World on the move
Even the rising tide of terror attacks cannot curb people's desire to travel, but many will switch to seemingly safer destinations such as Southeast Asia.
It is not an overstatement to say that the world is no longer a safe and peaceful place. News of terrorist attacks has become a sad fact of daily life, most recently in London and Paris again this month.
The conventional wisdom is that people should remain in safer places, such as home, or travel to safer destinations -- arctic zones or Iceland perhaps? -- if they insist on travelling. Yet, recent research on the travel and tourism business shows the aftermath of terrorist attacks has less of an impact on tourism than most people might expect.
Despite the ever-increasing and unpredictable shocks from terrorist attacks and political instability, to health pandemics and natural disasters, people still travel for work and for leisure. Travel and tourism continued to show its resilience in 2016, contributing direct gross domestic product growth of 3.1% and supporting 6 million net additional jobs, according to a report prepared by the London-based World Travel & Tourism Council (WTTC).
That is good for the economy. Travel and tourism generated US$7.6 trillion in revenue (10.2% of global GDP) and 292 million jobs in 2016, equivalent to one in 10 jobs in the global economy. The sector accounted for 6.6% of total global exports and almost 30% of total global service exports. For the sixth successive year, growth in travel and tourism outpaced that of the global economy (2.5%), according to the report released at the WTTC Global Summit in Bangkok in late April.
The high-profile event, dubbed the World Economic Forum for travel and tourism, focuses on stimulating new ideas and concepts, promoting sustainable tourism and disseminating intelligence on industry trends. A study about the impact of terrorism on tourism was one of the more novel features of this year's forum.
"The impacts from those events and time for recuperation are shorter than expected. This is a situation that people are getting used to," said Laurens van den Oever, chief marketing officer of ForwardKeys, a research firm specialising in tourism.
ForwardKeys based its study on air booking data collected worldwide from 2014 to April this year. Its database contains reservations handled by more than 200,000 online and offline travel agencies.
Its study, "Air Travel Defies Global Challenges", is surprisingly upbeat. Europe is recovering from last year's terrorist attacks and arrival growth is back on track. The study states that long-haul arrivals in Western Europe are on the increase -- reflecting its resilience in the face of frequent and major attacks in the previous years.
The continent, of course, suffered a sharp reduction in the immediate aftermath of major attacks. It has taken over a year -- or longer in the case of Paris following the attack in November 2015 -- to recover. Yet, tourists on long-haul stays started to return to Western Europe and the number is surprisingly higher than those seen before the Paris attack.
The BRICS countries are also back on track, with more Brazilians and Russians heading to Europe, while tourists from more economically robust India still prefer culturally similar Asian countries, especially Thailand. Tourists from China are still a major contributing factor to the growth of tourism worldwide.
"The learning curve from [the aftermath from Paris attacks] is that Chinese tourists do not stop travelling. They might skip some risky zones and go to Nordic countries or Switzerland instead. After all, travellers never stop, they just change routes," Mr van den Oever said during the launch of the report.
However, political factors surprisingly can still play a big role in tourists' decision-making. The study reveals Canada is growing in popularity as a North American destination among travellers turned off by US President Donald Trump and the inward-looking policies he is pursuing.
The study also found Chinese tourists turned their backs decisively on South Korea after the US installed Terminal High Altitude Defence (THAAD) missiles in South Korea early this year. Beijing views the system, intended to protect against North Korean incursions, as a potential threat to its territory.
According to data collected by ForwardKeys, international arrivals in South Korea, for stays of four to eight nights, dropped 10% in the first quarter of this year due to cancellations by Chinese tour groups in March. Forward bookings for stays of 4-8 nights are down by 28%.
The question is which countries will benefit from route changes. In this part of the world, because of the rising tensions on the Korean Peninsula, one region seeing a windfall is Southeast Asia.
According to the WTTC, Southeast Asia is the world's fastest growing market for international tourism in terms of GDP contribution. Revenue from tourism makes up 8.5% of Asia-Pacific's GDP. Revenue from travel and tourism makes up 11.8% (US$301 billion) of total GDP, outpacing the 7.7% growth of 2015. On a global scale, revenue from this sector contributed to 10.2% of world GDP.
Cities and destinations in Asia, and especially Southeast Asia, occupy high rankings in international polls on famous destinations. For example, a report by the market research firm Euromonitor International released early this year found Hong Kong and Bangkok have more travellers than any other destinations in the world.
According to the MasterCard Asia Pacific Destination Index 2017, Bangkok retains the title of the most visited city in Asia Pacific. Yet Singapore outpaces the capital of Thailand in term of expenditure per visitor. Singapore from 2015-16 had a leap of 18% in visitor spending. The city-state attracted the highest spending per visitor at US$254 per day, followed by Beijing ($242), Hong Kong ($242), Shanghai ($234) and Taipei ($208), according to MasterCard.
The study also finds tourists from Northeast Asia have helped boost these earnings. China and South Korea are the main contributors, followed by Taiwan, the US, Japan and the UK.
Tourists from China and South Korea have been top source market for Singapore and Bangkok, the favourite destinations for Chinese tourists. Tokyo has been the favourite destination for South Koreans and Chinese tourists. Tokyo is the top Asia Pacific destination for outbound Koreans with 3 million arrivals annually. China contributed 55 million overnight international arrivals, a 16.2% share of all tourists to the 171 destinations in Asia Pacific, according to the MasterCard report.
Kobkarn Wattanavarangkul, the minister of tourism and sport of Thailand, believes the burgeoning growth in Asian tourism is just a start. The formation last year of the Asean Economic Community (AEC) and infrastructure such as high-speed trains, east-west highways from China to the Mekong-sub-region will encourage more travel and tourism.
Ms Kobkarn believes there is more potential to develop more second-tier destinations in all countries in the region, and more "unseen" destinations in countries such as Myanmar and Laos, that can be promoted. Maritime tourism, especially cruises and facilities catering to superyachts, are going to next big thing for the region.
Vietnam, Hong Kong, the Philippines, Malaysia and Thailand are all trying to upgrade marinas, ports and maritime facilities for yachts in order to position the region as the Caribbean of Asia. Meanwhile, Thailand is working with Laos, Cambodia, Myanmar and Vietnam to promote the Mekong as the "Magic River", Ms Kobkarn said in a speech during the WTTC summit.
OBSTACLES ALONG THE WAY
But before they can enjoy the full scope of economic benefits from tourism, Asean countries need to cooperate more to create real freedom of mobility.
Asean is seen as a large emerging market. Yet, it is unable to match the European Union when it comes to a single visa. Each government in Asean has its individual visa arrangements. Singapore has visa-free passage agreements with 165 countries, making Singapore passports among the world's strongest in terms of freedom of movement, on par with Germany. Thailand, however, has free-visa agreements with only 57 countries.
Differing visa policies and fees impede the flow of travellers. Visa-free access or a single regional visa plays a major role in facilitating freedom of movement and travel. Indonesian Tourism Minister Arief Yahya told the forum that a single visa would fast-track Asean integration.
Philippine Tourism Secretary Wanda Teo also believes an Asean single visa would be a big boost for tourism. "We would like to have one visa for Asean countries. This would be for foreign tourists from all over the world to travel to Asean countries. They can stay longer in Asean countries," she said.
Indeed, discussions of a Schengen-style Asean single visa have already started. For instance, Thailand has created a committee to start a single-visa scheme with Cambodia, according to Ms Kobkarn.
"It is not that easy, but we are not stopping, so we have a single-visa committee working together," she said, adding that the process was time-consuming as the committee has to work with various bodies including the Foreign and Interior ministries, the Immigration Bureau and the National Security Council.
"It not only touches one ministry in our country, it needs to answer questions from so many bodies," she said. She didn't give a time frame for when the single visa might be possible. Technical barriers such as fees and border control policies must be addressed. Yet, Ms Kobkarn remains optimistic. "At the end of the day, a single visa for this region is possible if we tackle this issue case by case."
The centre of gravity of travel and tourism might be shifting to Asean, thanks to the mushrooming of low-cost carriers and burgeoning middle class. Yet, the region is still far from having truly open skies, despite attempts under the framework of the AEC to persuade member states lift trade barriers and liberalise their aviation industries.
Tony Fernandes, chief executive of the regional low-cost market leader AirAsia, called for full liberalisation of aviation. He used the WTTC event to call on the Thai government to allow foreign investors to hold 100% shares in aviation businesses, instead of capping holdings at 49%.
"It is crazy in this day that we can only own 49% of airlines. I think the next stage for this region is that you can have 100% ownership of airlines," he said.
Asean officially announced its open skies agreement in January 2015 and it took full effect last year -- on paper at least -- after all member countries ratified the agreement. It reflects the mission of the Asean Single Aviation Market (Asean-SAM) that any airline from any member state should be able to fly to any other member state and beyond.
Open skies is perceived as the driving factor to bring in more carriers and more travellers. Competition means lower airfares and more efficiently run carriers. But the policy has become a bitter pill for some governments that are trying to protect their national carriers from foreign competition. In reality, trade protectionism still exists. For example, Laos and Cambodia were still limiting Thai airlines' access to their airspace as recently as 2015.
Arun Mishra, regional director of the Asia-Pacific office of the International Civil Aviation Organization (ICAO), said Asean countries should do more to comply with the regional open-skies policy to support airlines based in member states to fly freely throughout the region.
Mr Mishra believes that countries that have airlines operating regional passenger air services will have greater bargaining power with European and Chinese airline giants to jointly promote tourism in the region.
MORE AND BETTER AIRPORTS
Mr Mishra also says that while Asean might be a rising star in travel and tourism, this is not reflected in the standard of airports in the region.
"Despite Asean being featured as the fastest-growing tourism market in the world, the region still lacks proper airports to support an adequate tourism economy, including Thailand and Indonesia," he said at the WTTC event.
He urged governments to invest more in aviation infrastructure, to accommodate the 6.5% annual growth in international tourist arrivals.
A clear case in point is the recent report on congestion, safety and operational problems at Suvarnabhumi Airport. The International Air Transport Association (IATA), which represents 260 airlines or 83% of total air traffic, last week warned the Thai government that the country could weaken its potential to become a top-10 air passenger market unless the airport capacity crunch and operational issues were resolved.
Mr Fernandes of AirAsia urged governments in Asean to build more airports dedicated to low-cost carriers, as Britain has done by providing low-cost facilities featuring the full range of airport services on par with what traditional airlines receive.
Low-cost airlines, he said, cannot compete with richer national carriers to afford all the services and equipment available at airports, such as boarding bridges or bus transport. Dedicated budget airports would boost overall tourism in the region and would help further lower airfares for passengers, he said.