While the recovery of tourism in Asean for the second half of 2023 “lost steam”, economists from Maybank Securities say that there will be “less sizzle in 2024” but still healthy levels of recovery.
In their Jan 19 note, the economists describe 2023’s tourism recovery in Asean as a “tale of two halves” in which recovery lost steam in the second half of the year largely due to the shortening of China’s revenge travel habits.
Tourist arrivals to Asean grew 388% in the first six months of 2023, but slowed to 67% in the period of July to November. At 77% of pre-pandemic levels in November 2023, total visitor arrivals to Asean were modestly higher than at the start of 2023, which stood at 61% in Jan, the economists note.
For 2024, they forecast total visitor arrivals to Asean-6 — referring to Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam — to grow by about 27% in 2024 (vs. 130% in 2023), recovering to 98% of pre-pandemic levels by this December.
“Visitor arrivals in 2024 will likely fall short of 2019 levels in all Asean-6 countries,” they note. “Recovery will be faster in Malaysia, Thailand and Singapore. Non-China markets will help cushion the sluggish China tourist rebound, but cannot fully offset it. Government targets for the Philippines and Vietnam may be too optimistic.”
On hotels and tourism receipts, the Maybank economists say that hotel occupancy rates have risen more modestly relative to the tourist arrivals, as more hotel rooms came back on stream.
They note that hotel occupancy rates have climbed to relatively high levels and are close to pre-pandemic rates in Thailand and Singapore. However, tourism revenue has been mixed and uneven, with visitors spending more than before in Singapore and Malaysia, but less in Thailand.
Meanwhile, other countries are emerging as important markets for cushioning and replacing the gap from a sluggish China recovery, the economists say.
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Tourists from India rank in the top five and account for larger market shares in Indonesia, Singapore and Thailand; while Koreans have overtaken China as the number one market in Vietnam, while remaining number one in the Philippines.
Indonesians have overtaken China as the number one market in Singapore; Malaysians have leapfrogged China as number one in Thailand; while new non-China markets emerging in the top five include Russians in Thailand and Australians in the Philippines.
China tourist inflows to Asean have recovered to only 38% of pre-pandemic levels in Nov 2023, as mainlanders have stuck to domestic travelling.
Some key factors that have put off travelling for Chinese tourists include consumer belt-tightening amid a weak economic climate; limited international flight capacity, which led to pricey airfares for overseas routes; and perceived bottlenecks in visa applications.
This year, higher flight capacity, lower fares and waiver of visas for Chinese citizens will support a more decisive tourism recovery, but the economists only expect recovery rates to return to pre-pandemic levels in late 2025.
