New frontier markets are highly dependent on tourism and lead the rebound post pandemic as consumers seek new places to explore. However, often they are at the forefront of the existential threats posed by climate change - from Fiji to the Maldives - requiring a swift sustainable transformation to future proof businesses and protect communities, biodiversity and the environment. This report assesses the potential for travel and tourism, along with progress made in key sustainability pillars.
This report comes in PPT.
As a group, the new frontier markets are rebounding faster from the pandemic, already regaining 64% of their 2019 levels, offering big potential for incremental value growth as consumers are looking for new, lesser well trodden destinations to explore. Offering a wide range of destinations from iconic to tertiary is a sure fire way to avoid over-tourism.
New frontier markets rely heavily on inbound tourism. This reliance meant that the new frontier markets were particularly badly hit in 2020. With borders re-opening and travellers’ desire for international trips high, the new frontier markets are now set to see strong inbound growth over the next five years.
Whereas the lodging market has been labelled as saturated in many large travel markets, lodging has significant growth potential in new frontier markets. Short-term rentals are a potential challenge to hotels’ recovery, as their growing popularity has cut into hotels’ market share in some new frontier markets.
The majority of new frontier markets are highly dependent on air, being island nations, which is a challenge for decarbonisation and meeting the 1.5C pathway. Destinations will need to apply pressure on airlines to ensure that the transition to net-zero happens well before the industry’s self-regulated CORSIA targets.
New frontier markets are more often than not on the front line of the climate emergency, facing existential threats from climate change. Emulating the regenerative model as seen in New Zealand, there is huge opportunity to accelerate ambitions to achieve net-zero emissions before 2050, creating a tourism model that gives back more than it extracts.
Travel encompasses several categories including tourism flows, lodging, travel modes, in-destination spending and booking.
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