2024 marks a new era of value-driven growth for the travel industry, with a forecast 1.5 billion international trips expected to generate tourism spending of a record-breaking USD1.9 trillion. Yet this success is overshadowed by the return of overtourism and rising anti-tourism sentiment in popular destinations around the world due to inequities, overcapacity challenges and housing pressures. Key strategies focus on diversification to higher-value source markets, generative AI-driven personalisation and the mainstreaming of sustainable travel and tourism.
Breaking new ground but same old challenges
With a full return to pre-crisis levels, international travel is poised for even stronger spending growth over the next five years, compared to historically (5.4% CAGR 2024-2029 vs 2.5% CAGR 2015-2019)
Source: Euromonitor International
The appetite for travel remains a top spending priority for consumers, especially for experience-seeking cohorts such as millennials and Gen Z despite macroeconomic headwinds and growing geopolitical tensions. Western Europe, Middle East and Africa are the fastest to exceed peak levels. The return of “business as usual” has led to certain hotspot destinations, especially in Spain, to witness overtourism where supply exceeds capacity limits. This leads to tensions with local communities where the benefits of tourism are outweighed by the costs.
The top five outbound source markets – the US, Germany, China, the UK and France – combined are set to spend USD662 billion on international travel and tourism in 2024 alone. India is garnering much attention as a dynamic source of high-spending visitors, set to jump up five places to the number six source market by 2029. Destinations continue to seek out new high-spending visitors as China’s return to pre-pandemic levels of spending for outbound travel is forecast by 2026 due to a slower-than-expected rebound due to price-sensitive consumers and air capacity challenges.
Accelerated digitalisation and generative AI drive personalisation
With generative AI driving further digitalisation in an already highly digitalised industry, global online booking is forecast to account for 69% of travel sales in 2024, rising to 73% by 2029
Source: Euromonitor International
More than one third of booking sales (37%) are conducted via mobile in 2024, anticipated to reach 44% by 2029 due to safe, secure and seamless mobile payments driven by the growing adoption of embedded finance.
The balance of power remains firmly in the hands of travel intermediaries, especially OTAs at 55% vs 45% for direct suppliers. Generative AI opens up potential for further disintermediation as consumers opt for personalised itineraries delivered in a more natural and faster way. 
Immersion in local culture, communities and nature continues to drive strong interest in categories like guided tours (8.8% CAGR 2024-2029), visits to museums and cultural sites (8.1% CAGR) and national parks and nature reserves (7.5% CAGR). The stronger performance of these categories speaks to the ever-growing interest in more sustainable and nature-based travel.
The fastest-growing leisure packages are sports related at a 6% CAGR for 2024-2029 as Europe enjoys a summer of sporting mega events like UEFA EURO 2024, and Paris 2024 Olympics and Paralympic Games
Source: Euromonitor International
Eco-tourism and adventure travel packages are set to enjoy above-average growth of 5.8% each as consumers trade up for more sustainable, transformative and regenerative travel experiences.
Rail is the stand-out performer, with value growth at a 12.7% CAGR forecast for 2024-2029, almost doubling in value sales to account for 24% of travel modes by 2029. Accelerating the decarbonisation of transport at scale is necessary to meet climate targets to half emissions by 2030 and achieve net zero by 2050. Rail will steal value share from air travel as travellers increasingly look for no-fly or lower carbon alternatives.
The outlook for business travel is challenging, as the new reality of mandatory sustainable reporting kicks in for large corporations, making companies think twice about business travel for their employees to ensure they meet their climate commitments. Return to pre-pandemic levels for business travel is slated for 2027 at the earliest. With the no-fly movement gaining traction and sustainable aviation fuel currently a tiny fraction of global fuel suppliers, employers will increasingly need to meet the needs of employees who choose not to fly. Accelerating transformation in travel is a critical priority to ensure global peak emissions by 2025 and deliver the 2030 and 2050 agendas.
Read our article to learn more about consumer trends in travel planning.