Global tourism arrivals will increase by 30% in 2023, following growth of 60% in 2022

Economist Intelligence Unit (EIU) recently released its Tourism in 2023 report. This report assesses the growth prospects, top risks and key trends facing the sector next year. The report finds that global tourism arrivals will increase by 30% in 2023, following growth of 60% in 2022, but will remain below pre-pandemic levels. The economic downturn, sanctions on Russia and China’s zero-Covid strategy will delay recovery.

Ana Nicholls, director of industry analysis, EIU, says:

“The tourism industry saw a strong recovery during 2022, and we expect that to continue in 2023, particularly if China starts lifting its zero-covid policy as expected. But the industry certainly won’t be immune to the economic slowdown. Costs have already risen sharply for fuel, electricity, food and staffing, and companies will have to pass those costs onto consumers who are already hurting from the higher cost of living. As a result, EIU has pushed back its forecast for a full recovery in international arrivals. We now don’t expect them to get back to 2019 levels until 2024, although the Middle East is one region that will be ahead of the curve.”

Key trends to watch in 2023 include:

• Global tourism arrivals will rise by 30% in 2023, following 60% growth in 2022, but they will still not return to pre-pandemic levels. The economic downturn, sanctions on Russia and, above all, China’s zero-covid strategy will be among the factors weighing on the industry.
• Hotels, restaurants and airports will struggle to cope with labour shortages, wage demands, and high food and energy prices.
• Even so, international airlines are expected to return to profitability, benefiting from continued pent-up demand.
• The impact of climate change on the industry will become more apparent, with high temperatures, water shortages and floods forcing tourism destinations to take action.

This report is part of a wider series that looks at the growth prospects for seven sectors of the global economy: automotive; consumer goods and retail; energy; financial services; healthcare; technology and telecoms; and tourism.

There are no longer any inexpensive international flights on sale; airlines don’t need to incentivize people to book since demand is so high and supply is so limited; consequently, if you are unwilling to pay a premium, there is no other alternative.

Airlines do not need to offer special airfares in the market since flights are fully booked. They (the airlines) are now profitable and have minimal operating expenses, which is the ideal combination for profit maximization.

The only significant expense that airlines are now facing is the high fuel cost, which is insufficient to justify the massive increase in airfares.

The desire to travel has increased after three years of people being unable to travel abroad owing to the pandemic. Airlines have battled to keep up to the point where they have learnt a good lesson that triggers the potential to profit.

Source: EIU

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