Issue #46 - Asia Pacific Travel & Tourism Report, June 2021
Issue #46 - Asia Pacific Travel & Tourism Report, June 2021
15 top talking points this month from Bali, Cook Islands, East Timor, Hainan Island, Kuala Lumpur, Phuket, Shanghai and more.
Hello. Welcome to the 4th Asia Pacific Travel & Tourism Report… which sees the return of Dr Jaeyeon Choe and Michelle Dy!
Featured destinations include China, Cook Islands, East Timor, Indonesia, Malaysia, Philippines, South Korea, Thailand and more.
Hot topics range from the EU-ASEAN Aviation Agreement and digital nomadism in China to health travel pass “aggregators” and the world’s new highest hotel.
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Thanks for being on board,
Gary
15 Travel Developments That Defined June 2021
1) Is Phuket’s ‘Sandbox’ A Model to Follow?
After months of negotiations, Phuket is scheduled to reopen on 1 July.
Under the ‘Sandbox’ scheme, vaccinated tourists from 66 countries will be able to visit Phuket without undertaking a formal quarantine. They must, however, stay on the island for 14 days if they wish to subsequently travel elsewhere in Thailand.
Tourism Authority of Thailand estimates 1,500 people will arrive on Day 1, using approved airlines. The island’s hotel occupancy rate is projected to reach 20-22% from July to October.
Numerous questions remain, though:
What impact will the tightened 30-day restrictions in Bangkok and 5 provinces have on travel demand?
How many of the “low-medium risk” countries will allow their citizens to travel to Phuket?
What’s the real ‘full’ vaccination rate for residents? Some local people not involved in tourism are concerned tourists might pass COVID-19 onto them.
How will the constant monitoring and tracking of tourists work in practice?
It’s positive news that a South East Asian destination is reopening, but will the restrictive Sandbox model be a framework for other destinations?
We hope the planning, management and measurement systems will be clearly communicated to the public over the coming weeks.
2) EU-ASEAN Air Transport Agreement: Who Wins?
June marked a historic occasion for commercial aviation. The first bloc-to-bloc air transportation agreement was signed between the European Union (EU) and the 10 member states of the Association of the South East Asian Nations (ASEAN).
There is a distinction, though. While both the EU and ASEAN are regional blocs, they differ in 2 crucial aspects:
1) The EU is a supranational institution. This gives it authority to make decisions on behalf of its member states in certain matters. ASEAN does not have this authority. Therefore, the air transport agreement is technically between the EU and the 10 ASEAN member states representing their individual interests.
2) As a consequence of these supranational powers, the EU has a unified aviation market. ASEAN does not. This means EU carriers can operate flights to any allowed point in South East Asia from any of the 27 EU member states. South East Asian carriers can only operate flights into the EU from their home countries.
This disadvantages ASEAN carriers since their network will be smaller. Ownership and control restrictions in ASEAN also limit airline consolidations, a problem that is absent in the EU.
3) South Koreans Head to Europe For Summer
South Koreans are flying to Europe for summer vacations. Hot destinations include Switzerland, France, Italy and Spain. Also on-radar are Guam, Saipan and Hawaii.
Pent-up desire for European trips is giving a boost to travel agencies. Plus, bookings are strong for the national Chuseok holiday in September, and Lunar New Year 2022.
South Korea is one of a few Asian countries that allow outbound travel. Returning travellers must do a 14-day home quarantine. But if vaccinated, they are exempt.
While South Korea is reporting 500+ daily cases, it aims to vaccinate 70% of the population by September.
South Korea is forecast to become Asia Pacific’s 3rd largest outbound market by 2025.
4) Cook Islands Seeks Tourism Recovery
Small steps in the early weeks of the 2-way New Zealand-Cook Islands Travel Bubble, which began on 18 May. The Pacific island group attracted 1,486 visitors in the first 2 weeks, after “15 months of zero visitors.” Some 634 arrivals were “returning residents.”
The Bubble remains open despite the Cook Islands Ministry of Health ordering 13 passengers to disembark “in error” a flight from Auckland. The unlucky 13 were from Wellington, where a COVID-positive Australian visitor sparked track-and-trace activity last weekend.
Meanwhile, discussions are ongoing for an Australia-Cook Islands Travel Bubble once the island nation has been fully vaccinated.
Also in June, the Asian Development Bank (ADB) visited for the first time since March 2020 to progress the Cook Islands Economic Development Strategy 2030. Its delegate, Iain Rennie, said:
“The Cook Islands is one of the economically hardest-hit Pacific Developing Member Countries during this pandemic, owing to its dependency on overseas tourism… GDP is estimated to have fallen by 26% in financial year 2020/21.”
5) Don’t Pack for Bali Just Yet!
First it was 11 September 2020. More recently, Bali planned to reopen 3 ‘Green Zones’ - Ubud, Nusa Dua and Sanur (plus, maybe Kuta?) - in July. The problems are mounting.
Bali’s primary source markets, Australia and China, remain closed. In Australia’s case (and maybe China’s), this will extend into 2022. They are big gaps to fill.
Indonesia is experiencing a surge of the delta variant while recording the highest death toll in South East Asia. Fears persist that the true extent is under-recorded.
Bali hopes to fully vaccinate 3 million of its 4.36 million citizens by the end of June. So far, 2.12 million residents have received a 1st dose, and 738,289 both jabs.
Bali has relied on domestic tourists in recent months. Similarly to Phuket, many businesses catering to inbound visitors are closed, which may dampen its allure.
6) Does South Korea Need 10 LCCs?
For a population of 52 million, South Korea has a LOT of low-cost carriers (LCCs).
According to the Centre for Aviation (CAPA), South Korea has 7 LCCs currently in operation, with 3 more planning to apply for an air operator’s certificate (AOC). If all 3 start-ups eventually operate, the country will have a whopping 10 LCCs.
Analysts were commenting 5 years ago that South Korea’s budget airline market was oversaturated. So, will the pandemic and Korean Air’s acquisition of Asiana Airlines alter the narrative?
The 2 carriers count 3 LCC subsidiaries, but no announcements have been made on their future. If these 3 carriers are consolidated, will this spur more market entrants?
Or, will it stimulate the appetite for other airline consolidations?
7) Multilateral Recognition of Vaccine Certificates
Fully vaccinated travellers to the Philippines now enjoy a shortened 7-day quarantine. The catch? You must have received your vaccine in the Philippines.
If you got the same vaccines offered in the Philippines elsewhere, you are not entitled to a 7-day quarantine as the Philippine government has no means of verification.
Almost all countries are facing the same problem.
The only way to resume friction-free international travel in a COVID-endemic world is a multilateral solution. This would enable countries to verify a vaccine certification issued by another government.
Global organisations like the International Civil Aviation Organisation are inching towards a solution, but this has gathered disappointingly little media attention.
In the meantime, we can expect bilateral recognition of vaccine certificates - but this is not enough.
8) Opening Up East Timor to Tourism
Having applied to become the 11th member of the Association of South East Asian Nations (ASEAN) in 2011, East Timor (Timor Leste) is still waiting. Realistically, it may take a couple more years.
Accession to ASEAN is vital to restructure the nation’s economic future as it transitions from a reliance on petroleum to building a stronger tourism sector.
This month, The South East Asia Travel Show spoke with David Orr and Nick Wolf of Australia’s Department of Foreign Affairs & Trade for a forthcoming edition.
They told us that expanding East Timor’s tourism economy requires improved air accessibility. It currently counts just 5 air routes, including Darwin and Singapore.
Australia, the Asian Development Bank and Japan International Cooperation Agency are funding a significant expansion of Dili Airport over the next 5 years.
East Timor currently has 1 air service agreement, with Australia, but more are under negotiation. The new airport will therefore be pivotal for shaping the future of travel.
One to watch.
About the Team
From South Korea, Dr Jaeyeon Choe is a researcher and consultant specialising in sustainable tourism development in South East Asia. She is a Visiting Professor at the School of Hospitality and Tourism at Hue University, Vietnam, and works as a sustainable tourism/business consultant at Insita Bali, Indonesia.
Based in Malaysia, Michelle Dy is a regulatory lawyer with extensive experience in policy research and public affairs across Asia-Pacific. She is also a published author of several academic journal papers and book chapters on cutting-edge issues in aviation.
Based in Malaysia, Gary Bowerman is Director of Check-in Asia, co-host of The South East Asia Travel Show and author of The New Chinese Traveler. Founder of Asia Travel Re:Set, he is an analyst, speaker and media commentator on Asian travel economics and consumer trends.
Click to read 3 our previous monthly reports below:
9) Solving the Health Travel Pass Stalemate
Digital health passports, or health travel passes, like the IATA Travel Pass, AOKPass and CommonPass, are considered vital by airlines struggling to convince governments to resume international travel while the pandemic endures.
However, limited resources and manpower mean airlines must make a calculated decision: which digital health passport should they go with? So far, Asia Pacific governments have failed to reach a consensus leaving airlines frustrated.
Apart from health travel passes, companies are developing “aggregators” or “unifiers”. These will enable airlines to access different health passes under a single platform.
This negates the need for airlines to integrate with different travel passes one by one, or wait for governments to agree on a single app to use.
Could this solution provide a way out of the current stalemate?
10) Is Hainan a Reopening Model for ASEAN?
With islands - such as Maldives, Sri Lanka, Cook Islands - dominating tourism reopening so far in Asia Pacific, where else is a viable case study?
“We’ve reviewed data from Hainan Island in China to understand weekend and weekday demands,” Brad Edman, Spokesperson for the Phuket Hotels Association, told The South East Asia Travel Show last week.
South East Asian destinations might look at 3 strong trends emerging from China’s holiday island: cruising, self-drive and surfing.
1) In June, China released the Master Plan for Construction of Hainan Free Trade Port, which should stimulate growth in regional cruising. It notes that Hainan will be “an international home port for cruise ships.”
2) During this month’s Dragon Boat Festival, Hainan’s Sanya and Haikou were among China’s top 3 destinations for car rental demand (along with Chengdu), says Fliggy.
3) The popularity of surfing continues to grow in Hainan, which has hosted several international competitions. Over the past year, more domestic tourists seeking adventurous outdoor pursuits have taken to riding the waves.
11) Full-Service Carriers Follow LCCs... Again!
Low-cost carriers (LCCs) have a history of disrupting the “traditional” airline business. The concept of “unbundling,” whereby other services - apart from your randomly assigned seat on a plane - are sold by airlines separately was pioneered by LCCs.
The success of this model proved “too irresistible” to be ignored by the full-service carriers (FSCs). A few years later, they started to unbundle their services, too.
New challenges brought by the pandemic have seen LCCs, like AirAsia, moving beyond the airline business in a bid to be resilient. FSCs are once again taking notice.
According to news reports, Cathay Pacific is taking a page from AirAsia’s playbook and wants to be more than just an airline. Few details have been released, but “Cathay” may become its own brand, with the company behind the airline branching out to other business ventures.
12) Is ASEAN the Next Tourism Education Hotspot?
Yes.
However, only 49 out of 7,000 higher education institutions in the region made it into the Times Higher Education World University Rankings in 2021.
With more funding, quality programmes and ASEAN cooperation, the region can promote and expand its higher education sector.
Given the need for greater professionalism in the tourism sector, more comprehensive tourism management programmes can attract domestic and international students and researchers, and contribute to sustainable tourism development across ASEAN.
13) Digital Nomadism in China
Who are ‘digital nomads’? You might imagine a European or Australian sitting in front of a laptop in a Bali cafe. Not anymore!
Young professional Chinese are taking up digital nomadism during the pandemic. COVID-19 has encouraged young people in a highly economically competitive nation to slow down and rethink their work-life balance.
Some 200 million Chinese now work from home, and co-working spaces are everywhere.
Chinese digital nomads like to escape to untapped destinations, such as rural towns.
Will this remain a sustainable working lifestyle after the pandemic, as young Chinese choose to escape the urban rat race in search of more meaning in their lives?
14) Malaysia’s Travel Pain Endures
In the May report, we noted “June will see Malaysia commence a 3rd national lockdown.” This was a more stringent extension of the 3rd Movement Control Order (MCO), which commenced in Kuala Lumpur and other states on 8 May.
Entering July, the situation is critical for the travel industry. The government’s 4-phase National Recovery Plan suggests that domestic travel (off limits since mid-January) may not recommence until November.
Some backtracking has been trailed, with ministers implying fully vaccinated citizens may be able to travel interstate before then. No timetable has been published.
Malaysia’s 7-day moving average of new infections has dropped from 7,653 on 1 June to 5,350 on 26 June. This is not sufficient to trigger the daily target of “below 4,000 cases” for lifting the lockdown, which expires on 28 June.
On a brighter note, the vaccination rollout is accelerating. Latest figures show 15.9% of the target of 26.18 million people have received a 1st jab and 6.2% a 2nd shot.
15) World’s Highest Hotel Returns to Shanghai
And finally, China reclaimed the World’s Highest Hotel status this month with the opening of the 165-room J Hotel Shanghai Tower. The hotel lobby sits 474 metres above Shanghai, and a 120th-floor restaurant is 523 metres off the ground.
Managed by China’s Jin Jiang, J Hotel brings the “highest hotel” title back to Shanghai. It previously held the record on two occasions: Grand Hyatt Shanghai (Jin Mao Tower) and Park Hyatt Shanghai (Shanghai World Financial Centre).
Since 2018, Gevora Hotel in Dubai has officially been the world’s highest hotel.
And, that’s a wrap.
The Asia Pacific Travel & Tourism Report returns on 25 July.
Meanwhile, eagle-eyed Euro 2020 watchers are noticing that 4 tournament sponsors are Chinese: AntChain, Vivo, Hisense and TikTok. I checked out the current state of Chinese sports marketing in this article for the Asia Media Centre.
Have a great week,
Gary