Global Tourism and Travel Industry: Performance During the Double-Dip Recession and Recommendations for Transition to a Green Economy
This review article outlines the impressive growth of the global tourism and travel industry during the on-going economic slowdown. It briefly addresses the recovery and business status in several geographic regions and countries including a few Small Island Developing States based on policy and statistical reports. The debates linking the climate change threats and the environmental costs are focussed throughout. It points out international initiatives, some of the opportunities and challenges facing a green economy transition as well as a set of recommendations.
The World Economic Situation Report 2012 forecasting the global economic prospects for 2012 and 20131 signals that the “world economy is teetering on the brink of another major downturn with output growth has already slowed considerably during 2011 and anaemic growth is expected during 2012 and 2013.” This report also argues that in the onset of the Great Recession, fiscal policy in most developed economies face a dual challenge: the need for preventing a double-dip recession as the economic recovery falters and the need for safeguarding the fiscal sustainability in the long run2. In this scenario, the tourism industry has made an impressive recovery in all geographic regions (especially in Europe and Asia Pacific) and once again has firmly emerged as one of the leading industries of the world. The benefits of tourism in generating revenue and employment in both developed and developing economies have been well documented by international organisations such as the United Nations World Tourism Organisation (UNWTO) and World Bank as well as by many tourism researchers.
Together with the travel industry (i.e. including tourist transport, air travel but excluding commuter transport services), tourism contributed $6.3 trillion to the global economy in 2011, equalling 9.1% to the world’s GDP as a result of the direct, indirect and induced impact of this industry. The World Travel and Tourism Council3 confirmed that the travel and tourism industry is above the automobiles industry (8% of world’s GDP) and next only to the banking sector, which accounts for 11%. This relatively quick recovery has been noticed in many countries and the increasing importance of the travel and tourism industry in balancing and improving people’s financial and social capital is realised in almost every country. With specific reference to developing countries, the World Economic Situation Report 2012 stated that they “remain net services importers, but their role as service exporters is continuously growing, especially in the transport and tourism sectors”4.
Growth of the tourism industry
International tourism industry maintained its growth in the last decades despite several challenges in addition to the current economic slowdown (e.g. 1997 Asian financial crisis, 2001 September 11 terrorist attacks, and the 2004 Asian tsunami). The UNWTO Barometer statistics for 2010 and 2011 indicate that in 2011, international tourist arrivals grew by 4.4% to a total of 980 million (up from 939 million in 2010), a year characterized by a stalled global economic recovery, major political changes in the Middle East and North Africa, and natural disasters in Japan. In 2010, Europe (+6%) was the best performer, while South-American sub-region (+10%) topped the ranking and the growth was higher in advanced economies (+5%) than in emerging ones (+3.8%), largely due to the strong results in Europe, and the setbacks in the Middle East and North Africa5. The latest edition of the UNWTO Barometer published in November 20126 confirmed that the number of international tourists worldwide grew by 4% between January and August 2012 compared to the same eight months in 2011 (28 million more) with a record 705 million tourists up to August. The long-term trends projected by the UNWTO also indicate the expansion of the tourism industry, its importance and reinforce that emerging economies are growing faster in terms of tourism (Table 1 ).
The latest communication from the UNWTO also indicated that in early December 2012 the international tourism arrival figures have reached the 1 billion milestone. Recalling the positive impact even the smallest action can have if multiplied by one billion, UNWTO launched the “One Billion Tourists: One Billion Opportunities” campaign to celebrate this milestone, informing tourists that respecting local culture, preserving heritage or buying local goods when travelling can make a big difference8. While the statistics show the positive figures and the economic benefits of the travel and tourism industry and are extremely useful to the growing world population, this industry does put enormous pressure on the natural capital of the world with its increasing environmental costs. This is mainly because of the fact that although there is awareness about environmental impacts of travel and tourism, this industry needs to step-up its initiatives for a sustainable future.
Tourism benefits and challenges in a sustainability context
The direct and indirect benefits of tourism in terms of employment, revenue, investments, transport, accommodation, food, events, leisure services, and linkages with allied industries including insurance, housing, clothing, and local produce are well known. The World Economic Impact Report 2012 of the WTTC9 highlighted that the travel and tourism industry supports either directly or indirectly 1 in every 12 jobs, 5 per cent of investment and 5 per cent of exports. It is anticipated to account for 328 million jobs, or 1 in every 10 jobs on the planet by 2022, which is an encouraging estimation. It economically benefits many countries.
For instance, according to several of the WTTC reports published in the year 2012 on individual countries and regions, travel and tourism’s total contribution to GDP in the Americas was US$1.9 trillion in 2011, equalling 8.6% of total GDP. This is higher compared to the performance of the automotive and mining industry (6%), and chemicals industry (7%). The travel and tourism sector contributed: £101 billion (6.7%) to the GDP of the UK and EUR117.6 billion (4.6%) to the GDP of Germany. In 2011, the total contribution of this sector to the GDP of fast developing countries such as China and India were 9.2% and 6.4% respectively, according to the WTTC.
In addition to its contribution to larger economies, tourism has been identified as a key sector for Small Island Developing States (SIDS) in the recent past as well as under the ‘Blue Economy’ concept since many of them are heavily dependent on tourism10. In 2010, tourism contributed to around 70% of the Republic of Palau’s GDP, Maldives (69%), Seychelles (57%), St Lucia (49%), and the Cook Islands (47%)11. The World Bank12 clearly highlighted that many SIDS rely on tourism as their major export industry. The five year review of the ‘Mauritius Strategy of Implementation’ for the further implementation of the Barbados Programme of Actions for the Sustainable Development of SIDS declared that “tourism has contributed much to the development of many SIDS and will continue to be very important for their future growth. For instance, on average, tourism receipts accounted for 51 per cent of the total value of exports of SIDS in 2007, up from 42 per cent in 2000”13. Yet, in many cases small islands continue to face problems in developing appropriate planning and policy measures to cope with external economic shocks, the continuing threats of climate change and sustainability challenges such as social development, poverty alleviation and exploitation of natural resources.
It is evident that the environmental impacts of tourism and travel continue to increase in countries across geographic regions. Tourism continues to cause detrimental impacts such as the loss of biodiversity and destruction to ecosystem services. It impacts on water sources, adds to visual, air and atmospheric pollution, environment related social problems and to greenhouse gas emissions.
Tourism and Green economy
Though the term ‘green economy’ has been used in several reports and meetings since the publication of ‘Blueprint for a Green Economy’ in 1989, mainly after the Millennium Ecosystem Assessment findings in 2005 (that clearly listed recreation and ecotourism under the cultural ecosystem services), there has been more global recognition of the role that tourism could play globally in a green economy transition by moving its practices to low-carbon approaches.
The UNWTO and several other international organisations have been advocating strongly that the green economy approach has the potential to achieve low-carbon socially inclusive sustainable tourism growth and to meet the combined carbon mitigation scenarios of the tourism sector i.e. 68% reduction when compared to ‘business-as-usual’ level before 203514 (see Figure 1).
Now that the global tourism industry has shown a remarkable recovery, more attention needs to be paid to reduce some of these environmental impacts and reach the 2035 carbon mitigation target, through combined scenarios with technical efficiency, transport modal shift and increased length of stay in destinations. With specific importance to the tourism sector, (the Tourism Chapter of) the UNEP Green Economy Report16 put forward key messages that outlined several priority areas requiring initiatives by private and public sectors at all levels in the near future. Yet there are only a few reliable research initiatives to realise the potential of technological opportunities and green investment challenges facing the travel, events, tourism and hospitality sectors.
Therefore more conceptual debates, methods, research initiatives and implementation measures need to be envisaged to enable the green economy transition. However, considering the overall tourism demand and forecast figures and to meet tourist satisfaction, researchers warn that achieving sustainability in destinations may be unrealistic in the near future as a result of the existing gaps in climate change policies and their implementation17. It is extremely important to identify methods and pursue appropriate strategies that will reduce the hurdles facing the carbon reduction targets of the tourism and travel sector and to work in the future for the green economy transition.
Much importance needs to be given to the social dimension of the green economy in light of the economic transformation in many countries when lifestyle changes (system change, not climate change) are needed to avoid serious crises (such as shortages of food, electricity or fuel). In the road to Rio+20, there were thoughtful interventions by the UN agencies (e.g. UN Geneva) to bring back the social dimension in sustainable development which very much coincides with socio-economic development and behavioural change, which is a key challenge for the travel and tourism sector (and both for tourists and hosts communities).
Greenwashing, Challenges and International Response
Even though several leading travel and tourism companies have started engaging in low-carbon business practices as well as encouraging their consumers to follow sustainable tourism ideals, the signs of “greenwashing” are apparent when the overall effort of this industry across geographic regions are carefully observed. The majority of current legal and institutional frameworks regulating the travel and tourism industry internationally, nationally and locally at the destination levels are dreadfully weak. Many of the businesses in developing countries and SIDS lack investments and technical skills to adapt themselves to green approaches.
The impacts of climate change and economic downturn will affect the following groups and tourism patterns:
• the vulnerable groups and poor countries already facing the impacts of climate change, such as South Africa (Kruger National Park); Zambia18
communities in Small Island Developing States, already facing the impacts of climate change and sea-level rise
• other less-developed countries with high levels of poverty (as a result of slow travel campaigns; and increasing travel costs – destinations will see less tourists)
• small and medium businesses in developed countries (as a result of lowering wages, job loss, and the increasing need to train staff for greener jobs in accommodation and tour operation)
• future regulations and legal frameworks facing the travel industry will affect the frequency of international travel (as a result of increasing costs, taxes, and other add-ons), and
the behavioural change of international (and domestic) tourists (selecting nearby and domestic destinations compared to international).
The travel and tourism industry is yet to go through a massive realignment with the review of current practices in many countries irrespective of the current economic benefits. Though the Rio+20 UN Conference on Sustainable Development did not come up with a timescale or a set of ‘regulations’ for countries to follow green economy principles, this crucial conference did provide a useful starting point to move some of the leading industries of the world (e.g. manufacturing, fisheries and agriculture) towards green approaches and improve the training and investments needed. It also provided a kick-off for the travel and tourism industry players, policymakers and national governments to think carefully about ways to move tourism towards green practices to contribute to the broader sustainable development goals facing the world.
In addition, sustainable tourism has been clearly discussed as one of the key global economic sectors, which highlights the important status the tourism sector receives from international organisations such as the UN Division for Sustainable Development New York, besides the campaigns of the UNWTO and the UNEP. For instance, the ‘Global Partnership for Sustainable Tourism’ (lead by the UNEP Department of Technology, Industry and Economics Paris) involves several multi-lateral partners to work on seven themes to enhance sustainable consumption and production patterns of tourism, including: emphasizing climate change adaptation and mitigation actions within the tourism industry; reducing tourism impacts and pollution in key biodiversity areas, adopting strategies to assist protected areas management and payments for ecological services; promoting greater adoption of sustainability criteria in tourism investments and decision-making; and assisting the tourism businesses, the supply chain and especially the small business sector in becoming more sustainable19.
The ways forward: for countries and the private sector
Encouraging more commitment and active involvement of the private sector; advocating private (and public) sector investments in sustainable production; developing low-carbon methods, training and skills; redesigning macroeconomic policies for jobs growth; and sustainable development through green economy transition are some of the ways forward. As the World Economic Situation 2012 Report20 argued, reinvigorating the global recovery in a balanced and sustainable manner poses enormous policy challenges. “Most developed economies have been growing too slowly for too long whereas the developing countries need to protect themselves against volatile commodity prices and external financing conditions and they need to step up investment to sustain higher growth and reorient their economies towards faster poverty reduction and more sustainable production”21. Therefore, industries such as travel and tourism have been considered more significant than in the past to contribute to the balanced recovery of the global economy.
The G20 summit held at Los Cabos, Mexico in 2012 advocated the importance of tourism to the global economy. The G20 Leaders’ Declaration under the ‘Employment and Social Protection’ section included, “we recognize the role of travel and tourism as a vehicle for job creation, economic growth and development, and, while recognizing the sovereign right of States to control the entry of foreign nationals, we will work towards developing travel facilitation initiatives in support of job creation, quality work, poverty reduction and global growth”22. The positive tourism development aspect of the declaration also needs active implementation in these major economies which would further strengthen the tourism industry.
For instance, there is lots of awareness in most developed countries (e.g. UK, Australia and Germany) about the unsustainable practices of travel and tourism but it lacks action in terms of investments for local businesses and improving the quality of tourism jobs and encouraging behavioural change. Interestingly, some of the developing countries have started to show more interest than developed countries in terms of green practices. For example, developing countries are a step ahead in terms of solar energy production and similar aspects. However, small and medium businesses in developing countries need more technical skills and financial aid in terms of widening their initiatives to help the travel and tourism industry to move more quickly towards green practices.
Developing countries including the BRIC community as well as the EAGLEs’ Nest countries (Emerging and Growth-Leading Economies) or the Watch List with incremental GDP in the next decade (e.g. Thailand and Mexico) should also utilise their relatively higher economic growth to develop further their travel and tourism practices sustainably at the destination levels. For instance, the domestic tourist arrivals in 2011, in China was 2.64 billion (National Bureau of Statistics, Beijing) whereas in India it was over 0.85 billion (Tourism Statistics, Ministry of Tourism, New Delhi) – both contributing to an immense domestic tourist total of around 3.5 billion visits in a one year. While China and India continue to quickly develop their accommodation services, domestic air connectivity and other tourism infrastructure, a more serious shift towards green business practices should be ensured.
To make the green technology approaches work for larger sections of the travel and tourism industry, larger investments are needed to cope with the change and the need for inclusive growth that will alter future production and consumption patterns. This is applicable not only for travel and tourism but for other industries including agriculture to manufacturing. There may be more criticism on some of the less performing sectors (e.g. transport, in particular).
This article proposes a set of ten recommendations for the tourism and travel industry to promote its measures for a green economy transition:
1. Appreciation of community-based skills and ways to make more use of local and indigenous knowledge need to be explored and adopted. For example, carbon emissions could be reduced in less expensive ways in many tourism destinations through improved eco-tourism practices, better use of ecosystem management and rainforest conservation measures (e.g. Reducing Emissions from Deforestation and Forest Degradation – REDD+)
2. Added focus on vulnerable groups such as the Small Island Developing States (and poor countries) to mitigate the impacts of climate change, allow investments for green practices and develop tourism-based economic revival frameworks with local stakeholder involvement to enhance community wellbeing and resilience23
3. Government funding, private sector investments and expertise need to be improved for the accommodation sector, other SMEs and tour and travel operators in destinations (not only in developing countries but also in developed economies) – to transform their business-as-usual practices to green approaches
4. Improving aircraft design and engines; enhancing road, rail, and water transport to increase fuel efficiency; as well as practicing slow travel forms
5. Reducing the water usage in accommodation sector and improving energy efficiency by using products such as refrigerators, bulbs, and through meaningful building construction and renovation (e.g. more ventilation instead of air-conditioning)
6. Recycling and reducing waste in the hotel, events and cruise industries; mobilising credit schemes; reducing huddles to favour renewable energy and improve enabling conditions
7. Moving towards green jobs by training the current tourism and travel workforce as well as educating and developing the latest skills among new employees
8. Increasing awareness among tourists; encouraging tourists to buy local produce; tourists and host communities to practice travel and tourism responsibly; behavioural change and marketing; respecting local practices and culture
9. Efficient management and conservation of forests and other natural resources; quantifying the costs of ecosystem services; indicator assessments; monitoring and reporting
10. Regulations and setting standards in relation to emission trading schemes, air passenger duty, and the use of biofuel as well as carbon disclosure, benchmarking destinations to compare and reduce carbon
In order to exchange research knowledge and allow further collaboration and networking to meet some of the above recommendations, the second international tourism conference organised by the author of this article on ‘Tourism, Climate Change and Sustainability’ at Bournemouth University (www.bournemouth.ac.uk/climatechange2012) brought together leading global stakeholders. The travel industry players that attended including British Airways and TUI Travel discussed some of their low-carbon initiatives and best practices; policy makers from international agencies (UNWTO, UNEP Global Partnership for Sustainable Tourism, UNESCO Man and Biosphere program) addressed their capacity building activities, inspiration for new projects, raising awareness and global responses; climatologists and selected University researchers from around 30 countries exchanged some of the cutting-edge methods based on research findings.
This conference stressed the continuous joint co-operation of the travel and tourism industry, international policy makers, national and local tourism authorities, and researchers to enhance the contribution of the travel and tourism economy in destinations whilst significantly reducing its emissions for a sustainable future. Though the tourism industry’s transition to green economy looks gloomy as of now, the recent intense global attention, responses and on-going research does bring a ray of hope for the future.
About the Author
Dr Maharaj Vijay Reddyis a Senior Lecturer in Tourism at Bournemouth University, UK. Vijay’s research interests include sustainable development, green economy, and corporate social responsibility. He has organised two international conferences on Sustainable Tourism themes in 2009 & 2012; edited a book on ‘Tourism, Climate Change and Sustainability’ (2012) (with Keith Wilkes); and currently editing the book on ‘Tourism in the Green Economy’ (with Keith Wilkes). Vijay’s papers appear in a range of journals and he has carried out several projects commissioned by national and international organizations, including UNESCO Paris. Email: email@example.com
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