Tourism’s next test: can sustainability drive investment and growth?

Investors and destinations need to capitalise on strong tourism growth, says Courtney Fingar.

International tourism continues its remarkable recovery, defying economic and geopolitical headwinds. According to the latest UN tourism data, released in September, almost 690 million tourists travelled internationally between January and June 2025 – 33 million more than the same period in 2024. Africa led the way with a 12% surge in arrivals, Asia-Pacific rebounded strongly with 11% growth, and Europe welcomed nearly 340 million tourists, surpassing pre-pandemic levels.

These numbers show that not only is tourism back in full force, its economic footprint is widening. Revenues are up, jobs are being created and international spending is rising. Japan, for example, recorded an 18% jump in tourism receipts, while outbound spending from China rose 16%. But alongside this resurgence comes an urgent question: Can the sector grow sustainably, and how can sustainability drive foreign direct investment (FDI) into tourism and hospitality?

The answer lies at the intersection of three forces: responsible tourism, investor confidence and long-term economic competitiveness.

FDI in tourism and hospitality has traditionally flowed toward markets promising high visitor volumes and fast returns. But as UN tourism secretary-general Zurab Pololikashvili cautions, “this growth comes with great responsibility to ensure it is sustainable and inclusive”.

Investors are increasingly taking note. Sovereign wealth funds, private equity firms and development finance institutions are prioritising projects aligned with environmental, social and governance (ESG) standards. In tourism, this means channeling capital into such segments as green hospitality infrastructure (energy-efficient hotels, water-saving resorts and eco-lodges); sustainable mobility (low-emission airport operations, electric-vehicle integration and better public transport connectivity); and community-driven projects (initiatives ensuring local populations benefit directly from visitor spending).

Competitive advantage

For host countries, sustainability is no longer an ethical choice: it’s a competitive advantage. Destinations that embed sustainability into their growth strategies attract higher-quality investments, secure long-term returns and enhance their global brand.

For governments, aligning tourism development with ESG principles is the surest path to attracting FDI and safeguarding competitiveness.

To attract and retain tourism FDI, governments, developers and operators must align with a vision with sustainability at its core. This means incentivising green development through measures such as tax breaks, fast-track permitting and concessional financing for eco-certified projects. It also requires investing in resilience, from renewable energy solutions to climate-proof infrastructure, to ensure destinations can withstand future shocks.

At the same time, engaging local stakeholders is crucial to guarantee that communities benefit equitably from tourism-driven growth, fostering long-term social and economic stability. Finally, adopting data-driven marketing strategies can help destinations target high-value visitor segments and attract investors seeking ESG-aligned opportunities. By embedding sustainability within their investment frameworks, destinations can transform tourism from a short-term revenue stream into a powerful driver of inclusive and resilient growth.

Despite the positive outlook, challenges loom. Tourism inflation is 6.8%, against a pre-pandemic average of 3.1%. Rising accommodation, transport and energy costs could erode consumer demand and investor margins alike.

For destinations dependent on price-sensitive travellers, this means adopting strategic positioning: shifting toward segments less vulnerable to cost pressures, such as luxury eco-tourism or business hospitality linked to green innovation hubs. Investors, meanwhile, are likely to favour projects resilient to demand fluctuations, underscoring again the importance of sustainability-led differentiation.

The first half of 2025 shows that tourism is once again a powerful engine of global economic recovery. Yet the real test for the sector lies ahead. The next phase will not be measured by sheer arrival numbers, but by how effectively destinations manage growth, safeguard competitiveness and attract long-term investment.

Courtney Fingar is the founding partner of Fingar Direct Investment and a contributing editor to Real Asset Impact.