Investing.com – Climate change is poised to dramatically change the travel industry, affecting destinations, costs, and demand patterns, says UBS.

UBS highlighted the growing challenges for both suppliers, such as airlines and hotels, and consumers as rising temperatures and efforts to curb emissions change global tourism.

Key impacts include higher travel costs as companies strive for net-zero emissions amid increasing regulatory pressure. UBS estimates that Ryanair may need to raise ticket prices by more than 10% by 2030 to offset environmental costs. Capital expenditures, such as investments in sustainable aviation fuel (SAF) facilities, could exceed $8 trillion worldwide by 2050, says UBS.

Rising temperatures are also changing travel preferences. In Europe, hotter summers will reduce tourism in Southern countries such as Spain, where a 1% increase in temperature will already affect the number of visitors. UBS has warned that tourism in Spain could decline by 11% per year by the end of the century. Conversely, colder regions, such as the UK, may see a slight increase in tourism revenues.

While there are opportunities for larger players and less affected regions, climate change as a negative for the travel industry, UBS said. The report highlights the risks of industry consolidation, higher risk premiums, and increased operating costs for companies in climate-vulnerable areas.

UBS suggests focusing on companies with a strong balance sheet and resilience to climate impacts, while cautioning businesses in regions that rely heavily on weather-sensitive tourism.