OECD: International Tourism Shows Definite Recovery, but Sector Still Faces Employee Shortages

Photo source: Visit Europe

A full recovery to pre-pandemic levels in the international tourism market is anticipated by the end of 2024, according to the latest report by the Organization for Economic Cooperation and Development (OECD), published during the first week of July.

According to the report, the recovery has been largely driven by the return of international tourism demand which saw some countries exceed pre-pandemic levels in 2023, notably Colombia (up 34 percent) and Portugal (up 12 percent). International tourism also exceeded previous records in some European countries which benefited from significant intra-regional travel and a strong US dollar, which boosted outbound travel from the United States to Europe.

For example, according to the OECD annual survey jointly funded by the European Union, in 2023 international arrivals exceeded 2019 levels in Luxembourg (up 2.1 percent), Spain (up 2.0 percent) and the Netherlands (up 1.4 percent). These strong performances continue the broader global recovery in the sector, with international visitor numbers returning to 77.3 percent of 2019 levels across all 50 OECD countries in 2022.

However, the OECD report says the road to recovery has been longer for many countries and the recovery is characterized as “uneven” among different national markets. The slower than expected rebound in outbound travel from China has constrained recovery, particularly in the Asia Pacific region, along with delayed border openings and reduced air connectivity.

Photo source: OECD

According to the OECD, geopolitical conflicts and tensions, including Russia’s war of aggression against Ukraine and evolving conflicts in the Middle East, have also weighed down on tourism flows and the wider tourism economy.

For those countries neighboring Russia and Ukraine, the impacts have been particularly significant. For example, international tourism arrivals to Finland, which shares a border with Russia to the east, remained 22 percent lower in 2023 compared to 2019 levels.

Globally, the return of international tourists has been widely welcomed. Indeed, tourism’s share of services exports in 2022 (14.8 percent) was 5.1 percentage points higher than in 2021 (albeit still 5.6 percentage points below pre-pandemic levels).

Tourism still faces employee shortages

Photo source: OECD

Despite the positive economic impacts associated with the sector’s recovery, strong demand and rapid growth continue to create challenges. Businesses struggle to attract and retain workers despite employment levels in OECD countries having stabilized at a level higher than before the pandemic.

Employment in the accommodation and food services, which often account for almost half of the tourism workforce, remained 5.3 percent below pre-Covid levels in 2022 across OECD countries, while job vacancy rates in 2023 were higher on average than in other parts of the economy in many countries in 2023. In Czech Republic, vacancy rates in accommodation and food services were 8.3 percent in Q4 2023, compared to 3.4 percent across the economy.

New trends and awareness in the tourism sector, says OECD

There is an increasing awareness of the need to safeguard the future viability and sustainability of the sector. Accelerated climate change and the increasing frequency of wildfires, floods, heatwaves, and other extreme weather events is directly impacting the sector.

This may result in profound and long-lasting structural shifts in travel patterns and destinations. Warmer winters are shortening the ski season in mountain destinations, while heatwaves may reduce the attractiveness of destinations during traditional peak periods but encourage visitation at other times.

Moreover, the report recommends for governments to implement policies to:

– Empower destinations to diversify and better manage visitor flows, to deliver better outcomes for the environment and local communities.
– Integrate tourism workers’ needs into broader development strategies, ensuring access to affordable housing and transportation in remote areas.
– Support tourism businesses to access financial aid and skills to adopt digital solutions, green business operations, and develop innovative work practices.