Tourists flock to Southeast Asia – but robust recovery shows signs of cracking

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After more than two years of lockdowns and border controls, Southeast Asia is finally experiencing some semblance of travel of yesteryear.

Flights are steadily returning to 2019 levels in the region’s major economies, with Singapore, Thailand and Malaysia being the most popular destinations this year, according to flight data analytics firm Cirium.

In Singapore, which has seen the highest number of inbound flight bookings in the region this year, bookings have increased from around 30% of 2019 levels in January to 48% by mid-June. The Philippines has also seen a surge in bookings, rising from around 20% in early January to almost 40% in mid-June, according to Cirium.

Tourism is a key source of income for Southeast Asia, a region that has seen international visitors more than double from 63 million in 2009 to 139 million in 2019, according to the United Nations World Tourism Organization. United.

The industry accounts for around 10% of gross domestic product in Vietnam, Singapore and Malaysia and between 20% and 25% of GDP in Thailand, Cambodia and the Philippines, according to a May 2022 report published by the Asian Development Bank.

Chart by Cirium on the absolute number of airline seats reserved in 2022 in Southeast Asia and Nepal.

The pandemic “has probably been more devastating in Southeast Asia than in the rest of the world [because] governments have kept borders closed for nearly two years,” said Gary Bowerman, director of travel research firm Check-in Asia. “There were even restrictions on domestic travel.

“If you compare that to North America or Europe, for example, in the two years of 2020 and 2021 … they had tourism and travel flows,” he said.

Changing travel habits

Most Southeast Asian countries – including Singapore, Thailand, Indonesia, Malaysia, Vietnam and the Philippines – have stopped requiring fully vaccinated travelers to take Covid-19 tests before traveling .

After Singapore dropped its pre-trip testing requirements in April, business has “recovered quickly and furiously”, said Stanley Foo, founder of local tour operator Oriental Travel & Tours. He said travelers were booking longer trips and also spending more than before.

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Before the pandemic, the company received about 20 tour bookings per week, mostly for three- to four-day tours. Now he handles 25 bookings a week, some for trips of up to 10 days. Average spend for personalized tours has gone from about $2,000 per person before the pandemic to $4,000 to $6,000 today, Foo said.

“It’s because of the revenge that travels,” Foo said. “They have saved enough in the last two years.”

As tourists spend more time in Singapore, Foo and his team of tour guides take clients to places outside the usual tourist route – to the suburbs to watch residents do tai chi and order coffee. at hawker centers “Singapore-style”, he said.

Joanna Lu of Ascend by Cirium, the consulting arm of the firm, said people are also spending more time planning trips. They “make sure they’re covered for unexpected changes,” she said.

Not your usual tourists

Tourists contacting Foo come from all over the world, especially Southeast Asian countries, he said.

This contrasts sharply with his pre-pandemic business, when Chinese nationals were among his company’s largest customer groups, Foo said. China continues to “strictly limit” non-essential travel outside the country.

With China largely closed, Southeast Asian tour operators will target Japanese, South Korean and especially Indian tourists to make up for the lack of Chinese visitors, said Gary Bowerman of Check-in Asia.

Sajjad Hussein | TSTIME | Getty Images

In 2019, visitors from China accounted for more than 30% of tourists to some Southeast Asian countries, according to the Asian Development Bank, a fact that makes the prolonged closure of the Chinese border even more painful for the country. region.

“China’s traffic decline deepened in April as strict travel restrictions limit air travel to and from the country,” Lu said, adding that she does not expect the situation is changing soon.

John Grant, chief analyst at travel data firm OAG, said Asia’s travel recovery was lagging behind other continents due to its reliance on international visitors, particularly from China, as well as different reopening strategies in the region.

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Southeast Asia has about 66% of flight capacity — measured by scheduled airline seats — compared to pre-pandemic levels, according to the OAG. Europe and North America are back to around 88% and 90% of pre-pandemic capacity, respectively, according to OAG data.

Cloudy skies ahead

Southeast Asia’s travel recovery also faces other global headwinds: rising costs and interest rates, inflation and a potential recession.

Jet fuel prices in early June were up 128% from a year ago, according to the International Air Transport Association. Airlines are raising fares accordingly, but “at least to date it doesn’t seem to have had an impact on demand since people have two years of pent-up demand,” Grant said.

But that could change quickly if fuel surcharges coincide with inflation eating away at travelers’ discretionary spending, he said.

Rising interest rates will likely devalue the currencies of emerging economies against the U.S. dollar, making imports more expensive and reducing the amount travelers can spend on non-essential things like vacations, Bowerman said.

Despite these strengths, travel insiders say most people aren’t canceling their plans just yet.

Expedia’s PR manager for Asia, Lavinia Rajaram, said Singapore-based travelers were already planning year-end holidays, while others were booking trips for the calmer months of September and october.

Additionally, if airlines restore flight capacity to pre-Covid levels, airfare prices could normalize, Rajaram added.

Foo said he expects to see more conventions and exhibitions held in Singapore in the second half of the year, where companies could hire agencies like his to run side tours for visitors. business.

Where are the workers?

Even if Southeast Asia continues to attract tourist flows, air carriers may have to turn them away if they cannot find enough workers to operate their flights.

Many workers in the airline industry left or were laid off in the first two years of the pandemic. The aviation industry had 50% fewer jobs at the end of 2021 compared to pre-Covid times – from 87.7 million to around 43.8 million – according to global airline association Aviation Benefits Beyond Borders.

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Flight cancellations, delays and crowded airports are frustrating the summer travel season in Europe and North America. Low pay has made working in airports and airlines unattractive, and workers across Europe are striking against low pay and poor working conditions.

The travel chaos in other parts of the world that has yet to hit Southeast Asia is something officials in the region hope to avoid.

Singapore’s Changi Airport Group aims to fill 250 vacancies by the end of the year, according to the agency. Singapore Airlines selected more than 800 cabin crew members from several thousand applications, “three to four times more” than it received before Covid, the airline said in an email to TSTIME.

The Malaysian Aviation Commission told TSTIME that local airlines are “actively looking to recruit”, but “demand for air travel remains uncertain as Malaysia progresses through the endemic phase of Covid-19”.

Singapore Airlines said passenger capacity averaged around 61% of pre-pandemic levels in the first quarter and expects an increase to 67% in the second quarter of 2022, the airline said in a statement in May. 2022.

Roslan Rahman | TSTIME | Getty Images

But there were signs of cracks. In April, Changi Airport Group had to reschedule some flights over a four-day long weekend due to staff shortages, according to local media.

Malaysian media reported that around 1 in 10 domestic flights that flew during the Hari Raya Aidilfitri celebration period in late April and early May were delayed, partly due to a lack of workers.

Mayur Patel, OAG’s regional sales manager for Japan and Asia-Pacific, said airlines have been denied extra slots to land or take off because airports don’t have enough manpower. working to accommodate additional flights.

“I think the plan is to get back to pre-Covid levels but with [the] China’s uncertainty, it will be… tricky,” Patel said.

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