Destination readiness: Preparing for the tourist flows of tomorrow

Tourism can help build a more connected, more vibrant world. But as tourism grows rapidly, the most visited destinations are experiencing more concentrated flows (Exhibit 1). Recent satellite data suggests that 80 percent of travelers visit just 10 percent of the world’s tourist destinations. The number of travelers and the frequency of their trips are only set to increase.

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A large flow of tourists, if not carefully channeled, can encumber infrastructure, harm natural and cultural attractions, and frustrate locals and visitors alike. Today’s tech-enabled travel landscape can exacerbate this issue: one eye-catching photo on a social media network can make a little-known attraction go viral.

Against this backdrop, now is the time for tourism stakeholders to combine their thinking and resources to look for better ways to handle the visitor flows of today—while properly preparing themselves for the visitor flows of tomorrow. We offer a diagnostic that destinations can use to spot early-warning signs about tourism concentration, followed by suggestions for funding mechanisms and strategies to help maximize the benefits of tourism while minimizing its negative impacts.

Carrying capacity and its impact on destination readiness

Carrying capacity refers to the maximum number of visitors that a destination can accommodate without causing harm to its physical, economic, and sociocultural environment or compromising the quality of visitors’ experiences. To effectively manage carrying capacity, destinations must first understand their specific limits—then actively work to stay within them.

When a destination exceeds its carrying capacity, the negative effects of tourism may begin to outweigh the benefits (Exhibit 2). Shutting down tourism isn’t always feasible or sustainable. Instead, destinations should focus on increasing their carrying capacity to enable more growth. By adopting early-detection mechanisms and attentively managing carrying capacity, destinations can strike a balance between welcoming visitors and preserving natural and cultural assets and quality of life for residents.

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In 2017, leveraging the growing availability of data about travelers, McKinsey, in collaboration with the World Travel & Tourism Council, developed a diagnostic tool to help spot early-warning signals that a destination is under stress from tourism.¹“Coping with success: Managing overcrowding in tourism destinations,” McKinsey, December 14, 2017. This year, we have updated this tool to address the evolving nature of the challenge and the accessibility of more nuanced and precise data (see sidebar “Methodology for assessing destination readiness”).

Starting with a list of 65 major, representative cities, we’ve separated locations into quintiles indicating levels of potential risk and negative impact stemming from tourism flows (Exhibit 3). While this data is focused on metropolitan areas, the approach can be replicated for all sorts of popular destinations—from beach towns to mountain villages to religious sites.

Destinations can be grouped into the four following archetypes, based on whether they are struggling with visitor flow and whether they have developed tools to manage it:

• Seasonally overloaded destinations pair high visitor concentrations with limited tourist-flow-management capabilities. These cities may have room to expand their visitor management tool kits to enhance the experiences of both locals and tourists. Representative examples include Cancún, Dubrovnik, and Marrakech.
• Increasingly stressed destinations currently receive limited numbers of visitors but exhibit signs of stressed infrastructure resulting from limited tourism flow management. These cities could both boost their visitor numbers and improve their visitor infrastructure. Representative examples include Los Angeles, Manila, and Mumbai.
• Actively managed destinations receive high concentrations of visitors and have developed robust visitor management flows in response. Continuous monitoring and innovation could help these cities continue to adequately manage carrying capacity. Representative examples include Amsterdam, Bangkok, and Dubai.
• Balanced-capacity destinations receive relatively fewer visitors but have already implemented sophisticated tourism-flow-management systems. These cities can focus on boosting their visitor numbers while actively monitoring the impact of this growth. Representative examples include Abu Dhabi, Lima, and Singapore.

Seasonally overloaded: Dubrovnik

Dubrovnik is an intensely seasonal destination, with roughly 20 times more inbound airline seats made available for sale during its peak season (July and August) than during low season (January and February). The density of vacation rentals can reach about 90 postings per square kilometer in summer. The city is a popular stop for Mediterranean cruises, and its small, history-laden center can experience concentrated tourist footfalls when a ship is in port.

Dubrovnik falls in the top quintile of risk in four of our six categories, although it has begun taking significant steps to combat overcrowding. The city recently banned new private-rental permits in its historic Old Town neighborhood to counter rising rent costs for locals,¹Sanjana Shenoy, “Croatia: Historic city Dubrovnik bans new rental permits to curb overtourism & help locals,” Curly Tales, March 15, 2024. and it’s also reorganizing cruise schedules to better stagger visitor flows.

Increasingly stressed: Mumbai

Mumbai is well positioned to capitalize on booming Indian tourism, but the city could benefit from building out its visitor-management-flow systems. Mumbai has the lowest tourism density relative to its population of all cities in our data set, yet visitors report some of the same concerns seen in more popular tourism hot spots, including long waits for entrance to attractions and a plethora of guides and vendors competing for attention. Road traffic is a major detriment to the visitor experience, with tourists in 2023 experiencing an average travel time of 20 minutes to cover ten kilometers.

The city has ambitious plans to reduce congestion with new metro and highway systems that could benefit both locals and tourists. It might have additional room to increase carrying capacity by addressing current visitor pain points—for example, by installing modernized metal detectors to smooth entry into major attractions or by creating centralized guide booths at attractions to help visitors find licensed guides.

Actively managed: Amsterdam

Given Amsterdam’s small geographic footprint, its extreme concentration of visitors puts significant pressure on local infrastructure—affecting the daily experiences of both tourists and residents. It has tried to actively manage tourism through measures such as its recently announced moratorium on hotel development¹Charlotte Van Campenhout, “Amsterdam bans new hotels in fight against mass tourism,” Reuters, April 17, 2024. and a ban on public smoking of cannabis in its red-light district.²“Amsterdam to ban cannabis outdoors in red-light district,” Reuters, February 10, 2023. It has also used marketing to promote less-well-known areas in an effort to channel some visitors away from the most crowded neighborhoods. Amsterdam uses data gleaned from social media and behavior tracked on its tourist-friendly city card to analyze tourist flows and spot areas under stress.

Balanced capacity: Singapore

Renowned for an automated metro train line, futuristic downtown core, and cutting-edge innovation, Singapore has the infrastructure, resources, and practices in place to grow and support larger tourism flows. It currently ranks 56th out of the 65 cities we analyzed in terms of inbound visits per square kilometer.

Singapore’s limited land mass does tend to concentrate visitor flows at top attractions, which could affect experiences at these sites for both tourists and residents. Recent development projects have expanded the depth and breadth of tourist offerings, creating new attractions that could help increase the city’s carrying capacity and keep it primed for future growth.

Exhibit 3

Funding destination readiness

Once the need for destination readiness has been identified, questions turn to funding. Destinations should carefully consider which sources and mechanisms to use to generate the revenue needed to address the impacts of tourism—and ensure that the burdens don’t fall disproportionately.

Devise permit systems for individual attractions

Requiring visitors to obtain a paid permit before viewing an attraction can generate revenue while simultaneously helping to manage capacity. Permitting systems are most effective in places where demand frequently exceeds capacity and, if left unchecked, could risk causing harm to ecologically or culturally sensitive locales. Galapagos National Park in Ecuador, for instance, uses a strict permitting system with entrance fees that are applied directly toward preservation efforts.

A potential downside of permit requirements is the financial barrier for tourists who have less ability to pay. Many destinations have instituted lotteries that govern the opportunity to purchase an affordable permit, though this also reduces the funding generated by this strategy. It’s worth noting that there can be limits to the effectiveness of permitting systems: Mount Everest’s sky-high fees haven’t reduced demand from climbers.

Capitalize on major, one-off events

The city of Vancouver was able to use the planning process for the 2010 Winter Olympic Games as a catalyst to unlock government funding for long-desired infrastructure development—including road and train projects that had been stalled for more than a decade. While there’s risk that any given future mega-event won’t lead to sustained tourism demand, it can lead to lasting infrastructure improvements that benefit locals²Nelson Bennett, “Path to 2010 Olympics built from asphalt, steel,” Vancouver Is Awesome, February 11, 2020. for years to come.

Explore public–private partnerships

Destinations can pursue public–private partnerships to accelerate development and spread out risk. Common examples of this approach include cofunded or cobuilt event centers or museums. Exclusive concessions established and granted by destinations can provide revenue-generating opportunities to operators or leaseholders in exchange for financial returns and other commitments, such as pledges to sustainably develop and maintain a location or to support local education, infrastructure, and healthcare.

Ensure proceeds from tourism are invested where they are needed

Cities shouldn’t underestimate the strain on waste, water, and road infrastructure that tourism can create. In places where visitors significantly exceed local populations, tourism tax revenue can be budgeted into core municipal expenses, such as road maintenance and waste management, so that repairing wear and tear caused by visitors doesn’t fall entirely on locals. Tourism taxes and entry fees can be redistributed to local communities or used for preservation or restoration projects.

Managing capacity and mitigating negative impacts from growing tourist flows

After risks and funding sources have been identified, there are several promising strategies that the tourism ecosystem can employ to prepare for growing tourist volumes. They are most effective when coordinated across a broad set of stakeholders, including city governments, destination management organizations, hospitality companies, experience providers, transportation authorities, and airlines:

• Build and equip a tourism-ready workforce.
• Use data to manage and forecast visitor flows.
• Be deliberate about which tourist segments to attract.
• Distribute visitor footfall over space.
• Distribute visitor footfall over time.
• Be prepared for sudden, unexpected fluctuations.
• Preserve cultural and natural heritage.

Build and equip a tourism-ready workforce

Preparing a tourism workforce goes well beyond making sure that staff at a reception desk are polite. Tourism stakeholders should strive to ensure sufficient labor supply by fostering interest in the tourism sector, training entry-level workers in soft skills, and providing ample opportunities for career advancement. Training can be a collaborative effort by the public and private sectors.

Africa’s not-for-profit Female Guide program partners with leading safari providers to sponsor, train, and employ African women who are interested in conducting safari tours.³Sandra MacGregor, “I went on a safari in Botswana with a female guide—here’s why it made all the difference,” Travel + Leisure, December 23, 2023. The alcoholic-beverage company Diageo hosts training for hospitality students near Da Nang, a tourism hot spot in Vietnam, covering bar knowledge, teamwork, and customer service skills.

Regulating and credentialing locals who are part of informal tourism economies can help raise service standards and create more positive tourist experiences. For example, Singapore’s efforts to legalize and license street vending resulted in UNESCO recognition of its street hawker culture.⁴“Hawker culture in Singapore,” National Heritage Board, accessed May 2024.

Use data to manage visitor flows

Destinations can build and continuously improve holistic data monitoring and forecasting systems. Data can be gathered from governments (visa tracking), businesses (accommodation bookings and event ticket purchases), social media platforms (user behavior), and other sources. Crowd monitoring tools can provide real-time data about the location of mobile phones to help forecast and manage visitor flows.

Some destinations provide value in exchange for data. For instance, the I amsterdam City Card offers tourists access and discounts to attractions while tracking where the card is used (see sidebar “How Amsterdam handles its tourist flows”).

How Amsterdam handles its tourist flows

Geerte Udo was CEO of Amsterdam & Partners until earlier this year, when she stepped down after 17 years. Amsterdam & Partners is a public–private foundation that focuses, in part, on managing tourism in the Amsterdam metropolitan area. McKinsey spoke with Udo about Amsterdam’s efforts to handle its large tourist flows. The following is an edited version of the conversation.

McKinsey: How does Amsterdam balance the positive aspects of tourism with some of the challenges that hosting large numbers of visitors can create?

Geerte Udo

Headshot of Geerte Udo

Geerte Udo: We’re very lucky in that we have a beautiful city that sells itself. People want to come here. And the visitor economy has a lot of benefits. It creates jobs, it pays taxes, and 30 percent of our public transport is financed by visitors. Our residents love the cultural infrastructure we have here, and we couldn’t support it by ourselves. We love the diversity and quality of our restaurants and bars, which are also supported by visitors. We need our visitors because they raise the quality of life for our residents.

But there are elements of the visitor economy that can harm the quality of life in the city. We’re seeing more and more visitors because the general income of people across the world is rising, and everybody wants to travel. Like other European cities that are old harbor cities with narrow streets, we have moments where we deal with overcrowding. This is mostly in the old city center, on a few narrow streets, at certain days and times. But the public space there isn’t well organized and can’t handle the number of people who want to go there.

Another issue we have is nuisance. Our city has a reputation: if you want to have a party, come to Amsterdam. It can be very annoying for residents in certain neighborhoods when visitors come to party from Thursday through Sunday evening. It makes it hard for people to live there.

There’s also an issue with managing the amount of waste in the city. Because we have more guests, there’s more waste in the street. And there’s a separate issue with private, short-term rental properties, which can sometimes crowd out housing that’s built for residents.

McKinsey: Are you able to gather data and use it to get insights that can help you handle tourist flows?

Geerte Udo: We have a lot of sources of data. At a European level, we share data with 110 European cities to see what the latest traveler trends are. We can learn from one another and understand, for instance, if a trend is only happening in the northern part of Europe or also in the southern part. More locally, we have a national data center that can tell us how many people visit the city, how long they stay, which countries they come from, their ages, and other factual information.

Our organization also does its own research on visitor behavior. For instance, we sell an I amsterdam City Card. It gives visitors free access to public transport, museums, and various attractions. We sell about 150,000 to 200,000 cards a year, and because people need to check in with our card at the locations, we can see their movement patterns. Over time, we’re able to anticipate when and where people will go. For instance, many people visit museums in the morning and then go on a canal boat ride in the afternoon. We can advise first-time visitors to reverse that order because they’re likely to have better, less crowded experiences that way.

But nudging people only works if you can connect to their needs. We wouldn’t tell a first-time visitor to venture out to a neighborhood that’s not well-known—we understand that if they’re here for the first time, they really want to see the highlights. Whereas if you’re here for the third time, and we know what you’ve been doing and a little bit about your preferences, we can guide you to other neighborhoods and areas we think you’ll enjoy.

We know from data that there’s a trend in behavior where, after 2.4 days, people are often ready to explore beyond the city. This number is similar in other cities, as well. After 2.4 days, people start to ask, “Can you show me where I can get some fresh air for a half day?” And we can then offer them guidance on visiting beaches, windmills, and so forth.

McKinsey: What are some mitigation strategies that you’ve tried or considered?

Geerte Udo: One thing we’ve put effort into is branding and marketing concepts. If people come to our city thinking that everything is in the canal district, it’s hard to guide them to other areas. So we’ve tried to build our image into much more than the canal district, expanding interest into other areas that all have different identities and different flavors.

There have been years of discussions about gating certain areas and charging fees to enter them. That might help generate revenue that the city can spend on cleaning streets and improving the subways, which would be beneficial for the tourism industry. But in my opinion, charging fees or raising tourist taxes won’t reduce visitor numbers at all.

We’ve spent a lot of time with city hall looking into the best ways to organize public spaces. For a long time, urban planning didn’t even take visitors into account when thinking about how to arrange public space. To truly manage visitor flows, there needs to be a bigger-picture, integrated approach to how a city is organized.

None of this will reduce the number of travelers because travel is growing so fast. But we can guide visitors to disperse them across time and space, minimize overcrowding, and put less pressure on the old city center. I think guiding and spreading tourism really can work if we manage to match supply and demand.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

Be deliberate about which tourist segments to attract

Different tourists arrive with different kinds of baggage—literally and metaphorically. Destinations can be strategic in identifying the types of tourism they want to encourage. Some destinations might welcome (and be able to handle) party crowds, while others might be more interested in attracting families or older travelers. Destinations should work to understand the demographics, preferences, and behaviors of their target customers before tailoring offerings and communications that will appeal to them.

Bhutan requires a sustainable development fee of $100 per day from visitors. This requirement serves to limit the number of visitors and their impact on the small nation while simultaneously creating a sense of exclusivity that spurs increased interest from international travelers.

Distribute visitor footfall over space

Nudging tourists to visit less trafficked areas can help ease congestion at the most famous and popular attractions. This can work at a neighborhood level: pop-up experiences and off-the-beaten-path tours hosted by local guides can entice tourists to explore farther afield. It can also work on a wider geographic scale: TikTok’s “destination dupe” trend surfaces less expensive, less crowded locales that offer many of the same experiences as more crowded destinations (for instance, Taipei instead of Seoul).

Marketing campaigns can frame a destination as a place where visitors chart their own paths. The “I amsterdam” campaign, for example, encourages tourists to create their own personalized versions of the city. AI-powered tools can help craft bespoke itineraries based on visitors’ preferences and interests, matching travelers with unexpected neighborhoods, accommodations, and restaurants that will appeal to their individual tastes.

Developing accommodations and attractions in less dense areas by repurposing assets can also help distribute footfall. Istanbul helped facilitate the restoration of a 1930s tobacco factory and warehouse that became a hotel. The Maboneng Precinct in Johannesburg was a run-down cluster of warehouses before being repurposed to create art galleries, restaurants, and retail spaces.

Distribute visitor footfall over time

Seasonal concentration of tourist activities can cause inefficient use of infrastructure and overload destinations’ ecological, social, and cultural systems. Forty-three percent of travelers already choose to travel off-season to avoid overcrowding.⁵“How to travel: a look at sustainable travel habits,” Booking.com, October 3, 2023. Stakeholders can take steps to encourage even more shifting of visits to off-peak periods. Iceland, for instance, has heavily promoted winter visits to see the Northern Lights, drawing on collaboration across the entire tourism ecosystem—from tour operators developing ice cave excursions to airlines promoting reduced winter airfares.

Distributing visitors across hours is another powerful strategy. The Hanauma Bay Nature Preserve in Hawaii has timed reservations, which smooth visitor numbers across the day and enable a better experience for all. The Petra archaeological site in Jordan has taken a different approach: by creating an evening light and sound show, this popular attraction has expanded the breadth of attractive visitation times.

Because domestic travel represents the bulk of trips, governments might be able to help distribute visitors by carefully managing holiday schedules. For example, the French government has split school holidays so that different regions are on break at different times, which helps mitigate overcrowding during ski season.

Be prepared for sudden, unexpected fluctuations

A viral social media post can send travelers flocking to a destination that might not be prepared for the influx. One beautiful block in Brooklyn’s Dumbo neighborhood earned the nickname “selfie street” when visitors—having seen other tourists’ picturesque selfies on social media—flooded it with phones in hand. Footfall data shows that Dumbo saw an 86 percent increase in visits from 2022 to 2023.

In some instances, this type of behavior can cause significant harm. Access to the secluded Burney Falls waterfall in Northern California was shut down this year in part because of trail damage caused by heavy visitor flows. Data shows that interest in this photogenic spot took off on social media during the COVID-19 pandemic, with peak season in 2023 seeing three to four times as many weekly visitors as in 2019.

Destinations should keep tabs on social media activity and cultural trends that pertain to them. They might consider developing playbooks in advance with planned procedures for handling viral surges. Local tourism stakeholders can attempt to anticipate this type of sudden interest and actively channel it in ways that will mitigate negative impacts. It’s important to be mindful that virality can have different levels of staying power—ranging from a brief phenomenon to an enduring trend.

Preserve cultural and natural heritage

Destinations need to weigh considerations of both accessibility and preservation as they manage tourists’ engagement with natural and cultural attractions. One option is to designate culturally or ecologically significant land and then engage locals in finding ways to strike this balance. Legally protecting lands is a long-standing conservation practice, and governments have increasingly turned to Indigenous populations to better understand cultural sensitivities around specific sites. For example, Indigenous Tourism Alberta partners with Indigenous groups to offer tourists authentic experiences—such as fishing, jewelry making, and hiking—while minimizing negative impacts on nature and culture.

Although tourists often prefer to roam freely around natural sites, limiting access—either geographically or temporally—can be critical to preservation. Creating specific pathways (with showcases for educational material along the way) can allow guests to safely and efficiently walk through a site without causing damage or disturbing wildlife habitats. Sometimes a digital substitute can be an effective solution: Digital Giza lets tourists experience a re-creation of the Egyptian tombs without needing to actually enter them.

Sensitive areas can be closed for predetermined time periods to allow for rejuvenation and sustainable development. And naturally seasonal sites can take advantage of off-peak downtime to fully close and refresh attractions. For example, the Inca Trail in Peru shuts for one month every year during the rainy season to allow nature to recuperate from heavy footfall on the trail. Ideally, these downtimes should be established preventatively and communicated to tourists well in advance, but in some instances, they may need to be prescribed on short notice to prevent imminent damage or rectify harm already done.

As global travel continues to grow, it’s crucial for stakeholders in the tourism ecosystem to be ready for the challenges that could arrive alongside increased visitor flows. By understanding the risks and opportunities, implementing funding strategies, and collaborating across sectors, popular destinations can take steps to preserve their cultural, economic, and environmental assets.