Issue #96 - Travel & Tourism in Asia Without China is Like the Bundesliga Without Bayern Munich
Tourism confronts weak currencies, high inflation and government recession warnings
Ordinarily, this would be a time to scour the week-long Chinese National Day holiday data, and draw tentative conclusions about outbound travel patterns.
For a third successive year, that is not possible.
While South East Asia is open and North East Asia is cranking open its airport gates, the largest piece of the Asia Pacific travel jigsaw is still hidden under the sofa.
With the travel industry conference season in full swing, there will be plenty of “When will…?” questions for panellists.
Until President Xi Jinping blows the whistle, assessing the 2022 regional travel season so far is a bit like discussing the Bundesliga without Bayern Munich. Such was the dominance over their respective domains through the 2010s. The true value of other teams playing among themselves will not be revealed until China returns to action.
As Japan prepares to reopen this week, The Japan Times headlined “Recovery of Japan’s inbound tourism likely muted without Chinese visitors,” while VN Express in Vietnam noted “China's ‘zero Covid’ policy has had a major impact on Vietnam's tourism recovery.” Thailand’s Bangkok Post recalls that “In 2019, 20-30% of airlines flying to Phuket were Chinese operators.”
The new 2022 CAPA Megatrends aviation report asks 3 central questions:
What will the re-opening of China look like?
What alternatives do airlines have to the Chinese outbound market?
How do destinations attract Chinese consumers when they do start venturing internationally again?
With Chinese airlines’ new schedules unclear, rumours abound that some international flight routes might be restored later this month. Meanwhile, watertight entry rules remain in place, and impromptu lockdowns are reported as China battles what Caixin describes as “a new omicron sub-variant, BF.7, which is thought to be more transmissible and better able to evade the immune system than other strains”.
Good luck answering those conference questions…
Thanks for being onboard.
The Sunday Itinerary
- “IN THE NEWS”
- Travel, Tourism & “The Fiscal Reckoning”
Tourism confronts weak currencies, high inflation and government recession warnings
- ASEAN’s New Era of Travel Infrastructure
Discussing the region’s big railway plans with James Clark of Future South East Asia
“IN THE NEWS”
8 days to go! Super excited for my first conference keynote of this “new era” at the 2022 International Media Marketplace Asia in Singapore, 17-18 October. The title? Rethinking the Travel & Lifestyle Economy.
Travel, Tourism & “The Fiscal Reckoning”
Source: OAG Webinar, 6 October 2022
Sometimes it’s tricky to focus on travel when North Korean missiles are flying over Japan, Taiwan Strait tensions intensify, Bangladesh suffers a national power outage, a mass slaughter occurs at a Thai daycare centre and climate trauma is all around.
Nevertheless, travel and tourism are entering uncharted waters. As fissures widen in global economic structures, we must scrutinise more closely than ever the macro and micro contexts. During the 2010s, the Asia Pacific travel industry expanded to an almighty size. En route, it acquired political, trade and geo-strategic heft. And then Covid-19 threw it under a bus. Recovery remains precariously fragile.
The pandemic emphasised two things. Firstly, the overall, yet highly nuanced, economic importance of travel and tourism. Secondly, how poorly this was grasped by many governments. Many of the miscalculations and go-it-alone fiscal decisions of the past two years are now unravelling. It’s going to be a tough few months ahead.
Nikkei Asia this week termed the regional outlook of debt, inflation and exchange rate chaos as a “fiscal reckoning” in the aftermath of Covid-19. The travel industry should take heed because an accelerated regional and global slowdown appears in motion - and China will not provide the stimulus that it did following the 2008 financial crisis.
Bloomberg, meanwhile, highlighted the pressure on property markets across Asia noting that the region’s “old standby” for dealing with weakening currencies and economic turmoil was “get more tourists.”
Here are 4 ways that this theme was reported in the region this week:
“Japan PM pinning hopes on big-spending tourists to revive economy”
As Japan takes down its ‘Closed’ sign this week, PM Fumio Kishida used his policy speech to target JPY5 trillion for annual visitor expenditure. “We will maximise the advantage of the weak yen” to recuperate the economy, he said. Spending by overseas visitors reached “a record JPY4.8 trillion in 2019, but plummeted to about JPY120 billion in 2021,” says The Mainichi. Meanwhile, rising fuel costs are impacting a hot spring resort, where the waters are ‘stirred’ with giant paddles, and Tokyo’s Narita Airport is offering wedding tours to offset “sluggish demand for international flights.”
Click HERE to listen to our interview with Kyoji Kuramochi of the Japanese National Tourism Organisation.
“Caught in a vicious currency cycle”
Downbeat messaging from Thailand as a struggling baht is not bringing a desired boost for arrivals, and stock market confidence is dissipating. Plus, interest rate hikes will increase the burden for hotels, “as most are reliant on bank loans, particularly for paying salaries as they attempt to lure back employees,” Bangkok Post quotes Marisa Sukosol Nunbhakdi, President of the Thai Hotels Association. Meanwhile, the Tourism Authority of Thailand warned “Flooding and a weak economy might be critical obstacles for local consumption in the final quarter [of 2022].’
“Tourism sector taking off despite weaker ringgit”
Election fever is gripping Malaysia. This week’s Budget tested the waters for PM Ismail Sabri to go to the polls. Growth momentum is slowing, though, and the ringgit continues to weaken. Free Malaysia Today reasons that “the weaker ringgit has brought more tourists to Malaysia. On the other hand, more Malaysians are also travelling abroad for holidays.” The article provides little statistical clarity on outbound patterns, but appears to refer to destinations beyond the region: “more Malaysians are buying the British pound, Australian dollar and the euro.” The PM, meanwhile, is talking a good game: “Although economic growth is expected to be challenging [in 2023], it will not be as challenging as situations faced by other countries.”
“Global recession threatens Bali’s economy”
A 5.95% inflation rate in Indonesia, South East Asia’s largest economy, in September was the highest since October 2015. The rupiah is down 7% against the USD in 2022, which is better than the double-digit drops of Malaysian and Thai currencies. “The threat of recession and signals of global economic decline are getting stronger,” Vice President Ma’ruf Amin said this week. With Indonesian and inbound visitor numbers to Bali rising, the Deputy Chief of Bank Indonesia told a seminar in Ubud that a global slowdown “has the potential to affect domestic and foreign tourist arrivals.”
ASEAN’s New Era of Travel Infrastructure
Will Vietnam's North-South Railway get built? When will the Jakarta-Bandung high-speed rail line open? And is a pan-ASEAN rail network a realistic possibility?
On this week’s The South East Asia Travel Show, I assess rail infrastructure development across the region with James Clark, Editor-in-Chief at Future South East Asia. We look at the big railway projects planned, compare the network models in China and South East Asia and ponder the impacts for domestic aviation.
Join us for a fascinating 30-minute journey through South East Asia, taking in Hanoi, Vientiane, Bangkok, Jakarta, Kuala Lumpur, Singapore, Kampot and more.
Listen to ASEAN’s New Era of Travel Infrastructure, with James Clark, 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 96.
The newsletter (which is published every 2 weeks) will return on 23 October.
Until then, find me on Twitter, LinkedIn, the Asia Travel Re:Set website and The South East Asia Travel Show.
Happy travels,
Gary