As travel resumes and builds momentum, it’s becoming clear that tourism is resilient—there is an enduring desire to travel. Against all odds, international tourism rebounded in 2022: visitor numbers to Europe and the Middle East climbed to around 80 percent of 2019 levels, and the Americas recovered about 65 percent of prepandemic visitors1 —a number made more significant because it was reached without travelers from China, which had the world’s largest outbound travel market before the pandemic.2
Recovery and growth are likely to continue. According to estimates from the World Tourism Organization (UNWTO) for 2023, international tourist arrivals could reach 80 to 95 percent of prepandemic levels depending on the extent of the economic slowdown, travel recovery in Asia–Pacific, and geopolitical tensions, among other factors.3 Similarly, the World Travel & Tourism Council (WTTC) forecasts that by the end of 2023, nearly half of the 185 countries in which the organization conducts research will have either recovered to prepandemic levels or be within 95 percent of full recovery.4
Longer-term forecasts also point to optimism for the decade ahead. Travel and tourism GDP is predicted to grow, on average, at 5.8 percent a year between 2022 and 2032, outpacing the growth of the overall economy at an expected 2.7 percent a year.5
So, is it all systems go for travel and tourism? Not really. The industry continues to face a prolonged and widespread labor shortage. After losing 62 million travel and tourism jobs in 2020, labor supply and demand remain out of balance.6 Today, in the European Union, 11 percent of tourism jobs are likely to go unfilled; in the United States, that figure is 7 percent.7
There has been an exodus of tourism staff, particularly from customer-facing roles, to other sectors, and there is no sign that the industry will be able to bring all these people back.8 Hotels, restaurants, cruises, airports, and airlines face staff shortages that can translate into operational, reputational, and financial difficulties. If unaddressed, these shortages may constrain the industry’s growth trajectory.
The current labor shortage may have its roots in factors related to the nature of work in the industry. Chronic workplace challenges, coupled with the effects of COVID-19, have culminated in an industry struggling to rebuild its workforce. Generally, tourism-related jobs are largely informal, partly due to high seasonality and weak regulation. And conditions such as excessively long working hours, low wages, a high turnover rate, and a lack of social protection tend to be most pronounced in an informal economy. Additionally, shift work, night work, and temporary or part-time employment are common in tourism.
The industry may need to revisit some fundamentals to build a far more sustainable future: either make the industry more attractive to talent (and put conditions in place to retain staff for longer periods) or improve products, services, and processes so that they complement existing staffing needs or solve existing pain points.
One solution could be to build a workforce with the mix of digital and interpersonal skills needed to keep up with travelers’ fast-changing requirements. The industry could make the most of available technology to provide customers with a digitally enhanced experience, resolve staff shortages, and improve working conditions.
“The uptake in sustainable tourism is driven by an appetite to travel sustainably and make more responsible choices. Bain has developed a framework defining the components of a sustainable tourism experience around three pillars: environmental impact (e.g., eco-friendly transportation and accommodation options), social responsibility (e.g., DEI standards), and community engagement (e.g., contract with locals)” says Karim Henain, Partner at Bain & Company Middle East.
There is a significant opportunity among the “sustainability enthusiasts” segment of travelers interested in visiting the MENA (Middle East and Northern Africa) region. The study’s aim is to better understand the behaviors and preferences of relevant travelers interested in MENA as a destination. The research covered consumers from six markets: Germany, Italy, France, the UK, Saudi Arabia, and China.
About the EY Europe Attractiveness Survey 2023
For this 22nd edition of the Europe Attractiveness Survey, we again draw on two sources:
The pace of technological change has redefined customer expectations. Technology-driven services are often at customers’ fingertips, with no queues or waiting times. By contrast, the airport and airline disruption widely reported in the press over the summer of 2022 points to customers not receiving this same level of digital innovation when traveling.
Imagine the following travel experience: it’s 2035 and you start your long-awaited honeymoon to a tropical island. A virtual tour operator and a destination travel specialist booked your trip for you; you connected via videoconference to make your plans. Your itinerary was chosen with the support of generative AI, which analyzed your preferences, recommended personalized travel packages, and made real-time adjustments based on your feedback.
Before leaving home, you check in online and QR code your luggage. You travel to the airport by self-driving cab. After dropping off your luggage at the self-service counter, you pass through security and the biometric check. You access the premier lounge with the QR code on the airline’s loyalty card and help yourself to a glass of wine and a sandwich. After your flight, a prebooked, self-driving cab takes you to the resort. No need to check in—that was completed online ahead of time (including picking your room and making sure that the hotel’s virtual concierge arranged for red roses and a bottle of champagne to be delivered).
While your luggage is brought to the room by a baggage robot, your personal digital concierge presents the honeymoon itinerary with all the requested bookings. For the romantic dinner on the first night, you order your food via the restaurant app on the table and settle the bill likewise. So far, you’ve had very little human interaction. But at dinner, the sommelier chats with you in person about the wine. The next day, your sightseeing is made easier by the hotel app and digital guide—and you don’t get lost! With the aid of holographic technology, the virtual tour guide brings historical figures to life and takes your sightseeing experience to a whole new level. Then, as arranged, a local citizen meets you and takes you to their home to enjoy a local family dinner. The trip is seamless, there are no holdups or snags.
This scenario features less human interaction than a traditional trip—but it flows smoothly due to the underlying technology. The human interactions that do take place are authentic, meaningful, and add a special touch to the experience. This may be a far-fetched example, but the essence of the scenario is clear: use technology to ease typical travel pain points such as queues, misunderstandings, or misinformation, and elevate the quality of human interaction.
Travel with less human interaction may be considered a disruptive idea, as many travelers rely on and enjoy the human connection, the “service with a smile.” This will always be the case, but perhaps the time is right to think about bringing a digital experience into the mix. The industry may not need to depend exclusively on human beings to serve its customers. Perhaps the future of travel is physical, but digitally enhanced (and with a smile!).
Importantly, compared with the rest of the survey respondents, sustainability enthusiasts were:
A chart showing the three most important factors respondents considered when choosing a country to invest in. The top three were:
Egypt has several assets to leverage, but still has some work to do
Egypt has already launched several initiatives to improve the sustainability performance of its travel and tourism sector. Examples include Mainstreaming Biodiversity in Egypt’s Tourism (MBDT), Green Star Hotel (GSH), as well as flagship initiatives promoting Egypt’s holiday destinations across sustainability pillars, such as the town of El Gouna, “the first place in Africa and the Arab region to receive the UN-sponsored Global Green Town award,” which recognizes cities that display “substantial efforts and progress towards environmental sustainability and a greener community.” El Gouna has a zero-waste system where more than 85% of all waste is reused and recycled.
To evaluate how travelers perceive Egypt’s sustainability efforts, the survey respondents were asked to rank Egypt’s sustainability performance vs. the main competing destinations in MENA (Greece, Turkey, Tunisia, UAE, Morocco). Sustainability enthusiasts perceived Egypt’s sustainability performance more favorably compared to competing destinations as they ranked Egypt 2nd, however, overall survey respondents ranked Egypt 4th.
Balancing the right mix of “bass notes” and “high notes” is important for Egypt’s sustainable tourism. While bass notes broad important topics such as sustainability certificates and green infrastructure are critical, customers tend to follow the high notes, which are topics that create differential competitive advantage. For Egypt, an example of high notes would be to enhance the preservation of its cultural and natural assets across key eco-tourism zones.
The opportunity that sustainable tourism presents to Egypt’s tourism sector is sizable and requires a coordinated effort across the entire ecosystem in order to capitalize on this opportunity. The roadmap should include:
Digital innovation is improving customer experience across multiple industries. Car-sharing apps have overcome service-counter waiting times and endless paperwork that travelers traditionally had to cope with when renting a car. The same applies to time-consuming hotel check-in, check-out, and payment processes that can annoy weary customers. These pain points can be removed. For instance, in China, the Huazhu Hotels Group installed self-check-in kiosks that enable guests to check in or out in under 30 seconds.9
Adoption of some digitally enhanced services was accelerated during the pandemic in the quest for safer, contactless solutions. During the Winter Olympics in Beijing, a restaurant designed to keep physical contact to a minimum used a track system on the ceiling to deliver meals directly from the kitchen to the table.10 Customers around the world have become familiar with restaurants using apps to display menus, take orders, and accept payment, as well as hotels using robots to deliver luggage and room service (see sidebar “Technology meets hospitality”). Similarly, theme parks, cinemas, stadiums, and concert halls are deploying digital solutions such as facial recognition to optimize entrance control. Shanghai Disneyland, for example, offers annual pass holders the option to choose facial recognition to facilitate park entry.11
Automation and digitization can also free up staff from attending to repetitive functions that could be handled more efficiently via an app and instead reserve the human touch for roles where staff can add the most value. For instance, technology can help customer-facing staff to provide a more personalized service. By accessing data analytics, frontline staff can have guests’ details and preferences at their fingertips. A trainee can become an experienced concierge in a short time, with the help of technology.
Even though guest-facing technology is available—the kind that can facilitate contactless interactions and offer travelers convenience and personalized service—the industry is only beginning to explore its potential. A report by Skift Research shows that the hotel industry, in particular, has not tapped into tech’s potential. Only 11 percent of hotels and 25 percent of hotel rooms worldwide are supported by a hotel app or use in-room technology, and only 3 percent of hotels offer keyless entry.12 Of the five types of technology examined (guest apps and in-room tech; virtual concierge; guest messaging and chatbots; digital check-in and kiosks; and keyless entry), all have relatively low market-penetration rates (see sidebar “Apps and in-room tech: Unused market potential”).
While apps, digitization, and new technology may be the answer to offering better customer experience, there is also the possibility that tourism may face competition from technological advances, particularly virtual experiences. Museums, attractions, and historical sites can be made interactive and, in some cases, more lifelike, through AR/VR technology that can enhance the physical travel experience by reconstructing historical places or events.
Up until now, tourism, arguably, was one of a few sectors that could not easily be replaced by tech. It was not possible to replicate the physical experience of traveling to another place. With the emerging metaverse, this might change. Travelers could potentially enjoy an event or experience from their sofa without any logistical snags, and without the commitment to traveling to another country for any length of time. For example, Google offers virtual tours of the Pyramids of Meroë in Sudan via an immersive online experience available in a range of languages.13 And a crypto banking group, The BCB Group, has created a metaverse city that includes representations of some of the most visited destinations in the world, such as the Great Wall of China and the Statue of Liberty. According to BCB, the total cost of flights, transfers, and entry for all these landmarks would come to $7,600—while a virtual trip would cost just over $2.14
The metaverse holds potential for business travel, too—the meeting, incentives, conferences, and exhibitions (MICE) sector in particular. Participants could take part in activities in the same immersive space while connecting from anywhere, dramatically reducing travel, venue, catering, and other costs.15
The allure and convenience of such digital experiences make offering seamless, customer-centric travel and tourism in the real world all the more pressing.
Importantly, compared with the rest of the survey respondents, sustainability enthusiasts were:
A chart showing the three most important factors respondents considered when choosing a country to invest in. The top three were:
Egypt has several assets to leverage, but still has some work to do
Egypt has already launched several initiatives to improve the sustainability performance of its travel and tourism sector. Examples include Mainstreaming Biodiversity in Egypt’s Tourism (MBDT), Green Star Hotel (GSH), as well as flagship initiatives promoting Egypt’s holiday destinations across sustainability pillars, such as the town of El Gouna, “the first place in Africa and the Arab region to receive the UN-sponsored Global Green Town award,” which recognizes cities that display “substantial efforts and progress towards environmental sustainability and a greener community.” El Gouna has a zero-waste system where more than 85% of all waste is reused and recycled.
To evaluate how travelers perceive Egypt’s sustainability efforts, the survey respondents were asked to rank Egypt’s sustainability performance vs. the main competing destinations in MENA (Greece, Turkey, Tunisia, UAE, Morocco). Sustainability enthusiasts perceived Egypt’s sustainability performance more favorably compared to competing destinations as they ranked Egypt 2nd, however, overall survey respondents ranked Egypt 4th.
Balancing the right mix of “bass notes” and “high notes” is important for Egypt’s sustainable tourism. While bass notes broad important topics such as sustainability certificates and green infrastructure are critical, customers tend to follow the high notes, which are topics that create differential competitive advantage. For Egypt, an example of high notes would be to enhance the preservation of its cultural and natural assets across key eco-tourism zones.
The opportunity that sustainable tourism presents to Egypt’s tourism sector is sizable and requires a coordinated effort across the entire ecosystem in order to capitalize on this opportunity. The roadmap should include:
Given the advances in technology, and the many digital innovations and applications that already exist, there is potential for businesses across the travel and tourism spectrum to cope with labor shortages while improving customer experience. Process automation and digitization can also add to process efficiency. Taken together, a combination of outsourcing, remote work, and digital solutions can help to retain existing staff and reduce dependency on roles that employers are struggling to fill (exhibit).
Depending on the customer service approach and direct contact need, we estimate that the travel and tourism industry would be able to cope with a structural labor shortage of around 10 to 15 percent in the long run by operating more flexibly and increasing digital and automated efficiency—while offering the remaining staff an improved total work package.
Importantly, compared with the rest of the survey respondents, sustainability enthusiasts were:
A chart showing the three most important factors respondents considered when choosing a country to invest in. The top three were:
Egypt has several assets to leverage, but still has some work to do
Egypt has already launched several initiatives to improve the sustainability performance of its travel and tourism sector. Examples include Mainstreaming Biodiversity in Egypt’s Tourism (MBDT), Green Star Hotel (GSH), as well as flagship initiatives promoting Egypt’s holiday destinations across sustainability pillars, such as the town of El Gouna, “the first place in Africa and the Arab region to receive the UN-sponsored Global Green Town award,” which recognizes cities that display “substantial efforts and progress towards environmental sustainability and a greener community.” El Gouna has a zero-waste system where more than 85% of all waste is reused and recycled.
To evaluate how travelers perceive Egypt’s sustainability efforts, the survey respondents were asked to rank Egypt’s sustainability performance vs. the main competing destinations in MENA (Greece, Turkey, Tunisia, UAE, Morocco). Sustainability enthusiasts perceived Egypt’s sustainability performance more favorably compared to competing destinations as they ranked Egypt 2nd, however, overall survey respondents ranked Egypt 4th.
Balancing the right mix of “bass notes” and “high notes” is important for Egypt’s sustainable tourism. While bass notes broad important topics such as sustainability certificates and green infrastructure are critical, customers tend to follow the high notes, which are topics that create differential competitive advantage. For Egypt, an example of high notes would be to enhance the preservation of its cultural and natural assets across key eco-tourism zones.
The opportunity that sustainable tourism presents to Egypt’s tourism sector is sizable and requires a coordinated effort across the entire ecosystem in order to capitalize on this opportunity. The roadmap should include:
While COVID-19 pushed organizations in a wide variety of sectors to embrace remote work, there are many hospitality roles that rely on direct physical services that cannot be performed remotely, such as laundry, cleaning, maintenance, and facility management. If faced with staff shortages, these roles could be outsourced to third-party professional service providers, and existing staff could be reskilled to take up new positions.
In McKinsey’s experience, the total service cost of this type of work in a typical hotel can make up 10 percent of total operating costs. Most often, these roles are not guest facing. A professional and digital-based solution might become an integrated part of a third-party service for hotels looking to outsource this type of work.
One of the lessons learned in the aftermath of COVID-19 is that many tourism employees moved to similar positions in other sectors because they were disillusioned by working conditions in the industry. Specialist multisector companies have been able to shuffle their staff away from tourism to other sectors that offer steady employment or more regular working hours compared with the long hours and seasonal nature of work in tourism.
The remaining travel and tourism staff may be looking for more flexibility or the option to work from home. This can be an effective solution for retaining employees. For example, a travel agent with specific destination expertise could work from home or be consulted on an needs basis.
In instances where remote work or outsourcing is not viable, there are other solutions that the hospitality industry can explore to improve operational effectiveness as well as employee satisfaction. A more agile staffing model can better match available labor with peaks and troughs in daily, or even hourly, demand. This could involve combining similar roles or cross-training staff so that they can switch roles. Redesigned roles could potentially improve employee satisfaction by empowering staff to explore new career paths within the hotel’s operations. Combined roles build skills across disciplines—for example, supporting a housekeeper to train and become proficient in other maintenance areas, or a front-desk associate to build managerial skills.
Where management or ownership is shared across properties, roles could be staffed to cover a network of sites, rather than individual hotels. By applying a combination of these approaches, hotels could reduce the number of staff hours needed to keep operations running at the same standard.16
Taken together, operational adjustments combined with greater use of technology could provide the tourism industry with a way of overcoming staffing challenges and giving customers the seamless digitally enhanced experiences they expect in other aspects of daily life.
Importantly, compared with the rest of the survey respondents, sustainability enthusiasts were:
A chart showing the three most important factors respondents considered when choosing a country to invest in. The top three were:
Egypt has several assets to leverage, but still has some work to do
Egypt has already launched several initiatives to improve the sustainability performance of its travel and tourism sector. Examples include Mainstreaming Biodiversity in Egypt’s Tourism (MBDT), Green Star Hotel (GSH), as well as flagship initiatives promoting Egypt’s holiday destinations across sustainability pillars, such as the town of El Gouna, “the first place in Africa and the Arab region to receive the UN-sponsored Global Green Town award,” which recognizes cities that display “substantial efforts and progress towards environmental sustainability and a greener community.” El Gouna has a zero-waste system where more than 85% of all waste is reused and recycled.
To evaluate how travelers perceive Egypt’s sustainability efforts, the survey respondents were asked to rank Egypt’s sustainability performance vs. the main competing destinations in MENA (Greece, Turkey, Tunisia, UAE, Morocco). Sustainability enthusiasts perceived Egypt’s sustainability performance more favorably compared to competing destinations as they ranked Egypt 2nd, however, overall survey respondents ranked Egypt 4th.
Balancing the right mix of “bass notes” and “high notes” is important for Egypt’s sustainable tourism. While bass notes broad important topics such as sustainability certificates and green infrastructure are critical, customers tend to follow the high notes, which are topics that create differential competitive advantage. For Egypt, an example of high notes would be to enhance the preservation of its cultural and natural assets across key eco-tourism zones.
The opportunity that sustainable tourism presents to Egypt’s tourism sector is sizable and requires a coordinated effort across the entire ecosystem in order to capitalize on this opportunity. The roadmap should include:
Summary
In an industry facing a labor shortage, there are opportunities for tech innovations that can help travel and tourism businesses do more with less, while ensuring that remaining staff are engaged and motivated to stay in the industry. For travelers, this could mean fewer friendly faces, but more meaningful experiences and interactions.
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