URBAN TOURISM MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Market Size and Trends

Global urban tourism market is estimated to be valued at USD 6.98 TN in 2024 and is expected to reach USD 10.56 TN by 2031, exhibiting a compound annual growth rate (CAGR) of 6.1% from 2024 to 2031.

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Global urban tourism market is witnessing high growth due to rising trend of urban explorations and experience seeking among millennials and generation Z travelers. These people are more interested in uniqueness, discovering new places and immersing themselves in local culture. Many cities are coming up with varied offerings such as street food tours, niche interest tours and mixed reality experiences to cater to this dynamic segment. Cities are also enhancing connectivity and infrastructure to improve visitor experience. With rapid urbanization, many emerging cities in developing regions are promoting their heritage and culture to attract foreign visitors, and this drives the market growth.

Growing interest in culture and history

Urban Tourism Market, By Purpose of Visit (Leisure, Entertainment, Shopping, Cultural, Others), By Type of Activities (Sightseeing, Outdoor recreation, Dining, Nightlife, Others), By Type of Accommodation (Hotels, Hostels, Homestays, Others), By Geography (North America, Europe, Asia Pacific, Latin America, Middle East and Africa)

Market Concentration and Competitive Landscape

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The changing lifestyle preferences of people around the world is driving significant growth in the global urban tourism market. As people have higher disposable incomes and more paid leave opportunities, they are prioritizing unique experiences while traveling over conventional vacation activities. This thirst for new experiences is leading more tourists to flock to major cities instead of traditional beach or nature destinations.  Cities now offer an enormous variety of attractions that continually evolve and new hotspots emerge. Be it diverse cuisines, vibrant arts and culture scenes, intriguing architecture and infrastructure, trendy retail and nightlife or myriad niche experiences - global cities have it all and then some. The concentrated nature of all these urban pleasures within walkable areas adds to city breaks being action-packed yet convenient. Further, improving connectivity makes cities more accessible than ever before. These compelling advantages are drawing tourists in droves to metropolitan areas worldwide.

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Political uncertainty and conflicts across many regions can hamper the growth of global urban tourism market. When there are domestic or international tensions between countries, travel advisories are often issued cautioning citizens against non-essential travel. This discourages tourists from planning trips to cities located in unstable political environments due to safety concerns. Even cities in countries with overall stable governance may see a dip in tourist arrivals if these have a history of localized conflicts, protests or unrest. This negative sentiment affects travel decisions and destination choices.  Geopolitical risks pose a serious threat in curtailing the free flow of tourism worldwide. According to the data published by UNWTO in 2022, international tourist arrivals was increased by 4% in 2021 as many borders remained partially closed. While vaccinations helped reopen cross-border travel to some extent, ongoing conflicts actively held the sector back from reaching pre-pandemic levels of growth. According to the Global Peace Index 2022 Report by the Institute for Economics & Peace, the level of peacefulness declined globally during the assessment period driven mainly by increased political instability and conflicts in Europe, Middle East and Africa. Cities located in these regions consequently witnessed lower tourism growth.

 Market Opportunity: Developing new niche tourism products

Developing unique and specialized niche tourism products can drive the urban tourism market growth in the near future. As people seek new experiences post pandemic, niche offerings allow destinations to attract different segments of travelers and play a role in reinvigorating local economies. Cities can develop niche tours and activities centered on special interests like arts, culture, food, heritage, sports, or various experiential activities. Many cities now offer specialized bike, walking or running tours that highlight urban architecture, public art or green spaces. These experience-driven products appeal to both domestic and international travelers in search of immersive local engagements off the beaten path. Sustainable and socially responsible tourism is also a growing niche, as more travelers want to visit destinations and support businesses that have a positive community or environmental impact. Urban areas have an opportunity to promote niche products from community organizations, minority-owned start-ups or socially-driven enterprises. For instance, in 2022, according to the report by UN World Tourism Organization, culinary tours, workshops and experiences led by marginalized groups in cities can help to preserve cultural heritage and provide new livelihoods.

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In terms of purpose of visit, leisure segment is estimated to contribute the 43.8% share of the global urban tourism market in 2024, owing to people's growing need to escape their busy urban lifestyles periodically. With increasingly fast paced and stressful lives in metropolitan areas, leisure tourism satisfies the human urge to unwind and recharge through fun and relaxing activities away from home. While business and cultural travel fulfil important functions, leisure allows stressed individuals and families to explore new places solely for pleasure and enjoyment. The desire to experience nature, arts, entertainment and new cultures helps overcome monotony and replenishes one's mental and physical well-being. Ease of access to leisure facilities in other cities, courtesy efficient transport and accommodations infrastructure has boosted cross-city leisure travel substantially. Competitive leisure packages bundled with comfortable accommodations and diverse recreation choices have made leisure travel more affordable and enticing. Continued urbanization worldwide will sustain demand for periodic leisure getaways outside one's home city to maintain a work-life balance.

Insights, By Type of Activity: Outdoor experiences in urban jungles

In terms of type of activity, outdoor recreation segment is estimated to contribute the 39.7% share of the global urban tourism market in 2024, owing to individuals' growing interest in active and experiential activities while traveling in cities. Metropolitan areas are surrounded by expansive parks, reserves and trails that offer abundant opportunities for outdoor sports, hiking, cycling and others. As urban congestion and indoor living rises, tourists and residents alike seek refuge in the outdoors to explore nature seamlessly integrated within city limits. Modern infrastructure has made eco-tourism more viable and safe in urban surroundings. Outdoor fitness trends have boosted interest in open-air activities which help to relieve stress through fresh air and exercise. Sustainable urban design is augmenting accessible wilderness areas and adventure sports facilities near population hubs. Outdoor recreation allows tourists to appreciate diverse landscapes and attractions through active engagement versus passive sightseeing, while staying healthy on urban breaks. 

Insights, By Type of Accommodation: Comfortable accommodations for all budgets

In terms of type of accommodation, hotels segment is estimated to contribute 41.3% share of global urban tourism market in 2024, owing to reliability, standardization and affordability across wide price points. As established brands, hotels assure consistent quality of service, hygiene and facilities for both leisure and business travelers worldwide. Their vast network provides accommodation access almost everywhere, minimizing logistical hassles. While hostels target backpackers and homestays offer cultural immersion, hotels remain the default choice for most people due to confidence in established processes, global acceptance of loyalty programs and comfortable standardized rooms. Varied room tariffs in hotels also make urban travel attainable for all budgets from budget to luxury. Hotels invest heavily in amenities, locations, loyalty programs and partnerships that enhance guest satisfaction. Their scale provides economies for affordable standardized product despite high real estate costs in urban centers.

Regional Insights

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North America remains the dominant region in the global urban tourism market with estimated 34.7% share in 2024. Hundreds of millions of people visit major cities like New York, Los Angeles, Chicago and Toronto every year. The large population and wealth of the region has made urban centers hugely popular travel destinations. Furthermore, factors like ease of travel through major airports, high quality accommodation and tourism infrastructure are expected to drive the market growth. Cities in the U.S. and Canada excel in aspects like entertainment, arts, culture and dining which adds to their appeal. Strong brand recognition globally for iconic attractions and neighborhoods ensure a steady influx of tourists. However, high costs of living could impact certain travel budgets in the long run.

Africa has emerged as one of the fastest growing regions due to renewed interest from international visitors. Cities like Cape Town, Johannesburg, Cairo, Casablanca and Marrakesh are transforming themselves into compelling urban hubs. Political stability, growing middle class and improving connectivity in major nations have boosted arrivals. There is rise in travelers looking to experience cultures and landmarks less explored. Promotional initiatives by local administrations have spotlighted the abundance of natural and historical treasures. The diversity across regions and affordability relative to developed markets work to the advantage. Awareness about unique attractions through social media and travel influencers drives more traffic. Infrastructure development to aid tourism can help sustain the momentum if appropriately scaled up.

Market Report Scope

Key Developments

• In April 2024, Kochi Metro integrated with ONDC, thus, bringing innovation to urban travel
• On May 7, 2024, Voco Jim Corbett, India's first voco hotel, was opened. It is located on the Kosi River in the Dhilkuli region of Jim Corbett.
• Vivanta Jamshedpur: Opened on April 23, 2024, this hotel has 95 rooms with views of the hills
• In 2023, Tummoc partnered with redBus to simplify outstation travel with one solution

*Definition: Global urban tourism market consists of tourists who visit cities and large metropolitan areas for leisure and recreational purposes. This market focuses specifically on activities, attractions, events and destinations located within urban centers. It includes things like sightseeing at landmarks, visiting museums and art galleries, shopping, dining, and attending local festivals or concerts, experiencing the local nightlife and culture. The urban tourism market has grown significantly in recent decades as more people are traveling to cities to experience diverse cultures and unique urban environments around the world.

Market Segmentation

• Purpose of Visit Insights (Revenue, USD TN, 2019 - 2031)
  • Leisure
  • Entertainment
  • Shopping
  • Cultural
  • Others
•  Type of Activities Insights (Revenue, USD TN, 2019 - 2031)
  • Sightseeing
  • Outdoor recreation
  • Dining
  • Nightlife
  • Others
•  Type of Accommodation Insights (Revenue, USD TN, 2019 - 2031)
  • Hotels
  • Hostels
  • Homestays
  • Others
• Regional Insights (Revenue, USD TN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • URBAN TOUR
  •  Intrepid Urban Adventures
  • MakeMyTrip
  • Yatra
  • ClearTrip
  • EasemyTrip
  • Expedia
  • Thomas Cook
  • Riya Group
  • Thrillophilia
  • Travel Troops Global Private Ltd.
  • Flying Squirrel Holidays
  • SOTC Travel Limited
  • G Adventures
  • Hays Travel
  • Audley Travel
  • Go Travel
  • TransIndus 
  • Travelex 
  • Al Tayer Group