With a unique value proposition to tourists, Mongolia’s tourism sector has substantial growth potential, but faces key constraints in air transport and sector coordination, according to the World Bank’s new study on Mongolia’s tourism sector.

The study, titled ‘Fostering Inclusive Tourism Development in the Aftermath of COVID-19’, analyzes the performance of the Mongolian tourism sector, its regulatory environment, and policy options, based on a data-driven economic modeling approach.

“Mongolia’s tourism sector has been severely impacted by the COVID-19 pandemic and its full potential is yet to unfold. The country has an abundance of strong niche products for leisure tourism linked to its diverse nature, nomadic lifestyle, culture, and historical legacy. This new study aims to help the government identify policy priorities for a more inclusive and sustainable tourism sector”.
Andrei Mikhnev, World Bank Country Manager for Mongolia

In a press release on March 17, 2022, the World Bank stated that tourism is an important contributor to Mongolia’s economy and accounted for 7.2% of GDP, 6.8% of total exports, and 7.6% of total employment in 2019, which was the best year ever, before collapsing in 2020 due to COVID-19.

Declining tourism market share

Relative to comparators in Eurasia as well as to countries outside of Eurasia with similar geographic features and/or tourism offerings, Mongolia has been losing market share over the last decade, the World Bank disclosed in its statement. However, the World Bank noted that leisure tourism continues to expand while business travel declines. The new study revealed that Leisure tourists spent less time in Mongolia as compared to similar tourist markets.

The government aims to develop sustainable and inclusive tourism and make Mongolia “the international destination for nomadic culture and tourism”. To realize this dream, the World Bank, in the report, emphasized that this may require prioritizing segments and markets with highest value potential before increasing the number of foreign tourist arrivals.

The lack of resources allocated for infrastructure development and a protectionist aviation policy impede sector development, according to the enterprise survey of tourism companies conducted in the beginning of 2021. Furthermore, the Bretton Woods Institution stated that the tourism industry representatives acknowledged policy and sector coordination issues to be among the top issues facing the sector, including the lack of centralized marketing support, national tourism policy implementation, and coordination.

Essence of the study in revamping tourism

Minister of Environment and Tourism of Mongolia, Mr. B. Bat-Erdene, said the COVID-19 pandemic had a devastating impact on the country’s tourism sector.

“Mongolia’s tourism sector has suffered a loss of MNT 1.5 trillion due to COVID-19 with around 1,600 companies and 88,000 jobs put in risk. We are facing an unprecedented challenge of retaining experienced professionals in the sector and minimizing the impact of the economic downturn. The comprehensive analysis—prepared by the World Bank at this critical time when we need a strategy to revive the tourism sector—will assist us in assessing the current situation and defining the appropriate measures and policy”.
Minister of Environment and Tourism of Mongolia, Mr. B. Bat-Erdene

Mongolia, a landlocked East Asian nation bordered by China and Russia, is known for its vast, rugged expanses and nomadic culture. Its capital, Ulaanbaatar, centers around Chinggis Khaan (Genghis Khan) Square where there is the National Museum of Mongolia, displaying historic and ethnographic artifacts.