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Tourists return to Southeast Asia but inflation could hurt recovery

After more than two years of embargo and border controls, Southeast Asia is finally experiencing some images of the old tourist days.

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

In Singapore, the country with the most flight arrivals in the region this year, bookings have increased from about 30% in 2019 in January to 48% in mid-June. According to Cirium, the Philippines also witnessed Bookings are expected to increase sharply, from about 20% in early January, to nearly 40% in mid-June.

Tourism is the main earner for Southeast Asia, an area where international arrivals more than doubled from 63 million in 2009 to 139 million in 2019, according to the United Nations World Tourism Organization.

This industry accounts for about 10% of the gross domestic product in Vietnam, Singapore and Malaysia and between 20% and 25% GDP in Thailand, Cambodia and the Philippines, by one Report May 2022 published by the Asian Development Bank.

Cirium’s chart of the absolute number of flight seats booked in 2022 in Southeast Asia and Nepal.

Pandemic “probably more devastating in Southeast Asia than the rest of the world [because] Gary Bowerman, director of travel research firm Check-in Asia, said the government had closed the border for almost two years.

“If you compare that to North America or Europe, in both 2020 and 2021… they already have some travel and tourism flows,” he said.

Changing travel habits

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

After Singapore dropped the requirement for pre-travel checks in April, Stanley Foo, founder of local tour operator Oriental Travel & Tours, said the business was “growing rapidly and furiously”. He said travelers are booking longer trips and spending more than before.

Before the pandemic, the company received about 20 bookings a week, mostly tours lasting three to four days. Now, the company is processing 25 bookings a week, some for trips as long as 10 days. Foo said the average spend on custom travel has grown from about $2,000 per person before the pandemic to $4,000 to $6,000 today.

“It’s for the revenge journey,” Foo said. “They’ve saved enough for the past two years.”

As tourists are spending more time in Singapore, Foo and his team of tour guides are taking customers to places that fall outside the usual tourist itinerary – to the suburbs to see people. People practice tai chi and order coffee at hawker centers “the Singaporean way”, he said.

Joanna Lu of Ascend by Cirium, the consulting arm of the company, says people are also spending more time planning their journeys. She “makes sure they are protected for unexpected changes”.

Not your usual tourist

Check-in Asia’s Gary Bowerman said that with China largely closed, travel operators in Southeast Asia will be targeting Japanese, Korean and especially Indian tourists to make up for the lack of Chinese visitors.

Sajjad Hussain | Afp | beautiful pictures

According to the Asian Development Bank, in 2019, visitors from China accounted for more than 30% of tourists to some Southeast Asian countries, a fact that makes China’s prolonged border closure all the more frustrating. add pain to the area.

“The drop in traffic in China deepened in April as strict travel restrictions restricted air travel to, from and from the country,” Lu said. She added that she did not expect the situation to change any time soon.

John Grant, chief analyst at travel data firm OAG, said Asia’s tourism recovery has been slower than that of other continents because of its reliance on international visitors, especially from China. as well as different reopening strategies in the region.

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

Cloudy sky ahead

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

According to the International Air Transport Association, jet fuel prices in early June rose 128% from a year ago. As a result, airlines are raising fares, but “at least so far it doesn’t seem to be affecting demand as people have had pent-up demand for two years,” Grant said.

But that could quickly change if fuel surcharges coincide with inflation eating into visitor discretionary spending, he said.

“Rising interest rates will likely devalue emerging economies against the US dollar, making imported goods more expensive and reducing the amount tourists can spend on those,” Mr. Bowerman said. non-essential work such as holidays.

Despite these forces, insiders said Most people have yet to cancel their plans.

Expedia’s head of public relations for Asia, Lavinia Rajaram, said travelers from Singapore were planning year-end holidays, while others were booking trips in the quieter months. than September and October.

Plus, if airlines raise their flight capacity back to pre-Covid levels, airfares could normalize, Rajaram added.

Foo said he hopes to see more conferences and exhibitions held in Singapore in the second half of the year, where companies can attract dealers like him to conduct side tours for corporate guests. Karma.

Where are the workers?

Even as Southeast Asia continues to attract many tourist flows, airlines may have to turn them away if they cannot find enough workers to serve their flights.

Many workers in the air travel industry left or were laid off during the first two years of the pandemic. The aviation industry with less than 50% of jobs by the end of 2021 compared to the time before Covid – from 87.7 million to about 43.8 million – according to the global air transport association Aviation Benefits Beyond Borders.

Flight cancellations, delays and crowded airports is frustrated in the summer tourist season in Europe and North America. Low wages make working at airports and airlines less attractive, and workers in Europe are on strike against low pay and poor working conditions.

The travel chaos in other parts of the world that has yet to reach Southeast Asia is a situation officials in the region hope to be able to avert.

According to the agency, Singapore’s Changi Airport Group wants to fill 250 vacancies by the end of the year. Singapore Airlines selected more than 800 flight attendants from several thousand applications, a number “three to four times more” than in the pre-Covid days, the airline said in an email to CNBC.

The Malaysian Aviation Commission told CNBC that local airlines are “actively seeking employment,” but that “air travel demand remains uncertain as Malaysia enters an endemic phase of Covid– 19.”

Singapore Airlines said passenger capacity averaged around 61% of pre-pandemic levels in the first quarter and is expected to grow to 67% in the second quarter of 2022, the airline said in a statement in September. 5 year 2022.

Roslan Rahman | Afp | beautiful pictures

But there were signs of cracks. In April, Changi Airport Corporation had to reschedule some flights for four long weekends because of staff shortages, according to local media reports.

Malaysian media reported that about one in ten domestic flights flying during the Hari Raya Aidilfitri celebrations in late April and early May have been delayed, partly because of the lack of workers.

Mayur Patel, OAG’s regional sales manager for Japan and Asia-Pacific, said airlines have been denied additional landing or take-off space because airports do not have enough staff to accommodate additional flights.

“I think the plan is to go back to pre-Covid levels but with [the] China isn’t sure, this is going to be… difficult,” said Patel.

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