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Tourism
OpinionComment
Nicholas Spiro
Nicholas Spiro

The View | China’s sluggish recovery will weigh on Southeast Asia’s tourism economy

  • Southeast Asia’s hotel industry has shown it can find its footing as it rebuilds from the ravages of the Covid-19 pandemic
  • However, persistently weak growth in China will inevitably take its toll on the region’s hospitality sector

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Visitors check travel deals at a travel and tourism fair in Bangkok on June 29. The tourism and travel fair featured hundreds of exhibitors from tour operators, hotels and travel agencies offering discounts in an attempt to revive the country’s tourism industry and boost its economy. Photo: EPA-EFE
Nicholas Spiro
When the Covid-19 pandemic erupted, Thailand’s hospitality industry had the rug pulled out from under it more calamitously than most other markets. In 2019, Thailand was the world’s eighth-most popular tourist destination and the second in the Asia-Pacific region after China. It was also the world’s fourth-biggest tourist earner, according to World Tourism Organisation data.
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To add to its vulnerability, the Thai tourist industry’s most important source market was mainland China, which accounted for 27.6 per cent of international arrivals in 2019. When Beijing introduced its draconian zero-Covid policy and cut China off from the rest of the world, the average hotel occupancy rate in Bangkok plunged to below 30 per cent and was still below 40 per cent early last year, according to data from STR.

Thailand was not the only market in Southeast Asia heavily reliant on Chinese tourists. In Vietnam, Chinese visitors accounted for a third of foreign arrivals in 2019. Last year, their share stood at just 2 per cent.

Moreover, although Vietnam’s domestic tourist market is larger than Thailand’s, the average expenditure per international tourist in 2019 was US$673, compared with only US$61 per domestic tourist, according to data from McKinsey.

An additional challenge is that the recovery in Southeast Asia’s hotel industry has hinged on the strength of demand from within the Asia-Pacific region. According to data from Pear Anderson, a Southeast Asian tourism consulting firm, Asian countries accounted for the largest share of international tourist arrivals in Thailand, Indonesia, Singapore and Vietnam in the first four months of this year.

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“There’s a lot of rhetoric around the importance of long-haul travel. Yet, the reality is that intra-Asian demand is the main driver of the recovery,” said Hannah Pearson, founder of Pear Anderson. This makes the relatively strong performance of Southeast Asian hotels during the past year and a half all the more remarkable, especially given mounting concerns about China’s weaker-than-expected rebound.

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