Although international visitors to Azerbaijan are projected to remain slightly under pre-Covid figures by the end of the year, the travel and tourism sector overall is expected to exceed 2019 levels, powered by a surge in domestic travel, according to the latest Economic Impact Research (EIC) from the World Travel and Tourism Council (WTTC).
1. Direct vs total contribution to GDP
While the UN Statistics Division-approved Tourism Satellite Accounting methodology only takes into account the industry’s direct contribution to GDP, the WTTC report takes into account the total GDP contribution of the travel and tourism sector, which is more than double the former.
The direct contribution, which only amounted to AZN2.7 billion (€1.47 billion) in 2023, representing 2.4% of the country’s GDP, reflects the “internal” spending, which is the total spending within a particular economy on travel and tourism by residents and non-residents for business and leisure purposes, as well as government individual spending, which is spending by government on travel and tourism services directly linked to visitors, such as cultural, for example museums, or recreational, for example national parks.
The total contribution on the other hand, which amounted to AZN6.9 billion (€3.7 billion) in 2023, representing 6.1% of the country’s GDP, includes “wider impacts” on the economy, such as:
- Travel and tourism investment spending – an important aspect of both current and future activity that includes investment activity such as the purchase of new aircraft and construction of new hotels;
- Government collective spending, such as tourism marketing and promotion, aviation, administration, security services, resort area security services, resort area sanitation services;
- Domestic purchases of goods and services by the sectors dealing directly with tourists, including, purchases of food and cleaning services by hotels, of fuel and catering services by airlines and IT services by travel agents.
By 2034, direct contribution is expected to only grow to AZN6.8 billion (€3.66 billion), representing 4.1% of GDP. Indirect contribution on the other hand is expected to grow to AZN16.6 billion (€8.9 billion), representing 10.1% of the country’s GDP. This however is “only possible if the government works with the private sector to make Azerbaijan an attractive destination for international visitors and provides viable long-term employment to Azerbaijani residents”, the WTTC highlights.
“Azerbaijan’s travel and tourism sector is on an impressive rebound, led by the robust growth of domestic and international tourism”, said WTTC President and CEO, Julia Simpson. “The Azerbaijan Tourism Board has supercharged its presence at international tourism fairs, showcasing the very best of Azerbaijan. With continued support and collaboration, Azerbaijan is well-positioned to exceed pre-pandemic levels and become a must-visit destination over the coming years.”
2. 2024 outlook
Considering total contribution, the report has found the sector’s contribution to Azerbaijan’s GDP is forecast to grow more than 28% this year to reach AZN8.9 billion (€4.8 billion), 5.3% over 2019 levels. This is powered by domestic tourism, which is expected to lead the sector’s growth this year, after a strong recovery in 2023, while international travel spend is still just below pre-pandemic levels.
Domestic visitor spending is expected to rise 12.5%, to reach AZN3.7 billion (€2 billion), more than 25% over 2019 levels. Although international visitor spending is anticipated to reach AZN4.1 billion (€2.2 billion) with a 52% surge, it will still be 6.1% behind 2019.
Despite the lagging of international tourism figures, overall, jobs in travel and tourism are predicted to increase more than 12% to reach 437,600, 8.4% more than in 2019. This is partly propelled by the COP29 climate summit, which takes place in the capital city of Baku in November and during which the country expects a tourism boom. Besides increasing the accommodation offer and creating tourist routes specially curated for conference attendees who will want to explore the country between COP29 days, Azerbaijan has also launched special visas for the event.
Fuelled by COP29 as well as the Formula 1 race, which will take place on the Baku City Circuit in September, Deputy Chairman of the Board of the Azerbaijan Tourism Bureau, Javanshir Bayramov, expects a return to 2019 tourism levels by the end of 2024. The year seems on the right track so far, with the month of February already exceeding pre-pandemic visitor numbers, the month of May only a small percentage behind and the rest of the less well-performing months expected to be easily compensated by autumn’s events.
