Home COVID-19 Can Asia’s tourism industry bounce back from the pandemic?

Can Asia’s tourism industry bounce back from the pandemic?

Bart W. Édes
Tourism is a key industry for many economies in Asia and has been severely impacted due to the pandemic. Policy priorities will be key to reviving the sector
Senior Associate, Center for Strategic and International Studies
A man cycling in the middle of the road with two gas cylinders

As COVID-19 swept across the Asia-Pacific last year, it dealt a body blow to tourism in the region. Governments tightened borders, restricted commerce, and limited mobility with lockdowns and quarantines in an effort to stop the virus’ spread. The number of international visitors declined sharply. The World Tourism Organization reports that Asia-Pacific experienced a stunning 82% decrease in international tourist arrivals between January and October of 2020.  

For many Asia-Pacific countries, the travel and tourism industry represents a huge part of their economies. The World Travel and Tourism Council (WTTC) estimated that travel and tourism contributed, directly and indirectly, to 42 million jobs in Southeast Asia in 2019. Before the pandemic struck, the industry accounted for more than 15% of total employment in Macau, Maldives, the Republic of Georgia, Cambodia, the Philippines, Thailand, New Zealand and some other Pacific island economies. Many micro, small and medium enterprises that depend directly or indirectly on tourism have gone out of business or currently see their fortunes hanging by a thread.

In Laos, more than half of the 327 tourism enterprises that participated in a May 2020 survey reported that they were temporarily closed and had reduced employees by 38%. In mid-January 2020, the president of the ASEAN Tourism Association warned that 70% of travel agents in Thailand would cease to operate in 2021 if the Thai government did not provide more assistance.

Similarly, taking a South Asian example, the pandemic could not have come at a worse time for Nepal’s tourism industry. The government had declared 2020 as the Visit Nepal Year, announcing a national campaign with an annual target of achieving 2 million tourist arrivals. The actual number of foreign visitors reached 230,000 in 2020 – the lowest figure in 34 years. 

Tourism is also important to subregions of many other Asia-Pacific countries, like Indonesia, where Bali registered 6.3 million direct foreign tourist arrivals in 2019. The Indonesian government has estimated that the country’s tourism sector lost $10 billion in 2020, and experienced a two-thirds drop in the number of foreign visitors. Meanwhile, Malaysia has witnessed an explosion of new COVID-19 cases over the past three months after appearing to have gotten the virus under control. Renewed outbreaks have further postponed recovery of the tourism sector, which accounted for about 16% of Malaysia’s GDP in 2019.

Government measures

The same story has played out in country after country across the region, deeply impacting tourism revenue, and employment in the sector.

The Pacific Asia Travel Association (PATA) notes that governments in the region have employed a range of fiscal and monetary measures to prevent enterprise closures and ensure that travel and tourism workers will have jobs to return to when the crisis subsides. Policy interventions have included the temporary elimination of taxes, reduction of regulations and fees, employment subsidies and other direct support to enterprise.

To help the industry retain jobs and prevent the loss of human capital and skills, some governments have provided incentives for training in food services, hotels, airlines and other business areas supporting travel and tourism.

As important as these efforts have been, they are for the most part just stabilising an industry that remains in a precarious state.

Is the future domestic?

People are only going to begin traveling again when they feel comfortable doing so. In countries that have successfully controlled community spread of COVID-19 with strong protocols supported by the population, domestic tourism has already resumed, as in Cambodia, China, South Korea, Sri Lanka and Taiwan. In September 2020, Vietnam Airlines reported that it was already flying more passengers domestically than it was a year before, prior to the start of the pandemic.

Thailand has been promoting domestic tourism through various measures, including a new collaboration with Tinder that seeks to get uncoupled Thais to travel within their country and meet other singles. Research of tourism patterns in 41 Asia-Pacific countries conducted by the Asian Development Bank shows that spending by domestic tourists could fully replace lost international tourist expenditures in 19 of the countries.

International cooperation and trusted, evidence-based solutions will be needed before there is extensive removal of travel restrictions. In the meantime, the travel and tourism industry in much of the region will remain in survival mode.

More than half of the 327 tourism enterprises that participated in a survey conducted in Laos in May 2020 were temporarily closed and had reduced the number of employees by 38%. The impact was reported as greater for enterprises that mostly serve international guests. The survey results suggested that enterprises targeting domestic guests are more resilient and, further, that promoting domestic tourism should be part of the Laos’ economic recovery plan.

But that will not be enough

Still, international visitors have made a very important contribution to the travel and tourism industry in Asia-Pacific. “Travel bubbles” are among the mechanisms being tried as a means of slowly enticing foreigners to visit once more. China and South Korea established the first travel bubble in the region in May 2020, although it was very limited, applying only to businesspersons invited by a counterpart in the destination country.

Australia and New Zealand have since forged an agreement on bilateral travel across the Tasman Sea, and Singapore created a green lane arrangement whereby people living in selected countries could travel to and from Singapore for business, and Singaporeans could do the same in those countries, without the need to quarantine. However, a resurgence of cases in some jurisdictions, and spread of new variants of COVID-19, have caused Australia to halt quarantine-free travel with New Zealand, and Singapore to suspend travel agreements with partner countries, such as Malaysia and South Korea.

Talks on creating travel bubbles have also taken place between Palau and Taiwan, Thailand and Vietnam, and other Asian jurisdictions eager to safely reboot international travel. India has signed travel bubble agreements with two dozen countries, including the Maldives, which has seen a surge in Indian visitors in the context of a substantially diminished pool of foreign visitors since reopening its borders in July 2020.

Businesses dependent on tourism in Malaysia are now lobbying the government to exempt vaccinated visitors from neighbouring Singapore from the current requirement for foreign visitors to quarantine for 14 days. However, efforts to create a travel bubble among the 10 ASEAN members are moving at a slow pace, in part because some countries, like Indonesia and the Philippines, continue to struggle in their efforts to contain COVID-19.

What will really get international travel and tourism going again is mass vaccination against COVID-19 and herd immunity. Temperature checks, rapid testing at airports and official documents confirming immunity will increasingly become a part of post-pandemic protocols in the short to medium term. Travelers and industry workers will adjust to them just as they have adjusted to stricter security precautions in the wake of the September 11 attacks and other terrorist incidents. Singapore Airlines is already working toward becoming the first airline to have vaccinated all of its crew and staff who interact with the public.

Southeast Asian nations look forward to the day when Chinese tourists venture abroad again in numbers, as China is the leading regional source for tourists. Given the continued large number of COVID-19 cases in North America and Europe, it will take longer for residents on these continents to begin booking holidays in Asia at the same pace as in 2019. Even though several Asian countries already allow transcontinental visitors, practical constraints, like quarantines at origin and destination, as well as continuing health concerns, serve as travel deterrents.

So when, exactly, will international travel rebound in Asia?

In a global survey of tourism experts conducted in January 2021 by the World Travel Organization, 42% replied that international tourism in Asia-Pacific will return to its 2019 levels only in 2024 or later. Around 39% believe that 2019 levels will be reached by 2023, 14% responded 2022, and only 6% think that 2019 levels will be attained this year.

The Economist Intelligence Unit has forecast that most developing countries in Asia-Pacific will not have achieved widespread vaccination of their populations until late 2022 or 2023. Further, the fast spread of new strains of COVID-19 could further postpone a full recovery of international travel.

For many Asia-Pacific countries, the travel and tourism industry represents a huge part of their economies. Due to the pandemic, many micro, small and medium enterprises that depend directly or indirectly on tourism have gone out of business or currently see their fortunes hanging by a thread.

International cooperation and trusted, evidence-based solutions will be needed before there is extensive removal of travel restrictions. In the meantime, the travel and tourism industry in much of the region will remain in survival mode. Leisure travel is likely to pick up before business travel, which is not good news for airlines and hotels that have depended on company-funded trips. The relatively successful experience of continuing commercial operations via teleconferencing over the past many months is likely to suppress business travel even when it is relatively safe and easy to get around again.

Thailand has created a Special Tourist Visa and extended its standard tourist visa to encourage foreigners to visit, but these measures have found few takers while a mandatory 14-day quarantine and other requirements remain in place. One would-be visitor shared his “impossible dream” of fulfilling all the airline and governmental formalities needed to travel to Thailand during a drawn out Kafkaesque ordeal related in the Bangkok media. The Republic of Georgia, meanwhile, has launched a programme to entice remote workers into making the country their temporary home. It allows foreigners from dozens of countries to work in Georgia for between 180 days and a year.

Policy priorities

In a December 2020 study on rebuilding tourism, the Organisation for Economic Co-operation and Development identified the following global policy priorities for reviving the sector:

  • Restore traveller confidence
  • Support tourism businesses to adapt and survive
  • Promote domestic tourism and support safe return of international tourism
  • Provide clear information to travellers and businesses, and limit uncertainty
  • Adopt response measures to maintain sector capacity and address gaps in support
  • Strengthen cooperation within and between countries
  • Build more resilient, sustainable tourism

The second part of this article looks at how tourism can be reinvented.

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Senior Associate, Center for Strategic and International Studies

Bart is an experienced international trade and development policy specialist analysing transformative trends reshaping Asia and the world. He is a former senior staff member of the Asian Development Bank and principal administrator at the Organization for Economic Cooperation and Development.

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