Issue #121 - 4 Factors Driving Tourism Diversification in South East Asia
Visitor market diversification is a hot topic as tourism competition heats up.
Welcome to issue 121 of Asia Travel Re:Set.
“Diversification is the kevlar that protects you from fatal financial injuries. It’s a defensive strategy that limits your downside, even if it limits your upside.”
Those words were written this week by Prof. Scott Galloway in his excellent essay, The Netflix Effect.
He was analysing a remarkable 12-month turnaround in Netflix’s revenues, market cap and future outlook.
One small phrase stands out: “Invest in your opportunities, not your problems.”
As governments and tourism boards in South East Asia confront another 12 months of looking back to 2019 in order to move ahead, diversification is a hot topic. Perhaps even more so as Australia, China and Saudi Arabia take highly strategised strides.
So let’s follow that train of thought…
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- “IN THE NEWS”
- 4 Factors Driving Tourism Diversification in South East Asia
Visitor market diversification is a hot topic as Australia, China and Saudi Arabia take purposeful strides.
“IN THE NEWS”
It's about more than just visitor numbers and tourism spend. “Partly, this is because China’s government views its tourism interests through a different lens. Trade and investment ties, strategic politics, diplomacy and tourism are intertwined in complex bilateral relationships.” Click HERE to read my new article for the Asia Media Centre.
"The general rule for China, as with most large outbound markets, is that traveller demand tracks air capacity and air capacity tracks traveller demand." I didn't make it to Singapore for ITB Asia this year, but it was nice to make a brief ‘appearance’ in the TTG Asia Show Daily discussing China's outbound recovery. Many thanks to Caroline Boey for including my comments.
4 Factors Driving Tourism Diversification in South East Asia
Recently on The South East Asia Travel Show, we interviewed Sam Palmer, General Manager of Visitor Economy at the Australian Trade & Investment Commission for an episode called Behind the Scenes of Australia’s Tourism Transformation Plan.
Sam discussed Australia’s International Diversification Strategy for the Visitor Economy. This sets new benchmarks for the nation’s primary and emerging inbound markets, and is founded on a top-to-bottom reappraisal of the visitor economy.
It was an illuminating discussion, not least because Australia is a popular destination for South East Asian travellers and regional tourism boards want to attract more Aussies. The research-enabled long-term planning and market-specific product development are impressive - particularly related to South East Asian markets. So, too are the carbon-impact factors taken into account.
Listen to Behind the Scenes of Australia’s Tourism Transformation Plan, with Samantha Palmer, AusTrade, here:
🎧 Spotify 🎧 Apple Podcasts 🎧 Website
Or search for The South East Asia Travel Show on any podcast platform
Which brings us to South East Asia, where recovery remains multi-speed. Each market is unique with its own priorities and approach to diversifying its inbound mix, but here are 4 shared influences region-wide.
1) The China Conundrum
China’s three-year Covid Zero travel isolation forced a a rethink about the developing regional reliance on Chinese tourists and their spending power. In 2019, China was the #1 inbound market for 4 ASEAN nations, #2 for 5 others and #3 for 1 more.
The heavily hyped “pivot to India” is a long-term play requiring a major scale-up of air connectivity and destination product development. Since South East Asia reopened in Q2 2022, tourism boards have also marketed hard in the Middle East, Central Asia, Japan, South Korea and Australia.
Nevertheless, hopes were high when China reopened in January. Nearly 10 months later, a slow / gradual / underwhelming / uncertain / accelerating (choose your adjective) return of Chinese tourists is raising fears about the viability of a full recovery to 2019 levels in 2024. In turn, this is generating new discussions about visitor market composition, and the ability to shore up China-shaped gaps.
2) The 2019 Catch-up Race
Tourism board benchmarking against 2019 is becoming somewhat tenuous (by 2024, 2019 will be half a decade in the past) but will continue regardless. In 2019, the 10 countries of South East Asia welcomed 144 million inbound arrivals. That figure plummeted in 2020 and 2021, and recovered to about 25% of the 2019 total in 2022.
In 2023, the upper estimate is around 100 million, roughly a 70% overall recovery. Although only one metric, visitor arrivals is the one pushed by governments in their national media. They also use aggregate spend, which has increased because of a higher cost of living/travel since the pandemic. Hotel rates and occupancies are sometimes published, but big variations exist between a small city state like Singapore and a large country like Thailand with a national inventory to fill nightly. An aggregate calculation of arrivals and length of stay is rarely published in the region.
While the 2019 catch-up continues, incremental policies like visa waivers and minimum stay extensions will be introduced for more key markets, while online influencers in target markets should expect an array of hosted trip invites.
What Did We Really Learn From China's October Golden Week Holiday?
Chinese Golden Week statistics are always huge. October’s headline figures didn’t disappoint. So, as China’ travel economy continues to recover, what did we learn?
CLICK HERE to watch my video chat with Shanghai-based tourism consultant Yereth Jansen featuring 5 key takeaways for tourism professionals worldwide.
3) New Competitors I
The first is China. As discussed during my chat with Yereth Jansen in Issue 120 (see above), Chinese destinations, hotels, airlines, OTAs and brands have become smarter at using social media to market to young Chinese travellers - some of whom were reticent to travel overseas initially, others who didn’t have the budget this year and those keen to explore more of China while international flight options improve. This has been an important factor in China’s domestic travel boom in 2023.
So, while South East Asian nations compete to entice Chinese tourists, marketers at home had a solid advantage. They understand Chinese consumer behaviours better. How this might, or might not, impact outbound travel in 2024 is an open question.
4) New Competitors II
The second is Saudi Arabia. “World tourism needs China back,” said Fahd Hamidaddin, CEO of the Saudi Tourism Authority in Beijing in April. He was one of the first global tourism leaders to visit China after it reopened, signing a destination marketing MoU with Trip.com at the same time. Last month, Saudi Arabia received Approved Destination Status from China’s government in time for Saudia to launch its largest winter-spring season flights volume between Beijing, Jeddah and Riyadh.
Saudi Arabia is targeting 3 million Chinese visitors annually by 2030 who might otherwise have visited South East Asian destinations. Its strategy is clearly structured, promising “new direct flights, customised products and strategic partnerships in place to make group and flexible independent travel seamless.” It will also seek to entice tourists from ASEAN countries away from travelling intra-regionally.
While 2030 is still viewed from afar, Saudi Arabia is becoming a genuine competitor for tourists that South East Asian countries would regard as key prospects.
Which recalls that earlier quote: “Invest in your opportunities, not your problems.”
And, that’s a wrap for Issue 121.
The Asia Travel Re:Set newsletter will be back on 12 November.
Until then, find me at LinkedIn and The South East Asia Travel Show - where this week we’ll be rounding up the top travel and tourism talking points from October.
Happy travels,
Gary