Recovering the investment, a great challenge for the hospitality market

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Recovering the investment, a great challenge for the hospitality market
Source: WTTC
June 15, 2022

The WTTC today published a report revealing the impact of the health crisis in terms of investment in the sector, a key aspect to support future growth


The World Travel & Tourism Council today released the "Critical Factors to Attract Hotel Investments" report, a document that highlights the importance of attracting capital investments to enable the full growth potential of the travel and tourism sector post-COVID-19, after a 25% drop in 2020.

The report, presented today at the Sustainability and Investment Summit taking place in San Juan, Puerto Rico, analyzes the key enabling factors for hotel investment and the success stories of destinations that have used these factors and have shown a strong growth in investment.

In 2020, when international travel almost came to a standstill, the travel and tourism sector suffered 62 million job losses and its contribution to GDP was cut in half, representing a painful loss of almost 4.9 trillion of dollars.

According to the document, capital investment in the sector also fell substantially during the height of the pandemic, from nearly $1.1 trillion in 2019 to just $805 billion in 2020, representing a nearly 25% drop. .

Investment in the sector continued to decline last year with a further drop of 6.9% to $750 billion.

However, the report provides cause for optimism as it forecasts strong growth in travel and tourism investment over the next decade. However, the world tourism body warns that to achieve this, governments around the world must create a favorable enabling environment.

In addition to political stability and liquidity, considered essential for investment, clear, open and consistent government action and support, favorable tax incentives and safety and security, among others, remain prerequisites for attracting hotel investment.

Julia Simpson, President and CEO of WTTC, said: “Hotel investment is absolutely key to the recovery and growth of the travel and 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 build back better, investments must not only benefit destinations economically, but more importantly, socially and environmentally.”

According to the groundbreaking report, key enabling factors for hotel investment include governance and the rule of law, a key enabler for investors as it determines how easy and successful it is to run a business, physical infrastructure, connectivity air and ground and the workforce.

The report looked at a number of popular destinations that have benefited from the implementation of these elements. For example, the Netherlands provides a favorable environment for foreign investment with less restrictive regulations and strong laws to criminalize corruption.

Physical infrastructure, air and ground connectivity are also crucial for investment, as well-connected hubs support broader regional development and provide access to lesser-known destinations that offer tourism opportunities.

South Korea, for example, ranks as one of the best connected countries in the world. The country's announcement as host of the 2018 Winter Olympics spurred investment in transportation infrastructure, resulting in hotel room supply increasing by nearly 15%, outpacing the overall healthy growth in investment in capital in travel and tourism of 8.7% in 2017.

The document also highlights the importance of reskilling and upskilling the workforce. Leading the way in this area is Portugal, which focused on strategies to help retrain the sector, such as the Tourism Training Talent (TTT) programme, committed to improving the quality of tourism training services.

Additional factors and success stories in the report include liquidity in the Maldives, government aid in Saudi Arabia, taxes in Colombia, destination planning and sustainability in Singapore and Rwanda, service culture in the Philippines, and travel facilitation in Aruba.

With contributions from STR, KSL Capital Partners and JLL, the report draws on experience to inspire both the public and private sectors as they develop and implement travel and tourism investment policies that will drive the sector's long-term recovery. .

To read the full report, click  here.

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