What does it take for a country’s economic growth to outpace that of its peers? A strong manufacturing sector? A productive labor force? Plenty of disposable income? All of the above, probably. But here’s a somewhat unexpected additional answer: a strong travel and tourism (T&T) industry. That is the primary conclusion of the Travel and Tourism Competitiveness Report 2007, which Booz Allen Hamilton developed jointly with the World Economic Forum and leading travel organizations and operators.
The study measured the factors that identify a strong T&T industry in 124 countries, and then ranked the countries to reveal which do the best job of using the industry as an incubator for economic growth and social welfare. From top-rated Switzerland all the way down to Chad, we found a high correlation — about 80 percent — between the index of variables of T&T development and GDP growth. As globalization shrinks the world, T&T has become an important means of stimulating development, accelerating local investment, and boosting employment and public education.
This is no longer a game confined to only the top-ranked players. The top 15 destinations today account for only 58 percent of international arrivals, compared with 97 percent in the 1950s, and, over the past decade, tourism in the world’s 49 poorest countries grew six times faster than tourism in Europe and the U.S. As travelers get more adventurous, developing countries have the chance to attract more of their tourism dollars, euros, or yen.
By further analyzing the best performers in the T&T index, we identified the requirements of a thriving travel and tourism industry. The first is a stable and relatively risk-free political and regulatory environment. This includes a high degree of safety and security, as well as good health, hygiene, and environmental standards. Because the global business community is averse to risky business conditions, political and economic stability is an absolute prerequisite for attracting private capital, foreign investors, and international business travelers and tourists. Since private investments increase competition and efficiency, countries that embrace foreign and private ownership, direct investments, secure property rights, and technological innovation are often rewarded with a fast-growing travel sector. Indeed, a regulatory framework that encourages all of these activities is so crucial to a country’s success that it had the highest correlation — 97 percent — with a competitive T&T sector.
Almost as important, with a 96 percent correlation, is business infrastructure. Has the country succeeded in putting together the type of air, ground, and tourism networks — either through direct government investment, state subsidies or by entering into public–private partnerships — that will attract both visitors and private investors? Are there enough quality hotels and banks to meet travelers’ needs? Is the country’s information and communications technology, such as broadband access, cell phone coverage, e-booking, and electronic-payment services, adequate to meet the needs of the 21st-century business traveler and tourist?
A desirable social and cultural milieu and physical environment also contribute to a competitive T&T industry, but many countries do not yet fully leverage their assets. Thanks in part to its great cities, wonderful food and wine, beautiful scenery, and rich history and culture, more tourists visit France than any other country in the world. Nonetheless, France failed to crack the top 10 in the T&T index. Similarly, Egypt’s spectacular heritage succeeds in attracting plenty of tourists, yet the country’s overall travel industry still has a long way to go before it can help Egypt’s economy become truly competitive.
Coming from the East: Europe’s Surprising Contenders
One of the more interesting, if nascent, T&T success stories we found is Bulgaria, which ranked 54th in the index. Bulgaria’s Black Sea beaches attract tourists, whose increasing numbers have lowered the country’s sky-high trade deficit. Pleased with these results, the government has drafted an ambitious €3.3 billion (US$4.5 billion) plan to improve roads, railways, ports, and waste treatment facilities in the country by 2015. The project is funded in part by the European Investment Bank and also through a variety of public–private partnerships. What’s more, Bulgaria plans to develop additional high-end travel offerings to lure the wealthier tourists and business travelers who have yet to come to the country in large numbers. Although Bulgaria’s travel and tourism infrastructure is still evolving, its achievements have helped the country to enter the European Union this year.
