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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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Tech Startups Look To Revitalize Tourism In Emerging Markets

  • Global tourism figures are recovering but remain below 2019 levels in most regions.
  • Support for smaller firms and local content is expanding tourism offerings.
  • Markets in the Middle East target the sector as path to economic diversification.
  • Regenerative tourism supports both revenue- and emissions-focused targets.

As emerging markets develop new attractions and tap into new visitor source markets, they are leveraging technology and sustainable development in line with emissions targets.

Following sharp declines in 2020, international tourism figures rebounded in 2021 and were on track to reach approximately 65% of pre-pandemic levels in 2022.

Notably, in September arrivals in the Middle East and the Caribbean surpassed 2019 levels by 3% and 1%, respectively.

The recovery in travel demand is projected to create 126m jobs globally over the next decade, according to the World Travel & Tourism Council (WTTC), with more than 60% of those jobs in the Asia-Pacific region.

The lifting of travel restrictions in China and Japan announced at the end of 2022 will likely fuel an uptick in activity in the region. South-east Asia in particular is set to benefit from an increase in demand from China, which was the world’s largest outbound tourism market in 2019.

Supporting MSMEs

Many countries sought to boost domestic tourism numbers as international source markets were cut off by Covid-19-related travel restrictions.

As international tourism numbers rebound, some governments are pushing reform to create more equitable tourism sectors post-pandemic. In St Lucia, for example, where tourism accounts for some 65% of GDP, lawmakers plan to launch the Community Tourism Agency, with a mandate to increase local participation in the sector.

Such policies often aim to support micro-, small and medium-sized enterprises (MSMEs) – which make up an estimated 80% of the sector globally, according to the WTTC – while also providing more authentic experiences for a new generation of visitors.

In Thailand, the Ministry of Labour has rolled out measures to support students working part-time in the hospitality industry and provide tourism-related training for the unemployed, hoping to address a labour shortage as the country prepares to welcome 25m visitors in 2023.

Prior to the pandemic, tourism activities, both domestic and foreign, accounted for 18% of the country’s GDP.

Africa’s tourism sector, meanwhile, is expected to grow at an average annual rate of 6.8% in the coming decade, more than twice the expected rate for the continent, according to WTTC data, in addition to creating 14m new jobs by 2032.

Private sector actors are also involved in efforts to develop the tourism industry. Purple Elephant Ventures, a Kenya-based venture studio, was founded in 2020 with the goal of building four start-ups per year, with a focus on firms working at the intersection of technology, climate and tourism.

During the pandemic the studio launched a software-as-a-service product that allowed hospitality providers to take direct online bookings, and it raised $1m in a pre-seed funding round in late 2022.

Targeting diversification

Tourism is an important plank in economic diversification efforts in the Middle East, and a number of high-profile projects are seeking to boost arrivals in the region.

Saudi Arabia has centred its goals for the sector around its Saudi Vision 2030, with an ambitious target to attract 100m domestic and foreign tourists by 2030.

In January 2023 the Kingdom’s Public Investment Fund designated Diriyah as its fifth giga-project. Encompassing the Turaif district, a UNESCO World Heritage site, the project is intended to educate visitors on the history of the country.

Egypt is also hoping to reinvigorate its tourism industry post-pandemic. Tourism revenue is set to rise by 20% to a record $13.6bn this year, according to projections from data and research firm Fitch Solutions. The Ministry of Tourism and Antiquities aims to attract 30m tourists by 2028, and the government is preparing to launch a new strategy for the sector later this year.

Beyond conventional tourism initiatives, Egypt is pushing the use of metaverse technology to promote the medical tourism segment. According to Ahmed El Sobky, chairman of the General Authority for Health Care, the use of 3D virtual-reality software will allow prospective patients to remotely tour health care centres in governates such as Luxor and Port Said.

This reflects a global growth trend for medical tourism, as Western patients seek more affordable care in emerging markets such as India, Turkey, Thailand and Malaysia – in turn propelling investment in advanced medical equipment powered by artificial intelligence and robotics.

Wellness tourism has been identified as another emerging trend as Covid-19-related restrictions are lifted. After contracting significantly during the pandemic, wellness tourism is projected to grow by 20.9% annually in the 2020-25 period, according to a 2021 report from the Global Wellness Initiative.

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Regenerative tourism projects

Achieving net-zero emissions has become a tourism sector priority, as the industry accounted for 8% of global emissions in 2019.

In January 2023 the UN World Tourism Organisation and the Development Bank of Latin America announced a partnership to fund tourism projects in Latin American and the Caribbean. The initiative is focused on attracting foreign direct investment to support projects focused on climate adaption and reducing the sector’s emissions.

In addition to reducing emissions, natural conservation efforts often align with tourism outcomes, as more emerging markets highlight their diverse natural heritage as part of their offering.

In mid-2022 a team of UK scientists used machine learning to develop an algorithm that uses sound to recognise the relative health of coral reefs. The technology has been deployed on a small scale in Indonesia. The country is also home to the Mars Coral Reef Restoration project, which is using hexagonal “reef stars” to kick-start coral growth across more than 40,000 sq metres of seabed.  

Two of the projects initiated by Saudi Vision 2030, the Red Sea and Amaala projects, focus on regenerating local ecosystems to support tourism. Managed by multi-project developer Red Sea Global, the projects are set to contribute SR33bn ($8.8bn) annually to the economy upon completion.

By Oxford Business Group

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