How will global warming affect the travel industry? By Investing.com

Investing.com – Climate change is set to reshape the travel industry, affecting destinations, costs and demand levels, UBS said.

UBS highlighted the growing challenges for both suppliers, such as airlines and hotels, and consumers as rising temperatures and efforts to combat emissions from global tourism.

The main impacts include higher travel costs as companies struggle to cut emissions amid increasing regulatory pressure. UBS estimates that Ryanair may need to raise ticket prices by 10% by 2030 to reduce environmental costs. Capital expenditures, such as investments in aviation fuel (SAF) services, could exceed $8 trillion globally by 2050, UBS said.

Rising temperatures are also changing travel options. In Europe, warmer summers could reduce tourism in Southern countries such as Spain, where a 1% rise in temperature is already affecting visitor numbers. UBS has warned that tourism in Spain could decline by 11% annually by the end of the century. On the other hand, cooler destinations, such as the UK, may see a small increase in tourism tax.

While opportunities exist for big players and less-affected destinations, climate change is a net negative for the travel industry, UBS said. The report highlighted the risks of industry consolidation, high risk premiums, and increased operating costs for companies in climate-prone areas.

UBS recommended targeting firms with strong balance sheets and climate resilience, while cautioning businesses in areas that rely heavily on climate-sensitive tourism.