The new wave of tourism that has surged in the wake of the Covid-19 pandemic has not yet translated into a new investment cycle for the entire industry as operators replenish existing capacity in developed markets and reassess risk exposure in emerging economies.
Tourism Investment Report 2022, fDiThe special annual report of monitoring the investment activity in the tourism industry, based on fDi Markets proprietary data and co-produced with the UN World Tourism Organization (UNWTO), reveal that foreign investors announced a total of 250 foreign direct investment (FDI) projects in the tourism group in 2021, worth about 9.5 billion dollars. That’s down from 271 projects worth $17 billion announced in 2020.
Despite persistently low levels of investment, “the sector has shown clear signs of recovery,” Zurab Pololikashvili, UNWTO secretary-general, wrote in the report. “This is expected to continue throughout the rest of 2022 as more destinations ease or lift travel restrictions and isolated demand is released.”
UNWTO data shows that worldwide tourist arrivals increased by 5.3% in 2021 from the previous year and were almost three times higher in the first quarter of 2022 than in the first quarter of 2021.
Key stakeholders in the tourism ecosystem are already reaping the benefits. Budget airline Ryanair has broken pre-Covid passenger records in the April to June quarter. In the same period, booking platforms Booking.com and Airbnb also surpassed the financial results achieved in the same period of 2019.
However, the outlook remains “fragile,” as Ryanair CEO Michael O’Leary put it, in light of current geopolitical and supply chain risks, and capital spending plans remain on hold across the industry.
Although absolute numbers remain far from pre-Covid levels, some regions have already experienced early signs of an investment recovery. Foreign investors announced more than twice as many investment projects in Africa in 2021 than the year before. Project announcements in the Middle East and Western Europe also increased by 66.7% and 19.2% respectively.
However, China’s zero-Covid policy has damaged any recovery prospects in the Asia-Pacific region, where announced FDI projects fell by another 60% in 2021 from last year. Developing Europe also experienced weak investment levels in 2021 – announced FDI projects fell by 60% in 2021 from 2020.
Worldwide, hotel developers remained conservative with their foreign direct investment commitments, with projects in the sub-sector falling to 115, from 172 in 2020 and 522 in 2019. While also remaining below 2019 levels, projects of FDI announced by digital tourism service providers rebounded to 61 in 2021 from 44 a year ago as innovation and new technologies such as artificial intelligence disrupt functions once provided by legacy players such as marketing, booking services and customer relationship management providers.
US hotel powerhouse Marriott confirmed itself as the single largest foreign investor in the tourism group, followed by Hyatt International and Travel + Leisure Co (formerly known as Wyndham Destinations). Selina remains the only hotel group in Latin America in the top 10. Accor, InterContinental Hotels Group, Barcelo, Melia Hotels International and TUI Group complete the top 10 from Europe while Minor International is the only representative from the Asia-Pacific region.
Click here to download a PDF of the 2022 Tourism Investment Report