Overview
Europe and Eurasia remains the world’s most competitive region when it comes to T&T; it outscores the global average score on nearly all pillars and includes six of the top 10 scorers on the TTCI. By leveraging its superior competitiveness, the region is able to maintain the largest T&T export economy in the world, accounting for half the international tourist arrivals and over 40% of international receipts of economies ranked in this edition of the report. Moreover, despite its maturity, Europe’s improvement in T&T competitiveness over 2017 actually outpaced all other regions.
One of the key drivers of Europe’s success as a travel destination is its abundant cultural resources, which are concentrated primarily in Southern and Western Europe. The large number of visitors that these assets attract are accommodated by the world’s most robust tourism infrastructure, with a particularly high level of hotel density. After a slowdown in receipts in 2015 and 2016, the region’s economies refocused on T&T, demonstrated by climbing T&T prioritization scores. Europe’s high degree of market, regulatory and travel policy integration centered on the European Union and the Schengen Area also reinforces intra-regional travel, which accounts for the vast majority of its international arrivals. Unsurprisingly, members of these pacts have very similar performances on international openness, outscoring the global average.
Travel throughout the region is also bolstered by world-class infrastructure. Air transport, which accounts for over half the region’s arrivals, has greatly improved as an uptick in travel in recent years has led to an increase in the number of air carriers and route capacity. Europe’s high concentration of airports and airlines also helps increase competition, thereby driving down airport and ticket prices, improving otherwise relatively low price competitiveness for much of the region. The compact geography of Europe (excluding Eurasia) also makes it ideal for ground transport, which includes high road and railroad density. In addition, regional economic integration, infrastructure and economic heft fuels significant business travel, with Europe hosting more international meetings than the rest of the world combined.
Many European economies (especially in Northern and Western Europe) also have strong enabling environments, with high marks on areas related to their business environment and labour markets. Moreover, with all of Europe’s nations scoring above the global average for health and hygiene and nearly all for safety and security, travellers can traverse much of the region with little concern for personal wellbeing. Europe’s high degree of ICT readiness allows T&T business and travellers to leverage increased use of online and digital platforms in B2B and B2C industry services. Recent improvements on environmental sustainability have the potential to better protect the region’s natural resources, an area in which regional scores are close to global averages.
Subregion Analysis
Western Europe improved its TTCI score over 2017, remaining the most competitive subregion in the world. It accounts for over one-half of Europe’s T&T spending, nearly two-thirds of its domestic spending, and is the largest source of outbound international expenditure in the region. Consisting of most of Europe’s largest and most-developed economies, the subregion has an exceptional enabling environment, including Europe’s highest-performing average business environment and strongest health and hygiene conditions, and ties with Northern Europe for the world’s highest-scoring human resource and labour market. Moreover, Western Europe has the world’s highest-rated overall infrastructure and is one of the TTCI’s leading regions when it comes to cultural resources. Due to the maturity of its T&T economy, Western Europe experienced only slight increases or declines on most pillars. Yet the region’s environmental sustainability improved substantially (a significant portion of this performance is due to a revised indicator for measuring fishing of overexploited or collapsed fish stocks), as did scores related to natural resources. The Price Competitiveness pillar was Western Europe’s most enhanced, although the subregion remains the most expensive in Europe.
All but one member of Western Europe improved its T&T competitiveness since the last edition of the report. Germany is the subregion’s largest T&T economy and third-most competitive in the world. The country boasts a large domestic T&T market, strong overall enabling environment (6th), infrastructure (7th) and natural and cultural resources (8th). Yet, with a smaller T&T sector (measured by GDP), France (2nd) remains the most competitive T&T economy in Western Europe thanks to one of the world’s best scores for cultural resources and business travel (2nd) and exceptional natural resources (6th). The Netherlands had the subregion’s greatest improvement, moving up two places to rank 15th globally. The country made substantial progress on air transport infrastructure (10th to 8th); and revised figures resulted in enhanced environmental sustainability (9th to 6th) and natural resources (119th to 80th). The United Kingdom was the only country in Western Europe to decline in competitiveness (5th to 6th), due to falling digital demand, which also led to significant drops in scores on natural (16th to 21st) and cultural (7th) resources. The Czech Republic (38th) remains the least-competitive T&T economy in the subregion, holding Western Europe’s lowest score for natural resources (93rd).
Southern Europe is the region’s second-most competitive subregion. Thanks in part to one of the best combinations of natural and cultural resources, in 2017 Southern Europe brought in the largest number of Europe’s international tourist arrivals. To manage this inflow, the subregion has developed the best tourism service infrastructure in the world, with a particularly high hotel density. Moreover, since Southern Europe depends on tourism more than any other subregion in Europe (based on visitor’s share of internal T&T spending), the industry is highly prioritized and international openness is above the regional average. At the same time, the subregion trails the regional average in areas related to the enabling environment, especially when it comes to business environment and human resource and labour market. Southern Europe’s growth in competitiveness is due mostly to broad improvements in infrastructure, ICT readiness, T&T prioritization and price competitiveness.
All eight economies in Southern Europe improved their T&T competitiveness from 2017 to 2019. Cyprus is the most improved (52nd to 44th) yet least competitive in the subregion. The country trails the global and European averages for environmental sustainability (111th) and natural (97th) and cultural resources (69th). Yet Cyprus experienced the subregion’s largest percentage rise on pillars covering ICT readiness (59th to 21st) and air (50th to 41st) and ground and port (51st to 32nd) infrastructure. Italy (8th) has the subregion’s largest T&T economy, benefiting from world-class natural (7th) and cultural (4th) resources, but is being held back by a relatively unfavourable business environment (110th). Spain remains the most T&T competitive country in the world thanks to rich natural (9th) and cultural (3rd) resources and impressive tourist service infrastructure (3rd). On the other hand, Spain also has the slowest rate of TTCI growth in Southern Europe since all the aforementioned strengths actually deteriorated between 2017 to 2019.
Northern Europe had the slowest rate of growth on the TTCI of all the European subregions but remains third-most competitive. Countries here tend to score highly for overall enabling environment, and the subregion includes Europe’s best average scores for safety and security and ICT readiness. These nations also tend to do well on T&T prioritization, international openness and infrastructure. However, a lack of price competitiveness and below global average scores related to cultural resources and business travel hold the region back. While Northern Europe scores below average for natural resource thanks to a more limited wildlife and low number of UNESCO World Heritage natural sites, it scores well for natural tourism digital demand and natural asset attractiveness.
Most of the subregion’s nations enhanced their T&T competitiveness since the last report. Denmark is the region’s most improved economy, climbing 10 places to rank 21st globally, thanks to a significant improvement on air transport infrastructure (44th to 29th) and price competitiveness, although it’s still one of the world’s most expensive countries (131st). Norway has Northern Europe’s largest and most competitive T&T economy, but also experienced the largest decline in overall score (18th to 20th). Like much of the subregion, the country scores well in areas related to the overall enabling environment (8th), infrastructure (22nd) and prioritization of T&T (19th). However, Norway stands out for exceptional air transport infrastructure (5th), due to high airport (4th) and departure density, leading environmental sustainability (2nd) and above subregion average natural resources (51st). Nevertheless, the nation’s Natural Resources pillar score dropped 21 places as recalibrated protected area data proved less favourable (100th). Natural tourism digital demand also fell (10th to 21st), as did scores related to business environment (10th to 20th) and safety and security (7th to 17th). Despite improvement, Lithuania still dropped three spots to 59th, keeping it as the least-competitive country in the subregion. While the nation’s enabling environment (22nd) is strong relative to the global average, it trails subregional competition. In particular, Lithuania trails global and subregional averages when it comes to T&T prioritization (89th), air transport infrastructure (83rd) and natural (114th) and cultural (89th) resources.
The Balkans and Eastern Europe subregion has a lower T&T share of GDP than most other European subregions, but the countries here are the most dependent on international tourist arrivals for internal T&T spending. Consequently, there is a need to improve competitiveness to keep arrivals coming to maximize the subregion’s T&T potential. Within this context, the Balkans and Eastern Europe had one of the fastest rates of improvement in T&T competitiveness of all the subregions. Countries narrowed their gap with other subregions in areas related to natural and cultural tourism, building their case as a travel destination. Enhanced T&T prioritization, tourist service infrastructure and price competitiveness (the subregion’s strongest relative advantage to the rest of Europe) have reinforced this case; Balkan and Eastern European countries are diverting more resource to the industry, making travel more convenient and less expensive. In part thanks to these trends, subregional arrivals picked up—as more airlines are now offering flights—thereby expanding route capacity. It’s no surprise, then, that the subregion had the strongest growth on air transport infrastructure in Europe. However, the subregion still underperforms the global average on six pillars and the European average on all but price competitiveness, indicating a need for continued improvements. In particular, subregional players need to speed up their improvements on aspects related to enabling environment and ground infrastructure.
All but one country in the Balkans and Eastern Europe improved its T&T competitiveness since the last edition of the report. Serbia (95th to 83rd) was the most improved in the subregion—and the Europe and Eurasia region in general—thanks to significant enhancements to its enabling environment (62nd to 56th), T&T policy and enabling conditions (112th to 91st) and air (86th to 76th) and ground (94th to 85th) infrastructure. Slovenia (36th) remains the most competitive economy in the subregion due to its overall enabling environment (38th), T&T prioritization (33rd), ground (20th) and tourist service (27th) infrastructure, environmental sustainability (8th) and natural resources (26th). Poland (42nd) is the subregion’s largest T&T economy and its second-most competitive. The country has benefited from a stronger performance on natural (72nd to 55th) and cultural (36th to 28th) resources, with
its scores on the latter category being the best in the Balkans and Eastern Europe. North Macedonia was the only country in the subregion to decline in T&T competitiveness (89th to 101st). The nation’s business environment (40th to 84th), human resources and labour market (83rd to 108th), safety and security (56th to 95th), T&T prioritization (85th to 114th), international openness (93rd to 119th) and ground infrastructure (62nd to 104th) all deteriorated substantially. Still, Bosnia and Herzegovina (105th) is the subregion’s least-competitive T&T economy, despite an increase to its overall TTCI score. The country has the subregion’s worst business environment (134th) and overall infrastructure (97th).
Eurasia is Europe’s least competitive—but most improved—subregion. Countries in the subregion typically score higher than the global average for pillars in the Enabling Environment subindex—in particular, Health and Hygiene indicators. However, Eurasia only outscores the European average in price competitiveness. In general, the subregion suffers from a lack of international openness, underdeveloped infrastructure and underutilized natural and cultural resources. The subregion’s rapid competitiveness improvement coincides in part with a T&T recovery following economic setbacks and instability. This includes enhanced safety and security (still the lowest in Europe), greater ICT readiness, international openness, T&T prioritization, price competitiveness and investment in infrastructure.
All eight of the subregion’s economies improved their competitiveness since the last edition of the report. The Russian Federation (39th) is Eurasia’s most competitive T&T economy and accounts for the majority of the subregion’s T&T GDP. While the country trails subregional and global averages on business environment (92nd), safety and security (98th) and international openness (123rd), Russia does have strong air transport infrastructure (23rd), representing most of Eurasia’s available seat kilometres. Moreover, it is the only Eurasian economy to score above the global average for natural (34th) and cultural (18th) resources. Ukraine had the fastest rate of TTCI score growth in the subregion, rising 10 places to rank 78th globally. In particular, as the country stabilized and recovered economically, Ukraine drastically improved its business environment (124th to 103rd), safety and security (127th to 107th), international openness (78th to 55th) and overall infrastructure (79th to 73rd). Kazakhstan had the slowest rate of competitiveness improvement, moving up one place to rank 80th globally. The country has become more competitive along most TTCI pillars but was held back by declining business environment (36th to 49th), labour market (47th to 57th) and health and hygiene conditions (6th to 12th). The Kyrgyz Republic performed better than two years ago, but remains Eurasia’s least-competitive T&T economy (110th). Most notably, the country needs further investment in its underdeveloped infrastructure (131st).
Selected Country/Economy Analysis
Spain remains the most competitive economy in the world when it comes to T&T. The nation is the second-most visited destination in the world and has developed an economy that is focused on tourism, with over half of internal T&T spending coming from international visitors. Spain’s main points of attraction are its excellent natural (9th) and cultural (3rd) resources, with the latter being its greatest advantage relative to the rest of the world. The country is a centre for international meetings (4th) and sporting events and has the strongest combination of intangible culture and heritage sites (1st) in the world. The number of UNESCO-recognized Natural Heritage sites has also increased (11th to 9th), helping to boost the attractiveness of its natural assets (23rd to 10th). Servicing travellers is an exceptional tourism infrastructure (3rd), including a high hotel density. Intra-country travel is supported by quality railroads (11th) and roads (13th), while good port infrastructure (12th) could help the cruise industry. The nation’s many international arrivals can rely on strong air transport infrastructure (10th), which includes a wide range of operating airlines (5th) that provide a considerable route capacity (8th). Moreover, like much of higher-income Europe, the country performs well in areas related to its overall enabling environment (33rd), with a solid global relative advantage on ICT readiness (27th) and security (16th).
More can be done, however, to improve Spain’s human resource and labour market (41st), especially in light of worsening hiring and firing practices (107th to 126th). Despite improvement, the T&T industry is still constrained by a business environment (64th) that trails the European average. Specifically, tax policy could be reformed to have less of an impact on incentives to work and invest (107th), and the legal framework for settling disputes (80th) and challenging regulations (89th) could be adjusted. In addition, while overall environmental sustainability (25th) is above the global average, Spain’s natural resources could benefit from a reversal of the recent deterioration in environmental enforcement and regulations (33rd to 48th) and forest cover (82nd to 85th). Lastly, competitiveness could be further improved by keeping an eye on Spain’s falling price competitiveness (98th to 101st).
Germany is the region’s largest T&T economy and ranked third on the global TTCI rankings. While it welcomes less than half of the international tourist arrivals of either Spain or France, it still ranks 9th globally in this area, and its T&T industry benefits from a substantial, dynamic economy that generates a big enough domestic market to give the country the largest T&T GDP in Europe. Travel demand is generated by a rich and expanding cultural and business travel environment (6th), which is Germany’s greatest strength relative to regional and global averages. Moreover, increased habitat protection (9th to 4th) and improved environmental sustainability (9th) have reinforced the country’s valuable natural resources (35th to 30th). Conditions for T&T investment and operations continue to be conducive to robust competitiveness thanks to an increasingly favourable business atmosphere (18th to 14th) and labour market (7th to 3rd), which have helped to ease foreign labour restrictions (64th to 11th). While there is still room for improvement, T&T has become more prioritized by the German government (80th to 55th), which recently allocated additional funding (103rd to 60th) for this sector.
Connectivity is also bolstered by strong international openness (18th) and a highly developed infrastructure (7th). Germany has especially impressive road and railroad (5th) networks, efficient ground transport (9th), considerable airline selection (3rd) and high airline capacity (6th). However, worsening perceptions of airport (12th to 17th), road (16th to 19th) and tourism infrastructure (19th to 33rd) quality point towards the need for reinvestment. Moreover, while Germany has become less expensive (124th) and safer (51st to 41st), these remain the nation’s least competitive aspects relative to the European average, potentially discouraging tourism.
Serbia experienced the largest score improvement in Europe, moving up 12 places to rank 83rd globally. In particular, Serbia has pursued polices that are highly beneficial to its internationally-focused and growing T&T industry. These include a substantial reduction in visa requirements (69th to 18th) and increased overall T&T prioritization (116th to 109th). Ticket prices and airport taxes have also been reduced (92nd to 55th), adding to the country’s overall improvement when it comes to price competitiveness (76th to 67th). In line with this improved openness and lower costs, the nation’s air transport infrastructure also improved (84th to 76th) as more airlines started operating in the country (51st to 46th) and perceptions of airport infrastructure quality became more positive (92nd to 88th). Likewise, Serbia’s ground infrastructure also got better (94th to 85th). Conditions for T&T investment have also become more favourable, with broad improvement in areas related to the business environment (112th to 74th) and human resource and labour markets (82nd to 58th).
Despite so much improvement, a lot more needs to be done for Serbia to become truly competitive. The country needs to continue addressing its weak natural (127th) and cultural (67th) resources if it wishes to leverage recent gains. One positive sign is increased environmental sustainability (61st to 40th), which should help grow the attractiveness of its natural assets (100th). Moreover, tourism service infrastructure (77th) needs to become more accommodating; in particular, its online branding strategy (133rd) should be given more attention. Serbia also needs to continue reducing travel barriers by entering into more air service (97th) and trade agreements (77th). Lastly, the nation has to improve its safety and security (71st), which is a particularly important point of consideration for those looking to travel internationally.
