on an needs basis.

In instances where remote work or outsourcing is not viable, there are other solutions that the hospitality industry can explore to improve operational effectiveness as well as employee satisfaction. A more agile staffing model  can better match available labor with peaks and troughs in daily, or even hourly, demand. This could involve combining similar roles or cross-training staff so that they can switch roles. Redesigned roles could potentially improve employee satisfaction by empowering staff to explore new career paths within the hotel’s operations. Combined roles build skills across disciplines—for example, supporting a housekeeper to train and become proficient in other maintenance areas, or a front-desk associate to build managerial skills.

Where management or ownership is shared across properties, roles could be staffed to cover a network of sites, rather than individual hotels. By applying a combination of these approaches, hotels could reduce the number of staff hours needed to keep operations running at the same standard. 16 “ Three innovations to solve hotel staffing shortages ,” McKinsey, April 3, 2023.

Taken together, operational adjustments combined with greater use of technology could provide the tourism industry with a way of overcoming staffing challenges and giving customers the seamless digitally enhanced experiences they expect in other aspects of daily life.

In an industry facing a labor shortage, there are opportunities for tech innovations that can help travel and tourism businesses do more with less, while ensuring that remaining staff are engaged and motivated to stay in the industry. For travelers, this could mean fewer friendly faces, but more meaningful experiences and interactions.

Urs Binggeli is a senior expert in McKinsey’s Zurich office, Zi Chen is a capabilities and insights specialist in the Shanghai office, Steffen Köpke is a capabilities and insights expert in the Düsseldorf office, and Jackey Yu is a partner in the Hong Kong office.

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November 1, 2022

What are the Biggest Challenges of Sustainable Tourism Today?

Tourism has experienced immense changes in the recent past. The COVID-19 pandemic and travel restrictions of 2020 and 2021 made the last three years very challenging. Now that we are rapidly unravelling the post-pandemic era, there is hope for a rapid shift toward sustainable tourism, but the industry still faces numerous challenges. What are these challenges? How can destinations and businesses address them? Whether you own/run a hotel, travel agency or planning to start one, this post highlights some of these biggest challenges. We also highlight the best answers to the challenges.

A Brief History of Sustainable Tourism 

To appreciate the challenges facing sustainable tourism , it is prudent to go back to the beginning and look at its definition. 

Sustainable tourism, according to the World Tourism Organisation (UNWTO) , is the development that meets the needs of present tourists, businesses, and regions involved while protecting and promoting opportunities for the future. It focuses on managing the resources in a manner that social, economic, and aesthetic needs are achieved without compromising essential ecological processes, cultural integrity , life support, and biodiversity. 

Between 1995 and 2020, tourism growth reached 25%, and it now accounts for approximately 10% of the global economic activity. Before COVID-19 struck in 2020, tourism arrivals had reached a peak of 900 million. In 2022, the numbers have gained momentum, but it has also become a major threat to biological diversity at all levels. As we are going to see shortly, threats such as overcrowding and excessive waste are already threatening to tear fragile ecosystems apart. 

As the list of challenges facing ecotourism grows, it only indicates why urgent solutions are required. This is why every industry player should be involved to try and cut down travel carbon footprint and take tourism to the next level.  

Challenges for Sustainable Tourism Today

There are many challenges facing sustainable tourism today, threatening to reverse the gains achieved over the last few decades. Let’s highlight them: 

Poor Understanding of the Concept of Sustainability

The biggest threat to sustainable tourism is a poor understanding of the concept. Although it has been around for some time, the idea of sustainable tourism still looks pretty complex to many players in the hospitality industry. This is why most of them consider it an additional cost and opt to forego it to optimise profitability. For example, efforts such as replacing energy-intensive lighting with more efficient models appear expensive, but the truth is that they help to cut down the overall cost and reduce travel carbon footprint in the long term.

Failure to understand the concept of sustainability implies that the hotel industry is unable to take advantage of available opportunities. For example, failure to improve the environment and communities around a hotel is likely to lower the sustainability rating of a facility. For your facility to be considered a green hotel, it should factor in all three areas of sustainability, including environmental, social, and governance (ESG). 

Greenwashing 

Today, guests and visitors looking forward to having a unique experience or holiday prefer green hotels because they are more sustainable. However, some hospitality facilities present themselves as sustainable, whereas they are not. This is known as greenwashing and it is a great threat because it discourages others who are focused on operating sustainably. 

The most common form of greenwashing is failing to factor in all impacts of a hotel’s operations. If your company has adopted strategies to cut down travel carbon footprint only in its facilities, this might not be enough to claim it has hit zero carbon emissions. To correctly present your travel carbon footprint , you have to look at the extended supply chain. For example, are the suppliers of your hotel having high rates of emission to produce what you need? 

Large Amounts of Waste Released into the Environment 

Like other organisations, hotels release a lot of waste into the environment. Once in the environment, these wastes rapidly damage different components, from polluting water resources to choking ecological systems . For example, approximately eight million tonnes of plastic find their way into the oceans per year. These are from water bottles, gloves, packaging materials, and packaging containers. 

The main challenge with plastic waste is that they clog the water systems, damage spawning sites for fish, and easily result in fatalities when ingested. They also damage the aesthetic appeal of beaches and other visitor sites.  

In addition to plastic, organic waste presents a huge challenge to sustainable tourism . The bulk of this comes from materials used to prepare delicacies and food remains. Although they are decomposable, many of them are dumped in open dumpsites, wilderness, and forests. The problem becomes worse when the organics are combined with harmful chemicals that poison flora and fauna. 

High Energy Consumption 

To run a hotel or motel, almost every aspect requires electricity and energy. From the gym to the kitchen and guest rooms, hotels use a lot of energy to ensure that guests are comfortable. However, the high levels of energy consumption can quickly raise the travel carbon footprint and compromise sustainability efforts. 

High energy consumption also means that you will be getting more power-related bills. This will not only eat into the hotel's profits but could also get your business into conflict with the law. For example, most governments have installed laws and policies to help cut down emissions and match the UN's target of reaching net zero carbon emissions by 2050. Therefore, you can be penalised for not following these policies or have the licence cancelled. 

High Consumption of Water 

Although about 70% of the earth is made of water, only about 3% is fresh. Indeed, way less than that is available for human use because the bulk of it is locked in glaciers. This is why conserving water is very important for all parties. In the hospitality industry , about 150 gallons of water are wasted per day by each guestroom. This high rate of water consumption means that the hotel industry is adding to the current precarious situation, where about two billion people do not have access to clean water globally. 

Working in Silos 

One crucial thing about sustainability is that it requires all parties to work in cooperation. However, players in the hospitality industry operate in silos, making it a serious threat to success. When working alone, it is almost impossible to make any significant progress on matters of sustainability. This problem comes from: 

• Direct competition from other threats.
• Fear of sharing important information with other stakeholders: 
• Limited focus on matters of sustainable 

Missing the Sense of Urgency in Addressing ESG Challenges 

Most hospitality facilities , like other businesses, are busy working on ways to grow profits and expand globally. As a result, some players do not see the urgency of addressing the challenges for sustainability. This is a major challenge because failure to improve the environment, such as parks and biodiversity, could result in reduced visitor numbers to your region, country, or facility. 

Solutions for Challenges Facing Sustainable Tourism

Now that we have listed most of the challenges facing sustainable tourism, the next question is, "what are the solutions?" The good thing is that there is a long list of things that you can do to not only improve your hotel's sustainability rating but also help make the planet a better place for all. 

One of the most recommended methods is improving the energy efficiency of your facility. Green hotels today are using CONTINEWM nets to cut down energy use in their HVAC systems. This is a device that improves efficiency of a HVAC system by clearing positive electrostatic charges that cause resistance to air flow. CONTINEWM is installed on the front part of the HVAC's heat exchanger. The device is affordable, easy to install, and can reduce AC bill by up to 25% on average.

Other solutions for addressing the challenges to sustainable tourism include: 

• Adopting a good sustainability plan for your facility which helps define clear goals for your hotel and partners. 
• Making sure to include parties in your supply chain for greater impacts from your sustainability efforts.  
• Partner with international organisations, such as Climate Fresk , for assistance with capacity building. The organisations have experts in matters of sustainability, and you can count on them to cut down your travel carbon footprint. 
• Support the local community’s initiatives, such as cultural events. This can help to make them part of sustainable tourism so that they can also benefit. You should also consider sourcing some of the materials, such as food, from them. 
• Support the development of legislation that promotes green hotels. This is crucial in ensuring that all hotels and players follow the same guidelines and principles for growth. 
• Encourage the adoption of sustainable tourism education at all levels of education. This can help to demonstrate the importance of protecting our planet so that more parties are involved. When taught from an early age, sustainability can become a stronger pillar to reduce the danger of further damage to the planet. 

In this post, we have highlighted the major challenges facing sustainable tourism . They have proved to be serious threats not just to the tourism industry but to almost every enterprise out there. This is why every party should be involved. The solutions we have listed above can help investors to cut down their travel carbon footprint and improve the sustainability rating of green hotels. Remember that sustainability is a progressive journey where every achievement becomes a support for the next action. 

To read this content please select one of the options below:

Please note you do not have access to teaching notes, health risks, pandemics and epidemics affecting tourism: understanding covid-19 pandemic.

Pandemics and Travel

ISBN : 978-1-80071-071-9 , eISBN : 978-1-80071-070-2

Publication date: 3 September 2021

Tourism activity is a global industry and, as such, it is subject to global risks. International travel has developed exponentially over the last few decades. At the same time, diseases have increased their geographical spread influenced by ecologic, genetic and human factors. Currently, the increasing virus, epidemic and pandemic outbreaks represent some of the most negative consequences of globalization, causing deaths and significant economic losses due to the negative impacts they have on the tourism industry, one of the sectors that have been the most affected by health crises.

This work presents insights on the epidemics, pandemics and virus outbreaks that have occurred throughout the twenty-first century and how those occurrences have affected the tourism industry and the global economy. A brief literature review on health risks in tourism is presented, followed by a clinical perspective to help people understand the differences between endemics, outbreaks, epidemics and pandemics. Then, the study offers a presentation of the most significant pandemics in recent human history and a deep analysis of the COVID-19 disease. Finally, the effects that the different pandemics, epidemics and outbreaks that occurred in the present century had on tourism are explained, and the challenges tourism has to face are presented and discussed.

• Health risks
• Epidemics and pandemics
• Impacts on tourism
• Virus outbreaks
• Challenges for tourism industry

Acknowledgements

This work was funded by national funds through FCT – the Portuguese Foundation for Science and Technology (UID/ECO/00124/2013 and Social Sciences DataLab, Project 22209), POR Lisboa (LISBOA-01-0145-FEDER-007722 and Social Sciences DataLab, Project 22209), POR Norte (Social Sciences DataLab, Project 22209) and under the projects UIDB/05583/2020 and UIDB/04084/2020. Furthermore, we would like to thank CEGOT – Geography and Spatial Planning Research Centre, and Research Centre in Digital Services (CISeD), the Polytechnic of Viseu and the Faculty of Arts & Humanities of the University of Coimbra for their support.

Abrantes, A.M. , Abrantes, J.L. , Silva, C. , Reis, P. and Seabra, C. (2021), "Health Risks, Pandemics and Epidemics Affecting Tourism: Understanding COVID-19 Pandemic", Seabra, C. , Paiva, O. , Silva, C. and Abrantes, J.L. (Ed.) Pandemics and Travel ( Tourism Security-Safety and Post Conflict Destinations ), Emerald Publishing Limited, Leeds, pp. 7-28. https://doi.org/10.1108/978-1-80071-070-220211002

Emerald Publishing Limited

Copyright © 2021 by Emerald Publishing Limited

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Top 5 Challenges Confronting Tourism and the Travel Industry

When it comes to volatile industries, there are many that come to mind. The travel industry is definitely one of them. For starters, tourism is far from being immune to economic, political, and social shifts.

Now, it’s agreed upon that most of these factors are outside the control of tourism boards and travel companies. However, staying aware can help the travel industry become more proactive and develop adaptive strategies quickly.

Here are 5 key challenges that the travel industry is currently confronting and needs to address.

Globalisation

Globalisation is leading to the creation of uniform standards and protocols. However, the unique selling point (USP) of travel companies or destination marketing organizations (DMOs) lies in providing a rare and unique experience. The travel industry, therefore, works towards offering products that allow the average tourist or traveller to experience something they have never experienced before. Novelty is a much-needed element in today’s travel aspirations.

However, at the same time, localization is also important. Tourism boards and travel companies must know how to connect with foreign travellers. They must make use of  translation services  to create  multilingual websites , vital travel information, and essential signages that can guide tourists in the proper manner. Tourists must feel welcomed and at ease while they are away from home.

Tourism is one of the most taxed sectors. A simple glance at the taxes paid on airline tickets and hotel rooms gives an idea of how taxation can greatly affect tourism. Therefore, it’s necessary for the travel industry to offer competitively priced offerings in order to balance out the equation.

Governments must also come to the realization that tourists already contribute to the local economy via purchases, travel retail, and other tourism expenditures.

Travel Marketing

Travel marketing can sometimes be deemed by travellers or tourists as being inadequate, false, or exaggerated. In order to change this perception, marketing entities must work toward developing innovative marketing solutions to lure the new crop of travellers who are becoming more discerning and informed. In addition, technological disruptions and the influence of social media also mean that it’s a time of both opportunities and risks. Travel marketers must look to harness tech and creativity to find their way into tourists’ travel plans. On the other hand, they must also pay attention to localized content.

8 Tips to Boost Bookings for Your Travel Packages

The Importance of Translation in the Travel and Tourism Industry

Infrastructure

Tourism infrastructure in many locations is outdated and underdeveloped. Governments, tourism boards, and destination marketing organizations must work towards improving the current infrastructure with foresight. Future challenges must also be addressed in this area. Solutions could include faster immigration at airports, faster checkout processes in hotels, better public transportation, and interpreting solutions at airports, stations or ports.

Industry players must work towards establishing better security infrastructure for tourists and travellers. This can be achieved by working with local law enforcement, city councils, and local governments. Governments must work towards sourcing for more manpower and economic resources to boost security and vigilance without stifling the travel experience within the country.

Now, the big question is, can these challenges be overcome? Well, some of these challenges can become growth opportunities for travel companies, tourism boards, and destination marketing organizations. As for the others with external factors involved, it would be unthinkable for individual travel businesses to make significant changes. The travel industry as a whole must unite and be willing to negotiate and discuss its terms – sometimes with governments and unions. At the same time, it must also be willing to adapt to changing scenarios and trends.

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