As Asia’s tourism market begins to recover after the coronavirus pandemic ends, Alan Watts, president of Hilton’s Asia Pacific region, is noticing a change in the number of guests checking into hotels in the region, and from a distance. It’s not coming anymore. And they are the ones who visit often. For example, some Asian leisure travelers head to the Indonesian resort island of Bali three times a year.
“I’ll give you a hard statistic: 10 years ago, inter-Asia travel accounted for only four in 10 arrivals. The other six came from the long-haul market,” Watts says. “now, [inter-Asian travelers are] 8 out of 10 people arrive through the door. ”
Watts is bullish about Hilton’s prospects in Asia. In an interview with Fortune magazine, Hilton executives doubled down on previous predictions that the hotel conglomerate would have at least 1,000 properties in the Asia-Pacific region by 2025. This goal, he says, is a “fact” and not a “wish.”
“We currently have 700 hotels on the market and another 800 under construction in various parts of Asia,” he says. “we [will] Sometime in 2025, the number of hotels will exceed 1,000. (Hilton hotels are a combination of Hilton-owned properties, Hilton-managed hotels on third-party owned properties, and franchised hotels).
Economies in the Asia-Pacific region were some of the last to open up after the coronavirus pandemic. Several countries in Asia have imposed restrictions on people arriving from abroad, requiring long periods of quarantine if not banning them altogether. Popular tourist destinations in Japan began accepting foreign tourists in October 2022. China, a major source of tourists, only lifted its quarantine regime in January.
The collapse of international travel was an existential crisis for many countries in Southeast Asia, which rely heavily on tourism. According to the OECD, the travel industry contributes about 12% to the GDP of Southeast Asian countries.
“The industry has been hit hard by COVID-19,” Watts said. “Many of our team members had never even seen downtown as the industry was experiencing a decades-long boom in Asia.”
However, with the lifting of coronavirus restrictions, both leisure and business tourism is starting to return.
The region still lags behind Hilton’s other major markets, but not by much. Last quarter, Hilton’s Asian hotel room occupancy rate was 74%, just behind the U.S. and 5 percentage points behind Europe. Room occupancy in Asia also increased by 12 percentage points year-on-year, which Watts attributes to Asian economies finally lifting coronavirus restrictions from late 2022 onwards.
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“100 million people join the consumer base every year.” [in Asia]. So in some ways, travel and tourism is still in its infancy, and the customer of tomorrow will be a pan-Asian customer,” says Watts.
Short-term trips are fueling Asia’s travel boom. Leisure travel in Asia tends to be short trips, Watts said, perhaps to Bali three times a year, Hong Kong once for Lunar New Year, and the Maldives once a year. We are also seeing an increase in business leisure travel, or “bleisure” travel, where business travelers bring their families for an extra weekend at a destination.
Young travelers in Asia are also looking for “experiences” and are becoming more open to exploring new places, he says. (This isn’t necessarily a good thing for tourist destinations, as post-COVID-19 mainland Chinese tourists are more interested in social media-friendly experiences than city malls, so retail is becoming more popular.) Hong Kong’s tourism sector is struggling).
New destination: Vietnam
Hilton positions Vietnam as a growth market. The company’s Asia president said the Southeast Asian country still had “undiscovered” attractions compared to more established destinations such as Thailand. Business travel may also increase as more companies move manufacturing and other operations domestically.
“Even 10 years ago, people wouldn’t have considered Phu Quoc or Da Nang on their travel shortlist,” Watts said. There were “virtually no hotels” at the two beach resorts in Vietnam.
“Currently, all the world’s major brands are in Phu Quoc, and most of them are also in Da Nang. Even if we don’t come there today, we will build it tomorrow,” he says.
In 2019, before the coronavirus pandemic, Vietnam welcomed a record 18 million foreign arrivals. The government is now trying to bring that number back up. So far this year, the country has received more than 11 million visitors, exceeding the government’s target of 8 million. Vietnam has simplified visa applications this year in a bid to boost its tourism industry.
New tourist source: India
If Vietnam is a promising destination, India is a promising source of tourists.
Consulting firm McKinsey & Co. said in a November report that India’s fast-growing economy and its huge young population are boosting the potential of the country’s outbound tourism market. The country has already seen outbound travel numbers recover to more than 60% of pre-pandemic levels.
“India is a great leisure market. And when you travel, you travel across generations,” Watts explains, with “parents, children and grandchildren” all traveling together.
China looks inward
But China still dominates Hilton’s regional forecasts. Before the coronavirus pandemic, the country was one of the largest sources of international tourists, supporting the tourism economy in Southeast Asia and other regions.
80% of Hilton’s business in China is conducted domestically, especially in second-, third- and fourth-tier cities around domestic business parks. The composition of China’s domestic leisure market is changing, with what Watts calls a “move toward experiences.”
Visa backlogs and flight shortages are keeping Chinese travelers at home. While this may be bad news for international destinations that once attracted Chinese tourists, it’s also bad news for Hilton, which has more than 500 hotels in the country and plans for 700 more. The shift to travel isn’t necessarily a bad thing.
Watts isn’t worried about China’s economic slowdown. “I think what people are focusing on is retail concerns,” he explains. “We just don’t see that in the travel and tourism space.”
The China Tourism Academy predicts that the domestic tourism market will reach 5.2 trillion yuan ($724 billion) this year, accounting for more than 90% of the total market in 2019. Government research agency CTA predicted earlier this year that domestic travel would only recover to about 70% of 2019 levels.
“If Chinese leisure consumers are concerned about travel, it is by no means short-term,” Watts said.
This article originally appeared on Fortune.com
