Travel and tourism industry

Industry Snapshot

GENERAL INDUSTRY: Hospitality and Tourism

CAREER CLUSTER: Hospitality and Tourism

SUBCATEGORY INDUSTRIES: Convention and Visitor Bureaus; Cruise Lines (to and from Domestic Ports); Cruise Lines (to or from Foreign Ports); Other Travel Arrangement and Reservation Services; Tour Operators; Tourism Bureaus; Travel Agencies

RELATED INDUSTRIES: Airline Industry; Hotels and Motels Industry; Passenger Transportation and Transit Industry

ANNUAL DOMESTIC REVENUES: $198.70 billion USD (Statista, 2024)

NAICS NUMBERS: 5615, 483112, 483114

Summary

Travel and tourism is one of the world’s largest industries and one that continues to grow. It serves the needs of those who choose to be, or must be, temporarily away from their homes. The industry includes travel agencies, public and private tourism enterprises, cruise operators, group tour packagers, and packaged vacation providers such as Club Med and Sandals. The travel and tourism industry also meets the special interests of business travelers, ecotravelers, adventure travelers, and senior travelers, to name a few target markets. Travel industry professionals must help their clients select the best products from an ever-expanding menu of available options.

History of the Industry

The first known professional tour operator was Thomas Cook, a Baptist missionary, who in 1841 made all the travel arrangements for a British group traveling from Leicester to Loughborough and back to attend a temperance meeting. By the end of the nineteenth century, Thomas Cook and Son was a successful company escorting travelers around the world. Carlson Wagonlit Travel began in 1872 as Wagon-Lits (from the French term for a sleeping car, wagon lits) because the founder, Georges Nagelmackers, added sleeping accommodations to his rail cars. The Ask Mr. Foster company came on the scene in 1888. Other companies followed, but the industry grew slowly.

During the early decades of the twentieth century, the so-called golden age of travel lured the privileged few to travel on the Orient Express and other storied trains. Some chose safaris in colonial Africa, and the European Grand Tour was still considered an essential part of the education of the wealthy. Travel service providers emerged to serve these travelers. Most travelers were still of the armchair variety, enjoying their adventures vicariously through the works of Marco Polo or Mark Twain.

For most Americans, however, such journeys were impossible. Not only were they prohibitively expensive, but also, in the days before air travel, most people lacked the time to leave their daily lives and jobs to board an ocean liner and spend weeks reaching and traveling in Europe. Playgrounds outside North America remained off limits to the average vacationer. While visits to far-flung relatives or a week at Yellowstone were considered travel, such jaunts required no travel agents or other industry professionals. The family gassed up the car, or boarded a train. As recently as 1950, fewer than 10 percent of Americans had passports.

The United States’ growing prosperity and the emergence of air travel opened the world to more people, and the travel industry simplified reaching it. Travel agents wrote tickets and made hotel reservations. They bought packaged tours for their clientele. Vacationers going abroad had once satisfied their wanderlust in Western Europe, but Asia, Africa, and Australia now beckoned. Corporate travel expanded to the extent that large companies often had in-house departments to take care of travel arrangements for their increasingly mobile executives and managers.

The cruise segment of the travel industry began as a necessary means of transporting people from one side of the ocean to the other, usually from New York to London. Accommodations varied greatly aboard grand old ships such as the Queen Mary. Most passengers sailed second or third class, while those traveling first class had “POSH” stamped on their tickets. POSH stood for “Port Over, Starboard Home,” meaning that in addition to receiving upgraded quarters and amenities, they would travel on the sunny side of the ship both ways; the term found its way into the lexicon as a synonym for "luxurious." In 1912, four days into its maiden voyage, the Titanic hit an iceberg and sank off the coast of Newfoundland. The death toll was 1,517, including many poor emigrants who had booked passage to North American in the less well-appointed sections of the ship. Among the survivors was Denver socialite Molly Brown, whose Titanic adventure was chronicled in the musical The Unsinkable Molly Brown.

As air travel increased, travel by ship decreased as a means of point-to-point travel until the emergence of the cruise industry—which featured attractions aboard ships, as well as those at ports of call. Fueled in part by the long-running television series The Love Boat, cruising surged in popularity until, by the late 1990’s, millions of vacationers were choosing that form of travel. Cruisers were likely to be repeat customers. Once clients experienced the entertainment, food, spas, casinos, and other amenities of modern cruise ships, they wanted to do so again. Dollar for dollar, cruises represented good value, and the passenger had to unpack only once. More and bigger ships appeared each year, and they began traveling to places such as Alaska, not just the tropics. Operators of river barges began taking people down the Danube and other European rivers, offering yet another type of cruise competing for tourist dollars.

The Industry Today

New interests and greater opportunities have changed the industry. Following the end of the Cold War, new destinations opened up to tourists. Russia and other countries of the former Soviet Union became popular European destinations. Westerners are now visiting Asian nations such as Thailand, Korea, Vietnam, and Cambodia, countries brought to their attention by U.S. involvement in events happening there.

While travel and tourism soften during economic downturns such as the global recession of 2007–9 or the upheaval brought about by the 2020 COVID-19 pandemic, they experience growth with the growth of new middle-class travelers in newly developed nations. In the United States, as in many other countries, tourism is the primary generator of revenue in many communities, where it drives the profits not only of the travel and tourism industry itself but also of the hotels and motels industry, the restaurant industry, the outdoor recreation industry, and many local retail industries. Taken together, these various industries represent one of the largest sectors of the economy in the United States and in many other countries.

Despite cutbacks driven by recession, reduced corporate travel, and fear of terrorism, the travel and tourism industry is viable and will remain so. Some demographics, retirees, for example, tend to be less affected by downturns in the economy, and they are still traveling in large numbers.

In the twenty-first century, the industry has undergone major changes that are due in large part to Internet companies that allow people to act as their own travel agents. The proliferation of self-help travel sites on the web continues. Travelocity, Orbitz, and Hotels.com are but a few of the companies that rendered the old-style travel agent obsolete. They triggered the end of travel agencies with mall or storefront offices that depended on walk-in trade. Travel agents and agencies reinvented themselves to fit the times, offering specialized services to niche markets. Some large companies remain, however, allowing home-based agents to affiliate with larger entities and gain the right to issue airline tickets. Even the online companies engaged in travel arrangements need employees. Today’s savvy travel agent knows everything there is to know about a small and identifiable segment of the travel market, such as honeymoon destinations, river rafting, ecotravel, adventure travel, inn-to-inn walking vacations, archaeological explorations, or deep-sea fishing.

Cruising still draws heavily from the senior population, a market segment that reached more than 41 million by 2011 and is expected to reach 92 million by 2060, according to US Census Bureau projections. Many of these people like the idea of unpacking only once, having their shore excursions preplanned, and enjoying a plethora of activities while at sea. Segments of the cruise industry have adapted to meet the more sophisticated demands of special-interest cruisers. Themed cruises are available for singles, the physically challenged, opera buffs, art and history lovers, and murder mystery enthusiasts, to name just a few. Luxury cruises on small vessels where the staff-to-passenger ratio is about one to three appeal to the affluent. “Barefoot cruises” on small vessels, where passengers participate in sailing the ship and preparing the food, attract a younger, more adventurous clientele. Those with unlimited time can indulge in around-the-world freighter cruises.

Another major industry segment is packaged tours, a broad category that includes everything from industry giants such as Globus and Trauck, which offer escorted coach tours in all the tourism hot spots, to individuals who put together themed walking tours of their hometowns—Al Capone’s Chicago, for example. Globus reports that its clientele has become discerning over the years and demands authentic experiences, unique to a given region. For example, a group visiting Moscow may be more interested in dinner with a true Russian ambience, with caviar and vodka, than in the familiar fare offered by the local Hard Rock Cafe. Visitors want to browse in Russian amber shops and look for nesting dolls or Fabergé-style eggs.

Here, too, specialization is gaining in popularity. Tourists enjoy being with a coachload of people who have purchased a travel package based on shared interests, rather than having to work at finding common ground with their fellow-travelers. Singles trips are popular, not to meet possible mates but to avoid expensive “single supplements,” surcharges levied by many tours to make up for lost revenues when there is no double occupancy. The more exotic a locale, the more its tourists seek the perceived safety of organized tours. It is one thing for a Westerner to sightsee independently in London but quite another for the same person to do so in Ho Chi Minh City, Vietnam.

Twenty-first-century travelers are informed, know what they want, and will continue to patronize those providers able meet those special needs. They are equally loyal to successful providers in related industries, such as airlines, restaurants, hotels, motels, and themed entertainment venues. One example of a fast-growing travel market is ecotravel. Many of today’s travelers are choosing to leave smaller carbon footprints. They want accommodations with green practitioners who share their concerns. Hunting safaris are losing favor, while photo safaris are gaining in appeal. Some travelers seek total immersion in a different culture and choose home stays over traditional hotels. Industry professionals must keep abreast of the times and adapt to their clients’ wishes.

Medical tourism has also risen to prominence, as Americans without adequate health insurance seek lower-cost treatment in India, Thailand, Mexico, South Africa, and the Caribbean, among other destinations. This market segment is expected to see rapid growth in the years to come. The travel professionals best able to evaluate those offshore clinics and advise traveler-patients seeking medical attention may reap huge rewards. Industry insiders are split in their views of how the Affordable Care Act will affect the numbers of Americans engaging in medical tourism: some believe there will be an increase, others a decrease, and still others no effect

Financial considerations have also changed the way people vacation. Fluctuating fuel prices have caused some recreational vehicle enthusiasts to stick closer to home and explore their own states or geographic regions. This means local tourism promoters now court their neighbors, as well as potential clients across the country. The travel and tourism industry is poised for growth and is continuously evolving as it develops new travel products and new twists on the old. Its success will depend on offering something different, seamless service, and good value for money spent.

Industry Outlook

Overview

The outlook for the travel and tourism industry shows it to be stable in some areas and in decline in others. The industry was severely affected by the 2020 COVID-19 pandemic, which saw the implementation of lockdowns and travel bans to prevent the spread of the disease, but as of 2022, the industry had rebounded and resumed growing.. Corporate travel has lessened, as companies have tightened their belts, but not all business travel can be eliminated. A large portion of it is conducted in the pursuit of sales, so the need exists to continue or even increase such travel. In addition, couples are choosing parenthood later and taking more vacations before becoming encumbered with families. That said, family travel represents a sizable chunk of the industry, and families will continue traveling, though they may make budgetary adjustments such as exploring their home states’ riches and postponing the trip to Disney World.

The BLS projects that the number of jobs for travel agents in the United States will increase by 3.5 percent between 2022 and 2032.

The cruise ship segment of the industry snowballed between 2002 and 2009, when approximately forty-seven thousand cruise ship jobs were created. With new and bigger ships coming, it would seem that almost anyone could find a job in this industry sector. However, most of these jobs are at the low end of the scale, involving cleaning, food preparation, and so on. Turnover is high on cruise lines, as most who work on these ships do not intend to make doing so a permanent career. As a result, there are always openings, as workers go back to school, start a family, or decide to put down roots on land.

It is predicted that growth will continue in other areas of travel and tourism, particularly exotic and luxury travel, as that market is less affected by the economy. Medical tourism will grow as well. Travel for volunteerism and humanitarian purposes has mushroomed in the wake of Hurricane Katrina and the devastating earthquakes in Haiti and South America. People with time and disposable income feel a responsibility to help. While that category of traveler does not spend lavishly, they can help keep the industry afloat during difficult economic times.

Another industry threat is the ever-present danger of terrorist attacks. Increased security will help ease fears, but there are some who will not fly unless absolutely necessary. This may be a boon to the cruise industry, as departure ports can be reached by car. People will continue traveling, but they may look for creative solutions to safety and economic issues. The industry, too, must find creative ways to make travel appealing.

Some trips cannot wait. Travel professionals may reach out to those who want to treat children and grandchildren to an extensive multigenerational trip. There is a small window of opportunity when the kids are old enough to appreciate the wonders they will see and still young enough to want to take such a trip. Such trips are often planned around a milestone birthday or wedding anniversary, and that, not the state of the economy, dictates when the trip will be taken.

Employment Advantages

Tourism is one of the largest drivers of revenue in the United States. Thus, opportunities will always exist for those seeking employment in tourism-boosting professions, which remain crucial to the health of regional economies. The BLS reports that the median annual wage for travel agents in 2022 was $46,400. However, published salary ranges can be misleading, as lodging and meals can be part of one’s compensation package while traveling. Some industry professionals, tour guides and escorts for example, also receive tips.

Not all advantages are monetary. Entrepreneurs enjoy independence. Some choose to work only part of the year and specialize in locations with peak seasons. There is room for laidback individuals to work extremely hard for shorter periods of time, just as there is room for careerists who wish to work long hours to reap great rewards. Those afflicted with wanderlust—who are the most likely to seek jobs in this industry—can see the world while showing it to their coach or cruise ship passengers. Whether self-employed or an employee of a large agency, an employee in this industry will likely have great opportunities to travel. “Fam” trips are a mainstay as resorts, hotels, attractions, and even governments invite agents to their destination in the hope those agents will steer clients to the destination.

Annual Earnings

According to Statista, the domestic travel and tourism industry was projected to earn revenues of $198.70 billion in 2024. This was a far cry from the height of the COVID-19 pandemic in 2020, when global tourism dropped by about 73 percent compared to the previous year. The global tourism slowdown continued into 2021, but later began to rebound.

As many agents and other travel professionals are self-employed, it is difficult to gauge their earnings. Jobs often pay commissions, not salaries, and some work only part time. Commissioned sales representatives or travel agents earn less during lean years but can make up for it when business is good. This requires strategic planning and preparing in advance for slow periods.

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