Insights & Inspirations | Trends & Challenges in Asia Pacific Tourism

Soon-Hwa WONG
PATA Immediate Past Chair, Executive Board Member

Full text:

Distinguished guests, dear friends：

Greetings on behalf of the PATA Chair, Peter Simone, and members of the Executive Board. Today, my presentation is about trends and challenges in the Asia Pacific tourism.

When we look at statistics and data, particularly tourism data, we must look beyond the numbers. The data collected for 2020 and 2021 are not really useful. And even 2022 did not give a complete picture as some countries are still having travel restrictions. Now with China’s reopening in 2023, it will be more representative. And, hopefully, by 2024, travel demand and supply will normalize.

Now, let me quickly walk through a couple of slides on Asia Pacific international visitor arrivals, focusing on the recovery rate under three different scenarios — mild, medium, and severe. So, this is the recovery rates across Asia Pacific as a total region. As you can see under the medium scenario — we will see continue recovery this year, but only by 2024 that we will see levels reaching and exceeding the pre-COVID levels. And as for the rest of Asia, just Asia itself, it is more or less the same thing.

Now, on a country level, though, arrivals will shoot up the moment the border restrictions are lifted. Let’s take a look at Hong Kong for example. When Hong Kong just opened, just very recently, you can see that Hong Kong air traffic surge 28 times to 2 million. Just the opening, a few days and weeks, you’ll see such uplift. Then we look at Thailand, Thailand is another good example. Just three days after China relaxed outbound travel, the total number of mainland tourists booking travel to Thailand has reached 80% of that in the first quarter of 2022. And some 5 million Chinese tourists are expected for the whole year.

China’s re-opening is a pleasant surprise to everyone and a massive boost, certainly a very big boost to global tourism. But there will be lots of challenges headwinds along the way. We must draw useful lessons from the pandemic and build agility, resilience and sustainability into our operating business models and strategies.

Now, the Asia Pacific region lacks the US and Europe in recovery, relatively speaking, APEC countries who are slower in reopening. However, it is important for us to respect and accept that each country has the sovereign right to decide what measures to take and when to reopen. Every country is different. And there isn’t a magic formula. Without a playbook, the sharing of best practices and learnings must be strongly encouraged.

Now, in general, Asia Pacific countries are more conservative. It means that the governments here are relatively more concerned about the health and safety of their citizens and residents. Understandably, it can be extremely frustrating when you see people from other countries traveling and moving around freely, but perhaps we should be thankful for having governments who would put us first, sometimes even ahead of the economy. An important point for us to note is that in certain situations, it is more policy driven than market driven.

Now, the first trend we are seeing is the air capacity recalibration. The airfares at the moment, I think, we all know are still relatively high across the board. And it’s really a case of supply and demand. Capacity build up does take time. It cannot happen overnight. Now, while the airlines are adding capacity, there’ll be some recalibration. Due to the China reopening some capacity will be redirected to the China market, because China is a strategic market for many countries and for many airlines. By 2024, we will see a return to pre-COVID levels for most routes.

Now, airports have challenges too. Take Singapore Changi Airport for example, Singapore opened quite early last year. But despite that, I hear that they can only expect traffic to return to previous highs only by the end of 2023 or early 2024. So, please understand that, you know all this building up, adding capacity and all that does not happen so quickly. Obviously, we hope it’s fast, but it does take time.

Now, travel tech. Obviously, we all know that everything now is digital. The McKinsey survey showed that because of COVID companies have accelerated digitalization of their customer and supply chain interactions and their internal operations by 3-4 years. That means it is accelerated. Now, going digital is no longer a nice to have. It is a must have.

You have virtual reality, augmented reality, mixed reality, metaverse, AI, and now the latest one in town, ChatGPT. It is really quite scary. Now, we all love how tech can help us achieve super personalization. We can also use tech to help us achieve some form of harmonization. Take for example the various types of forms and declarations that we have to complete when we travel from country to country. I know it’s wishful thinking, but wouldn’t it be nice if one day all countries or most countries can have similar travel policies using standard forms and sharing data.

The next thing I want to talk about is sustainability. Now, it is a huge topic. But let me quickly just mentioned that for now, this is a growing trend and the pandemic has accelerated this trend. Now, eco-conscious travelers are looking for options, sustainable options for both products and services. And the good news is that many are prepared to pay more for this. So, it is not a case of just spending and not getting a return.

So, for those tourism stakeholders who have not started on sustainability, be warned that it is a matter of time that legislation will force compliance. So, let’s put the planet, the people first, before profits.

The next trend is experiential tourism. Experiential tourism is a fast growing trend where travelers are seeking to engage the destination by actively and meaningfully having contact with history, people, culture, food and environment. It is where rural tourism has great potential to grow, which will help alleviate poverty and improve the livelihood of the local community. Travelers are no longer contented to do just sightseeing. Great opportunity for destinations like China with community based tourism.

So, what are the challenges ahead? We have economic headwinds. And they are already here. We have recession, inflation, and high interest rates. Now, this will curtail consumer spending. And it would impact both leisure and corporate travel. But we haven’t felt the full effect yet. We are going to see that coming very soon. So, let’s hope that it won’t be a prolonged one.

Another challenge that we are seeing right now is geopolitical tensions. We live in a VUCA world. VUCA is volatile, uncertain, complex and ambiguous. Geopolitical tensions will cause more trade wars and sanctions, both of which will adversely impact tourism. Competition amongst nations is increasing. And there will be higher risk of further conflicts.

Another big challenge is the labor shortage. Now, this is one of the biggest challenges. In fact, it’s not only for the tourism industry, it’s for all industries all over the world. Now, to speed up recovery, we need qualified and trained staff. But where do we find these people after 3 years of pandemic? Employers are complaining they cannot get enough stuff, but where have the workers gone?

In 3 years, many things happened. Some of the workers have been laid off. So, they have found a job in another industry. And they are unlikely to come back because they can see how vulnerable travel and tourism is. What happened if there’s another pandemic coming? So, you cannot blame them for not wanting to return to the tourism industry. And we’re also seeing a lot of people now going into the gig economy. People who have no jobs, they’ve been laid off, they decided to be ride hailing drivers, for example, Grab or Uber drivers, or they could have delivered food. And some of them start their own businesses, freelancing. So, after experiencing the freedom and the independence over the last 3 years, these people are unlikely to want to come back to the workforce. So, we are losing a lot of people there.

And the other thing that also causes a lot of loss is that some older people have decided to retire early. So, overall, this is a major problem，unless we can resolve this quickly, the recovery pace may be impacted.

Now, I’d like to just close this as we need more to go by calling all stakeholders to collaborate. This is a time that we have to come together to collaborate. PATA welcomes partnerships from all stakeholders to help build a resilient and sustainable tourism industry and to protect the only planet that we have, so that our future generations can enjoy.

Thank you very much.