The Iran War has given the travel trade a rare thing: a new stress test. A new report from Tourism Economics, produced for the Saudi-backed TOURISE platform, runs the sector through three ways this year could go, and the gap between them is where the money is.
The modelling, published in August under the title “Resilience in a World that Doesn’t Reset”, starts from a headline that ought to reassure anyone with exposure to long-haul: even under a renewed escalation, the analysts put the hit to global travel at around 1%. Tourism, on this reading, does not collapse. It reallocates. The question the report keeps returning to is not whether demand comes back, but how fast, how evenly, and at what price.
The report put the path forward in three ways, which in theory could be true or a version of them may come about considering the ongoing conflagration between Iran and the US .
Road one: the ceasefire holds
This is the base case the analysts build from the deal struck in mid-June. Airspace reopens, advisories come off, and traffic through the Strait of Hormuz resumes. Global travel still grows in 2026, at about 6% rather than the 8% expected before the war. Roughly nine in ten destinations worldwide still post annual growth.
The Middle East is where it stings. Regional inbound arrivals fall around 32% across 2026 before a sharp 51% rebound in 2027 as the base effect and pent-up demand kick in. For destinations outside the region, the picture is close to business as usual: 8% growth this year, 7% next.
What the trade should read into this: recovery under a ceasefire looks a lot like the recoveries that followed earlier geopolitical shocks, where a return to pre-crisis trajectories inside roughly 12 months is achievable if connectivity comes back quickly and travellers believe it is safe. The report is blunt that belief is doing heavy lifting here. Postponed MICE and large-scale leisure events, hosted in the second half of the year, function as confidence signals as much as revenue.
Road two: renewed hostilities
Here the ceasefire breaks in the second half of 2026 and the story stops being about safety and starts being about affordability. Global travel dips to around -1% for the year before recovering to 6% growth in 2027. The Middle East takes a heavier blow, with regional tourism activity down as much as 60% in 2026, then a violent 81% rebound the following year off that low base.
The mechanism is cost, not fear. Oil pushes above $150 a barrel and brushes $200 in the worst moments. Jet fuel climbs faster than crude on refining margins. Global consumer price inflation runs toward 8%, comparable to the 2022 energy shock, and central banks tighten into it. Consumer spending growth slows to about 1.5%. Travellers do not stop moving. They shorten trips, book later, trade down, and stay closer to home.
For operators, the read-across is a squeeze on the long-haul book and a premium on flexibility. Airfares under this path run up to 20% above pre-war expectations by late 2026. The report notes that most hotel and cruise operators are expected to absorb cost rises in the short term through yield management rather than blanket price hikes, which protects headline competitiveness but not margins.
Road three: sustained disruption
The third road is the one nobody sells brochures for. The conflict simply does not resolve. Periodic escalation, intermittent Hormuz blockades and persistent uncertainty become the weather rather than the storm. Global travel contracts around 3% in 2026 and stays soft into 2027. The Middle East sheds 64% of activity.
This is where the report changes register. Under sustained disruption, the analysts argue, tourism faces a structural rather than cyclical problem. Airlines redesign networks around the region instead of through it. Gulf hub airports, which handle roughly 14% of global transit traffic and sit on about a fifth of Europe-to-Asia connections, could see their competitive position erode if bypass routes become permanently embedded. Long-haul demand keeps growing, but slowly, and trips that traverse the affected airspace get longer and dearer for years.
The through-line across all three: confidence, connectivity and affordability decide the outcome, and they decide it in that order early and in reverse later.
Why it matters for the trade
Strip away the scenario architecture and the report is making an argument the trade should take to its next planning meeting: resilience has stopped being a risk-management line item and become a competitive advantage you can measure.
The evidence for that shift is in the diversification data, which is arguably the most useful thing in the document for anyone selling destinations. The combined market share of the world’s ten largest source markets has fallen from 54% in 2001 to 45% in 2025, while the number of markets needed to account for half of all international travel has grown from eight to fourteen. The global book is broader and steadier than it was. But the averages hide brutal concentration at destination level. In 2025, 41 destinations still leaned on a single source market for more than half their arrivals. The Bahamas and Mexico both sat at 86% dependence on one market.
The report’s two worked examples make the case better than any framework. Cyprus went into 2022 with Russia supplying over 27% of arrivals. After the invasion of Ukraine and sanctions, it pivoted hard into Central European and Nordic markets, watched Russia’s share collapse to 1% and Poland’s climb from 2% to 9%, and still posted record volumes in 2024. The United States ran the experiment in reverse: heavy reliance on Canadian and Mexican demand, a tariff dispute, Canadian share of US arrivals down from 31% in 2023 to 23% in 2025, and a slower, lumpier recovery than peers. Diversification, the analysts conclude, is no longer a growth strategy. It is a resilience strategy. For agents and DMCs, that is a portfolio instruction, not a slogan.
Two more findings earn their place in a trade brief. First, response speed is now a hard commercial variable: destinations that restore capacity, communicate clearly and demonstrate safety recover around 1.5 times faster than the norm, and average crisis recovery times have more than halved, from roughly 24 months in the early 2000s to 10 to 12 months today. Second, perception has decoupled from reality. In 2025, viral rumours of a Japanese “megaquake” drove booking declines of up to 50% from some East Asian markets with no scientific basis, and Hong Kong agencies reported falls of that order. Sentiment now moves faster than people, which makes misinformation a distribution problem as much as a comms one.
The Saudi frame
It is worth being clear about who commissioned this. TOURISE is powered by the Saudi Ministry of Tourism, and the foreword is signed by tourism minister Ahmed Al-Khateeb. The report’s integrated-resilience section leans on Saudi Arabia as its central case study, citing 37.2 million domestic and international tourists in the first quarter of 2026, up 8% year on year, and the Kingdom passing its 100 million annual visitor target seven years early. The report also cites a Consulum and HarrisX survey reporting that 93% of Saudi residents backed continuing Vision 2030 through the war, and that three quarters expected Gulf tourism to have recovered within three months.
Those are the sponsor’s numbers, and the trade should weigh them as such. The underlying modelling from Tourism Economics, an Oxford Economics company, stands on its own regardless. Read together, the message is coherent even if the messenger is interested: the destinations that treated recent shocks as a reason to broaden their source markets, harden their connectivity and invest through the downturn are the ones the data now rewards.
For tour operators, airlines and destination marketers, the practical value is that the report converts a geopolitical fog into three plannable states with numbers attached, and the planning implications diverge sharply. A ceasefire rewards those ready to move fast on capacity and events. Renewed hostilities rewards flexible fares, shorter-haul product and value positioning. Sustained disruption rewards whoever has already diversified away from Gulf-transit dependence. None of these are things you can arrange once the crisis has arrived. The resilient position is bought in advance, and the clearest commercial signal in the whole document is that the market has started paying for it. In a world that no longer resets between crises, that is the whole game.
For a full version of the report, see here.