The World Bank Group - Promoting Sustainable Tourism for Development

Why is the World Bank interested in tourism?

Tourism is growing and growing faster than the global economy. After passing 1 billion international visitors in 2012, the global industry is expecting 1.8 billion visitors by 2030.

Tourism has evolved into a diverse and sophisticated sector. Together with travel, it is recognized as one of the world’s most economically significant sectors. Highly specialised market segments have developed for both leisure and business travel. Deregulation of airline services and the introduction of low cost carriers has created new markets and opened up new destinations. Changes in capital markets and the development of more specialised hotel brands has changed the way hotels are owned, operated and financed. Technology is essential for managing tourism and a pathway for participation by small and medium enterprises (SMEs) and service providers. Governments now see cities and urban areas, and cultural and natural heritage sites as significant tourism assets - which must be conserved and managed to remain competitive, deliver employment opportunities and benefits to local communities, services and quality of life to residents, and be passed on to future generations.

Tourism is growing fastest in the developing world – especially in Africa, the Middle East and East and South Asia – where nature and culture are strong drivers of demand and where growing economies spur business travel. In 2015 for the first time, more people travelled to the developing world than the developed world. There is major growth in the outbound markets of China and India as well as in domestic travel.

Tourism has the potential to significantly reduce poverty. In 2013, tourists spent $413 billion in developing countries – nearly three times the level of development assistance that year. This places tourism in the top five export income-earning categories for 83% of developing countries.

Tourism is labor-intensive, generating a wide range of jobs from highly skilled to entry level and is highly inclusive of women and youth. Women have a proportionally higher share of the travel and tourism workforce (at 50%) and are almost twice as likely to be owners of tourism enterprises and employers relative to other sectors. Similarly, tourism employs young people at almost twice the rate of other industries.

Tourism generates significant demand for local goods and services. For every dollar spent on tourism, on average 3.2 dollars is generated in GDP across the entire economy. Tourism is the first or second source of export earnings in 20 of the 48 Least Developed Countries (LDCs). Global business travel is estimated to be responsible for about a third of the growth in world exports over the past decade.

The Challenge

Countries are asking for help in managing their destinations so that tourism can deliver the best possible outcome for their people and economies. The challenge is how to focus the wealth creating power of tourism on the people most in need while managing growth for the benefit of all. A mismatch between the demands of the tourism industry, the resource endowments of local communities and their capacity to manage that demand can lead to significant revenue leakage and stress on the natural and cultural environment.

Many developing countries have great tourism assets, which are often poorly protected and presented. They face challenges orienting their product to the needs of the market which make them less competitive as visitor destinations. Their regulatory regimes do not support a sustainable and targeted use of investment resources to support growth.

Key assets that tourism depends on and that can be used to leverage incomes and livelihoods are at risk – from poaching, cultural degradation, informality and damage to natural ecosystems through overuse and pollution. At the same time, tourism is fragile and needs long-term support to manage risks such as security, epidemics and natural disasters.

Poor policies such as restrictive air service agreements or visa requirements - still constrain growth especially in Africa and the island regions of the Pacific, Caribbean and Indian Ocean. Informal and unregulated businesses affect the quality and reputation of the destination, puts visitor health and safety at risk and undermine job security and income levels.

While the tourism industry globally is crying out for more staff, many countries are facing serious challenges matching an appropriately trained labor supply to the growing demand. This is particularly challenging in emerging markets where growth is also fastest. Reasons include uncompetitive employment practices and policies, lack of education and training programs, insufficient skills and variable attractiveness of career pathways. The World Travel and Tourism Council (WTTC) recently projected that this will result in a global shortfall of 14 million jobs.

Managing tourism effectively is not easy because tourism cuts across many sectors. Its development requires that not only the public and private sectors come together, but also that many different government departments coordinate their efforts. It requires an integrated approach.

How Does the World Bank Group Support Tourism for Development?

The World Bank Group is responding to the needs of its client countries and is moving toward an integrated approach to supporting tourism for development. This approach sees tourism as an engine of growth and jobs and seeks to improve sustainability, resiliency and the livelihoods of those working within the sector and in sectors connected to it.

The World Bank Group’s six-point action plan for the travel and tourism sectors now offers integrated solutions to our clients – bringing together the World Bank, the International Finance Corporation (IFC) and MIGA, and mobilizing the skill sets of our many specialists across the entire institution.  The plan

1. Enables countries to access market growth through competitive regulatory structures and realistic development strategies

2. Provides finance for public investment to increase capacity and connectivity

3. Supports targeted private sector investments that provide necessary and appropriate visitor infrastructure and facilities

4. Builds countries’ capacity to manage sustainable destinations

5. Ensures that tourism delivers jobs and incomes to communities

6. Ensures that the World Bank Group becomes a thought leader in finding solutions to tough tourism development challenges