Global Tourism Recovers, But Vacations Become More Expensive

The global tourism industry has recovered from the COVID-19 pandemic, with international tourist arrivals reaching 1.52 billion in 2025, generating $11.6 trillion in economic activity and supporting 366 million jobs worldwide. However, this rapid rebound has led to a new challenge: rising vacation costs.

A recent report by the World Economic Forum, the Travel & Tourism Development Index 2026, indicates significant improvements in tourism infrastructure, connectivity, and services globally. Out of 110 economies surveyed, 101 showed improved scores since 2024, with the global average score increasing by 2.1%. Despite these infrastructure gains, the report highlights a decline in price competitiveness, with 75% of surveyed economies experiencing a drop in their price competitiveness index between 2024 and 2026. The global score in this area decreased by 3.1%.

Several factors contribute to the increased costs. Hotel prices have risen by an average of 6%, and overall tourism service prices have outpaced general inflation in many countries. This is attributed to higher labor, food, and energy costs, as well as volatile transportation and fuel prices. For instance, gasoline prices have increased by approximately 65% in many surveyed countries since 2024. High demand, coupled with capacity limitations in some destinations, allows businesses to pass these increased costs onto tourists.

The industry faces a significant labor shortage, with an estimated deficit of over 43 million workers by 2035. This shortage, driven by factors like long and unpredictable working hours and limited career advancement perceptions, increases labor costs and hinders expansion. Additionally, while capital investment in the sector has grown, it lags behind demand growth, with new infrastructure projects requiring substantial time and resources.

Technology is also playing an increasing role, with a notable rise in mentions of artificial intelligence in company reports and venture capital investments in AI-based solutions. Japan leads the 2026 index, followed by the US, Spain, Australia, and France. Developing economies, particularly in Asia and the Pacific, are showing faster improvement rates than leading nations. The challenge for global tourism now is to increase supply, address labor shortages, and ensure that vacations remain attractive and affordable for travelers.