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The keys to driving hotel investment

A new WTTC report outlines action to attract greater investment in the hotel sector

The World Travel & Tourism Council (WTTC) has published ‘Critical Factors to Attract Hotel Investment’, a new report highlighting the importance of attracting capital investment in the post-pandemic travel and tourism sector.

The report, launched at the Sustainability and Investment Summit taking place in San Juan, Puerto Rico, looks at key enabling factors for hotel investment, as well as success stories of destinations that have shown strong growth in investment.

According to the report, key enabling factors for hotel investment are:

  • governance and rule of law
  • physical infrastructure
  • air and ground connectivity
  • workforce

The report analysed destinations that benefitted from implementing these elements effectively. For example, the Netherlands provides an enabling environment for foreign investment with less restrictive regulations and strict laws to penalise corruption.

Physical infrastructure, air and ground connectivity is also crucial to investment as well-connected hubs support wider regional development and provide access to lesser-known destinations that offer tourism opportunities.

South Korea ranks as one of the best-connected countries in the world.

The announcement of South Korea as the 2018 Winter Olympics host, incentivised investment in transport infrastructure, which resulted in hotel room supply soaring by almost 15%, outstripping the healthy overall travel and tourism capital investment growth of 8.7% in 2017.

The paper also highlights the importance of re-skilling and up-skilling the workforce. Leading the way in this area is Portugal, which focused on strategies to help reskill the sector, such as the Tourism Training Talent (TTT) programme, committed to improving the quality of tourism’s training services.

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Regarding governance, the report highlights political stability and liquidity, clear and consistent government action and support, favourable tax incentives, and safety and security as the prerequisites to attract hotel investments.

Some success stories in the report include liquidity in Maldives, government aid in Saudi Arabia (pictured), taxation in Colombia, destination planning and sustainability in Singapore and Rwanda, service culture in the Philippines, and travel facilitation in Aruba.

In 2020, when international travel came to a near-standstill, the travel and tourism sector saw 62 million job losses and its GDP contribution halved, representing a loss of nearly US$4.9 trillion. According to the paper, capital investment in the sector also fell substantially during the height of the pandemic, from nearly US$1.1 trillion in 2019, to only US$805 billion in 2020, representing an almost 25% drop. Investment in the sector continued to decline a further 6.9% in 2021 to US$750 billion.

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However, the report forecasts a strong growth in travel and tourism investment over the next decade if governments around the world create a favourable enabling environment.

Julia Simpson, WTTC President & CEO, said: “Hotel investment is absolutely key for the recovery and growth of the travel and tourism sector. Destinations must have a clear commitment and take a holistic approach to become resilient and competitive.

“As we recover from the pandemic and we build back better, investments not only need to benefit destinations economically, but more importantly, socially and environmentally.”

For more information and a copy of the report, visit WTTC.org 

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