Tourism Investment Report 2020

In association with fDi Intelligence from the Financial Times

For the third year in a row, the UNWTO has partnered with the fDi intelligence from the Financial Times to develop a joint publication on Tourism Foreign Direct Investments (FDI) analyzing data on Greenfield investments trends. The relevance of this report is pivotal to governments and investors because it exposed data on flows of capital, and destinations for investments providing insight on market trends for the tourism recovery.

In times of uncertainty, expertise and trusted information is more important than ever. This report provides investment and market data that both investors and stakeholders will need to maximize their impact of the sector in terms of economic growth, job creation and sustainability. Especially when around 100-120 million direct tourism jobs are at risk, which threatens to roll back the progress we have made in establishing tourism as a driver towards achieving the Sustainable Development Goals (SDGs). For this edition, the UNWTO’ Innovation, Digital Transformation and Investments department has developed an interactive report using data (2015-2019) from the fDi Intelligence on Tourism FDI.

The COVID-19 pandemic has hit the tourism sector hard; the data suggests that global FDI into tourism plummeted by 73.2% in the first half of 2020, compared with a year earlier. This put an end to the sector’s record high years. This data has a close relationship with the UNWTO’ scenarios for international tourist numbers decline, which could fall between 60 and 80% this year depending on the speed with which travel restrictions are lifted. This could translate into a loss of 850 million to 1.1 billion international tourist arrivals and a fall of $910 billion to $1.2 trillion in export revenues.

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Although, the investment cycle remained strong throughout 2019, with tourism mobilizing $61.8bn in global FDI, which, in turn, created more than 135,000 jobs. The trend appeared particularly consistent in Latin America and the Caribbean, where FDI reached new record levels. For example it created more than 56.000 jobs in Mexico from 2015 – 2019. Tourism FDI was also strong in the Middle East and Africa, where it rose to the highest level in a decade. However, almost half of all tourism investments globally (46.51%) are made at top 10 countries. From which around 30% of projects are concentrated in five countries: United Kingdom, United States, Germany, China, and Spain. It is important to notice that more than 30% of projects and of capital investment announced in the tourism cluster between 2015 and 2019 occurred in 2019.

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The major sub sector that has led tourism investments are consider traditional investments, with construction as the main driver for around 57% of total Greenfield investments from 2015 to 2019. As such, the trends in accommodation are around the sustainability where multinational companies are investing in green, and clean energy matrix of their operations. According to the fDi intelligence of the Financial Times, investors are paying increasing attention to the social and environmental footprint of the projects they assess in tourism. They seem willing to prioritize developments that lift communities and preserve ecosystems, as long as financial sustainability is also taken into account.

Finally, there is also an increasing number of non-traditional investments related to services around software technologies that include: Travel arrangement & reservation services, Internet publishing, web search among other, which represent around 32% of total investments considering investments between 2015 - 2019. This data invites to research more about investments in technology as a source of FDI in the tourism sector. The Travel Tech startups have been introducing innovations in the tourism ecosystem, and they are constantly changing business models attracting more investors.

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The COVID-19 pandemic has made clear that sustainable tourism requires that sustainable investments are at the center of new solutions, and not just of traditional investments that promote and underpin economic growth and productivity. It has also highlighted the importance of non-traditional investments that enhance innovation through the creation and diffusion of new solutions to decarbonize the sector. To harness the advantages of investments, it is critical that governments promote policies as well as new investment vehicles to recover, retain and attract foreign direct investments. Only this way can we reimagine tourism and enhance the sector’s positive impact on people and planet as we accelerate the achievement of SDGs.

The UNWTO is developing a series of investment guidelines to understand and generate sustainable investments and promote innovations in the tourism ecosystem. If you are interested in the UNWTO’ reports and guidelines to understand, enable and mobilize tourism investments, we invite you to register to receive the our investment updates.