people and goods while enhancing destination accessibility and competitiveness. Without strategic investments in transportation networks, digital connectivity and supporting facilities, economies risk constraining their tourism potential and impeding broader economic development trajectories. –T&T socioeconomic impact: In emerging markets, T&T generates 33% of high-wage jobs versus 19.5% in advanced economies, according to World Travel and Tourism Council (WTTC) data.8 However, stagflationary pressures in tourism-dependent economies (e.g. the Maldives, the Seychelles) can hinder economic growth, leading to both higher inflation and economic vulnerabilities.9 Indeed, these pressures are generally exacerbated by the limited economic diversification typical of small island tourism economies, making them highly sensitive to external shocks such as fluctuations in tourist arrivals or global commodity price; as a result, rising import costs and persistent current account deficits can quickly translate into higher consumer prices and increased debt burdens, further constraining fiscal space and heightening economic vulnerability. –Price competitiveness: Global inflation (averaging 6.5% in 2023) has eroded TTDI 2024 scores by 8% since 2019,10 with low-income economies (−14%) disproportionately affected. Crude oil prices have undergone high volatility, ranging from $58 to $123 per barrel,11 due to global economic uncertainty, which had a direct impact on flights and other fuel-based transportation costs that typically represent a significant budget item for a trip. The potential implications include: –Demand polarization: High-income travellers drive luxury segments (e.g. luxury eco-lodges, space tourism), with India and China fuelling the need for premium offerings. Asia-Pacific’s middle class, projected to reach 3.5 billion by 2030,12 will reshape regional tourism, favouring destinations such as Indonesia and Viet Nam. –Debt and investment: Debt-to-GDP ratios exceeding 60% in 78 countries limit public- sector tourism infrastructure spending. Jamaica’s tourism-dependent economy, for instance, faces a $1.2 billion annual financing gap for climate- resilient hotels.13 As an additional example, the Maldives’ public debt-to-GDP ratio reached 110% in 2022 and is projected to remain above 120% in 2024, severely constraining the government’s ability to fund new tourism infrastructure despite the sector’s critical role in economic growth.14 –Labour market pressures: Hospitality wages lag 19% behind comparable sectors in Organisation of Economic Co-operation and Development (OECD) nations, exacerbating shortages. Digitalization could displace 18 million jobs by 2030, necessitating reskilling programmes such as the European Union’s “Tourism Skills Passport”.15 Sustainability transition speed The variable here relates to the pace of decarbonization, circular-economy adoption and policies balancing tourism growth with ecological limits: –Environmental sustainability: While renewable energy in global travel and tourism operations would be in the range of 4.5% to 10%, sustainable aviation fuel (SAF) use remains below 1% of global aviation fuel supply. Only 22% of nations align with Paris Agreement targets for tourism.16 –T&T demand sustainability: Overcrowding at United Nations Educational, Scientific and Cultural Organization (UNESCO) sites (e.g. Angkor Wat, Machu Picchu) has reduced by 4.7% since 2021. Dynamic pricing and visitor caps at Borobudur Temple, Indonesia, cut footfall by 29% in the same period while increasing per capita spend to 34%.17 The potential implications include: –Regulatory shifts: Carbon border taxes (e.g. the EU’s Carbon Border Adjustment Mechanism [CBAM]) may fund T&T decarbonization by as much as €9.1 billion annually by 2030.18 Costa Rica’s eco-lodges achieve 28% return on investment (ROI), incentivizing green investments. –Asset stranding: Coastal resorts face $1.2 trillion in flood risks by 2035. The Caribbean’s parametric insurance pools19 now cover 60% of properties, mitigating losses. –Consumer behaviour: Air mobility remains the highest source of carbon emissions, whereas cruise-ship emissions of nitrogen oxide compounds (NOx) rose by 18% between 2019 and 2022.20 This trend signals that travellers and industry stakeholders must confront the growing environmental impact of their choices, as persistent high emissions from air and cruise travel are likely to draw increased regulatory scrutiny and public concern. If the sector does not proactively invest in cleaner technologies and transparent emissions reporting, it risks losing environmentally conscious customers, facing stricter regulations, and damaging its long-term reputation and growth prospects. Technological adoption curve The variable here relates to the diffusion of AI, blockchain and internet of things (IoT) solutions Four Scenarios for the Future of Travel and Tourism 6

Four Scenarios for the Future of Travel and Tourism 2025