Business on the Edge 2024

High LowHigh Low Extreme heat Wildfire Coastal flooding Tropical cyclone Water stress Drought Fluvial flooding2055 203515 23 3 13 16 3 22Travel Compromised livelihoods The increased frequency of climate hazards constrains tourism-dependent destinations and residents that depend on travel-related income. Climate hazards risk cultural disconnection and economic isolation as the attractiveness of destinations shifts and local populations are forced to find alternative sources of income.Destruction of cultural heritage Climate hazards can lead to the destruction of cultural heritage sites, diminishing the historical and cultural identity of communities. This destruction negatively impacts the travel sector by diminishing cultural experiences that attract visitors and reducing tourism revenue in local communities.Increased health risks Climate hazards can cause heat-related illnesses, respiratory problems and the spread of vector-borne diseases, putting a strain on local healthcare systems and discouraging travel to affected areas. These hazards are transforming many tourist destinations and associated health risks are already prompting some travellers to reconsider their plans.Financial overview Average company EBITA margin (2023) Total industry fixed assets value (2023) Average company fixed assets value (2023)15.6% $969.7 billion $6.3 billion Sector overview The travel industry encompasses a broad range of businesses and services that facilitate travel experiences. It involves sectors such as airlines, accommodation, tour operators and travel agencies. The industry stimulates investment in infrastructure and fosters the conservation of cultural and natural heritage. Financial implications of climate hazards Climate-driven fixed asset losses set to climb steadily Average listed travel company fixed asset losses under low and high emissions scenarios ($ million per year; 2035, 2045, 2055) Fluvial flooding an emerging threat beyond extreme heat Estimated fixed asset losses for all listed travel companies under high and low emissions scenarios, by climate hazard ($ billion per year; 2035, 2055) Notes: Analysis of n=153 listed travel companies. Source: S&P Global Sustainable1, Accenture analysis.Estimated losses equate to a drop in earnings of one fifth by 2035 Fixed asset losses as a proportion of EBITA under low and high emissions scenarios (% EBITA per year; 2035, 2045, 2055) Societal implications of climate hazardsLow High (additional losses) Total losses (High)2055 2035 2045118140179 110 11612851 24 8 2035 2045 2055 Low High20.2%21.6% 21.3%25.7%23.6%33.0% By 2035, the average listed travel company is expected to face fixed asset losses of $110–118 million per year due to climate hazards depending on the emissions scenario, increasing to $116–140 million by 2045 and $128–179 million by 2055. This highlights the need for climate adaptation measures to protect travel infrastructure and ensure business continuity. The losses to property, plant and equipment are set to equate to 20.2–21.6% of earnings by 2035, potentially leading to higher travel costs for consumers and reduced funds for service improvements and expansion. Extreme heat is expected to be the primary driver of these losses, accounting for $13–15 billion (82–84%) of the industry total in 2035, emphasizing the need for heat-resistant facilities and cooling technologies. Fluvial flooding is set to contribute 11–14% to the annual losses in 2035, underscoring the importance of resilient travel infrastructure. Business on the Edge: Building Industry Resilience to Climate Hazards 59