Issue #47 - What Have We Learned About Domestic Tourism During COVID-19?
"Keep governments out of the quest to develop new domestic tourism services."
Hello. Welcome to Asia Travel Re:Set #47…
“Thailand Wields Axe Over Tour Teaw Thai”
A story this week in the Bangkok Post suggested the Thai government may curtail its Tour Teaw Thai domestic travel subsidy programme.
Although homespun travel has been a lifeline since March 2020, this is no surprise.
In general, state travel assistance programmes have been poorly conceived, targeted and delivered. The promised benefits fail to reach the small operators who need them.
Mostly, this is because little attention was ever paid to domestic tourism. As a result, governments don't fully understand what travellers want or travel suppliers need.
So, could COVID-19 inspire policy planners to rethink domestic travel longer term?
Some will. Most won’t. Inbound tourism remains Priority No. 1.
So for this week’s newsletter, I’ve adapted an article I wrote for Asia Gaming Brief, entitled COVID Sparks Innovation in Domestic Tourism.
Thanks for being on board,
Gary
The Sunday Itinerary
- DashBoard
Five intriguing vaccination statistics this week
- QuoteBoard
Asia Pacific airline woes, Bubble vs Corridor, Bali’s reopening bust
- What Have We Learned About Domestic Tourism?
What happens next for local travel in the rush to rebuild inbound arrivals?
DashBoard
Five intriguing vaccination statistics this week…
3.16 billion: Total vaccine doses administered worldwide.
1.96 billion: Total vaccine doses administered in Asia.
1.24 billion: Total vaccine doses administered in China. (1 July)
335.67 million: Total vaccine doses administered in India.
46.25 million: Total vaccine doses administered in Japan.
Sources: Our World in Data & China National Health Commission
QuoteBoard
You heard it here…
“The travel and tourism sectors in [Asia Pacific] have continued to suffer as strict border controls remain in place. International passenger traffic carried by Asia Pacific airlines amount to barely 5% of pre-pandemic volumes.”
Subhas Menon, Director General, Association of Asia Pacific Airlines. [AAPA release]
“We're going to call it the air travel corridor from now on. The word ‘bubble’ is a bit of a jinx, I think.”
Ong Ye Kung, Singapore’s Health Minister, says the Hong Kong-Singapore Air Travel Bubble will be revived, and will also be renamed. [The Straits Times]
“When it comes to Bali, It is impossible to reopen it in the near future, given the Delta variant of COVID-19 in the country.”
Luhut Binsar Pandjaitan, Indonesia’s Coordinating Minister for Maritime Affairs and Investment. [The Bali Beat]
While most Asian borders are locked, South Koreans are taking summer holidays to Europe - and booking ahead for Lunar New Year. The South East Asia Travel Show discusses the drivers behind this upsurge in Asia’s most vibrant outbound market with Dr Jaeyeon Choe, Visiting Professor at the School of Hospitality & Tourism at Hue University, and - of course - co-producer of The Asia Pacific Travel & Tourism Report.
Click to listen to the podcast HERE
What Have We Learned About Domestic Tourism?
The pandemic has triggered a tourism reset. How this unfolds from here is uncertain, but governments and tourism boards have been forced to embrace domestic markets.
This shift would not have occurred without a prolonged, world-altering interruption.
Prior to the pandemic, domestic tourism enjoyed little state support in terms of finance and marketing.
Take Malaysia. Its National Tourism Policy 2020-2030 (published in December 2020, when COVID-19 was in full swing) makes not a single reference to domestic tourism.
Such long-standing oversight meant that most countries in the region were seriously under-prepared when COVID-19 forced the shutdown of international travel.
Private Sector Players Revitalise Local Tourism
COVID-19 necessity, which resulted in locked borders, saw political attitudes shift. Governments and tourism boards suddenly began imploring residents to travel and spend more at home.
Messaging emphasised a National Duty to keep the tourism industry afloat and the economy ticking over.
In response, we have seen new innovation by private sector tourism players.
Health and wellness travel, soft adventure, trekking, photography and mountain biking tours targeting first-time and repeat local visitors have gained popularity.
Vietnam, Cambodia and Laos are enjoying vibrant growth in hiking, nature trekking, mountain biking, road and hill cycling, zip-lining and river sports.
Self-drive escapes create a sense of family safety and itinerary control, with Vietnam and Thailand developing new coastal and mountain drive routes.
Camping at locations once favoured by backpackers is hot in Vietnam, and camper-van trippers in South Korea are taking BBQ cooking tutorials.
Chinese tourists, who were often considered to prefer city breaks or Hainan Island retreats, are hitting the road to explore more rural locations.
The results of this clamour for outdoor experiences are easily viewed on social media. It remains uncertain, though, whether tourism boards will tap into this huge resource of user-generated travel content to reimagine destination marketing.
The Economics of Inbound Travel
As Thailand’s Phase 1 reopening strategy in Phuket demonstrates, governments and tourism boards still view inbound tourism as an unchallenged priority.
As preparations began to welcome back inbound visitors, significant spend was invested into destination videos targeting international markets.
In countries that derive - or aspire to derive - sizeable income from tourism, the rush to bring back inbound travellers simply reflects economic reality.
Over the past 16 months, finance ministers have noted that domestic tourism simply cannot fill the void in terms of trip numbers, expenditure and tax revenues.
Therefore, it’s unlikely to attract the foreign investment needed for an economic recovery.
Inbound tourism brings more than cachet to tourism board target setters. It is a viable route to foreign exchange and infrastructure investment.
This investment may comprise airports, railways, ports and highways. It may also focus on sectors that benefit from improved connectivity and logistics infrastructure.
Either way, inbound tourism is viewed - perhaps more than ever - as a pivotal cog in the national economic wheel.
China’s Domestic Travel Model
China redefined the model for driving tourism through an infrastructure build-out.
For the past two decades, it has ploughed vast investments and resources into national infrastructure to stimulate travel spending alongside overall economic development.
This has delivered:
A portfolio of new airports, including Chengdu Tianfu International Airport, above, which opened this week
Refreshed airline fleets
Upgraded cruise ports, including the mega-port project in Hainan Island.
Self-drive, rural and winter sports tourism have also been heavily promoted.
That last word is crucial. Big-ticket investment, a geographically diverse country and a population of 1.41 billion are fine, but joined-up domestic tourism policy is vital.
China has reaped the benefits of all these factors over recent months.
Some 4.1 billion domestic trips are projected in 2021 - a 42% uplift from 2020.
Strong and supported, China’s domestic tourism sector will continue to flourish whenever outbound travel is permitted once again.
Subsidies & Rate Discounting
Region-wide, much of the expansion in domestic travel has been bolstered by state subsidy programmes and heavy discounting.
The fact remains that in many countries of South East Asia, for example, pricing for international tourists is beyond the reach of domestic tourists.
In Vietnam, airlines were afforded tax holidays and airport fee reductions enabling them to launch new city pair routes.
Singapore introduced the SingapoRediscovers voucher scheme to encourage citizens to spend at tourism attractions.
Hotel rate discounting was noticeable at resorts in Langkawi, Malaysia’s popular island retreat, over Christmas and New Year - a period when rates usually rise.
City hotels offered extra add-ons, like free meals, spa treatments and discount extra night stays, rather than significantly reducing their core rate.
Cruises to Nowhere
Given its city-state size and with one major airport, Singapore had no domestic tourism sector as a safety net.
Its most successful innovation has been Cruises to Nowhere. Operated by two cruise lines, these 2, 3 and 4-night cruises include no port calls.
Instead, they revamped the onboard entertainment, activity and dining options, and introduced high-tech healthcare facilities.
They have proved hugely popular, and - although onboard capacities have been adjusted according to changing COVID-19 regulations - Royal Caribbean extended its domestic cruise season to 11 months.
High Costs of the Pandemic
It is too early to predict the recovery of international travel in the region, but it seems likely that domestic travel will remain an important part of the mix for some time.
Reasons for this include the extra ancillary costs and inconvenience of overseas travel, fear about the health risks of air travel and variable rates of vaccine rollout.
Localised economic factors matter, too. Many people lost their jobs or are on reduced salaries. In Malaysia, for instance high personal debt levels will impact travel plans.
A major issue that has not altered during the pandemic is that domestic tourism is focused on public and school holidays and weekends. In general, paid annual leave allowances are low.
So how do you incentivise people to travel domestically beyond public holidays? This will be especially difficult if the strategic focus shifts back to inbound tourism.
So, What Next?
Policymakers, and their appointed tourism boards, should think radically, imaginatively and long-term. Here are a few bullet-point thoughts:
Develop the learnings accumulated over recent months about the shifting aspirations, expectations and vacation choices of domestic travellers.
Encourage and provide incentives - like the tax breaks and tax holidays afforded to inbound investors - for projects that prioritise domestic tourism services.
Channel this incentivised investment into secondary and tertiary areas and untapped natural locations of a country – away from the tourism crowds.
Tailor these services for domestic travellers, but - over time - drive visits by adventurous inbound visitors to graduate the expansion in an organic way.
Keep central and local government authorities and their ‘preferred suppliers’ out of the development and delivery of new domestic tourism services. They slow everything down and cause costs to rise and product quality to be compromised.
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This week’s newsletter is adapted from my article for Asia Gaming Brief on 26 June. Click to read in full HERE
It also draws on a presentation I gave at the Domestic Tourism in Asia: Restart and Long-term Strategies Forum in May. Click to Watch HERE (from 1 hr, 27 mins)
The South East Asia Travel Show’s Monthly Review discusses 6 key talking points in June. These include the Phuket Sandbox and Bali’s troubled reopening. Plus, moves are afoot to reboot educational travel and a high-profile ASEAN brand makes its Vegas play. Plus, which travel players applied for a Malaysian digital banking licence?
Click to listen to the podcast HERE
And, that’s a wrap for Issue 47.
Asia Travel Re:Set takes a break next Sunday, as I’m writing a new South East Asia Travel Market report (more soon), which will eat up my time. Back on 18 July.
Until then, you can find me on Twitter, LinkedIn, and the Asia Travel Re:Set website.
Have a great (2) week(s),
Gary