In May 2022, the World Economic Forum (WEF) released its new and updated version of the index that countries worldwide use to benchmark their tourism performance. The index is now called the “Travel and Tourism Development Index” (TTDI) instead of the “Travel and Tourism Competitiveness Index.” Ruba Hafayda and I just completed a “deep dive” analysis of the TTDI, the following summary of which could help both public and private sector stakeholders in tourism decipher the index.

 

Change in the Objective and Global Context 

Title and Objective

The index changed its name and title from “Travel Tourism Competitiveness Index- The Travel and Tourism Competitiveness Report 2019 Travel and Tourism at a Tipping Point” to Travel and Tourism Development Index-Travel and Tourism Development Index 2021 Rebuilding for a Sustainable and Resilient Future.”

The change in the name reflects the overall objective to focus on measuring potential drivers of development rather than the level of T&T competitiveness a country possesses. TTDI “provides a strategic benchmarking tool for business, governments, international organizations, and others to develop the T&T sector.” 

Country Coverage and Global Context

Compared to TTCI’s country coverage of 14 economies, TTDI covers 117 economies. Countries covered in TTCI but not TTDI are Algeria, Brunei Darussalam, Burkina Faso, Burundi, Democratic Republic of the Congo, Ethiopia, Eswatini, Gambia, Guinea, Haiti, Iran, Jamaica, Liberia, Mauritania, Mozambique, Norway, Oman, Russian Federation, Seychelles, Uganda, Ukraine, Zimbabwe, and Taiwan, China. Several factors were impacted, excluding some countries, including the war in Ukraine.

Looking at the global context, the two main events that impacted the tourism index and the overall transition in the objective are COVID-19 and the war in Ukraine.

What does that mean?

Changing the overall objective and title of the report within the global context of COVID-19 and the war on Ukraine indicates the interconnectivity of various global events on tourism. As presented below, this impacted the pillars and indicators in which tourism is measured across the 117 selected economies, which will be important not only to understand by governments but also businesses in the arena of tourism and even individuals who wish to travel. 

 

Index Framework and Weight Distribution 

The below chart summarizes the evolution of the TTCI to the TTDI. The struck-out text – “Natural and Cultural Resources” and “Cultural Resources and Business Travel” shows what was removed from one of the subindexes.  

The main changes in the TTDI Index Framework are:

Score Weight Distribution

• In TTDI, pillars are equally weighted averages of their KPIs, which the TTDI explains as a way to help reduce bias within the index  
• In TTCI, weight distribution varied where different pillars have more significance/weight than others, indicating the importance of some indicators over others in tourism

Index Framework Changes

• TTCI has four subindexes, while TTDI has four:
  • Natural and Cultural Resources changed to Travel and Tourism Demand Drivers
  • Travel and Tourism Sustainability is added
• Under those subindexes, TTCI has 14 pillars, while TTDI has 17 pillars:
  • Three new pillars are added: 1) The Non-Leisure Resources under Travel and Tourism Demand Drivers subindex 2) Socioeconomic Resilience and Conditions 3) T&T Demand Pressure and impact are added under the new subindex Travel and Tourism Sustainability  
  • Environmental sustainability is moved from the T&T Policy and Enabling Conditions subindex to Travel and Tourism Sustainability
  • Cultural Resources and Business Travel changed to Cultural Resources
• TTDI has more Key Performance Indicators (KPIs)– from 90 in TTCI to 112 in TTDI. The 62 KPIs are new or updated
  • Environmental sustainability as a subindex has the highest number of indicators (and pillars) in both reports (40 indicators in the TTCI and 38 indicators in the TTDI)
  • The number of indicators for the T&T policy and enabling conditions subindex dropped by nine indicators from 23 in TTCI to 14 indicators in TTDI, mainly because the environmental sustainability pillar is moved under the Travel and Sustainability subindex in TTDI

 

Global Trend and Interconnectivity 

As TTDI now places even more importance on sustainability and resilience, pillars and KPIs cover various dimensions of travel and tourism sustainability. This reflects a global sustainability trend as the KPIs are interlinked and interdependent tourism with a broad spectrum of interests and issues. For example:

Digital Transformation and Platforms

COVID-19 confinement increased the need for internet access for education, marketing, and entertainment. This emphasizes the importance of digital platforms for T&T services, including accommodation (hotels, Airbnb), restaurants, and leisure activities. Related themes are added as KPIs to pillar 11 (KPIs 11.02, 11.05), pillar 4 (KPI 4.08), pillar 5 (KPI 5.07), and pillar 8 (KPI 8.05).

Social Conditions and Socioeconomic Resilience

They are important to sustainable development, especially for tourism. Education-related themes are added as KPIs to pillar 4 (KPIs 4.01, 4.04 in TTDI), and pillar 16 (KPI 16.04 in TTDI), emphasizing the importance of education for improving the T&T sector and the overall local labor force in the tourism sector.

As for the latter, i.e. labor force and workers’ rights, relevant KPIs are added to pillar 4 (KPIs 4.07, 4.08, 4.09), and pillar 16 (KPIs 16.06, 16.07, 16.02, 16.03), showing the growing importance of social conditions for a more sustainable T&T sector.

Environmental Sustainability

There is a significant focus on the environment as a new subindex was added, “Travel and Tourism Sustainability,” recognizing the increased importance of sustainability for travel and tourism.

Environmental sustainability as a subindex has the highest indicators (38 indicators in TTDI). Relevant KPIs are added to pillar 15 (KPIs 15.07, 15.12, 15.15) and pillar 12 (KPIs 12.03, 12.05).

Other areas include SME access to finance which comprise most businesses in travel and tourism, accessibility of healthcare services as COVID-19 revealed insufficient access globally, T&T capital investment to progress T&T, and airport connectivity, which is critical to industry growth, amongst others. 

 

Recommendations and Final Thoughts 

The severe global impacts of COVID-19 underscored the need for holistic, cross-sector approaches to development firmly based on sustainability and resilience, especially for sustainable tourism development.

As described in the TTDI, the travel and tourism industry intertwines nearly every economic and social sector. As stated in the TTDI 2021 (pp.7), TTDI “focuses on the sector’s role in broader economic and social development as well as the greater need for T&T stakeholder collaboration and integrated development strategies (local, regional and international) to mitigate the impact of the pandemic, bolster the recovery and deal with future challenges and risks.” 

As COVID-19 demonstrated to the world, tourism impacts and is impacted by many other various sectors. This increases the importance of thinking and acting holistically by both the public and private sectors. This means that considering a communication plan amongst stakeholders, public and private entities, as well as considering environmental sustainability, social conditions, digital transformation, and cooperation across borders with other countries, is no more a luxury but a necessity for a resent and sustainable tourism sector and overall social and economic growth. 

I would like to thank my colleague Ruba Hafayda in the analysis of the TTDI.

 

This article was contributed by our expert Scott Wayne

Frequently Asked Questions Answered by Scott Wayne

Q1. What are the main principles and practices of sustainable tourism?

The UN World Tourism Organization defines sustainable tourism as “Tourism that takes full account of its current and future “triple bottom line” of economic, social, and environmental impacts, addressing the needs of visitors, industries, the environment, and host communities.”

The principles and practices for achieving sustainable tourism are rooted in this triple-bottom approach. They have been guided since 2015 by the UN Sustainable Development Goals (SDGs), which span 17 critical issues areas with 169 targets for tracking progress toward achieving them. While the tourism sector might contribute to achieving all 17 SDGs, three goals can be identified as having the strongest link with tourism:

SDG 8

Promote sustained, inclusive, and sustainable economic growth, employment, and decent work for all. Target 8.9: By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products.

SDG 12

Ensure sustainable consumption and production patterns. Target 12.b.: Develop and implement tools to monitor sustainable development impacts for sustainable tourism that creates jobs and promotes local culture and products.

SDG 14

Conserve and sustainably use the oceans, seas, and maritime resources for sustainable development. Target 14.7. By 2030, increase the economic benefits to small island developing States and least developed countries from the sustainable use of marine resources, including through sustainable management of fisheries, aquaculture, and tourism.

Q2. What is the future of travel and tourism industry?

The Future of Travel and Tourism

Pre-COVID-19, international tourist arrivals and tourism receipts were growing exponentially, with the former reaching 1.465 billion and the latter USD 1.5 trillion by 2019. Many of the most popular destinations globally were benefiting economically and negatively affected by the social and environmental impacts of too many tourists.

The term “over tourism” was increasingly heard, and the residents of destinations such as Barcelona and Venice felt overwhelmed by tourists. COVID-19 brought tourism to zero in most of the world throughout 2020 and into 2021 and the beginning months of 2022.

Tourism was rapidly returning to pre-2019 levels, with international arrivals doubling from 455 million in 2021 to an estimated 917 million in 2022. As travel again became more possible, especially in 2022, many destinations, businesses, and visitors were reconsidering approaches to tourism, with some prioritizing more sustainable, less impactful tourism activities and developments.

Whether the more sustainable SDG-driven approaches will “stick” as people everywhere rush to recapture lost experiences is a question to be answered. With the outbound, Chinese market reopening and aging travel-hungry baby boomers in OECD countries rapidly increasing, achieving sustainability will be challenged. Continual leadership and education on the importance of the SDGs and achieving sustainability in tourism and across all sectors will be paramount.