Tourism is bouncing back from the impacts of the recent pandemic that brought the sector to a standstill. But to survive the challenges that lie ahead, a new approach is needed.
International tourism is bouncing back
The tourism industry continues to play a crucial role in many economies, contributing significantly to GDP, job creation and economic stability.
The recent OECD report Tourism Trends and Policies 2024 shows the tourism sector has shown a remarkable recovery. In some OECD countries international tourist arrivals and tourism output have already exceeded pre-pandemic levels.
In Portugal, Mexico and Costa Rica, the direct contribution of tourism to GDP had exceeded pre-pandemic levels as early as 2022, positioning tourism as a major sector in the post-covid economic recovery.
The success of the tourism recovery process is even more impressive given the headwinds it has faced, with the emergence of geopolitical conflicts in different parts of the world, the rise in inflation and the consequent economic and social uncertainty.
This entire process reminded society of the important role tourism plays as a driver of growth, employment and community life in most countries as well as the role that Governments can play in shaping outcomes for the sector through policies and stabilising mechanisms.
Portugal’s swift tourism recovery Post-COVID
Portugal – my own country – was one of the countries that managed to recover most quickly from the pandemic, adjusting its tourism strategy to face challenges that arose from the pandemic, but never losing sight of the strategy’s longer term objectives: growing in value, managing environmental challenges and generating quality of life for the community.
The sector’s partnership with the Ministry of Health to launch the Clean and Safe stamp to prepare tourism firms to manage their businesses during the pandemic, was one proactive policy that helped reassure travelers, leading to a significant increase in demand when travel restrictions lifted.
The government’s massive support for companies made it possible to maintain thousands of jobs and somewhat mitigate one of the main challenges that emerged from the pandemic – talent attraction and retention.
Finally, the recovery of air connectivity and the focus on the diversification of source markets supported a growth of 10% in arrivals in 2023, 40% in hotel revenues and 37% in international tourism receipts compared to the pre-pandemic period.
The strengthening of Portugal’s competitiveness as a destination also contributed to this recovery process, as the country rose 3 places to 12th position in the World Economic Forum’s Travel & Tourism Development Index 2024, which highlights, Safety & Security, Health & Hygiene, Openness, Tourism Infrastructure and Cultural Resources as the main sources of competitiveness in the country.
A need for forward thinking
As we emerge from the crisis, governments and companies now need to look ahead. They will see familiar challenges, such as the need to align tourism policies with commitments on climate change and sustainability agendas and the need for digitalisation and technology adoption to improve the sector’s productivity and customer experience.
These challenges not only remain, but have been amplified with the pandemic, with significant growth in the use of technology and the growing recognition of the social impacts of tourism.
These have also generated important opportunities for the future (e.g. digitalisation), requiring governments to adapt tourism policies to harness these benefits while managing negative externalities.
To meet these challenges, policy makers need better evidence and tools to monitor these issues and the impact of tourism policies on the well-being of communities, exploring the potential that technology and new sources of data have to offer.
In short, we need to build a new generation of tourism policies capable of generating balanced, sustainable and inclusive growth, over the longer-term: a new model that works for all tourism stakeholders.
