Asean tourism pivots and recovers, but Chinese tourist gap remains

SOUTH-EAST Asia’s tourism industry is seeing light at the end of the Covid-19 tunnel, as eased travel restrictions and the diversification of tourist offerings lure international travellers back. But the continued absence of tourists from China – the main pre-pandemic source of visitors for many regional destinations – will limit the pace and strength of the recovery, say analysts.

Countries which removed pandemic-related curbs early have been successful in attracting travellers, said Jane Lim, vice-president of global markets at Tripadvisor: “Tourists are visiting new destinations … that they might not have considered before and may continue to revisit them in the future.”

She noted that in a recent survey by the online travel company, 49 per cent of Singaporeans said travel regulations are their top worry when making plans for upcoming trips.

Lavinia Rajaram, Asia head of public relations at Expedia Group Brands, noted that bookings for travel from Singapore to Thailand on its platform increased by 94 per cent in the week following the announcement of Thailand’s eased testing requirements in May.

ANZ Asia economist Krystal Tan added that further easing in Thailand’s domestic and international restrictions boosted arrivals to 1.1 million in July, roughly a third (33.8 per cent) of its pre-Covid levels in 2019.

Much of this renewed travel is taking place within the region, with Expedia’s Rajaram noting that “intra-Asia travel has certainly strengthened month on month in the first half of 2022”. According to Expedia flight data, Thailand and Singapore were the second and third sources of inbound traveller demand in South-east Asia, at 15 per cent and 5 per cent, respectively.

But the United States was by far the top source, at 30 per cent. During this summer season, travel platforms expect visitor traffic from the US and UK to rise in the Asia-Pacific (Apac) region. Tripadvisor search traffic by non-Apac travellers for Apac destinations was 75 per cent higher this July compared to January.

Between April and May this year, Expedia searches by non-Apac travellers heading to the region in July and August were up 115 per cent from the year-ago period.

Yet even as travel picks up, the conspicuous absence of Chinese tourists is being felt across South-east Asia.

The “extended period of mandated quarantine upon re-entry to the country, repeated lockdowns of major hubs and subsequent unwillingness of mainland Chinese residents to travel abroad” have seen the market share of Chinese arrivals to top tourist destinations in Apac plunge to around 3.5 per cent as at June 2022, from 15 per cent in 2019, according to Gus McConnell, research manager for hotels and hospitality, Apac at CBRE.

In 2019, China was the top contributor of arrivals to Thailand and Vietnam, accounting for about 28 and 32 per cent, respectively.

However, countries are not sitting idly by. As the date and scale of China’s reopening remain uncertain, “it would only be realistic for these major tourism operators to look at non-China tourists in the meantime”, said Suan Teck Kin, UOB’s head of global economics and markets research.

He noted that Thailand’s marketing plan for 2023 included the targeting of new source markets such as Saudi Arabia and secondary cities in the US, “as well as promoting entry to the country via all entry points such as air, land and sea”.

“Tourism products are also being enhanced to attract travellers,” he added. “In addition to utilising high-class beach resorts, and tourism to discover heritage, culture and nature, the industry will promote a number of segments including golf tourism, MICE (meetings, incentives, conventions, exhibitions), wellness and adventurous tourism,” Suan said.

Professor Abhishek Bhati, a regional vice-president of the International Tourism Studies Association – an association of tourism scholars and practitioners with offices in China and the UK – said that accommodation and food and beverage providers are revising their products to suit Western travellers, who prefer to travel as individuals or small groups, and moving away from Chinese travellers’ preferences for large groups.

Retailers, too, are “reviewing their collection” and may move away from a brand-conscious, image-focused range to “environment, human-rights and sustainability themes”, added Prof Bhati, who is also campus dean at James Cook University Singapore. He noted that “some controversial decisions” such as the legalisation of marijuana in Thailand may be linked to “an agenda” to encourage Western tourists to linger.

Govinda Singh, executive director for hotels and leisure, Asia at Colliers, said: “Ultimately… we expect markets to become more diversified in terms of source markets, and likely to remain so even when China returns eventually.”

Compared to the past, visitors from India, the US and Europe form a much more considerable chunk of arrivals to South-east Asia as at June 2022, said CBRE’s McConnell. Hotel operators in the region have shared that a larger portion of occupancy demand has come from US and European markets, he added.

ANZ’s Tan noted: “Economies that are less reliant on Chinese tourists, like Malaysia and Indonesia, where Chinese tourists accounted for 6 per cent and 13 per cent of total arrivals in 2019, will have better odds in filling the gap.”

Yet she is sceptical that economies that relied on China tourists pre-Covid, such as Thailand and Vietnam, will be able to fully compensate for their absence.

Despite diversification efforts, the sheer pre-pandemic volume of Chinese tourists means they are still sorely missed, while the country’s growing affluence means that it retains great potential. Lim Siew Khee, head of research at CGS-CIMB Singapore, said: “With the growing wealth of the Chinese, we could see greater contribution to tourism receipts from Chinese tourists upon reopening in the future.”

Christopher Khoo, managing director of international tourism consultancy MasterConsult Services, said: “China is a great market, broad and deep across all phases of the cycle … given the size of the country, there is and will continue to be an ample supply of first-timers market, mid-range segment, high-end segment and specialised segments.”

“When they return, nobody is going to say, ‘Nah, we’re used to doing without them, we won’t put any effort in pursuing them now.’”