TOURISM in Asean is set for a significant upside, but more needs to be done in areas such as infrastructure, and there are risks of over-reliance on China arrivals and casinos, according to a new Maybank report, Asean Tourism: Blue Skies, But Keep Your Seatbelts Fastened.
Although Asean visitor arrivals have grown at a compound annual growth rate of 8 per cent since 2010, with tourism receipts being a sizeable contributor to many of the economies, the sector still has potential to expand further thanks to the falling cost of travel and rising affluence.
More to be done
Singapore and Thailand are continuing to invest in their well-established value propositions as travel destinations, while other countries in the region are in the midst of building these up. In the World Economic Forum’s Travel & Tourism Competitiveness Index 2017, many Asean countries lag behind: Vietnam ranking 67th out of 136 countries, the Philippines 79th, Laos 94th, and Cambodia 101st.
In the rankings, Asean does well on safety and security, as well as having an adequate labour supply. But it scores poorly on capitalising upon cultural resources. An infrastructure readiness gap also persists between the most advanced countries -- Singapore, Thailand, and Malaysia -- and the rest of the region.
On the bright side, Asean scores highly in prioritisation of tourism as a national development strategy, with most countries having tourism roadmaps to drive growth. Infrastructure investments are also being made in many countries, including the expansion and building of new airports.
The report highlights the falling average tourist spend in Vietnam, and suggests that this may be because "there are not enough higher-quality services to spend on", with only a fifth of hotel rooms in the country having ratings of three to five stars. "As this changes in the coming years, we could see both higher tourist arrivals and higher spending per tourist," said the report.
Arrivals from China have been a significant driver of Asean tourism growth, despite a slowdown in recent months, with Thailand, Vietnam, and Singapore being the most popular regional destinations. With only 9 per cent of China's population owning a passport, there is vast potential for growth.
In some Asean markets, however, the rise in China visitors is associated with the opening of casinos. The Philippines has seen a surge in China visitor numbers since casinos began to open in 2013, and casinos now account for a third of tourist activity expenditure. Cambodia has seen China tourist numbers quadruple from 463,000 in 2013 to 2 million in 2018, again fuelled by casino openings.
The report highlights three areas of concern. One, even as China tourist numbers rise, "it’s unclear if average spending per visitor will increase as the incremental new traveler may be a lot more price sensitive", notes the report. Two, Chinese tourist activity can fluctuate depending on the state of international relations. Three, casinos in Asean face rising competition from other markets, not least Macau. Casino-reliant tourism markets such as the Philippines thus face a pressing need to diversify.
Other trends in the report include the rise of eco-tourism and nature attractions; medical tourism; and halal tourism in Indonesia and Malaysia. A more diversified Asean tourism sector could also be aided by growth in visitors from India, who currently account for just 3.3 per cent of total visitors to the region