Issue 84 - Can South East Asian Tourism Boards Forecast the Future?
Benchmarking the scale of demand for international travel in 2022 is proving tricky.
Welcome to Issue 84 of Asia Travel Re:Set…
“Structural under-supply” is a term we are frequently hearing from economists.
Used to describe everything from precious metals and commodities to staple foods and pilots, diminished supply and volatile demand patterns bedevil various sectors.
As the global economy shows signs of cooling, demand-supply equations are being upended. And then some.
Travel is similarly affected. Having just returned to KL after 5 weeks in the UK and Belgium, I’ve reflected on the supply-demand outlooks in South East Asia and Europe.
In Europe…
The economically vital ‘tourism summer’ has started early. Demand for tourism is booming. Airports, rail stations and city squares are packed. I saw this with my own eyes in London, Oxford, Brussels and Bruges.
But supply constraints - notably in terms of airline, airport, railway, hotel and F&B staff are causing bottlenecks. These may worsen before the real dampening impacts of a rise in the cost of living are expected to take effect in early Autumn.
Back in South East Asia…
The landscape is patchy. An incipient recovery is driven by familiar destinations - Thailand, Bali, Singapore. Inbound bookings are slower in other countries.
Despite the shareholder-driven bravado we read, outlook optimism is mixed. This is largely, although not wholly, due to curtailed travel supply from China - which lowers the recovery ceiling. Destinations also need more visitors from Japan and South Korea.
Thailand is fretting about whether eliminating the Thailand Pass and declaring Covid-19 “endemic” would deliver an arrivals surge. Malaysia is debating the anticipated duration of its tourism recovery. Despite leading the way to eliminate Covid-19 travel restrictions, Cambodia is not yet experiencing the rebound it hoped for.
Meanwhile, entire new airports are being built and terminal expansions are commencing in the expectation that demand will expand to meet supply.
A competitive numbers game…
For now, tourism board forecasting provides a barometer of expectations. Pre-pandemic, we became accustomed to optimistic quarterly, half-yearly and annual international arrivals forecasts - which were often revised upward.
Tourism evolved into a competitive political numbers game. And then came Covid-19.
Two-and-a-half years later, that game is back in play. The numbers being traded in South East Asia are greatly diminished, though.
Early days of a new era…
So, does this all add up to a recalibration, a short-term realignment?
Or are we witnessing the start of a structural shift in supply and demand for international travel in Asia Pacific?
In the course of my daily work, I discuss these questions with economists and tourism officials, hoteliers and aviation analysts, retail brands and travel insurers.
The answers are mixed and informative - but can be (very) roughly aggregated into a single phrase: “These are early days. It’s simply too soon to say.”
Thanks for being onboard.
- “IN THE NEWS”
- Can South East Asian Tourism Boards Forecast the Future?
Benchmarking the scale of demand for international travel in 2022 is proving tricky.
- South East Asia Seeks to Build Momentum for a Travel Recovery
With traveller testing gone, can South East Asia now build a much-needed recovery?
“IN THE NEWS”
“Even as Sri Lanka buckles under the weight of its worst economic crisis on record, tourists continue to flock to the island nation.” This week, I was interviewed by Lina Batarags, Managing Editor at Business Insider Asia, for this piece about tourism and the economy in a country whose Prime Minister admits is facing prolonged hardships.
Can South East Asian Tourism Boards Forecast the Future?
It is unsurprising that tourism board confidence has taken a hit in South East Asia. Covid-19 didn’t just savage the travel sector for two years, it forced everyone to ask difficult questions about how a future tourism landscape might look.
A state of suspended animation exists until clarity emerges from China regarding its Covid-control future. For all the talk of tapping previously under-valued markets - be they India, Middle East or Central Asia - shifting the supply and demand trajectory of an industry as large as travel and tourism takes time.
And in our minds is that recurring question: Will tourism return to “pre-pandemic levels” in 2023, 2024, 2025? Or is that, actually, the wrong question?
Is an entirely new paradigm needed for measuring inbound tourism - one that replaces total arrivals, gross revenue spend and percentage of GDP with factors that reflect a geo-politically and economically altered world?
War, Circular Economies & Metaverses
Shouldn’t quantifying travel aggregate all 3 pillars: inbound, outbound and domestic - particularly as most South East Asian governments are paying closer attention to domestic travel demand than ever before?
And what about the impacts of climate change and circular economies? Where do they fit into tourism forecasting?
And we haven’t mentioned food supply chains, inflation, volatile currencies, high unemployment (and an accelerating quest to replace paid labour with automation).
Or the cumulative impacts of war in Ukraine.
Or the emergence of a new Covid-19 variant (or an entirely new pandemic).
Or the potential distraction away from real-world travel of metaverses among young consumers.
The upshot is that, for now, South East Asian tourism ministries and tourism boards are under-forecasting. This reflects uncertain economic realities, and the absence of a reliable demand and supply data from the past 2 years on which to base forecasts.
Current projections include…
Thailand is South East Asia’s most prolific tourism forecaster. Upbeat projections usually reflect it being the region’s most visited nation. That will not change any time soon, but concerns about the speed and scale of recovery overlay numerical caution.
This week, the Tourism Authority of Thailand (TAT) upgraded its 2022 arrivals forecast to “at least 8 million.” Better-than-anticipated bookings for June encouraged the TAT to “project a consistent monthly level [of arrivals] of around 1 million from June until the rest of the year,” notes the Bangkok Post.
Last December, Vietnam’s National Administration of Tourism forecast 5 million arrivals for 2022. This figure was reiterated at the Vietnam International Travel Mart in April. In mid-May, Vietnam removed testing restrictions for visitors and is expecting a strong second half of the year.
Malaysia believes it “can exceed 2 million arrivals” in 2022. The 2 million target was set in March. This seems rather downbeat given comments by the Tourism, Arts & Culture Minister this week that the country had received “close to 1 million arrivals” since opening its borders on 1 April. Meantime, the National Recovery Council, a political entity chaired by former Prime Minister Muhyiddin Yasmin, says Tourism Malaysia’s 5-year timeline for a tourism recovery is “too long.”
In mid-May, Cambodia’s Ministry of Tourism set a low bar of 1 million arrivals in 2022. This figure will be complemented by an estimated 8 million domestic trips. The Ministry forecasts domestic travel to return to a pre-pandemic activity with 11 million trips in 2023. Inbound arrivals are not expected to surpass the 2019 level until 2025, however, when 7 million arrivals are currently forecast.
South East Asia Seeks to Build Momentum for a Travel Recovery
Traveller testing requirements are gone, so can South East Asia build a strong tourism recovery? May was a positive month, but familiar destinations are leading the return of tourism while bookings are slower elsewhere. On The South East Asia Travel Show, we recap May’s key developments, and look ahead to the second half of 2022.
Listen to South East Asia Seeks to Build Momentum for a Travel Recovery, here:
🎧 Website 🎧 Spotify 🎧 Apple Podcasts
Or search for The South East Asia Travel Show on any podcast platform
And, that’s a wrap for Issue 84.
Until next Sunday, find me on Twitter, LinkedIn, the Asia Travel Re:Set website and The South East Asia Travel Show.
Happy travels,
Gary