In 2019, the tourism market in Southeast Asia was booming. The region’s six largest economies (Indonesia, Thailand, Singapore, Malaysia, Vietnam, and the Philippines) combined for more than 127 million tourists that year. These visitors spent tens of billions of dollars and contributed significantly to the region’s economic activity.
Of course, things changed dramatically in 2020 with the arrival of the COVID-19 pandemic. With lockdowns and border closures taking effect, total tourist arrivals from the same six countries fell to just 2.6 million in 2021, more than half of them from Indonesia.
The recovery has been slow, certainly slower than export-oriented countries like Thailand would like, but tourism in the region is starting to recover. In 2022, ASEAN’s six largest economies recorded 39 million tourist arrivals. Last year, the number was up to 91 million. Perhaps 2024 will be the year inbound tourism returns to pre-pandemic levels of 120-130 million.
Unsurprisingly, Thailand is leading the recovery. A staggering 40 million tourists arrived in Thailand in 2019, generating $60 billion in travel services exports. Last year, 28 million people entered the country, about 71% of pre-pandemic levels, and the Bank of Thailand recorded $30 billion in export revenue from the travel sector.
Although these numbers are higher than other economies in the region, tourism is central to Thailand’s economic growth model and the overall economy is weaker as tourism has not yet fully recovered to 2019 levels. There has been some delay. This is one reason why the Thai government is considering unusual policy responses, such as the large-scale cash stimulus program currently underway.
Malaysia will recover fairly quickly and will receive 20 million tourist arrivals in 2023. This is 77 percent of pre-pandemic levels. Tourism revenue was $15.8 billion, 83% of pre-pandemic levels. However, Malaysia’s tourism industry is a bit of an outlier as it is highly dependent on Singapore and is not a good barometer of broader regional or global travel trends. The number of arrivals in 2023 was 8.3 million from Singapore. Speaking of Singapore, this island nation received 13.6 million international tourist arrivals in 2023, an increase of 116% over the previous year.
Countries such as Indonesia, the Philippines, and Vietnam are perhaps a better indicator of regional tourism trends. The number of tourists visiting Japan in 2023 will be 11.7 million, and although Indonesia’s tourism industry is steadily recovering, it is still far short of the record number of 16.1 million tourists visiting Japan in 2019. As then, the majority of these travelers head to Bali, which is beginning to feel its influence. Overcrowding and traffic jams again. To ease the burden on Bali, the government is trying to market destinations in other parts of the archipelago, such as Labuan Bajo, but it also noted that 5.2 million tourists arrived at I Gusti Ngurah Rai Airport last year. Considering, Bali is still the biggest tourist attraction.
The Philippines has also recently tried to revitalize its tourism industry with a flashy rebrand as the country recovers from the pandemic. In 2023, they announced a new “Love the Philippines” campaign, which came under fire after it was discovered that the campaign used stock photos from other countries. The Philippines is far behind its regional competitors in the tourism game, with only 5 million foreign visitors expected in 2023. This is 61 per cent of pre-pandemic levels, compared with more than 70 per cent in other major economies in Southeast Asia.
Vietnam’s tourism industry was experiencing explosive growth even before the pandemic, with the number of visitors to Japan rapidly increasing from 8 million in 2015 to 18 million in 2019. This growth was fueled by large numbers of tourists from China and South Korea. In 2019, 5.8 million Chinese tourists and 4.3 million Korean tourists visited Vietnam. In 2023, Vietnam’s inbound tourism will recover to 70% of pre-pandemic levels, with 12.6 million visitors. However, while Koreans are returning to Vietnam in large numbers (3.6 million last year), Chinese tourists have not, with 1.7 million still well below 2019 levels.
This is true across the region and may help explain why it will take years for the industry to get back on track. Chinese tourists were a big part of Southeast Asia’s tourism boom before the pandemic, but so far inbound travel from China has been slow to recover. Given the 2023 trajectory and the fact that many currencies in the region are expected to continue depreciating in 2024, Southeast Asia could soon be poised to return tourist activity to 2019 levels. It will be interesting to see if and to what extent Chinese tourists returning to the region are included in that story.
