Tourism Industry Bounces Back: A Look at Global FDI Trends Post-COVID-19
19-Sep-2023
The tourism industry was one of the sectors most affected by the COVID-19 pandemic, and it has taken a long time to recover. In 2020, the number of FDI projects in the tourism sector decreased by 59% year-on-year, and capital investment in the sector decreased by 70%.
The global tourism industry has been recovering steadily from the lows it touched during the COVID-19 pandemic. This is reflected in the investment figures for the tourism cluster, which grew by 23% in 2022 from 286 investments in 2021 to 352 in 2022. The number of jobs created by tourism FDI also increased by 23% over the same period, to an estimated 36,400 in 2022.
The recovery of the tourism industry is good news for businesses and workers in the sector. It also bodes well for the global economy, as tourism is a major source of foreign exchange earnings for many countries.
Europe was the leading destination for tourism FDI projects in 2022, with 143 announced investments at a combined estimated value of $2.2 billion. The UK was the top destination for tourism FDI in Europe, attracting 160 projects, or 16% of total tourism FDI in Europe. The UK was also the top source market, with 311 outbound tourism projects tracked at a value of $18.3 billion.
The volume of tourism FDI projects in Europe increased by 16% from 2021 to 2022 but still remained below 55% of its 2019 figures. The top destination market for capital investment in the region between 2018 and 2022 was Spain, with projects in the country generating $19.4 billion worth of capital investment which equated to a market share of 38%.
The Asia-Pacific region attracted 517 tourism FDI projects between 2018 and 2022, representing $65.1 billion of capital investment and creating more than 105,600 jobs. The number of announced projects in the region increased marginally by 2.4% to 42 projects in 2022, after declining in 2020 and 2021.
China attracted the highest number of tourism FDI projects in the region between 2018 and 2022, with 79 announced projects, or 15% of the total market share. However, the number of projects in China has declined steadily since 2019.
India attracted three times more tourism FDI projects in 2022 than it did in 2021, and ranked as the top destination country in the region last year. Between 2018 and 2022, India received a total of 51 announced tourism FDI projects, representing a market share of 9.9% in Asia-Pacific and more than $2.2 billion in capital investment.
The hotel and tourism sector accounted for almost two-thirds of all tourism FDI projects between 2018 and 2022. The number of FDI projects in the sector increased by 25% from 2021 to 2022, but capital investment declined from $48.9 billion in 2018 to $7.8 billion in 2022. Job creation in the sector has remained at less than a third of its 2019 high of 94,300 since 2020.
Accommodation was the largest sub-sector of tourism FDI globally, accounting for more than half (51%) of all FDI projects. More than 70% of capital investment ($126.8 billion) and job creation (270,000) in the tourism cluster was generated by the accommodation sub-sector during the same period.
Travel arrangements and reservation services ranked as the second-largest sub-sector for tourism FDI by number of projects recorded between 2018 and 2022. FDI project numbers in the sub-sector grew almost 2.5 times from 29 in 2021 to 72 in 2022, signalling a strong rebound in the industry as international tourism started to recover following the impact of COVID-19.
Software and IT services were the second-largest sector for tourism FDI projects between 2018 and 2022. Its share of global FDI tourism projects grew from 10% in 2018 to 16% in 2020, 22% in 2021 and 28% in 2022, indicating the sector’s resilience and its ongoing shift towards digitization. The software publishers (excluding video games) sub-sector was the third-largest recipient of FDI projects, growing by 32% between 2018 and 2022.
Source: UNWTO | fDi Intelligence
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