As the global tourism sector rebounds from the impacts of the COVID-19 pandemic, investment in tourism infrastructure and hospitality has become increasingly attractive for most governments across the world. However, the private sector is equally playing an important role via investment funds. Various funds are set to leverage this growth with each focusing on a unique strategy. This article highlights the top five leading investment funds in the tourism sector. Some of these funds are public and privately led, but hold great potential for investors.
1. Defender Tourism and Hospitality Fund
The Defender Tourism and Hospitality Fund focuses on acquiring tourism and hospitality assets, including both passive investments and actively managed businesses. The fund’s portfolio includes destinations like Ballina Beach Resort and Stewarts Bay Lodge, among others. It hopes to deliver stable returns with a historical distribution rate estimated at 10% per year.
The fund aims to improve its operational systems to improve guest experience, which is necessary to maintain a competitive edge in the tourism industry. This is especially necessary as the tourism industry expects a surge in Demand as tourist arrivals are expected to return to pre-pandemic levels across the world. This aligns well with Defender’s goals as more tourist activity will support higher occupancy rates, driven by its CEO Darren Wolter whose ethos of the management involves adopting best practices to enhance guest experiences.
2. Saudi Arabia’s Tourism Development Fund (TDF)
The Tourism Development Fund (TDF) in Saudi Arabia is one of the major investment initiatives across the world and is attracting both local and international investors into the country. The TDF is pivotal in supporting luxury resort developments via partnerships such as those with Karisma Hotels & Resorts International. The partnership aims to develop multiple hotel projects across Saudi Arabia, which is contributing to the fund’s ambitious target of welcoming 150 million visitors by 2030. The TDf is designed to facilitate access to a range of tourism investments with a high potential to outperform the broader market especially as Saudi Arabia has a reputation
The TDF is designed to facilitate access to high-potential tourism investments, reflecting a broader government strategy to enhance Saudi Arabia’s reputation as a top global tourism destination. In 2023 alone, Saudi Arabia reached 100 million visitors, illustrating the rapid growth of the tourism sector and industry in the Kingdom. High demand spells better returns, especially as the fund views tourism as a hotbed for its development over the long run.
3. Enabling Tourism Fund (Victoria, Australia)
The Enabling Tourism Fund in Victoria is another notable investment initiative that is designed to support regional tourism initiatives with an allocation of up to $8 million for various projects. The fund focuses on first-people-lived experiences and tourism. The grant ranges from $20,000 to $500,000 which will enable local councils and organisations to develop feasibility studies, preparing them for larger investments. The fund reflects a growing recognition of the importance of sustainability and community-focused tourism initiatives. This is crucial as international tourism receipts reached
$1.4 trillion in 2023 such as those enabling the Tourism Fund to significantly enhance regional economies while promoting sustainability.
4. BlackRock’s Global Infrastructure Fund
BlackRock’s Global Infrastructure Fund is increasingly turning its attention towards tourism-related investments. It is particularly focused on sustainable investments that can support long-term growth in the travel and hospitality sectors. It aims to leverage its know-how and resources to generate strong yields of about 8-10%. This will be supported by the resurgence in travel demand post-pandemic. As global tourism rebounds, infrastructure investments like the ones undertaken by the fund will be necessary for boosting visitor volumes. The UNWTO finds that International tourism is nearing pre-pandemic levels, underscoring the need for better and improved services.
5. Brookfield Asset Management
Brookfield Asset Management is another key player in the tourism investment landscape with an investment strategy that focuses on high-quality hospitality assets across various markets globally. The fund emphasises sustainability in its acquisitions and management practices, favouring eco-friendly operations that are vital for future tourism demand driven by a surge in eco-tourism.
In 2024, Brookfield expects significant returns on its hospitality investments as a result of higher occupancy rates and increased spending on amenities. The fund anticipates that hotel revenues will grow by an average of 15% every year, driven by pent-up demand as travellers are eager to travel after the pandemic. The fund earned $2 billion in 2023, illustrating a potential to outperform in 2024 driven by a positive outlook.
The tourism investment fund sector in 2024 is characterised by a robust recovery following the pandemic’s disruptions and the ensuing recovery. Funds like Defender Tourism and Hospitality Fund, TDF in Saudi Arabia, and others are strategically positioned to capitalise on this growth through innovative approaches and sustainable practices that will lure a new generation of travellers. With global tourist arrivals projected to return to pre-pandemic levels, such funds stand to benefit financially while supporting local economies. These trends suggest that strategic investments in the tourism sector will play a crucial role in shaping the future of the industry and investor returns.
