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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Countries across the globe are over tourism. Several European holiday hotspots are hoisting a stop sign to cruise ships. Barcelona is banning apartment rentals to tourists. Japan, where the weak yen is attracting hoards of visitors, has walled off an overrun selfie spot and is even toying with two-tier restaurant pricing.
Yet still they come. International tourism in the first three months of this year was only a few percentage points shy of pre-Covid times. Airborne passengers will generate revenues of $744bn this year, estimates aviation trade body Iata, up 22 per cent and 15 per cent on 2019 and 2023, respectively.
Cruise ships will carry 34.7mn passengers this year, reckons trade body the Cruise Lines International Association, up 17 per cent on pre-pandemic 2019.
For investors in the travel sector, this is both a threat and an opportunity. Following the tourist dollar rather than bureaucratic angst is tempting. Shares in Carnival performed strongly after trumping analyst expectations in its first-quarter numbers last month. Rivals Royal Caribbean Cruises and Norwegian Cruise Line rose in its wake. Online travel agencies Booking.com and Trip.com, which acquired the UK’s Skyscanner, have both done well over the past year.
For the most part, valuations are comparatively cheap. Cruise line operators are still weighed down with debt; airlines need business as well as leisure travellers. Capacity constraints, the result of barren order books during the pandemic and snagged supply chains, are a mixed blessing. On the plus side, it means higher-priced tickets.
It may be safest to head upmarket, where top spenders are increasingly wooed by cruise ships, hoteliers and luxury travel agencies. That dovetails with the backlash against tourism: small ships are preferred by countries irked by huge vessels beached in their ports as well as by passengers on board. Capacity in the luxury cruise ship sector is growing at three times the rate of the broader category, according to Tourism Economics.
Hotel groups Aman Resorts, Ritz-Carlton and Four Seasons are all seeking growth at the ultra-luxury end of the market. Accor, which acquired the Orient Express in 2022, last month teamed up with French fashion house LVMH to develop the nearly 150-year-old brand.
Exclusivity can pay. Look at Bhutan. The Himalayan kingdom’s “high value, low volume” tourism philosophy — which includes a (reduced) $100 daily fee to fund conservation efforts — pulls in funds. Tourism accounts for 5 to 6 per cent of economic output. Growth is controlled: visitor numbers in the first quarter of the year doubled to 25,000, or roughly a quarter of Japan’s daily onslaught.
