Due to decline in tourism activity, global investments dipped immensely in 2020. According to ‘fDi Markets Report’, Foreign direct investment (FDI) projects announced last year declined by 63%, from the record highs seen in 2019. And, job creation as well as capital expenditure declined by more than 70% in the same period.
The Report indicates that Western Europe attracted the highest number of tourism FDI projects in 2020, with 85 announcements, and was also the leading source region for investment, accounting for around half of projects and $5.2bn of capital investment. Asia-Pacific was the top destination for tourism FDI by capital investment, with $5bn-worth of projects tracked, although this represented a 79% decline from the previous year.
Accommodation remained the largest subsector of tourism FDI, generating more than 29,870 jobs in 2020. This was just 10% of the 298,000 jobs created by companies in the subsector since 2016.
However, domestic tourism recovery has been noticed as Covid-19 vaccination programs continue worldwide. Though vax programs were unequal between developed and developing nations, domestic tourism has proven more resilient than its international counterpart. Preliminary UNWTO data quoted in the report shows that international tourist arrivals were down by 82.7% in the first quarter of 2021, compared with the same period of 2020. Domestic tourism is expected to recover to 2019 levels in summer 2021.
China, where restriction-free domestic travel has recovered strongly, attracted more foreign tourism investment in 2020 than any other country, raking in projects valued at $2.4bn.
In the five-year period up to 2020 analysed in the report, the US was the largest recipient of tourism FDI with 159 projects, followed by the UK (151) and Germany (130).
Between 2019 and 2020, Latin America and the Caribbean saw the largest year-on-year decline (63%) in tourism capital investment since fDi Markets began recording data in 2003.
In the Middle East and Africa, capex plummeted by 82% to $1.6bn in the same period, with approximately 14,600 fewer jobs created in the sector through FDI.
The report also explores the role of software booking platforms in restoring travel confidence and the pandemic’s impact on the meetings, incentives, conferences and exhibitions (Mice) sector.
Booking.com chief executive Glenn Fogel recently argued that more clarity on regulations is needed for global travel and tourism to recover. “If governments around the world came together to set forth specific guidance to promote safe travel, restrictions could be lifted and travellers would regain confidence,” he wrote for fDi.
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