Trends in the Travel & Tourism Industry 2023

Published Last Updated 11 min read

After more than two years of travel bans, draconian entry requirements, and setbacks, tourists began dusting off their passports and suitcases in 2022. As the last vestiges of pandemic-era border restrictions eased, global tourism arrivals grew by 60% last year amid pent-up demand - an upward trend that’s expected to continue in 2023.

However, as the global travel and tourism industry continues its journey to recovery, new and existing challenges will present themselves to businesses. So, let's explore the trends affecting the travel and tourism industry’s landscape, seascape and airspace over the coming months - the opportunities and the potential threats.

Opportunities in the Travel & Tourism Industry

From a virtual shutdown in 2020, to partial recovery in 2021 and full systems go in 2022, will 2023 be the year global travel soars? These latest trends in the travel and tourism industry suggest the future looks bright for businesses that operate in this space.

Tourism arrivals will grow

In its Tourism Outlook 2023 report, the Economist Intelligence Unit (EIU) assesses key travel industry trends. The report predicts that global tourism arrivals will grow by 30% in 2023, but will remain below pre-pandemic levels. According to the EIU, the global economic slowdown, war in Ukraine, and China’s zero-Covid strategy will stunt the recovery following growth of 60% in 2022.

Ana Nicholls, director of industry analysis at EIU, commented on the forecast: “The tourism industry saw a strong recovery during 2022, and we expect that to continue in 2023, particularly if China starts lifting its zero-covid policy as expected. But the industry certainly won’t be immune to the economic slowdown.”

In the UK, however, ongoing strike action by rail workers and Border Force staff could spell chaos for this remobilised army of tourists in 2023. After disrupting rail travel throughout much of 2022, strikes are continuing into 2023, with trade unions calling for better pay for their members amid the cost of living crisis.

Tourist spending expected to grow

Despite the grip that soaring inflation has on consumer purse strings, total tourist spend is projected to exceed $1.4 trillion globally in 2023. This forecast by market research company Euromonitor International in its Top 100 City Destinations Index 2022 follows a 112% increase in “inbound” tourism spending - from transcontinental and inter-regional visitors - in 2022 compared to the previous year.

Euromonitor’s annual index ranks the performance of the world’s top 100 cities across six key categories: economic and business performance, tourism performance, tourism infrastructure, tourism policy, health and safety, and sustainability.

Globally, the travel and tourism industry is expected to continue on its road to recovery, with the report suggesting that international and domestic trips will both grow in 2023. International travel is forecast to grow by 40% compared to the 80% growth pace recorded in 2022.

Euromonitor caveats this by warning that inflation may impact the pace of recovery for international travel this year: “Of course, if prolonged, the economic uncertainty and rising cost of living can seriously hurt the rebound of the industry and travellers’ preferences,” said Nadejda Popova, senior project manager at Euromonitor International.

Plunging pound attracts US visitors

The embattled pound - which experienced its worst annual performance against the dollar since 2016 - is causing British holidaymakers to baulk at the current price of going abroad. But there’s one section of the travel industry that’s cashing in on the plunging pound.

Tour operators catering for visitors to the UK have experienced a spike in bookings by US tourists looking to take advantage of dollar strength. Visitors from across the pond - which represent inbound tourism’s biggest market - have been keen to rekindle their love affair with the UK after their restrictions were eased in June.

This is a lucrative market, to say the least: the average American tourist spends three times more than an average UK holidaymaker on a domestic trip. These anglophiles shelled out £4.2 billion in 2019 - a figure that could be boosted next year if the pound’s woes are perpetuated by red-hot inflation, interest rate rises, and recession.

The upcoming coronation of King Charles III in May is already piquing interest in the US market. However, rising inflation, energy costs and staff shortages at UK hotels and tour operators will present a challenge to US tourists keen to soak up the pomp and ceremony of the British monarchy's first coronation in over 70 years.

Challenges in the Travel & Tourism industry

The impact of the pandemic on the global travel and tourism industry was seismic - and the sector is still experiencing aftershocks from the worst public health crises in modern history.

Labour shortages

From the runways to the resorts, the travel and tourism industry is feeling the effects of a chronic labour shortage.

Having laid off staff during lockdowns, many airlines have struggled to rehire. Amid this lack of staff, the aviation industry continues to be plagued by gridlocked airports and caps on passenger numbers, as well as flight cancellations, lost luggage, and strikes by border staff - chaos that the chief executive of Heathrow Airport believes could last until the end of 2023.

Brexit has stymied the flow of seasonal tourism workers from the EU to the UK. For example, during peak season in 2022, 128,000 positions remained unfilled. Acute labour shortages have also been experienced across Europe following an exodus of workers from their jobs during lockdowns that began in 2020, and only a partial recovery last year. According to estimates by local organisations and trade unions, there were 400,000 tourism industry vacancies across the southern eurozone countries during the 2022 high season. These shortages pose an existential threat to many hotels, restaurants and bars, with some already forced to close.


Decades-high inflation will not only restrict the spending power of travellers in 2023; the tourism sector will suffer too. Hotels, bars and restaurants are wrestling with soaring food and energy prices, while airlines are contending with spiralling fuel bills. Companies are being forced to pass those costs onto consumers who are already grappling with the higher cost of living.

For example, airlines were recently forced to pay the largest premium for jet fuel on record, driving up ticket prices for passengers and denting their bottom line. According to the International Air Transport Association, jet fuel was 50% higher than Brent crude oil at the start of September, with airlines paying more than $140 a barrel for fuel even as global oil prices dropped towards $90.

The rate at which prices are rising has eased slightly, but inflation remains close to a 40-year high. Consequently, the Bank of England has increased interest rates to 3.5% - the highest level for 14 years - to tackle inflation. This is making borrowing more expensive for businesses in the travel and tourism industry.

Climate change

The environmental consequences of tourism have become a major consideration for many travellers. According to the European Investment Bank, 22% of Europeans and 22% of Americans will avoid flying because of climate change concerns. Some of those will be prepared to pay premium prices for more eco-friendly or carbon-offsetting options.

The regulatory screw will be tightened in the travel and tourism industry in 2023. For example, eight countries - including Cambodia, Cuba and Zimbabwe - will join the voluntary pilot phase of the Carbon Offsetting and Reduction Scheme for International Aviation, bringing the total number of participants to 115. This carbon offset and carbon reduction scheme aims to lower CO2 emissions for international flights to curb aviation's impact on climate change. Its goal is to have carbon-neutral growth from 2020.

Key Takeaways

In our 2022 article on predicted trends in the travel industry, we touched on the impact of inflation and the pound, as well as international tourist arrivals and labour shortages amid the pandemic. As the industry takes its first tentative steps into 2023, these issues remain on the sector’s radar. Yes, inflation continues to inflate prices for tourists and operators, the plummeting pound is making it more expensive to head overseas, and labour shortages persist - but it’s not all bad news.

Forecasts suggest that - despite sky-high inflation - global tourism arrivals and tourist spending will grow in 2023, as the industry continues on its strong path to recovery. There’s even a silver lining amid the pound’s misfortune, with US tourists making the most of the strong dollar by hopping across the pond to splash their cash in the UK.

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