Tourism is a major component of Emerging Asian economies, and the sector is beginning to rebound as the restrictions implemented in response to the COVID-19 pandemic have been lifted. However, the interruption of tourism allowed countries in the region to consider reforms in the sector, including diversifying inbound travel markets, promoting domestic tourism and addressing labour market challenges. Many enterprises, in particular MSMEs, require assistance in digitalising their operations and human capital must improve to enhance productivity. Furthermore, protecting vulnerable workers and making tourism jobs attractive to address labour shortages are essential. There is also a need to adapt to new travel preferences. In addition to local travel and rediscovery, lockdowns and focus on illness prevention reinvigorated desires for nature-based tourism or experiences focused on health and wellness.
Economic Outlook for Southeast Asia, China and India 2023
Chapter 3. Post-pandemic travel and tourism in Emerging Asia: Adaptation, recovery and challenges
Abstract
Introduction
Tourism is recovering in Emerging Asia as travel restrictions ease and confidence returns, but the pandemic and response dealt a severe blow to the region’s important travel and tourism sector, and challenges lie ahead. During the pandemic, tourist arrivals in the region decreased significantly, affecting millions of people reliant on tourism revenues. Physical distancing, lockdowns and border restrictions impacted all travel, tourism and hospitality stakeholders, from street-food vendors and small tour operators to high-end restaurants, international hotel chains and major airlines. As international arrivals plummeted (Figure 3.1), destinations that depend heavily on tourism as an income generator were seriously affected. However, recovery accelerated in 2022, as travel restrictions eased. Globally, destinations welcomed more than twice as many international tourists in the first nine months of 2022 as in the same period of 2021 (UNWTO, 2022a). The Asia-Pacific region recorded even stronger year-on-year growth, as international tourist arrivals more than tripled (up 230% over January-September 2021), but nonetheless remained 83% below 2019 levels, as some destinations, particularly the People’s Republic of China (hereafter “China”), remained closed to non-essential travel.
Figure 3.1. Asian tourism arrivals before and during the COVID-19 pandemic
Source:Authors’ compilation based on UNWTO (2022b), UNWTO World Tourism Barometer, Vol. 20/3, May 2022, https://www.e-unwto.org/toc/wtobarometereng/20/3.
This chapter analyses the impact of the COVID-19 pandemic on the travel and tourism sector in Emerging Asia and examines the challenges and opportunities ahead. The first section presents the contribution of travel and tourism to the region’s economies. It reviews the effects of the pandemic on the travel and tourism industry, including the impact of COVID-19 restrictions on employment and the labour market, and considers how to support and diversify both international and domestic travel and tourism. The second section focuses on how the pandemic has changed tourist preferences, with greater interest in local travel, nature destinations and wellness tourism, and considers how Emerging Asia can adapt.
Contributions of the tourism sector in Emerging Asia
Emerging Asia enjoyed a booming travel and tourism industry prior to the COVID-19 pandemic. Southeast Asia had become known as a thriving tourism region, with 138.7 million international tourist arrivals in 2019. Travel and tourism contributed 11.7% to the Southeast Asian economy and employing 41.8 million people, or 13.2% of total employment (WTTC, 2022). In addition, China (including Hong Kong and Macau) received 260 million international visitors, while India received 17.9 million. Chinese outbound tourists made 155 million trips in 2019, spending USD 255 billion. They were the most significant tourism spenders, with around one-fifth of international tourist spending, far ahead of the United States and Germany (UNWTO, 2020).
In the lead-up to the pandemic, several Emerging Asian economies were highly dependent on tourism. In 2019, tourism contributed 25.8% of total gross domestic product (GDP) in Cambodia, 22.5% in the Philippines and 20.3% in Thailand. Contributions to exports from international visitor spending were very high in Cambodia (32.1%), Thailand (19.8%), Myanmar (16.9%) and Lao PDR (13.6%) the same year (WTTC, 2022). Although the contribution of tourism to GDP started to rise again in 2021, its contribution to exports continued to decline in most countries. In 2021, industry employment showed recovery in all countries (Figure 3.2).
Figure 3.2. Travel and tourism contribution to economy, 2019-21
Note: Contribution includes direct, indirect and induced impacts.
Source: Authors’ compilation using data from WTTC (2022), Economic Impact Reports (data bank), https://wttc.org/Research/Economic-Impact.
Figure 3.3 presents a picture of the resilience of the travel and tourism industry in Emerging Asia, plotting each country’s tourism risk resilience (TRR) score against the dependence of its economy on tourism. Cambodia and the Philippines, where tourism accounts for 25.8% and 22.5% of GDP, respectively, are severely dependent on tourism and at high risk, with high TRR scores (3.30 and 3.35). Lao PDR is also severely vulnerable (TRR score 3.74) and increasingly dependent on tourism (10% of GDP), while India is at the borderline between severe and high risk, though less vulnerable with dependency on tourism at a medium level. Hence it is questionable whether these countries have the supply of services and infrastructure needed to handle an increasing volume of international tourist arrivals. Thailand is at the borderline of severe dependency on tourism (20% of GDP), but TRR is at a medium level (2.64), indicating that the country might be able to adjust. Countries with high dependency on tourism but at medium risk are Malaysia and China, while Indonesia and Viet Nam are at medium resilience risk and medium dependency. Hong Kong (China) and Singapore, with relatively developed infrastructure and economies less dependent on tourism, are at lower risk.
Figure 3.3. Tourism resilience risk, 2019
Note: Data from Travel and Tourism Development Index 2021 (WEF, 2022) and WTTC (2022) provide input for calculation of Tourism Resilience Risk (TRR) score and scale employed by Word Bank (2020). TRR score was calculated in two steps. In the first step the authors estimated the mean score across eight pillars compiling the Travel and Tourism Development Index 2021 for Emerging Asia (WEF, 2022), namely: business environment; health and hygiene; information and communications technology (ICT) readiness; prioritisation of travel and tourism by the government; international openness; air transport infrastructure; tourism service infrastructure; and socio-economic resilience and conditions. In the second step, the mean score was converted into tourism resilience risk (TRR) score. TRR score was then plotted against the total tourism contribution to GDP (WTTC, 2022) to identify which countries’ tourism sectors are most at risk and most likely to need support in response to the COVID-19 crisis. The results are divided into four risk categories by World Bank’s TRR scale (2020): severe, high, medium, and low. “Severe risk” countries have the highest GDP dependency on tourism and highest TRR score, while “low risk” countries have low GDP dependency and a low TRR score. Dependency (GDP): Severe: >20%, High: 10-20%, Medium: 5-10%, Low: <5%. Resilience risk: Severe >=3.5, High: 3.0-3.5, Medium: 2.5-3.0, Low: 1-2.5. Myanmar and Brunei Darussalam are not included because the World Economic Forum does not collect data on either country for the index.
Source:Authors’ calculations using WTTC (2022), Economic Impact Reports (data bank), https://wttc.org/Research/Economic-Impact and WEF (2022), Travel and Tourism Development Index 2021: Rebuilding for a Sustainable and Resilient Future, https://www3.weforum.org/docs/WEF_Travel_Tourism_Development_2021.pdf based on method and scale derived from World Bank (2020), Rebuilding Tourism Competitiveness: Tourism Response, Recovery and Resilience to the COVID-19 Crisis, World Bank, Washington, DC, https://openknowledge.worldbank.org/handle/10986/34348.
Travel picked up as restrictions were lifted
In the early phases of the pandemic, more than 90% of all destinations were under full or partial international travel restrictions and various forms of lockdown. Between late 2021 and mid-2022, all Southeast Asian countries and India eased international travel restrictions and opened up for international tourism. Thailand pioneered restoring international tourism in Southeast Asia in July 2021 by launching the “Phuket Sandbox” plan, which allowed vaccinated foreign tourists to visit Phuket. Thailand later expanded its sandbox programme to include other key destinations. By 1 February 2022 it had resumed quarantine-free entry to all fully vaccinated foreign tourists under the “Test and Go” programme, and it later scrapped pre- and post-departure tests. With regulations and health contexts constantly changing, governments and the tourism industry must communicate clearly to consumers and businesses.
While most countries in Emerging Asia have opened their borders for inbound and outbound travellers and relinquished lockdown policies in 2022, travel to and from China was possible but remained highly limited until the end of the year. The country started to ease its zero-COVID approach in the last quarter of 2022. For most of Emerging Asia, the roll-out of COVID-19 vaccines and the easing of international travel restrictions led to the start of gradual international tourism recovery. Airlines in Southeast Asia started to report more positive results, even though aviation recovery still has a long way to go. For example, the Singapore Airlines group recorded net profit in the second quarter of 2022 (Singapore Airlines, 2022), although passenger traffic at Changi Singapore Airport was still at 50% of pre-pandemic levels (Ministry of Transport Singapore, 2022). By June 2022, international travel bookings to Indonesia had reached 84% of 2019 levels, while bookings to the Philippines had reached 50% of pre-pandemic levels (IATA, 2022).
Despite diverse levels of socio-economic development, all Emerging Asian countries have embraced tourism as a vehicle for income generation, job creation and overall national economic development. International borders were open as of late 2022 in most countries in the region, with countries aiming to re-attract international visitors. From 15 March 2023, China fully opened its borders for international tourism, permitting all types of visas to be issued. China is the last Emerging Asian country to do so.
Box 3.1. Depreciating currencies and inbound tourism
The recent depreciation trend in Emerging Asia can place major pressure on import prices, but it can also benefit exports, including tourism. Holders of foreign currencies such as the US dollar or the euro will find tourism to be less expensive. This increases demand for tourism and consequently boosts tourism revenues.
Purna, Munandar and Bija (2021) use data from Indonesia, Malaysia and Thailand from 1995 to 2016 to show that “the exchange rate has significant positive effect on foreign tourist flow”. The study also finds that an increased consumer price index (CPI) has a negative and significant effect on the flow of foreign tourists. Total trade (the sum of exports and imports as a percentage of GDP) and several other development indicators may have effects of different significance and sign depending on model specification. The exchange rate findings echo those of Agiomirgianakis, Serenis and Tsounis (2014) on inbound tourist flows for Turkey.
Making the analysis from the perspective of the outbound tourist, Webber (2001), finds that exchange rate volatility has a significant effect on where Australian tourists decide to travel, especially for ASEAN countries (Malaysia, Singapore, the Philippines and Thailand). Webber finds that excessive exchange rate volatility can lead to the cancellation of up to 40% of planned travel to a particular country as the effects are interpreted as price changes. However, the effect is less pronounced for travel to the United Kingdom or the United States. Travellers tend to view Asia, Europe, and the United States as blocs for price comparisons in travel.
Sharma and Pal (2020) find that exchange rate volatility has a net negative effect on tourism inflows to India, robust to a variety of measures. These effects are more pronounced in the long run than in the short run, suggesting that policy decisions that affect exchange rates have a stronger effect than market-driven movements. As such, policy makers should consider the effects on tourism when managing exchange rates for other purposes such as promoting goods exports.
All four of these studies also highlight the importance of exchange-rate stability. Increased volatility in exchange rates will be interpreted as a source of risk by consumers and will therefore reduce inbound tourist flows.
Source: Agiomirgianakis, Serenis and Tsounis (2014), https://dx.doi.org/10.11130/jei.2014.29.4.700; Purna, Munandar and Bija (2021), https://doi.org/10.15294/jejak.v14i2.30417; Sharma and Pal (2020), https://doi.org/10.1177/0047287519878516; Webber (2001), https://journals.sagepub.com/doi/pdf/10.1177/004728750103900406.
Diversifying and expanding international inbound markets
Prior to the pandemic, international tourism accounted for much of the industry’s activity in Emerging Asia. In 2019, international arrivals accounted for 80% of tourism spending in Cambodia, more than 60% in Thailand and 60% in Myanmar. Intra-ASEAN travel had expanded thanks to a visa exemption for ASEAN citizens traveling within the region (Connell, 2018). This boosted low-cost airlines (Duval and Weaver, 2017) and spurred tourism infrastructure improvements (Box 3.2). Intra-ASEAN tourism flow is unequal among countries, however, with Malaysia and Lao PDR depending primarily on this market. In contrast, the market share of ASEAN tourists to Viet Nam and the Philippines is relatively small (Figure 3.4A). From outside the region, Southeast Asia, which earlier hosted primarily European tourists, began being more dominated by tourists from East Asia, particularly China, as well as a growing number from South Korea and Japan (Hall and Page, 2017). In 2019, Chinese tourists accounted for more than a quarter of total international arrivals in Cambodia, Myanmar, Thailand and Viet Nam (Figure 3.4, Panel B). The structural imbalance of international inbounds weakened the resilience of Southeast Asian tourist destinations, particularly when China implemented its zero-COVID policy.
Intra-ASEAN tourism is dominated by travel between neighbouring countries. Malaysia generates the largest number of travellers to Singapore, Indonesia, Thailand and Brunei Darussalam, thanks to border-sharing among these countries. Similarly, tourists from Lao PDR, Cambodia and Myanmar account for significant traffic to Thailand (Figure 3.5).
Most travellers to Malaysia arrive by land, and accessibility to Lao PDR, Myanmar and Brunei Darussalam is also primarily by land. Thailand and Singapore have the best air accessibility, while Viet Nam, the Philippines and Indonesia have recently increased their air transport capacity. Maritime Southeast Asian countries like Singapore, Indonesia and Malaysia have an increasing number of international arrivals by water (Figure 3.6).
Box 3.2. Low-cost carriers present opportunities in the tourism sector
Low-cost airlines, also known as low-cost carriers or LCCs, can grow into an essential component of Emerging Asia’s transportation and tourism sectors. LCCs generally offer short or medium-haul flights at lower prices than major carriers, with the discounts coming at the expense of amenities such as free checked baggage, seat selection, seat class or meals. LCCs are thus better suited for shorter flights or for passengers going on trips of shorter duration where less luggage is needed. Tourism, particularly intra-ASEAN tourism, represents an air-travel market segment where LCCs could shine. Since LCCs typically use smaller aircraft, the airport infrastructure needed to accommodate them is not as extensive as for major carriers. This could open opportunities for airport development near tourist destinations, with LCCs able to offer direct flights. In contrast, plans offered by major carriers often feature a journey in multiple stages that transit through a major centre. Provision of direct flights by LCCs to tourist destinations that are less in demand could also be a useful strategy for combatting overtourism in the most popular areas.
It is important for LCCs to develop brand loyalty, as it is easier for airlines to retain existing customers than to recruit new ones. Shen and Yahya (2021) explore components of perceived airline quality and find that both higher service quality and lower prices have positive impacts on customer satisfaction, which in turn promotes loyalty. Balancing the importance of price and quality is challenging because consumers are far more price sensitive in the LCC market than when using traditional airlines, but superior service and amenities may cost more. Shen and Yahya (2021) show that “airline tangibles”, “empathy”, “airline image” and lower prices have positive relationships with customer satisfaction, which in turn has a positive relationship with loyalty. “Airline tangibles” are the facilities and equipment inside the aircraft, such as the seats, toilets and entertainment options. “Empathy” refers to an airline’s willingness to provide individualised care and attention to passengers, with the behaviour of the cabin crew towards passengers as the key determinant. As for “airline image”, perceptions are often shaped by the direct interactions of customers with an airline, and maintaining consistent standards is key. Terminal tangibles and service are less important, yet infrastructure decisions should take account of how these attributes can feed into the attributes previously listed. While this strand of literature is limited, the results here are similar to those found by Suki (2014).
Source: Shen and Yahya (2021), https://doi.org/10.1016/j.jairtraman.2020.101966; Suki (2014), https://doi.org/10.1016/j.rtbm.2014.04.001.
Figure 3.4. International inbounds to ASEAN
Source: Authors’ calculations based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019.
Figure 3.5. Intra-ASEAN inbound travel, 2019
Source:Authors’ compilation based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019, https://www.e-unwto.org/doi/book/10.18111/9789284422494.
Figure 3.6. ASEAN arrivals by mode of transport, 2019
Source:Authors’ compilation based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019, https://www.e-unwto.org/doi/book/10.18111/9789284422494.
China is the largest source of visitors to all countries in Southeast Asia. The top destinations for Chinese tourists are Thailand, Viet Nam, Singapore and Malaysia (Figure 3.7). Four countries that are highly dependent on the Chinese market are Cambodia, Myanmar, the Philippines and Viet Nam, where the market’s annual growth rate has been 25% to 40%, and the market share as of 2019 was 20-40% (Figure 3.4, Panel B). More than 50% of 45 million East Asian visitors to mainland China are from Hong Kong and Macau, which can also be at least partly attributed to the ease of access by land.
Figure 3.7. Emerging Asia outbound tourist flows, 2019
Note: China does not include Hong Kong, China or Macau, China.
Source:Authors’ calculations based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019, https://www.e-unwto.org/doi/book/10.18111/9789284422494.
Southeast Asian countries, especially Thailand and Viet Nam, are increasingly targeting the Indian tourist market. Although India is not among markets with the highest number of outbound tourists, its population of more than 1.4 billion and its potential for high-spending tourists make it an attractive source market. Currently, the Indian market has yet to match the potential of having a large population and geographical proximity to Southeast Asia. The top destinations for Indian travellers in the region in 2019 were Thailand, Malaysia, Singapore, Indonesia and China (Figure 3.7). Significant Indian heritage remains in the culture, traditions, religions and physical sites of those four ASEAN countries. The Little India area of Singapore and Brickfields area of Kuala Lumpur, Malaysia are major attractions for Indian travellers. Figure 3.8 shows global arrivals to ASEAN countries, with Thailand, Singapore, Malaysia and Indonesia hosting the most tourists from South Asia (mainly India).
A structural imbalance in international tourism demand has weakened the industry’s resilience (ADB, 2022), particularly when many countries in Southeast Asia are overly dependent on arrivals from China. Therefore, diversification of international inbound markets is recommended for some countries in the region, such as the Philippines, Viet Nam, Myanmar, Cambodia and Lao PDR. Preparations to welcome Chinese tourists back to the region should take place in parallel with a revision of marketing strategies aimed at: i) increasing tourist traffic within ASEAN; ii) connecting with India; and iii) reconnecting with expatriates and the ASEAN diaspora.
Figure 3.8. Inbound arrivals to ASEAN by region, 2019
Source:Authors’ calculations based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019, https://www.e-unwto.org/doi/book/10.18111/9789284422494.
Strengthening intra-ASEAN travel is recommended particularly for the Philippines and Viet Nam, where there is relatively little regional traffic. In 2019, visitors from ASEAN to the Philippines accounted for only a tiny fraction of total inbounds (6%). Recommendations for the Philippines include increasing air connections to major ASEAN cities and tailoring marketing efforts to attract travellers from other ASEAN countries. Viet Nam has increased its market share of intra-ASEAN tourism to 11% in recent years in 2019. Although visitors from some ASEAN countries such as Thailand, Cambodia and Lao PDR to Viet Nam increased via the opening of the East-West Economic Corridor, the country needs further efforts to attract tourists from some other ASEAN countries, for example by increasing water recreational routes. Lao PDR, Cambodia and Myanmar also need to strengthen regional arrivals through market diversification. This is an urgent matter for Lao PDR, where 68% of arrivals are from Southeast Asia but where the growth rate is negative, indicating that the country’s popularity is declining.
Given the long cultural and economic ties between India and Southeast Asia, attracting the Indian market is another option for redressing the tourism imbalance. The growing number of Indians visiting Malaysia, Singapore and Thailand indicate that Myanmar, Lao PDR, Cambodia and Viet Nam could also target this potential market, although proper research and market intelligence would be necessary. Efforts include opening direct flights to increase accessibility from India and promoting and preserving Indian heritage in Southeast Asia. Malaysia’s successful marketing campaign, Malaysia Truly Asia, and Singapore’s multicultural identity set examples for other countries. Myanmar has a particular advantage as it shares a land border with India. Cambodia, Lao PDR and southern Viet Nam might also capitalise on their historic connections to India.
A third way to expand the market involves targeting expatriates and diaspora. The countries of Southeast Asia, as well as China and India, have a large proportion of expatriates living and working overseas, with disposable incomes and ties to their home culture. The labour export trend from Indonesia and the Philippines has contributed to the expansion of this niche market. However, tailored packages are needed to target expatriates as their preferences are not the same as those of other tourists. Countries in the region well acknowledge the importance of expatriate communities. The Thai Authority of Tourism, for example, offers special deals and discounts to expatriates (Helbe and Choe, 2020). Malaysian government introduced the Malaysia My Second Home (MM2H) Programme for foreigners to retire and live in Malaysia for an extended period of time.
Boosting support for domestic tourism
Globally, domestic trips (overnight visitors) numbered an estimated 9 billion in 2018, and more than half of these trips were taken in the Asia-Pacific region. The world’s largest domestic tourism markets are in the demographically largest countries. However, domestic tourism also plays a vital role for smaller countries and markets: it can stimulate disadvantaged economies and remote areas, and slowly change the travel patterns that have been dominating tourism.
The World Travel and Tourism Council finds that factors spurring domestic tourism in major economies include a growing or sizeable middle-class population; an increase in spending power among domestic consumers; government initiatives in promoting new locations; and strong or improving transportation infrastructure and economic links between different internal regions (WTTC, 2018). Domestic trips per capita ranged between 2.7 and 3.5 in Indonesia, Thailand and Malaysia in 2019. The Philippines and Viet Nam have emerging domestic tourism markets, with around one trip per person per year (Table 3.1).
Table 3.1. Domestic trips by country, 2019
Source: Authors’ calculations based on UNWTO (2021), Compendium of Tourism Statistics, Data 2015–2019, https://www.e-unwto.org/doi/book/10.18111/9789284422494.
China and India have the region’s largest domestic travel markets, primarily due to their large populations and geographical size. China recorded 6 billion domestic trips in 2019, including overnight and same-day visitors. In terms of spending, Chinese domestic tourists spent USD 841 billion in 2017, overtaking the United States to become the world’s most significant domestic travel and tourism market (WTTC, 2018). An average of eight new airports have been built every year since 2013 in China, while a rapidly developed high-speed railway has opened up previously remote places to domestic tourists. India, meanwhile, reported more than 2.3 billion domestic trips in 2019. India’s government plans to build 100 new airports, with a budget of USD 60 billion, over the next 10-15 years to accommodate and stimulate demand for domestic travel. The rapid growth in middle-class income among households in emerging markets has been an essential driver of domestic tourism in the region (ADB and UNWTO, 2022).
Domestic tourism spending, defined as the tourism expenditure of a resident visitor within the economy of reference, can be higher than the revenue generated by international travel. Within Emerging Asia, domestic spending represented at least 50% of all tourism spending in Indonesia, Malaysia, Brunei Darussalam, India, the Philippines and China in 2019 (Figure 3.9, Panel A). During the pandemic, domestic tourism and its share of spending increased significantly. In 2021, all countries in emerging Asia heavily relied on the spending of domestic tourists (Figure 3.9, Panel B).
Figure 3.9. Domestic and inbound spending in Emerging Asian countries
Note: China does not include Hong Kong, China and Macau, China.
Source:Authors’ compilation based on WTTC (2022), Economic Impact Reports (data bank), https://wttc.org/Research/Economic-Impact, accessed on 7 October 2022.
Prior to the COVID-19 pandemic, the balance of domestic and international tourism differed greatly across Emerging Asia. The countries with the greatest share of domestic tourism spending in 2019 were China (86%), India (82%) and the Philippines (84%). Domestic and inbound spending were more or less equal in Brunei Darussalam (54%), Indonesia (50%), Malaysia (51%) and Viet Nam (48%), while domestic tourism revenues in Singapore (28%) and Thailand (30%) were outweighed by international tourist spending. While the small territorial size of Singapore might explain this, a full 70% of tourism revenue came from international tourists in Thailand. During the pandemic, however, domestic tourism gained greater importance in all countries in the region.
Due to extended periods of international travel restrictions across Asia from 2020 to early 2022, most countries in the region repositioned their tourism and marketing strategies to invigorate the domestic market. This focus on the domestic market could not compensate for the lack of international travel, but helped sustain important parts of the hospitality and tourism businesses in the region. In Thailand, for example, hotels started to base their marketing on Thai tourist behaviour. The Tourism Authority of Thailand (TAT) collaborated with Thai Smile Airways, the online travel and lifestyle platform Drive Digital and Tinder to promote “Single Journey” domestic tours specifically designed for the single traveller. TAT explained that the COVID-19 pandemic had changed travel behaviour, creating the need to think “out-of-the-box” and target solo travellers (TAT, 2020). Many destinations that had previously been popular among international tourists, such as Hoi An in Viet Nam, turned themselves into domestic tourism hotspots, for example by adding more local dishes to their menus. A programme titled “Vietnamese People Travel in Viet Nam” was launched to stimulate domestic tourism. In Malaysia, AirAsia launched the Unlimited Pass Cuti-Cuti Malaysia in 2020, priced at MYR 399 (Malaysian ringgit, or about EUR 83), allowing members of all Malaysia-based airline programmes unlimited domestic flights. In India, the decade-old “staycation” concept experienced a strong revival, embracing budget and luxury accommodation for more extended stays close to home (Sudevan, 2020).
Domestic tourism has proven its resilience in times of crisis as the region expands its middle class. Two strategies are recommended to capture the growth of the domestic market: i) market diversification, i.e. recognising and increasing the share of the domestic market in tourism revenue; and ii) product diversification through development of the domestic market. While recognising that domestic tourism cannot make up for the absence of international visitor arrivals, it is crucial to explore the full potential of this market. Some countries in Southeast Asia that have long favoured international tourism, such as Thailand, Singapore, Malaysia and Viet Nam, might consider further supporting domestic tourism. While some countries have already implemented initiatives targeted at domestic tourists including marketing, support for domestic tourism may also include the development of infrastructure to facilitate access, and assistance with digitalisation for MSMEs so they can promote their products effectively using the Internet and conduct e-commerce.
At the same time, businesses in the sector could invest in new products and services that are not only affordable for domestic tourists but also provide them with better value for money than do current offerings. Value-for-money is not only (or even necessarily) found in low-cost options, but also in unique opportunities that cater to the desires of the domestic market, even down to the local level. With strong domestic tourism, Indonesia and the Philippines might pursue a product development strategy targeting domestic tourists by providing new products, experiences and services. Better understanding is needed of travel behaviour, consumption, activities and the preferences of domestic tourists. Countries with small populations, such as Lao PDR and Cambodia, can implement both product and market diversification strategies. Singapore provides a good example of reorienting citizens to domestic tourism. Table 3.2 shows initiatives for boosting domestic tourism at a time of crisis in the region.
Table 3.2. Examples of government initiatives to support domestic tourism
Although domestic tourism cannot fully replace international tourism, a resident-focused tourism strategy should continue post-pandemic. Such a strategy helps to reduce dependency on international tourists, serves local needs and, with fewer transport miles, also reduces tourism’s carbon footprint.
Another local market often overlooked in tourism marketing is the expatriate population. Müller, Huck and Markova (2020) showed that expatriates (international residents) at a community-based tourism site in Cambodia were willing to pay higher prices for most tourism services than international travellers or local Cambodian tourists. Thailand’s TAT developed incentives for expatriates, to motivate them to travel again during the pandemic and to share their local travel experiences at home and abroad (ADB, 2021).
Addressing employment and labour market challenges
The COVID-19 pandemic has heavily affected employment and the labour market in Emerging Asia, particularly in the travel and tourism sectors including hotels, restaurants, transport and other face-to-face service activities. Before the pandemic, travel and tourism supported 41.8 million jobs (13.2% of total jobs) in Southeast Asia, 82.2 million (10.8% of total jobs) in mainland China and 40.1 million (8.4% of total jobs) in India (WTTC, 2022). These figures dropped when travel restrictions were imposed. The International Labour Organization (ILO) predicted in 2020 that nearly all jobs in the tourism sector in the Asia-Pacific region would be impacted by the pandemic, with a disproportionate impact on small firms and low-wage workers (ILO, 2020). The report highlighted the risk of long-term damaging consequences because longer periods of inactivity may lead to skills depreciation and demotivation at the individual level, which lowers productivity and potential economic growth.
Supporting small firms and informal workers
The travel and tourism sector is characterised by a high share of micro, small and medium-sized enterprises (MSMEs) in the accommodation, restaurant, and tours and services segments. These businesses are often individually or family owned. In Thailand, for instance, MSMEs comprise more than 90% of firms in the hospitality sector (APEC, 2017). Owing to their small size and limited access to finance, these companies have fewer options in terms of resilience and diversification for dealing with shocks (IMF, 2021).
The tourism sector is also characterised by low-skilled jobs and a high degree of informality owing to its seasonality. Informal employment makes up nearly 70% of all tourism employment in Myanmar and more than 90% in Cambodia and Lao PDR (ADB, 2022; ILO, 2018). Moreover, informal employment in the industry comprises a high share of youth, women and migrant workers, resulting in income inequality (ILO, 2020). The tourism sector employs a high share of young workers (aged 18 to 25) and is estimated to generate one out of ten youth jobs. Women are highly represented in tourism and hospitality jobs across Emerging Asia and comprise the majority of the sector’s workforce, accounting for 54% of those employed in the industry, compared to 39% in the broader economy. However, gender gaps persist in terms of positions, pay and type of contract (ADB, 2021). Women are underrepresented in management roles and earn 14.7% less than men (UNWTO, 2019). Employees in the sector are likely to be among the most vulnerable, as labour laws do not protect informal workers and MSMEs lack access to financial assistance in times of crisis (ADB, 2021).
The informal sector has been particularly hard hit by the pandemic. Throughout Asia, informal workers play a crucial role in providing essential services and goods. Street vendors belong to the largest subgroup of the informal workforce. They sell food, drinks and other small items such as souvenirs, and thus represent an important group in the informal tourism sector. Studies on street vendors in Asia conclude that governments have essentially failed to recognise street vending as a legal activity and that the vendors are viewed as irritants or obstacles to cities’ modern development. Working in public spaces usually means working outdoors and thus being directly exposed to heat or cold, strong sunlight, rain or snow as well as to dust and air pollution. Street vendors largely remain without social protection and welfare such as health insurance, paid sick leave or pensions.
Moreover, street vendors often lack technological skills and devices, as well as professional skills, and this prevents them from adopting digitalised sales methods (e.g. online or mobile sales). They are consequently among the most vulnerable groups in times of crisis. A study on female street vendors in urban Viet Nam showed that the pandemic left 56% with almost no sales (Thanh and Duong, 2022). Yet many continued to work despite the risks of exposure to the virus or getting fined for breaking regulations. This shows that informal vendors may be willing to suspend business – even in times of crisis – only when they can ensure their basic needs. Accordingly, city stakeholders need to provide food assistance, housing subsidies or cash grants for the urban poor. Since many of the street vendors across Emerging Asia run non-registered businesses, governments need to include these vulnerable groups in their outreach programmes. Moreover, authorities should endeavour to provide street vendors with access to clean water and clear health advice to the best extent possible. Communicating health advice is vital. For instance, Malaysia’s Ministry of Health used announcements in media supported by press conferences from officials and daily text messages to remind residents of current health advice and recommendations since the start of the COVID-19 pandemic (Aziz et al., 2020).
Strengthening skills to boost labour productivity
Labour productivity is uneven across countries and within tourism and travel sectors. The “Human Resources and Labour Market” pillar in the World Economic Forum’s 2021 Travel and Tourism Development Index comprises nine indicators (WEF, 2022). It measures qualification of the labour force (years of schooling, formal educational attainment rates, the education system’s ability to meet economic needs and private-sector involvement in upgrading human resources), as well as the flexibility, efficiency and openness of labour markets and labour productivity in the hospitality, restaurant and transport sectors. Table 3.3 shows that labour productivity is very high in these sectors in Singapore (5.5 on a scale of 1-7), while China also scores well (4.9). Among the countries studied, Cambodia, Lao PDR and India score lowest on labour productivity, indicating a need to train and support the labour force to increase its skill level.
Table 3.3. Human resources and labour market characteristics
Source: Authors’ compilation based on World Economic Forum data (WEF, 2022), Travel and Tourism Development Index 2021: Rebuilding for a Sustainable and Resilient Future, https://www3.weforum.org/docs/WEF_Travel_Tourism_Development_2021.pdf.
Improving social protection for migrant workers
The tourism sector experiences high labour mobility driven by economic conditions. In Thailand, for example, it is estimated that a fifth of the workers in the hospitality sector come from neighbouring countries with lower wages (Cambodia, Lao PDR and Myanmar). Such workers tend to have limited access to social safety nets: a survey by ILO shows that 97% of migrant workers from ASEAN who were unemployed in destination countries had no access to their host country’s social safety systems (ILO, 2021). The high share of migrants in the tourism workforce presents challenges relating to workers’ protection, visa arrangements and external dependency (ADB, 2021). Nonetheless, remittance payments made by overseas tourism workers constitute significant income for families at home (ADB, 2021). Migrant workers might also form an expatriate tourist market. Table 3.4 shows the net migration rate calculated by the ratio of the difference between in-migration and out-migration figures from a country expressed per 1 000 people. Singapore remains positive net migration (4.7 per 1 000 people in 2020), as well as Malaysia (1.6 per 1 000 people), although the net migration rate shows sharp decline from previous decades. Less developed countries such as Lao PDR, Cambodia, and Myanmar show constant negative net migration rate, indicating an out-migrant trend from these countries. The negative net migration rate is also observed at a lesser extent in countries with large populations like the Philippines, Viet Nam, and Indonesia.
Table 3.4. Net migration rate (per 1 000 people)
Source: World Bank (2022), World Development Indicator database, https://databank.worldbank.org/source/world-development-indicators.
Making tourism jobs more attractive to ease the labour shortage
Another issue in hospitality and tourism is a shortage of labour. Prior to the pandemic, countries such as China, Malaysia and Thailand were characterised by a high demand for workers in tourism coupled with the unwillingness of young people to enter the labour-intensive industry for a rather low wage. The pandemic exacerbated this problem. During the border closures, many businesses shut down, and as border restrictions were lifted many foreign workers returned to their home countries. Others changed jobs and were unwilling to return to the sector.
Malaysia, which has long relied on foreign workers to sustain the hospitality and tourism industry, is currently experiencing significant shortages in the labour force. Before the pandemic, Malaysia counted more than 3 million migrants (about 10% of the population), according the Department of Statistics Malaysia (2021). Many of these foreign workers have left Malaysia since the pandemic began. While many were deported, others left due to limited economic opportunities during the periods of restrictions.
With the reopening of Malaysia’s borders in April 2022, international tourism is recovering faster than anticipated by the government. By September, the country had more than 5 million incoming tourists, surpassing its target for 2022, with a projected 9.2 million by the end of the year. Yet the labour shortage in the tourism and hospitality sector means that many businesses, including restaurants and hotels, may not be able to capitalise fully on the tourism recovery.
The unemployment rate in Malaysia decreased throughout the 2022 recovery and stood at 3.8% (630 600 people) in June, the lowest level since the pandemic struck. In the context of relatively low unemployment and low wages, many hospitality and tourism businesses have difficulty attracting local workers. In May 2022, Malaysia raised the monthly minimum wage by 25%, from MYR 1 200 to MYR 1 500 (EUR 320). Industry stakeholders state that most hotels offer more, with salaries of MYR 1 600 to MYR 2 000 per month as well as a housing allowance, and that this has not been enough to entice locals to take jobs in the tourism sector (Rou, 2022).
To retain and attract workers, employers must provide decent working conditions and competitive terms of employment. During the pandemic, many tourism and hospitality employees – both local and foreign – left or had to leave the industry. By offering them their jobs back (especially to the local workforce), employers would show appreciation for their experience, skills and knowledge. It is also crucial to provide training and career prospects. Hospitality and tourism employees often feel that they lack opportunities for career advancement. This should be addressed via workshops and training that encourages learning and career progression. Feedback on job satisfaction, quality of work life and loyalty can provide helpful information for employers. High levels of job satisfaction increase employees’ willingness to remain with an employer.
Steps for tackling the challenges
Challenges facing the tourism and travel industry include upskilling workers via language and vocational training, addressing gaps in digital skills, supporting local MSMEs in order to meet tourist demand for new destinations, empowering local communities to participate and increasing workforce diversity.
Countries generally have programmes to upskill tourism workers to increase labour productivity. The programmes seek to expand vocational and language training for better workforce preparation, and often target travellers from Europe. In Thailand, for instance, the TAT organised online Spanish and Portuguese language training courses for tourism staff. Cambodia’s Tourism Ministry signed a memorandum with Swisscontact Cambodia to provide tourism and hospitality vocational-skills training for Cambodian youth. Myanmar, with support from the Luxembourg Development Co-operation Agency, established the Myanmar Institute of Tourism and Hospitality, which focuses on training and developing supervisors, managers and trainers in the hotel and tourism industries (ADB, 2022). Strengthening vocational education and retraining programmes can also allow for swifter sector reallocation. Vocational training opportunities can benefit women and youth, strengthening labour force participation by women and young people.
Skills gaps in local labour markets are the main barrier to adopting new technologies, according to the World Economic Forum’s The Future of Jobs Report 2020 (WEF, 2020). The digitalisation and the use of ICT in the travel industry presents its labour force with challenges but also with great opportunities, including enhancing productivity (Box 3.3). Digitalisation will be discussed further in Chapter 3. Job training and education in the sector should provide soft skills and lay the groundwork for workplace flexibility. Employers can also help develop transferrable skills that enable workers to explore career paths both inside and outside the industry. Providing digital skills training is crucial in digital transformation. Three steps for strengthening the workforce’s digital skills are: i) identification of the status of digitalisation; ii) creation of a programme to address skills gaps; and iii) provision of financial incentives (ADB, 2022).
Box 3.3. Enhancing productivity in tourism
The Asian tourism sector is hampered by low productivity and, consequently, by low profit margins. Furthermore, recent the COVID-19 pandemic had a scarring effect on the sector. Two main causes of low productivity can be identified: concentration of demand and low use of information and communications technology (ICT), though the two factors can be interrelated.
Concentration of demand in certain places or at certain times can lead to overtourism and a decrease in tourism quality. In Cambodia, for example, most tourists flock to the Angkor Archaeological Park, while tourism to smaller cities or rural areas remains niche with over 2.6 million visitors to the Angkor/Siem Reap region in 2018 compared to fewer than 900 000 to coastal destinations and just over 70 000 to designated ecotourism sites. Likewise, nearly 39% of visitors to Indonesia entered through Bali, more than double the 15% that entered through Jakarta, the second-busiest entry point. Indonesia’s efforts to address overtourism in Bali precede the COVID-19 pandemic, with the launch of the 10 New Balis campaign in 2016 to not only preserve Bali, but also to distribute the economic benefits of tourism throughout the archipelago. In addition, inbound tourism can be seasonal, with dramatic ebbs and flows posing a challenge to consistent cashflows. Efforts to promote tourism outside well-known destinations – to so-called “hidden gems” – should be enhanced to help alleviate overtourism and provide a broader distribution of economic benefits in the sector. To the extent that seasonality is related to regional variance in tourism demand, promoting destinations that are better enjoyed in the off-season, perhaps as discount tourism options, could help smooth seasonality.
ICT use has become one of the important factors in the tourism sector. Development of better ICT skills would serve the sector well, not only for accounting purposes – many places of lodging keep their financial records on paper – but also for the promotion of offerings. In ASEAN, unique experiences may be forgone simply due to a lack of awareness within the potential consumer base. People increasingly rely on travel-advice websites and social media to plan travel, with sites such as Instagram being very popular with young people. Effective promotion involves leveraging the strength of each platform and perhaps recruiting local “influencers” with large social-media followings to promote the destinations. ICT development in the financial operations of tourism businesses is also essential, as tourists may be more likely to pay for travel expenses by credit card than cash, and perhaps online. Online payment systems would also control booking rates and help to prevent overtourism. Several priceless fragile tourist sites across ASEAN began using online ticketing systems during the COVID-19 pandemic to control crowd sizes and could continue to do so even if the focus shifts from health to the sustainability of the attractions. These systems permit dynamic pricing to discourage overtourism. If tourism SMEs enter a common system, some destinations can be suggested as alternatives for periods where the destinations in highest demand are at their sustainable capacity.
Source: Ministry of Investment Indonesia (n.d.), “All You Need to Know about the 10 New Bali Project in Indonesia”, https://www3.investindonesia.go.id/en/article-investment/detail/all-you-need-to-know-about-the-10-new-bali-project-in-indonesia.
Support of local MSMEs is essential for the viability of the tourism industry. This is linked to the tourism sector’s efforts to geographically decentralise and diversify. Tourist demand for small-scale, remote locations and off-the-beaten-track niche products can facilitate the emergence and vitality of MSMEs. Establishing regional tourism incubators can promote co-operation between tourism MSMEs and research and educational organisations. The internal linkages between tourism demand and local agriculture, manufacturing and entertainment could extend tourism’s supply chain, increasing the penetration of visitor spending into the local economy. In less market-oriented economies such as Cambodia, Lao PDR, Myanmar and Viet Nam, start-up funds and microfinance for entrepreneurial establishment are encouraged. Social entrepreneurship can be one of the ways to invest in people and offer sustainable solutions for existing social problems.
Finally, diversification of demand and decentralisation of supply for the travel and tourism sector can only be achieved by empowering local communities and supporting workforce diversity. Making the tourism supply chain more local can enable the leadership and participation of communities and encourage minority groups, women and youth to join the workforce. For local people, accessibility to a resource does not simply mean ownership of the resources but also the capacity to utilise them. Thus, enhancing the capacity of local residents for learning and adaptation to change is recommended for decision makers.
Adapting to new preferences as travel and tourism recover
Local travel and rediscovery
The consequences of the COVID-19 pandemic, along with inflation worldwide and tightened spending on travel and tourism, could lead to a shift towards short-haul domestic and international tourism. Three reasons underlie this potential trend. First, the post-pandemic recovery could see the re-emergence of patriotic consumption, where citizens support local businesses as an act of communitarian commitment. Second, a fall in household incomes could make domestic tourism relatively more feasible than international travel. Third, adopting digital tools to conduct virtual meetings could diminish demand for long-haul meetings, incentives, conferences and exhibition tourism (Helbe and Choe, 2020). Travellers’ needs, expectations and preferences have shifted as a result of prolonged travel restrictions, uncertainty over cancellation policies and physical distancing requirements. A survey by the MasterCard Economics Institute of 2 250 consumers across 15 markets found that roughly 21% expected to spend their money on domestic travel and 12% on international travel in the second quarter of 2022 (MEI, 2022). As of July 2021, tourism spending on “experiences” such as restaurants and bars, amusement parks, museums, concerts and other recreational activities was about 34% above 2019 levels and was outpacing spending on “things”, such as souvenirs, apparel, cosmetics and other retail goods.
Research by the World Travel and Tourism Council (WTTC) and Trip.com points to four emerging consumer trends: i) domestic rediscovery; ii) freedom and flexibility in travel; iii) rural and nature-based destinations; and iv) a healthier lifestyle (WTTC and Trip.com, 2021). A study by the Asian Development Bank with a focus on ASEAN outlines three similar trends: i) emphasis on health and hygiene; ii) preference for proximity; and iii) demand for sustainable tourism (ADB, 2022). A different survey by American Express shows that 87% of respondents in India are interested in taking extended trips to experience new destinations, and that, when asked whether remote working during quarantine and travel might make them stay longer, a majority of respondents agreed in Thailand (69%), Viet Nam (57%) and China (54%) (Amex, 2021). Data from Trip.com shows that the most attractive destinations for domestic travellers in the region in 2021 included Shanghai (China), Manila (Philippines), Kuala Lumpur (Malaysia) and Bali (Indonesia). When international travel restrictions were in place in China, demand for domestic travel increased, with bookings for in-province trips or travel within a 300-kilometre radius of home dominating among Chinese travellers in 2021 (WTTC, 2021).
While some studies have highlighted opportunities for more sustainable and local travel in the post-pandemic era, others point to a different pandemic-related trend. After living under lockdowns and travel restrictions for extended periods, people develop a strong desire to travel and consume tourism and hospitality products more frequently and intensively. This pent-up demand is further driven by savings accumulated during the period when people could not travel. Accordingly, this argument suggests that post-pandemic travel will be more frequent, more indulgent and further from home. However, tourists at present are tending to book more short-term travel.
The renewed interest in travel is also supported by the latest UNWTO Confidence Index, which has returned to 2019 levels for the first time since the start of the pandemic, reflecting rising optimism among tourism experts worldwide (UNWTO, 2022c). This optimism builds on strong pent-up demand, in particular for intra-European travel and travel from the United States to Europe. For the Asia-Pacific region, 26% of experts now see a potential return of international arrivals to 2019 levels by 2023, while 69% expect this recovery by 2024 or later (Figure 3.10). Globally, pre-pandemic travel levels are expected to be reached earlier. The region thus lags behind the rest of the world, particularly Europe and the United States.
Figure 3.10. Expert expectations on the return of international tourism to pre-pandemic levels, 2019
Percentage of experts
Source:UNWTO (2022b), UNWTO World Tourism Barometer, Vol. 20/3, May 2022, https://www.e-unwto.org/toc/wtobarometereng/20/3.
In considering the recovery of the travel and tourism sector, it must not be forgotten that the COVID-19 pandemic is also an economic and social crisis. Most households in Emerging Asia faced a considerable drop in income due to the pandemic. In a survey of eight Southeast Asian countries, conducted from May through July 2020, 75% of households reported a decrease in household income and more than 50% a decline in income of at least 26% (Morgan and Long, 2021). The pent-up demand for travel thus mainly applies to consumers of secure and higher income groups. Within the Asian middle class, consumers of the younger generation may have experienced the first major economic crisis of their working lives and may thus be more cautious with spending for travel. A complex economic environment, coupled with Russia’s war of aggression against Ukraine, also puts the recovery of international tourism at risk. Inflation and the increased costs of everyday life, in particular for energy and petrol, may slow the travel recovery.
Rural and nature-based destinations
The pandemic response not only gave tourists and consumers a forced break from travel and consumption, but also isolated many people for a long time. In the post-pandemic era, more consumers are seeking travel to rural and nature-based destinations. They are focusing on experiences and people, prioritising host-guest encounters in small numbers, dialogue and human development. Moreover, with an increase in public awareness about personal health and the need for physical distancing, going to crowded places and being shoulder-to-shoulder with other tourists have become less appealing (Spenceley, 2021). Some consumers avoid crowded places and long-distance travel where they must sit close to other travellers for a long time. Visiting natural venues can help people escape the lockdown experience and improve mental health. More demand is expected for close-up and meaningful experiences with nature (Chaudhuri, 2020).
A 2021 WTTC and Trip.com report on changing travel preferences derived from data on the Chinese online travel booking site Ctrip, reveals that nature-based attraction bookings in China increased by 66.7% in 2020 compared to such bookings in 2019, and rose by 264% in 2021 compared to 2020. In March 2021 alone, rural tourism-related bookings on Ctrip increased by more than 300% compared to 2019. Research by WTTC (2020) also signals an increased desire to explore places closer to home, and to reconnect with nature and travel “off the beaten path” through outdoor and non-urban activities. For example, the official tourism campaign of Malaysia promoted several off-the-beaten-track destinations including Kenong Rimba Park, Taman Negara Sungai Relau, Gua Sisik Naga, Via Ferrata at Muse Ecopark and Lojing Highland.
The pandemic also heightened awareness of environmental issues. Consumers worldwide are paying more attention to the human impact on the environment and are seeking more sustainable travel options (Booking.com, 2021). A survey by Airbnb (2021) found that 44% of consumers in India prefer to travel closer to nature, and that 94% look at sustainable travel options when they leave home. Research by China’s Trip.com Group showed that, in order to reduce single-use waste and secondary contamination, more than 80% of its customers supported hotels that did not provide disposable products (WTTC and Trip.com, 2021). Other research finds that consumers in Asia and the Pacific are consuming more consciously and responsibly (ADB and UNWTO, 2022). Research by Earth Changers published in January 2021 found that 76% of consumers had become more concerned about sustainability since the COVID-19 pandemic. When asked specifically about “sustainable tourism”, 14% more were concerned with sustainability than before the pandemic (Earth Changers, 2021).
While there may be increased interest in ecotourism, certain types of wildlife tourism require careful management to minimise the risk of transmission of viruses from animals to humans (ADB, 2021). Education remains at the forefront of promoting sound ecotourism practices that are mutually beneficial for tourists and the environment. Establishing or relaunching educational centres in national parks provides an enriching experience for tourists and also boosts overall conservation efforts. Nature Education Research Centres (NERCs) in Malaysia, for instance, involve partnerships between universities and non-governmental organisations (NGOs), as well as collaboration with the corporate sector through sponsorship programmes. Projects include the revitalisation of former NERCs, such as the one at Endau Rompin National Park, a protected tropical rainforest, which involved collaboration among the government, the Danish Corporation Environment and Development, and the Malaysian Nature Society. New NERCs have been proposed for Lambar Hills, Taman Negara National Park, Tasik Kenyir and the Setiu Wetlands.
The pandemic-driven interest in more authentic and sustainable forms of tourist experiences (Cheer, 2020) is aligned with previously identified trends associated with the experience economy and activity-oriented tourism in the Asia-Pacific region (Tolkach, Chon and Xiao, 2016). Markets include families seeking to rediscover their surroundings via participation in half-day trips, independent travellers looking for transformational journeys via trips of two to three days and institutional groups participating in educational trips. Such trips can provide “experiential authenticity”, with tourists actively engaging in activities such as handicraft making, foraging for food and other local events.
Small businesses are vital to the competitiveness of destinations because they can provide alternative products and services that resonate well with an increasing number of discerning travellers looking for immersive and personally transformational experiences.
A growing number of visitors are seeking authentic and responsible experiences based on high-quality service. To assist in developing unique experiences within the Mekong region (Cambodia, Lao PDR, Myanmar, Thailand, Viet Nam and China’s Yunnan Province and Guangxi Zhuang Autonomous Region), the Experience Mekong Collection promotes examples of good tourism practices. The website features responsible travel experiences in the Mekong region in six different categories: Cruise, Do, Shop, Stay, Taste, and Tour. The experiences are to be operated by small and medium-sized enterprises. Each experience has a profile page, including a short description and photos. A system of open nominations encourages anybody to suggest businesses for free. Businesses on this platform need to offer travel products and services that are responsible. Nominations are endorsed by the Mekong Tourism Advisory Group (MeTAG), made up of tourism professionals active in responsible tourism.
The Mekong Tourism Co-ordination Office (MTCO) acts as an anchor for the tourism sector in the Greater Mekong Subregion, allowing initiatives such as the Experience Mekong Collection to grow across borders of the six member countries. Yearly fora organised by MTCO play an essential role in fostering dialogue among leaders, entrepreneurs and policy makers in the tourism sector. Platforms such as the Experience Mekong Collection are prominent benefactors of the forums, with benefits reaped by tourism businesses and tourists alike. Improving digitalisation levels could expand the user base of such websites.
The trend toward more localised experiences and nature-based activities represents both opportunities and challenges for destinations. On the one hand, a stronger interest in rural and marine tourism in less densely populated destinations can reduce overcrowding in urban destinations. It can also contribute to the decentralisation of tourism and the development of remote areas by spreading more tourism revenues to local communities. Furthermore, regional and shorter-distance trips have a smaller carbon footprint. On the other hand, increased interest in remote areas and nature-focused trips could put additional pressure on a sensitive natural or cultural environment and transform less crowded places into mass tourism destinations.
Health and wellness tourism
The COVID-19 pandemic has had a detrimental effect on mental health on a global level, and this has led to increased consumer interest in improving and maintaining good mental health and overall wellness. A survey conducted in April 2021 found that 79% of consumers believe wellness to be essential, and that 42% consider it a top priority (McKinsey, 2021). Another report found that the desire to spend more time and money on self-care, wellness and stress relief will likely continue growing (WTTC, 2021). Several countries in Emerging Asia, including China, India, Malaysia and the Philippines, incentivise businesses to set up wellness programmes. In the Philippines, for instance, the Department of Tourism announced plans after the pandemic to attract health and wellness tourists to the country, while Thailand announced plans to attract medical tourists to Phuket’s luxury resorts to shift towards high-value tourism (ADB and UNWTO, 2022). Wellness tourism can benefit the tourism industry in various ways. According to a report by the Asian Development Bank, wellness tourism “diversifies visitor economies and spreads risks associated with concentrated market segments such as the vulnerability of beach tourism to climate change” (ADB, 2021).
The health and hygiene standards of tourist destinations and facilities have become a priority for many travellers. The pandemic transformed the way we approach health and hygiene. For travellers, measures such as additional sanitation at hotels and restaurants and during transportation are now expected (WTTC, 2021). Other measures, such as mask wearing and physical distancing, increasingly depend on individuals, their risk perception and level of comfort. In East Asia, especially mainland China and Hong Kong (China), mask wearing, and in particular surgical mask wearing, is more common than in many other parts of the world (Eves, 2022). Surgical masks were already common in the region during previous health crises such as the SARS epidemic of 2002-03.
Perceived risk such as the perceived probability of a critical incident, feelings of fear or anxiety, and safety concerns are an important component of travel decision making, and risks associated with the COVID-19 pandemic are influencing travel intentions and behaviour. Meng et al. (2021) studied the effects of COVID-19 risk perception on Chinese travel intentions. They found that Chinese travellers were worried about safety measures, the seriousness of the pandemic and the risk of getting infected. The study predicts that if Chinese travel restrictions are lifted, people will still have concerns about travelling. Therefore, tourism and hospitality businesses will need to focus on hygiene and cleanliness to assure travellers that they are safe. Moreover, contactless technologies and touch-free services (e.g. contactless check-in, payments, and food delivery) will increasingly become necessary for consumers. Tourist sites should consider implementing advance bookings to limit and manage crowds.
Due to health-related concerns, travel in large groups has also been highly impacted by the pandemic, forcing some tour operators out of business. In China, large group travel, which is generally less popular among young tourists, is expected to play a minor role in the post-pandemic era (ADB and UNWTO, 2022). However, group travel will not disappear as there is still a market, especially among an older generation of travellers. Countries with a large share of Chinese tourists, such as Cambodia and Thailand, have a tourism infrastructure that specialises in the Chinese market (e.g. hotels, Chinese-speaking guides and shopping areas).
Wealthy tourists increasingly seek high-quality local health-care facilities where they can find treatment if needed, which points to potential strong demand for medical tourism (ADB and UNWTO, 2022). During the first two years of the pandemic, most health-care facilities in Asia, which previously catered to international medical tourists, shifted their focus to emergency management related to COVID-19 patients (Tatum, 2022). Signs of recovery of the sector are evident in Thailand and Malaysia. According to the Malaysia Healthcare Travel Council (MHTC), revenue from medical tourism could reach pre-pandemic levels by 2025. To ensure that the health-care industry remains a major contributor to services exports, MHTC is focused on strengthening the health-care travel ecosystem to provide a seamless quality of care for each step of the journey. The government is also increasingly focused on branding effectiveness to promote Malaysia as a premier health-care destination. Initiatives include large-scale brand awareness campaigns through digital and conventional channels. Thailand, meanwhile, hosts the biggest number of medical tourists in Southeast Asia, and the Thai government aimed to grow its medical tourism sector by 5% in 2022. It has emphasised wellness facilities broadly, from high-end centres for COVID-19 recovery to nutrition, traditional medicine, herbology, and anti-ageing treatments.
Conclusion
The travel and tourism sector plays an important role in Emerging Asian countries, contributing significantly to the region’s economies. However, travel and tourism were severely impacted by the COVID-19 pandemic due to prolonged travel restrictions. The suspension of movement across the globe posed the greatest challenge to the tourism-dependent economies. As restrictions have been lifted, the sector has started showing signs of recovery, although travel and tourism have not yet reached pre-pandemic levels. This challenging situation nonetheless offers an opportunity to look at critical issues in the sector and take corrective actions as borders open for international tourism. Diversifying and expanding the international inbound market and supporting domestic tourism are both important. Countries in the region will need to pay attention to additional challenges, including labour market and human resources issues and adjusting to the post-pandemic tourism and travel aims of consumers.
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