Post-pandemic tourism boom continues

The global travel industry continues to see impressive growth, as individuals continue to prioritise holidays and travel in their free time. This has occurred despite significant inflation in the sector and tensions between nations stoked by Donald Trump’s trade war.

According to the May 2025 World Tourism Barometer from United Nations (UN) Tourism, more than 300 million tourists travelled internationally in the first three months of 2025. This is a 5% increase on the equivalent months of 2024 and is 3% more than in the pre-pandemic year of 2019. Robust demand occurred despite a range of geopolitical and trade tensions, as well as high inflation in travel and tourism services. Highlights included the following:

• The US, the world's top tourism earner, reported 3% growth in January-March 2025, after a 14% increase in the year 2024.
• Spain, the world's second largest tourism earner, reported 9% growth in the first two months of 2025 after a remarkable 16% increase in the year 2024.
• Turkey (+7%) posted solid results in the first quarter of 2025, as did Greece, Italy and Portugal (all +4%).
• France recorded 6% growth in international tourism receipts, Norway 20% and Denmark 11%, in the first quarter of 2025.
• In Asia and the Pacific, Japan continued to enjoy a surge in receipts in the first quarter (+34%), while Nepal (+18%), the Republic of Korea and Mongolia (both +14%) also recorded double-digit growth.

Revised data for 2024 also showed significant strength across the travel industry. Total export revenues from international tourism (receipts and passenger transport) grew by 11% in real terms to reach a record $2.0 trillion in 2024, about 15% above pre-pandemic levels. This represents about 6% of the world's total exports of goods and services and 23% of global trade in services.

Boom reflected in results

The first-quarter earnings reporting season is just coming to a close and the positive industry trends have been reflected in these statements.

Short-haul carrier easyJet narrowed its losses significantly, with revenues up 13% to £2.0bn helped by double-digit growth in ticket sales and onboard revenue plus a 36% uplift in its package holiday business. Its load factor – a key industry measure of how full its planes are on average – rose to 88.2% from 86.3%. Full-year guidance was maintained but there was some disappointment in its outlook for the second quarter. Guidance was weaker than expected due to softer pricing on new routes. Nevertheless, more seats have already been booked for this financial year compared to at the same point last year.

IAG – the owner of British Airways, Iberia, Vueling, Aer Lingus, and LEVEL, as well as freight carrier IAG Cargo – beat market expectations significantly in the first three months of 2025. Resilient demand helped to almost triple earnings year on year. Full-year guidance remains unchanged, with further operating profit growth expected.

Online travel agency Booking Holdings delivered a solid first-quarter result, meeting headline growth expectations (Room Nights +7%) amidst what management described as a backdrop of macro and geopolitical uncertainty. Profitability was a key positive and there was healthy growth in margins as costs were cut. Gross bookings (+10%) and revenue growth (+10%) showed continued demand, benefitting from what management deemed a “globally diversified business”. There were notable changes in certain travel patterns, with a moderation in inbound travel into the US but an improvement in other travel corridors.

German-listed package holiday group Tui, Europe’s largest, saw first-quarter revenues rose 13% to €4.9bn, driven by higher demand at improved prices. Despite the impressive first quarter outcome, management revealed that bookings growth for the summer period has slowed.

Indications of a looming slowdown were seen in figures from credit card group Mastercard. The US-listed group reported that cross-border payments volume growth slowed during the first quarter. The slowdown in growth showed reduced travel in regions like the Middle East and Africa, with Western markets – so far –relatively resilient. Growth in this segment slipped to 15% from 18%, so did not represent a major collapse, but companies operating in travel markets will be keen to watch this indicator and hope that there are now significant shifts in growth ahead.

The sector is essential to the health of the global economy – and it is good news that the services sector has escaped any tariff measures from Washington. Travel is a discretionary sector and is usually hit by a reining in of consumer spending particularly quickly. Donald Trump’s trade war has sparked economic uncertainty and could result in less spending in discretionary sectors such as travel. This has made forecasting a major challenge.

However, 2025 still appears as if it will be a positive year for the travel industry. If the global economy muddles through this challenging period, demand for holidays should remain solid. However, it is vulnerable to the ebbs and flows of global economic growth. It’s fate, like many other sector, lies in the actions of Donald Trump over the coming months.