Overtourism and inflation, the main threats to travel industry

14-12-23

According to a new report from Euromonitor International, the biggest challenges facing the travel industry are efforts to combat overtourism through new and more costly tourist taxes, as well as ongoing economic headwinds such as inflation.

In its Top 100 Cities Index 2023, Euromonitor notes that several destinations are set to impose hefty visitor fees and reduce hotel capacity to limit the post-pandemic spike in tourist numbers and minimize the impact of travel on local communities and ecosystems.

Cities in countries such as Croatia, Iceland, Japan, Thailand, the Netherlands, Greece and the UK intend to use revenue from visitor fees to reinvest in sustainable development, conserve biodiversity and preserve local cultural heritage," says Euromonitor. Edinburgh is set to become the first UK city to introduce a visitor fee.

"In an era marked by heightened environmental awareness and the pressing need to address climate change, cities are undergoing a remarkable transformation as travelers seek more responsible alternatives," Euromonitor says.

Speaking at WTM London last month, Martin Brackenbury, former chairman of Abta, described overtourism as "a very big barrier" to the overall sustainability of the travel industry. 

Euromonitor has also cut its forecast for international arrivals during the first quarter of 2024 from 1.5 billion to 1.46 billion, citing a combination of inflation and economic stagnation. "Inflationary pressures, economic uncertainty and labor shortages will be among the key challenges facing the travel industry in 2024," it warns.   

Despite this cautious outlook, the report highlighted how biometric identification, generative AI and augmented reality tools will mitigate labor shortages and improve customer service in the coming year. The report also hailed the "strong recovery in international travel," which will increase 38% through 2023.

According to the report, the strength of this recovery is partly due to the return of Chinese international tourists after China lifted quarantine restrictions. Hong Kong recorded the fastest growth of all cities last year, with travel up nearly 2,500%.

Paris topped Euromonitor's list of the world's best cities, thanks to its "exceptional performance" on several metrics, including economic performance, tourism infrastructure and sustainability, boosted by the hosting of the 2024 Olympic Games.

Dubai ranked second, considered "the best performing city in the Middle East," and Madrid third, topping Euromonitor's ranking solely for its sustainability efforts. Tokyo was fourth and Amsterdam fifth, with New York eighth, London tenth and Lisbon rounding out the top 20.