The story of travel and tourism recovery continues into 2024, but persistent uncertainties in the macro-environment will keep industry players on their toes
Providers of travel industry business intelligence, market research data and analysis of trends forecast recovery of tourism into Asia will continue in 2024 and reach close to 2019 pre-pandemic levels.
According to PATA, “the start of the coming new year looks generally optimistic” with the full removal of travel restrictions and the reopening of Asia-Pacific destinations, but Paul Pruangkarn, chief of staff, noted “uncertainties still exist, which may prevent visitor arrivals to recover to their pre-pandemic levels”.
He continued: “These uncertainties are caused by unfavourable economic conditions such as inflationary monetary policies, supply chain disruptions, and diminishing business and consumer confidence. In this regard, 2024 Asia-Pacific total visitor arrivals are forecast to recover to 109.92 per cent, 90.70 per cent, and 69.86 per cent of the 2019 level under a mild, medium and severe scenario, respectively.”
Uncertainties are caused by unfavourable economic conditions such as inflationary monetary policies, supply chain disruptions, and diminishing business and consumer confidence.
Chief of staff,
This translates to approximately 910 million arrivals, 762 million, and 593 million by the end of 2026 under the mild, medium and severe scenarios, respectively.
Euromonitor International’s senior analyst Prudence Lai expects Asia-Pacific tourism in 2024 to see sustained momentum, recovering to 90 per cent of 2019 pre-pandemic levels, and forecasts 319 million inbound trips this year.
However, Lai noted Asia-Pacific was a ”region of regions” with markets seeing “a diverse degree of recovery in 2024”.
ForwardKeys tracks customers’ air travel patterns – where they are going, when, and for how long – and market analyst Nancy Dai noted “the status of travel across Asia-Pacific is highly diverse”.
Dai said the sub-regional outlook for international arrivals from December 23, 2023 to January 6, 2024 showed South Asia (minus five per cent) as the most recovered sub-region nearing 2019 volumes, driven by the dynamism of VFR travel in major markets like India, Pakistan and Bangladesh.
“On the other hand, the Oceania sub-region (-35 per cent) is still struggling to fully recover from the impact of the pandemic due to the strong dependence on air connectivity, high fares, and the slow reactivation of key regional markets, primarily China, which have complicated the recovery of major regional destinations Australia and New Zealand.”
Seat capacity rising
Looking at global visitor arrivals to Asia-Pacific from December 23, 2023 to January 6, 2024, ForwardKeys said numbers lagged behind pre-pandemic levels by 26 per cent and 1Q2024 international arrivals to the region were 12 per cent behind 2019 levels.
ForwardKeys said 1Q2024 international airline capacity in Asia-Pacific was projected to be 11 per cent lower compared to pre-pandemic levels.
The top three countries displaying resilience and witnessing added seat capacity are India (+16 per cent), Vietnam (+ eight per cent), and Indonesia (unchanged).
In India’s case, IndiGo, Air India, and Air-India Express have surpassed their 2019 seat capacities by 177 per cent, 18 per cent, and 23 per cent respectively.
In Vietnam’s case, VietJet Air, AirAsia, and Thai AirAsia have exceeded their 2019 seat capacities by 105 per cent, six per cent, and 27 per cent respectively.
In Indonesia’s case, Garuda Indonesia Airlines, Singapore Airlines and Batik Air Indonesia have surpassed their 2019 seat capacities by seven per cent, two per cent and 321 per cent respectively.
Meanwhile, Euromonitor’s Lai acknowledged that speculation of a persistent high interest rate environment would impact discretionary spending, such as travel expenditure. Adding to uncertainties in the new year are critical political elections in the US, Taiwan and Indonesia.
“There is more uncertainty in the US and Taiwan elections as the results directly impact the US-China geopolitical tensions. Indonesia does not rank highly in terms of being an international source market and the elections may pose more of an impact on domestic tourism instead.
“The silver lining amid these uncertainties is that travel industry capacity is expected to continue its recuperation in 2024 with improving flight capacity taking pressure off airfares and hotel average room rates and normalising to pre-pandemic levels.”
In general, the mood among travel suppliers is upbeat, with many reporting an uptick.
Fuelled by a significant increase in demand for travel to Asia in 2023, DTH Travel Group CEO, Stephan Roemer, is positive about 2024.
“It’s already looking to be a very promising year for us,” he said, noting at press time that pre-bookings for 2024 are close to 40 per cent of 2023’s sales performance.
“We think that some of the trends we saw this year will continue into 2024; for example, travel to Asia will continue to pick up with particular interest for a deeper, more intimate experience of the destination.
“Apart from Thailand, which has always been a best-selling destination for us, we also noticed a pick-up in demand for our packages for the Philippines, Malaysia and Vietnam, which may be due to the new products that we have created for our clients, focusing on authentic travel.”
Roemer noted a 2023 trend – low-season travellers – could extend into the coming year, saying travellers have been warming up to the benefits of lower rates and less crowding.
“We also saw people starting to book more in advance compared to when borders just started to reopen following the pandemic, which may be due to the general stability of being able to travel to Asia,” he added.
The silver lining amid these uncertainties is that travel industry capacity is expected to continue its recuperation in 2024 with improving flight capacity taking pressure off airfares and hotel average room rates and normalising to pre-pandemic levels.”
Likewise, Willem Niemeijer, founder and CEO, Yaana Ventures, was “looking back on an amazing 2023”.
“Smaller destinations like Laos and Cambodia have had a fairly slow start, but these too are fully back to where they were before the border closures. This momentum continues to drive advanced bookings for 2024, and so we are quite optimistic that the coming year will be even better than 2023,” he said.
Niemeijer added that recovery is no longer fuelled by just revenge travel.
“The region has so much to offer: nature, beaches, vibrant cities, interesting culture, great food and much more – all of these keep Asia firmly on the map for travellers. As long as pricing remains reasonable, so that Asia remains good value for money, further growth should be sustainable. However, the concern of overtourism and all its negative effects is looming, and in some cases already back,” he told TTG Asia.
A Trip.com Group spokesperson also expressed optimism for inbound travel in 2024, citing the ramping up of international flight capacity and policies which have been updated to simplify the entry process for inbound tourists.
On destination China, the spokesperson noted the requirement for inbound arrivals to fill in the Entry Health Declaration Card had been removed and unilateral visa-free entry expanded to six countries, namely France, Germany, Italy, the Netherlands, Spain and Malaysia.
In addition, Trip.com Group signed a strategic framework agreement with China International Culture Association to implement the Nihao! China programme in late-2023, which includes production of global promotional videos and a digital communications campaign.
On the hotel front, Hilton’s Ben George, senior vice president and commercial director, Asia-Pacific, said the chain, which celebrated the opening of its 700th hotel in the region, had an ambitious growth strategy in place to exceed 1,000 trading hotels by 2025.
Across Asia-Pacific, RevPAR grew about 40 per cent year-on-year, with the whole region outperforming 2019 by 10 per cent.
George said occupancy continued to be driven by leisure demand, as travellers aim to reduce other personal spending to prioritise leisure travel.
“In addition, we’re seeing a sustained uptick in corporate and group travel, with Tokyo, Bali and Shanghai standing out as our top performing destinations,” he said.
Hilton’s optimism in Asia-Pacific’s travel and tourism potential is reflected in the company’s hearty expansion plans. It will enter emerging markets such as Nepal, Laos, and Timor Leste in 2024.
We expect travel demand for Asian destinations to rise in the coming year as Asian travellers are driven by a growing desire for a deeper understanding of their own cultural and ancestral heritage.
Senior vice president and commercial director,
“We’re also excited to soon introduce a new lifestyle brand, Motto by Hilton, as the first of its kind in Asia, in Hong Kong.
“At the same time, we continue to expand in key markets and popular destinations such as China, India, Japan, Australia, Vietnam, Thailand and Singapore,” he elaborated.
George added: “We expect travel demand for Asian destinations to rise in the coming year as Asian travellers are driven by a growing desire for a deeper understanding of their own cultural and ancestral heritage. In our latest trends research, Japan topped the list of popular Asian destinations among travellers across the region, followed by Hong Kong, Malaysia, and Thailand.”
In fact, to meet the needs of small and medium businesses, Hilton is launching Hilton For Business in early-2024 as part of its ongoing commitment to digitally transform the business travel experience. Guests will be able to enjoy a range of benefits, including exclusive discounted rates, travel management tools. and loyalty perks.
Asia-Pacific outbound trends in 2024 are expected to be “generally positive”, where China, Hong Kong and India are said to be the region’s top three source markets while international departures in the first-quarter are expected to reach 80 per cent of 2019 levels.
Factors like visa requirements, flight connectivity and travel costs have conditioned the evolution of the travel recovery, and Nancy Dai, insights expert, ForwardKeys, noted Asia-Pacific outbound travel, from December 23, 2023 to January 6, 2024, lagged behind pre-pandemic levels by 16 per cent.
Total airline capacity for outbound travel from the region in 1Q2024, she added, was “set to decrease by nine per cent compared to pre-pandemic levels”.
“The top three resilient countries out of Asia-Pacific witnessing added seat capacity are the UAE (+ eight per cent), Australia (+ three per cent) and the US (-13 per cent).
“From the UAE, Flydubai, Air Arabia, and IndiGo have exceeded their 2019 seat capacities by 59 per cent, 16 per cent, and 56 per cent respectively. In Australia’s case, Qantas, Jetstar, and Scoot have surpassed their 2019 seat capacities by 10 per cent, 24 per cent, and 109 per cent respectively.
“Regarding the US, United Airlines, All Nippon Airways, and EVA Air have exceeded their 2019 seat capacities by 19 per cent, 22 per cent, and 19 per cent respectively.”
Euromonitor International senior analyst Prudence Lai named China, Hong Kong and India as the region’s top source markets to watch in 2024, and forecasted 341 million outbound trips from the region in the new year, which is 90 per cent of pre-pandemic 2019 levels.
A big outbound trend shows more travellers booking ahead, six to nine months in advance and as far ahead as in 2025 for cruises, where the high-end products are selling out.
Executive director and head of travel,
When deciding on destinations, Lai said Asia-Pacific travellers pay attention to value for money, safety, relaxation, quality of food, and nature and outdoor activities.
Euromonitor’s Voice of the Consumer: Lifestyle Survey in 2023 also established that traveller behaviour varies across different markets, as Asia-Pacific is one diverse region.
China, for instance, is seeing a slow outbound recovery despite border reopening in early-2023.
“With unemployment rates and a sluggish economic outlook for the market, Chinese consumers are expected to maintain a cautious attitude in 2024 for discretionary spending.”
As consumers watch their expenses, domestic travel becomes a strong substitute for outbound travel. This is the case for China, according to Lai, as well as for Japan.
To entice travellers who are price- and value-conscious, “destinations focus on improving the quality of tourism over mere volume”.
She stated that “value tourism is a key word for 2024”.
With value tourism in mind, destinations are also paying attention to overtourism issues so as to ensure sustainability.
For example, Japan plans to introduce a tourist tax and redirect visitors to rural areas.
“Considering the headwinds for leisure travel sentiment in 2024, a lot of destinations are also ramping up their capacity and attractiveness for meetings, incentives, conferences and exhibitions (MICE). There is intense competition to be the top MICE hub in Asia as destinations and industry players collaborate to provide a seamless MICE journey for business travellers,” she added.
At PATA, chief of staff Paul Pruangkarn said the generally positive outlook for the outbound market in the region could be impacted by sluggish economic growth and associated labour and air capacity constraints continuing into 2025, resulting in a less-than-expected recovery path in terms of the outbound departures in the region.
He added: “Visitor departures from Asia-Pacific are forecasted to recover by 133.39 per cent, 113.15 per cent and 88.16 per cent of the pre-pandemic level under the mild, medium and severe scenario, respectively.
“The grand total visitor departures from Asia-Pacific are forecasted to be approximately 686 million, 582 million and 453 million by the end of 2026 under the mild, medium and severe scenarios, respectively.”
PATA further forecasts under the medium scenario, for instance, the top three Asia-Pacific source markets as China, the US and Hong Kong, respectively between 2023 and 2026.
By the end of 2026, Hong Kong is expected to exceed the US to become the second largest Asia-Pacific source market.
Under the medium scenario, over the 2024-2026 period, the top three destinations for tourists from China are dominated by Hong Kong, Macau, China and Japan. Likewise, visitors from Hong Kong will mainly visit China, Macau and Japan.
Pruangkarn also noted that “longhaul travel will be slow to recover, and tourists may substitute their longhaul destinations with short or medium-haul travel or even with domestic travel”.
“The higher operational costs and supply chain challenges may push up accommodation, transportation, food and other related prices, which will negatively affect tourists traveling outside of Asia-Pacific.
“Due to slower economic growth in key source markets, such as China, Hong Kong, Japan and South Korea, outbound travel by tourists from these countries/regions may not fully recover to pre-Covid levels.”
A Trip.com Group spokesperson also commented on China’s resilient domestic tourism, which surged 200 per cent in 2023 compared to the same period in the previous year.
With unemployment rates and a sluggish economic outlook for the market, Chinese consumers are expected to maintain a cautious attitude in 2024 for discretionary spending.
UOB Travel, a wholly-owned subsidiary of United Overseas Bank Group, has a clear view of South-east Asian outbound travel interest following its acquisition
of Citigroup’s consumer banking businesses in four key South-east Asian markets in 2022.
According to Steven Ler, executive director and head of travel, UOB Travel, the appointment of top travel agent partners in Malaysia, Indonesia, Thailand and Vietnam in late-2023 will increase opportunities for intraregional business travel.
He added: “South-east Asia was the first region to recover post-reopening, and has recovered strongly to 80 per cent.”
“A big outbound trend shows more travellers booking ahead, six to nine months in advance and as far ahead as in 2025 for cruises, where the high-end products are selling out.
“Suites on cruises for 2024 year-end are sold out and the rich continue to spend.”
However, Ler is “cautiously optimistic about 2024”, as airfares are high and seat capacity not fully recovered.
While the first-half of 2024 is back on track, the second-half may face headwinds from the uncertainty of a recession and some corporates being more cautious about spending, combining two trips into one, staying longer, and lowering frequencies of long stays.
Ler foresees leisure growing up to 20 per cent in 1H2024 “if airfares are reasonable” and a pick-up in cruise/river holidays for their “convenience”.
Train holidays, he added, were also growing and new direct flights were allowing new destinations like Palau, on the bucket list of many, to be featured as a year-round live onboard dive holiday offering eco-friendly and sustainable options.