New middle class, hedonism and visa ease: The economic reasons behind the boom in global tourism

Madrid, Tokyo, Doha, the islands of Fiji — no world region will remain untrammeled by tourist footsteps in 2024. Just between January and March, 285 million people traveled to an international destination, 20% more than during last year’s first quarter, according to United Nations Tourism. Bottled-up demand thanks to the continuing Covid-19 pandemic, rise in airline connectivity and the recovery of Asian countries will contribute to a 2% rise in passenger numbers as compared to pre-pandemic figures, according to forecasts. Last year, tourism’s contribution to the global economy rose above $3.2 billion, equal to 3% of the global gross domestic product. That number will rise even higher in 2024 if things play out in accordance with expert predictions.

A long list of economic and political factors is in the industry’s favor. The most notorious of them is heightened demand, which appears to be unsated despite three years having passed since Covid paralyzed the world, causing borders to be closed to an extent that had not taken place in recent memory. This is what experts have dubbed a “champagne effect,” according to Juan Molas, president of the Spanish Tourism Board. “There are so many people who haven’t been able to carry out the activities associated with travel and tourism over the past four years. Now that they have the opportunity, they want to take advantage of the moment, and spending rates reflect that,” he says. And though everyone wants to travel, if you had to point out on a map where the majority of tourists are coming from, you’d be gesturing towards China, United States, Germany, United Kingdom and France. In 2023, those were the countries that spent the most amount of money on vacations, although emerging markets like India and South Korea also appear on the list. Analysts agree that the recovery of the Asian market and the expansion of a middle class with buying power in developing economies are the two driving forces behind the new tourism craze.

According to the McKinsey consulting firm, in 2030, 40% of China’s population will belong to the middle class, which amounts to an increase of 200 million people compared to today’s figures. Similarly, India, the most-populous country in the world with more than 1.4 billion inhabitants, is home to a middle class that will grow by 250 million people over the next decade, according to the India Brand Equity Foundation. “These enormous numbers will have important repercussions when it comes to the global tourism industry, because they represent new travelers who will begin to visit foreign countries,” says Trent Innes, chief growth officer at SiteMinder.

The appearance of more potential travelers is inexorably linked to market recovery. Last year’s long-awaited return of China after three years of lockdown did not generate the hoped-for economic boost. Peking officials reacted with a battery of measures in response, and in 2024, the country’s GDP is expected to grow by a healthy 5%. The International Monetary Fund (IMF) calculated in April that there would be a worldwide growth of 3.2% this year. It appears that the world has reached cruising speed, given that this is the same percentage that global GDP rose by in 2023, and that is expected in 2025.

There’s no better tailwind for tourism than a robust economy. Even the European Union, which started the year flagging, saw a slight increase of 0.2% in household consumption in the first quarter. Analysts credit this European resilience, despite Germany’s seized engine and an IMF forecast for poorer growth than that of the United States, to strong job creation and an extraordinary pool of savings that was accumulated during the pandemic. Apparently, with help from public assistance and lower spending during lockdown, Europeans have yet to fully spend this nest egg. It therefore should come as no surprise that consumer optimism remains stable and has even improved as we head into summer, as a recent McKinsey survey pointed out.

Industry analysts have also pointed to psychological factors on the margins of this relative economic bonanza. They believe that the pandemic changed many people’s way of thinking and has given rise to a new kind of hedonism. “Different factors have led people to prefer short-term experiences over projects that might not be successful in the long term,” says Oscar Perelli, director of studies and research at Exceltur Tourism Alliance. No one knows if this preference will be around forever, but the World Travel and Tourism Council has stated that, since 2022, “even when things get difficult, people prefer to economize in other areas rather than cutting their travel budget.”

Governmental policies have also contributed to the boom. Some, to the point of regret. José Serrano, professor at Madrid’s Universidad Europea, illustrates this using the example of the Japanese government’s strategy to position the Asian country as a prime tourism destination. Among other things, these included subsidies for the development of tourist attractions and promoting rural tourism. Now, the region hosts so many millions of tourists every year that recently, the government took action to slow the wave of visitors.

Among the governmental strategies that have been implemented in the recovery of an industry that, years ago, went dry overnight, are changes in visa regulations that have provided another push. The most noteworthy case has been that of China, which, at the end of last year, announced a visa exemption for the citizens of five European countries and Malaysia. After this easing of requirements, trips to the country multiplied by 10 during Lunar New Year festivities (which run from February 10-17), according to the latest report from U.N. Tourism.

“There is no world region that does not want to increase its revenues, and that is making them dedicate more money to the promotion of tourism,” says José Manuel Lastra, vice president of the Spanish Confederation of Travel Agencies. “Morocco and Peru are seeing a significant increase, similar to Ireland and Austria,” he says. Pablo Díaz Luque, an educator at the Universitat Oberta de Catalunya, adds that social media platforms like Instagram and TikTok have made travel a necessity. “Sharing your tourism experience is now required, and its immediate consumption makes it all the more urgent. Before, it was a slower process, though you did share photo albums,” he says.

All this is adding up to what could be a record-breaking 2024. The World Travel and Tourism Council estimates that 142 of the 185 countries it analyzed will see numbers of tourists and spending above pre-pandemic figures. Jobs linked to the industry will grow by 10% because, as Julia Simpson, the organization’s president, explains, economic growth and tourism are mutually compatible. “Traveling and tourism is not just about getting on a plane and going to new places. They are engines for job creation, economies, and cultural union around the world,” she says. Regardless of outcry over the overcrowding at some popular destinations, there seems to be no limit for the tourism industry in 2024.

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