(CTN NEWS) – The Asia-Pacific region, known for its diverse landscapes, rich cultural heritage, and booming economies, has been a magnet for tourism foreign direct investment (FDI) in recent years.
According to the World Tourism Organization (WTO) of the United Nations, between 2018 and 2022, a total of 517 tourism FDI projects were recorded in this dynamic region, amounting to an impressive $65.1 billion in capital investment and the creation of over 105,600 jobs.
These statistics, released in the ‘Tourism Investment 2023’ report to coincide with World Tourism Day, provide a compelling narrative of the growth and resilience of tourism-related investments in the Asia-Pacific region.
Investment are returning to tourism.
We team up again with @fDiIntelligence to provide an overview of the ongoing investment cycle in the tourism sector, breaking down investment figures by region, segments and companies.
— World Tourism Organization (@UNWTO) September 14, 2023
The Rollercoaster Ride of FDI Projects
The trajectory of FDI projects in the Asia-Pacific region has not been without its ups and downs.
After experiencing a decline in 2020 and 2021 due to the COVID-19 pandemic’s devastating impact on international travel, the region witnessed a modest uptick in announced projects in 2022, with a 2.4% increase to a total of 42 projects.
Job creation in the sector followed a similar pattern, reaching its peak in 2018 when more than 49,000 jobs were generated. However, in the midst of the pandemic in 2021, job creation hit its lowest point with approximately 4,300 jobs created through tourism FDI.
The good news is that the number of jobs rebounded in 2022, rising by 6%, a sign of recovery and renewed confidence in the tourism sector.
China and India: Leading the Charge
China emerged as a frontrunner in attracting tourism FDI projects, securing 79 announced projects between 2018 and 2022, representing a 15% market share in the region.
The country reached its peak for tourism FDI in 2019, with 30 announced projects, although these numbers have been declining since then.
Meanwhile, India made remarkable strides, attracting three times more tourism FDI projects in 2022 compared to 2021, earning the top spot among destination countries in the region for the year.
This surge highlights India’s growing appeal as a tourist destination and its increasing attractiveness to foreign investors.
Global Perspective on Tourism FDI
Beyond the Asia-Pacific region, global trends in tourism FDI reveal a complex picture.
The sector, one of the hardest hit by the pandemic, faced a substantial setback in 2020, experiencing a staggering 59% year-on-year decrease in project numbers, which dropped to 312. Capital investment also plummeted by 70%, from $60.9 billion to $18.2 billion.
However, the global recovery began to take shape in 2022, with FDI project numbers and job creation in the tourism sector increasing by 23%, offering hope for a brighter future.
The Key Players
The United States emerged as the largest recipient of tourism FDI between 2018 and 2022, with 198 projects, closely followed by the United Kingdom (160), Spain (133), and Germany (133).
These top 10 countries accounted for nearly half (47%) of all announced tourism projects globally during the same period.
In terms of capital investment, Spain led the pack with $19.4 billion, followed by China ($11.5 billion) and the Philippines ($11.1 billion).
Interestingly, Mexico took the lead in job creation in the tourism sector, with an estimated 31,000 jobs generated between 2018 and 2022, followed by China (22,130) and Spain (20,590).
The Evolution of the Tourism Cluster
The hotel and tourism sector played a pivotal role in the tourism cluster between 2018 and 2022, contributing to nearly two-thirds of all projects.
While FDI project numbers in this sector increased by 25% from 2021 to 2022, capital investment experienced a decline, falling from $48.9 billion in 2018 to $7.8 billion in 2022.
This shift in capital investment patterns suggests changing dynamics in the industry.
Within the tourism cluster, accommodation remained the dominant sub-sector, accounting for over half (51%) of all FDI projects.
Impressively, this sub-sector also contributed to over 70% of capital investment ($126.8 billion) and job creation (270,000) during the same period, underlining its significance in the tourism landscape.
The Rise of Software and IT Services
Another intriguing development within the tourism FDI landscape is the growing prominence of software and IT services. This sector’s share of global FDI tourism projects steadily increased from 10% in 2018 to 28% in 2022.
This trend underscores the resilience of the software and IT services sector, as well as its increasing role in the digitization of the tourism industry.
In conclusion, the ‘Tourism Investment 2023’ report provides valuable insights into the remarkable resilience and growth of tourism foreign direct investment in the Asia-Pacific region and globally.
Despite the challenges posed by the COVID-19 pandemic, the tourism sector is showing signs of recovery, with increasing project numbers and job creation.
China and India are emerging as key players in the region, while Spain, the United States, and the United Kingdom continue to attract substantial investments.
The transformation of the tourism cluster, particularly the rise of software and IT services, points to the industry’s adaptability and its commitment to embracing the digital age.
As the world continues to navigate the post-pandemic landscape, tourism FDI promises to play a vital role in driving economic growth and job creation across the globe.
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