Is climate reshaping tourism?

Emissions and weather influencing travel

Increasingly, climate change is impacting tourism and travel patterns. This, in turn, will influence real estate, particularly hotels and holiday rentals, as well as hospitality.

A few months ago, I read a Bloomberg article titled "Australia Losing Tourism Appeal as Fliers Count Carbon Emissions". In it, the Tourism & Transport Forum Australia highlighted the risk that "Australia is losing its appeal as a destination for international business events and even high-profile rock stars, because of the carbon that's emitted flying there." Australia's Qantas Airways is seeking sustainable aviation fuel for key routes to the US and Europe to meet the needs of corporate customers aiming to reduce their carbon footprint. However, Air New Zealand just ditched its 2030 target due to not enough sustainable fuel or more efficient aircraft. The number of international tourist arrivals in Australia was 22% lower in 2023 than in 2019, according to UN Tourism.

More broadly, some 17% of the 328 US, European, and Indian companies in the Travel Smart Ranking have set targets to reduce their travel emissions. While still a minority, greater scrutiny and accountability could make this a more significant factor in the future. Locations that are more accessible by train may see fewer impacts.

But it’s not just emissions from travel. Extreme weather events were cited by 30% of respondents to the UN Tourism survey in May 2024 as a primary factor weighing on the recovery of international tourism, making it the third most prominent barrier. Globally, international tourism arrival numbers were 1.3 billion in 2023, still some 11% below 2019 levels, though there are signs of improvement in many regions in 2024. In Europe, which benefits from shared borders, an accessible train network and (in some cases) freedom of movement, the fall was lower at 4%. But that doesn’t make it immune to the concerns raised. Last month, temperatures in Greece exceeded 40°C for two weeks, with 33 wildfires in 24 hours. Spain and parts of the south of France and Italy are also at risk of wildfires as temperatures soar, with 21st July 2024 marking the world's hottest day ever, until July 22nd.

Higher temperatures and a focus on reducing flight emissions could influence travel destinations and patterns, affecting accommodation demand and how cities adapt. For example, Barcelona plans to use tourist tax (revenue) to fund heat pump installations. The city government has already installed climate refuges where people can cool off in July and August. Additionally, school classrooms grew hotter in June and September, with another use of the tourist tax fund being to install air conditioning systems powered by rooftop solar panels in 170 schools by 2029. Other cities could follow suit, and in other parts of Spain, they are moving to limit the number of tourists.

For more eco-conscious travellers, hotel sustainability is also on the rise. Many hotels offer guests to be more sustainable by reusing items such as towels, but increasingly certifications for eco-hotels are growing. Green Tourism is one such certification program in the UK that assesses UK accommodations, visitor attractions, and tour operators for their commitment to sustainable practices.

Major progress, but now the hard part

The Climate Change Committee's (CCC) annual assessment acknowledges the UK’s progress as the first major economy to have halved emissions since 1990. However, the starker message is that only a third of the projected emissions reductions required to meet climate targets in 2030 are backed by credible policies. With just six years left to achieve a 68% reduction from 1990 levels, the new government has a big task ahead.

In 2023, the previous government confirmed the zero-emission vehicle mandate and increased funding and grants for heat pumps in homes via the Boiler Upgrade Scheme, which has led to a significant increase in take-up. The number of heat pumps installed in 2023 increased by 4% compared to 2022, rising from 58,000 to 60,000, but this progress "is significantly off track". Installation rates in residential buildings need to increase tenfold from 2023 levels by 2028 to meet the goal of 600,000 per year. The CCC highlights the need for 10% of existing homes in the UK to be heated by a heat pump by 2030, compared to the current c.1%.

The CCC points to several priority areas. One is the pace of renewable energy rollout and requisite planning policy to support - we dissected the government ambitions here and planning pinch points here. Since the election, the Department for Energy Security and Net Zero (DESNZ) has granted planning permissions for the construction of three major solar farms in the east of England, promised "to unleash a UK solar rooftop revolution," relaxed planning laws for solar and onshore wind and the Great British (GB) Energy mandate was written into the King's Speech. Additionally, the Onshore Wind Industry Taskforce has been formed to unlock barriers to deployment of wind farms by identifying "where there are financial, regulatory or policy challenges that are preventing the construction and operation of onshore wind projects in an efficient and cost-effective manner”.

The report also stresses the need for building emissions to fall by c.3% annually between now and 2030, nearly triple the rate from 2015-22, though slower than between 2022-23. Energy efficiency measure installations have been moving in the wrong direction. They were significantly off track in 2022, and they fell in 2023. With the Minimum Energy Efficiency Standards in the private rented sector confirmed as minimum EPC C by 2030, more clarity is needed in the non-domestic sectors to spur more significant action.

London's susceptibility to climate change laid bare

A new 168-page document by UN Global Ambassador and former Environment Agency Chair Emma Howard Boyd CBE called for a "reset moment" for London regarding preparing for the prevalence and frequency of climate risks. The report outlines a series of scenarios (past, present and future) that are likely to impact the capital.

Mayor Sadiq Khan has "accepted the recommendations" and will work to take them forward over the coming months. Our ESG consulting team, prior to the release of the report, penned a blog on climate resilience, a growing trend in the industry and one that asset owners should be aware of and act on where appropriate.

According to the report, "around 43% of London properties are likely to be affected by subsidence by 2030," citing a Met Office report that explains: "ground movement/subsidence, shrinkage and heave of high plasticity soils are expected to be exacerbated by projected increases in drought conditions and periods of prolonged heavy rainfall… This, in turn, would lead to shrink-swell effects permeating deeper into the soil."

Solutions could include planting more trees, levying "stormwater charges" on home-owners who pave over gardens (and offering incentives to remove paving), installing "rain gardens" on or near roads to soak up surface water, and working with landowners to create "sacrificial zones" along the river Thames to mitigate widespread flooding.

Nicola R. 's stat of the month – 95%

“The 2024 Paris Olympics are underway and exemplify the trend towards retrofitting of existing buildings to set new sustainability standards. A staggering 95% of competition venues are either pre-existing or temporary. The remaining 5% meet high environmental standards, including the use of low-carbon technologies and have been built with sustainable legacy uses, like housing, at the core. This is a stark contrast to past games, where new builds were the norm.”

What else I am reading

What the potential new US Democratic nominee, Kamala Harris, means for climate, plans for GB energy to turn a profit in five years, reporting on Scope 3 emissions remain a challenge and Frankfurt using skyscrapers, roof gardens and green facades for cooling.