The state of tourism and hospitality 2024
Tourism and hospitality are on a journey of disruption. Shifting source markets and destinations, growing demand for experiential and luxury travel, and innovative business strategies are all combining to dramatically alter the industry landscape. Given this momentous change, it’s important for stakeholders to consider and strategize on four major themes:
- The bulk of travel is close to home. Although international travel might draw headlines, stakeholders shouldn’t neglect the big opportunities in their backyards. Domestic travel still represents the bulk of travel spending, and intraregional tourism is on the rise.
- Consumers increasingly prioritize travel—when it’s on their own terms. Interest in travel is booming, but travelers are no longer content with a one-size-fits-all experience. Individual personalization might not always be practical, but savvy industry players can use segmentation and hypothesis-driven testing to improve their value propositions. Those that fail to articulate target customer segments and adapt their offerings accordingly risk getting left behind.
- The face of luxury travel is changing. Demand for luxury tourism and hospitality is expected to grow faster than any other travel segment today—particularly in Asia. It’s crucial to understand that luxury travelers don’t make up a monolith. Segmenting by age, nationality, and net worth can reveal varied and evolving preferences and behaviors.
- As tourism grows, destinations will need to prepare to mitigate overcrowding. Destinations need to be ready to handle the large tourist flows of tomorrow. Now is the time for stakeholders to plan, develop, and invest in mitigation strategies. Equipped with accurate assessments of carrying capacities and enhanced abilities to gather and analyze data, destinations can improve their transportation and infrastructure, build tourism-ready workforces, and preserve their natural and cultural heritages.
McKinsey Live event: Faces, places, and trends: The state of tourism & hospitality
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Now boarding: Faces, places, and trends shaping tourism in 2024
Global travel is back and buzzing. The amount of travel fell by 75 percent in 2020; however, travel is on its way to a full recovery by the end of 2024. More regional trips, an emerging population of new travelers, and a fresh set of destinations are powering steady spending in tourism.
There’s no doubt that people still love to travel and will continue to seek new experiences in new places. But where will travelers come from, and where will they go?
We share a snapshot of current traveler flows, along with estimates for growth through 2030.
The way we travel now
Which trends are shaping traveler sentiment now? What sorts of journeys do today’s travelers dream about? How much are they willing to spend on their trips? And what should industry stakeholders do to adapt to the traveler psychology of the moment?
To gauge what’s on the minds of present-day travelers, we surveyed more than 5,000 of them. The findings reveal disparate desires, generational divides, and a newly emerging set of traveler archetypes.
Updating perceptions about today’s luxury traveler
Demand for luxury tourism and hospitality is expected to grow faster than for any other segment. This growth is being powered in part by a large and expanding base of aspiring luxury travelers with net worths between $100,000 and $1 million, many of whom are younger and increasingly willing to spend larger shares of their wealth on upscale travel options. The increase is also a result of rising wealth levels in Asia.
We dug deeper into this ongoing evolution by surveying luxury travelers around the globe about their preferences, plans, and expectations. Some widely held notions about luxury travelers—such as how much money they have, how old they are, and where they come from—could be due for reexamination.
Destination readiness: Preparing for the tourist flows of tomorrow
As global tourism grows, it will be crucial for destinations to be ready. How can the tourism ecosystem prepare to host unprecedented volumes of visitors while managing the challenges that can accompany this success? A large flow of tourists, if not carefully channeled, can encumber infrastructure, harm natural and cultural attractions, and frustrate locals and visitors alike.
Now is the time for tourism stakeholders to combine their thinking and resources to look for better ways to handle the visitor flows of today while properly preparing themselves for the visitor flows of tomorrow. We offer a diagnostic that destinations can use to spot early-warning signs about tourism concentration, along with suggestions for funding mechanisms and strategies to help maximize the benefits of tourism while minimizing its negative impacts.
Six trends shaping new business models in tourism and hospitality
As destinations and source markets have transformed over the past decade, tourism and hospitality companies have evolved, too. Accommodation, home sharing, cruises, and theme parks are among the sectors in which new approaches could present new opportunities. Stakeholders gearing up for new challenges should look for business model innovations that will help sustain their hard-won growth—and profits.
Unbundling offerings, cross-selling distinctive experiences, and embracing data-powered strategies can all be winning moves. A series of insight-driven charts reveal significant trends and an outlook on the future.
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COMMENTS
By incorporating critical drivers of tourism demand, Ulucak et al., 2020 find that a gravity model is a useful tool for modelling tourism demand and show that the exchange rate and globalization are impacting positively on tourism demand. Ulucak, Yücel and Ilkay find that political uncertainty, inflation, household debt and distance to Turkey ...
Econometric studies of tourism demand rely on the economic theory that underpins the causal relationship between tourism demand and its determinants. The econometric models in more recent investigations have incorporated theories from other disciplines, such as sociology and psychology, to capture the complexity of tourist behavior.
Abstract: This chapter reviews the conceptual and theoretical foundations underlying the specification of empirical tourism demand models. It begins with a review of basic concepts, theories, and the literature on the determinants of tourist flows. Its goal is to synthesise a conceptual framework within which issues in relation to tourism ...
tourism demand in USMCA: Theory and evidence. TourismEconomics. Epub ahead of print 22 November 2019. DOI: 10.1177/1354816619888346. Nguyen CP, Schinckus C and Su TD (2020) Economic policy uncertainty and demand for international tourism: An empirical study. Tourism Economics. Epub ahead of print 22 January 2020.
The development of theory on destination image through refinement and constant adjustment to new conditions is consistent with theory development logics. The theory in tourism has outgrown its basis in the marketing discipline, where product image research could be considered to be less intense. Tourist experience. A micro-level theory in tourism.
To do so, firstly, in Section 2, a summary of the origins of the gravity model and the basic economic theory considered as reference in the context of tourism demand are presented. In Section 3 , the paper discusses a review based on an analysis of 143 papers published from 1966 to 2021, analyzing the used dependent and independent variables ...
Conclusion. This paper assesses the recent progress in tourism demand research and critiques several major analytical flaws noted in the assessment process. The insights from our assessment not only provide the most recent and holistic view of tourism demand research but also identify critical flaws that must be addressed.
2.2 Descriptive information. Among the 425 articles on tourism demand research identified, the numb er published. each year generally increased, with 59 articles published in 2017, 44 in 2018, 68 ...
ABSTRACT. Tourism has long been explored through the lens of development theory. David Harrison was one of the earlier academics to do so, subsequently turning his attention to critiquing the relevance of such theory to tourism, concluding that although much tourism research has been framed within it, development theory has contributed little if anything to knowledge and understanding of the ...
Developed from the successful Portuguese textbook Teoria do Turismo, Tourism Theory provides clear and thorough coverage of all aspects of tourism theory for ... disciplines and topics; and the tourist, which includes areas such as demand, gaze, psychology and typologies. A fourth section covers intermediation, distribution and travel ...
Tourism Economics. 2021. TLDR. Travel resilience is found to be strongly associated with income, education level and the tenure of a second residence and the probability of continuing travelling during the summer of 2020 is positively associated with pre-pandemic travel intensity and tourism being considered a priority leisure activity. Expand. 5.
This chapter discusses how tourism demand can be characterized and outlines some of the factors that influence tourism demand. ... Tourism Theory, Ebook Checkout Restore your content access Enter your email address to restore your content access: Email - Note: This functionality works only for purchases done as a guest. ...
According to the demand theory, the pivotal factors shaping a tourist's budget line are the income of the consumer and the price of the tourism product/service. Specifically, in empirical tourism demand studies, the income of origin country/region, the own price of a destination, and the substitute prices of alternative destinations are the ...
the research on tourism demand elasticity has been of interest to researchers and practitioners. Song et al. (2010) provided two main reasons for studying tourism demand. ... enriched the theory and methods of measuring tourism demand elasticity by prices and income in different contexts. However, these publications are mainly in the ...
An Endogenous Growth Model of International Tourism. I. A. Pina M. P. Martínez-García. Economics. 2013. This paper investigates the relationship between tourism and economic growth in a dynamic model of international trade. Tourism is viewed as a twofold channel for promoting long-term growth.
Tourism demand forecasting is proven essential to optimize management, increase revenues, and control risks. Spatial effects have been widely considered in forecasting models and achieved good resu...
The results show that tourism development and economic growth are interdependent in Germany; whereas tourism development induces economic growth in China and Turkey, the reverse is true in Spain. Causal relationships between renewable energy and economic growth give credence to theories of renewable energy-led growth in Spain and growth-led ...
The purpose of this study is to advance the tourism demand theory by excluding simultaneous effects of exchange rates and prices in empirical models, formulating an alternative pricing modus operandi consistent with recent research in the area, and demonstrating the efficacy of the use of an industrial production index (IPI) as a proxy for income.
Demand for luxury tourism and hospitality is expected to grow faster than for any other segment. This growth is being powered in part by a large and expanding base of aspiring luxury travelers with net worths between $100,000 and $1 million, many of whom are younger and increasingly willing to spend larger shares of their wealth on upscale travel options.
Tourism demand modeling in the consumer demand tradition is usually done by modeling tourism flows between each origin-destination pair, and for each pair independently of other flows. The gravity model models the set of all origin-destination flows as a system. Another approach would be to specify models for each origin-destination pair but ...
"There's been a substantial increase on last year's demand," says Tom Jenkins, CEO of the European Tourism Organisation, speaking about US travelers to Europe. "2023 saw higher numbers ...
Abstract. This article uses econometric methods to estimate how tourism demand reacts to increased economicgrowth. Three models are introduced and used in the illustration of the effects of a 1% increase in growth on real revenue from tourism in nine European countries.
Chao Liang is an assistant professor in the School of Economics & Management at Southwest Jiaotong University. He is an associate editor of SSCI journal Research in International Business and Finance and Evaluation Review. His research interests include time series forecasting, empirical finance, machine learning, and energy economics.