Following a 25 per cent decline in 2020, the World Travel & Tourism Council (WTTC) issued ‘Critical Factors to Attract Hotel Investment,’ new research underlining the necessity of attracting capital investment to enable the Travel & Tourism sector’s full development potential beyond COVID-19.
The paper, released today at the Sustainability and Investment Summit in San Juan, Puerto Rico, examines critical enabling factors for hotel investment and success stories of locations that have implemented such factors and seen high investment growth.
When international travel stopped in 2020, the Travel & Tourism sector lost 62 million jobs and saw its GDP contribution half, amounting to a staggering $4.9 trillion loss.
According to the study, capital investment in the industry declined sharply during the pandemic’s peak, from roughly $1.1 trillion in 2019 to barely $805 billion in 2020, a loss of about 25 per cent.
Last year, investment in the industry fell 6.9 per cent to $750 billion, continuing its downward trend.
The research does, however, give a reason for hope, predicting a significant increase in travel and tourism spending over the coming decade. However, the international tourist organisation advises that governments worldwide must build an enabling climate to do this.
An explicit, transparent, consistent government action and support, advantageous tax advantages, and safety and security, among other things, remain necessary to attract hotel investments, in addition to political stability and liquidity, which are regarded vital for investment.
Julia Simpson, WTTC President & CEO, said: “Hotel investment is absolutely key for the recovery and growth of the Travel & Tourism sector. Destinations must have a clear commitment and take a holistic approach to become resilient and competitive.
“As we recover from the pandemic and we build back better, investments not only need to benefit destinations economically but more importantly, socially and environmentally.”
Governance and the rule of law, which is a crucial facilitator for investors since it impacts how readily and successfully a firm functions, physical infrastructure, air and ground connections, and workforce are among the essential enabling aspects for hotel investment, according to the new analysis.
The paper looked at several well-known vacation spots that profited from including these components. The Netherlands, for example, offers an enabling climate for foreign investment by lowering regulatory barriers and enforcing stringent anti-corruption legislation.
Physical infrastructure and air and ground connections are vital for investment since well-connected hubs encourage regional growth and enable access to lesser-known tourist locations.
South Korea, for example, is one of the world’s most well-connected countries. The country’s selection as the 2018 Winter Olympic host spurred investment in transportation infrastructure, resulting in an almost 15 per cent increase in hotel room supply, outpacing the robust global Travel & Tourism capital investment growth of 8.7 per cent in 2017.
The study also emphasises the necessity of worker reskilling and upskilling. Portugal has taken the lead in this area, focusing on methods to assist in reskilling the industry, such as the Tourist Training Talent (TTT) programme, which is dedicated to increasing the quality of tourism training services.
Liquidity in the Maldives, government help in Saudi Arabia, taxes in Colombia, destination planning and sustainability in Singapore and Rwanda, service culture in the Philippines, and travel facilitation in Aruba are some of the other elements and success stories discussed in the study.
The paper, which includes contributions from STR, KSL Capital Partners, and JLL, relies on expertise to help both the public and private sectors establish and implement Travel & Tourism investment plans that will support the sector’s long-term recovery.
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