By Georgina Davies, Communications Manager, Travel Forward (formerly the Travel Foundation)

We hear a lot about destination resilience in the face of our changing climate, but how often do we discuss the financial solutions needed to make that resilience a reality? From flood defences to new governance structures, nature restoration to staff training, the investment needed is huge. The question for destinations is no longer whether they need to adapt, but how they will pay for it.

Tourism is entering a period of profound change. Climate change is no longer abstract, or distant. It is here now, driving record-breaking heat waves, floods, droughts and wildfires that increasingly affect everyday life. In the last month alone, headlines have ranged from deadly 48°C temperatures in India to unusually early and intense heatwaves across Europe.

These events no longer feel exceptional. They are becoming a constant backdrop to how people live, work, and travel. For many destinations, particularly those whose economies depend on tourism, the implications are impossible to ignore. Climate change will increasingly impact where people travel, how destinations operate and how liveable places feel for residents and visitors alike. It will also influence regulations, insurance availability and investment decisions. At the same time, tourism worldwide is growing. Latest IATA forecasts suggest passenger numbers could double over the next 25 years. For many destinations, that means increasing pressure on infrastructure, housing, water systems, environments, and public services. Many communities are already pushing back against unmanaged growth and the impacts on their daily lives.

Where should destinations be investing?

To manage these changes and ensure their viability, destinations will need practical investment across multiple areas:

• Infrastructure, such as resilient transport, renewable energy, water systems, shaded public space, active travel routes, and climate-resilient visitor facilities.
• Business transition, including support for SMEs to reduce emissions, improve resource efficiency, diversify products, and manage growing climate risks.
• Workforce and skills, including retraining, emergency preparedness, heat adaptation, digital capability, and local enterprise support.
• Nature and place-based resilience, such as ecosystem restoration, coastal protection, biodiversity protection, and visitor management.
• Governance, risk management and planning systems, so destinations can understand climate risk, strengthen coordination, engage communities, and prioritise action.

This is not just a cost. The return on investment lies in avoided losses, protected jobs, stronger community support, improved visitor experience, and greater long-term destination competitiveness.

Yet, despite the scale of the challenge, tourism remains poorly served by the current climate finance system. There is still no clear or joined-up way of getting climate finance to destinations to fund adaptation and transition.

Destination authorities are rarely set up to attract or manage climate finance. Many lack the data needed to demonstrate risk or build investable projects. At the same time, the small businesses that make up much of the tourism economy often struggle to access affordable finance for adaptation or transition measures.

Tourism also falls awkwardly between policy areas, spanning transport, housing, water, energy, nature, and infrastructure. The result is that investors and insurers increasingly recognise the risks, but often do not yet see a clear pipeline of credible destination-level solutions.

Solutions to fund the climate transition

Looking at sectors such as energy, infrastructure, and nature finance, several models are beginning to emerge that could help tourism build a more coordinated approach.

Blending public and private funding

One is blended finance, where public or philanthropic funding is used to reduce risk and unlock larger pools of private investment. In practice, this could mean governments or development banks providing guarantees or early-stage funding for projects such as coastal protection, renewable energy, or water infrastructure, helping attract private investors who might otherwise see the projects as too risky. Barbados is exploring this through its Blue Green Bank, which is designed to combine public and private money with support from international development banks, then channel it into climate-resilient investment, including tourism infrastructure. The aim is not just to raise money, but to create the institutional systems needed to get finance flowing to local projects and businesses.

Tourism taxes

A second model is the use of visitor levies or tourism taxes ringfenced for climate adaptation and destination protection. These are sometimes controversial, but they reflect a growing recognition that tourism needs to contribute more directly to the resilience of the places it depends on.

The Great Barrier Reef offers one of the clearest examples. Tourism operators collect an Environmental Management Charge from visitors, helping fund reef management, conservation, and resilience work. The system has operated for decades and demonstrates how visitor contributions can create a long-term funding stream for the natural assets tourism relies on.

On-going loans for SMEs

A third approach is the creation of revolving transition funds for SMEs, where affordable loans are provided to businesses and repayments are then recycled to support further investment. This creates an ongoing pool of transition finance rather than a one-off grant programme.

This matters because many tourism SMEs face several barriers at once: borrowing costs are high, access to affordable loans is difficult, and many businesses lack the time or expertise to identify viable climate investments.

Malta Tourism Authority has developed a layered support system for tourism businesses that combines loan guarantees, interest subsidies, and advisory support to help SMEs invest in sustainability and climate adaptation measures.

Making tourism’s future financially and environmentally viable

Other models are also emerging, including parametric insurance that pays out automatically after climate events, resilience bonds for large-scale infrastructure investment, climate justice funds for highly exposed communities and programmes that encourage tourism businesses to invest directly in destination resilience.

For destination leaders, the question is not simply “how do we pay for climate action?” It is also “how do we make the future of tourism investable?” That means identifying priority risks and corresponding resiliency measures, building credible business cases, strengthening governance, and bringing together the right public and private partners. It also means recognising that some of the most important returns, such as community support, ecosystem health, and workforce stability may not immediately appear on a balance sheet. DMOs may not control the infrastructure or finance systems needed, but they can play a critical role as convenors, evidence-builders and agenda-setters.

This is the focus of new work being explored through climate finance discussions convened by Travel Forward (formerly the Travel Foundation), including a roundtable during London Climate Action Week, with further dialogue planned around New York Climate Week. Developed with partners including Cornell and the University of Edinburgh, the aim is to identify where research and pilot projects are needed to help bridge tourism’s climate finance gap and find practical ways of funding the infrastructure, business and community resilience measures destinations increasingly need.

If you are interested in attending the London event, 8-10am on Thursday 25 June, please fill in this form.