Tourism in Asean: More sunny days ahead

By: Vanitha Nadaraj

Some of the world’s finest beaches, and snorkeling and scuba sites are somewhere between a 30-minute walk and a two-hour flight for those of us living in Southeast Asia. The coastal areas of Asean are dotted with these little sunny paradises that offer palm-fringed beaches and cascading white waves all year round.

It is not just the accessibility but also the diversity that makes the tropics so attractive to the tourist. Tourism in Asean is as varied as the cultures and nature in the region – from iconic temples and historic cities in the Mekong region, dense jungles in Sabah, idyllic villages in Mindanao, spas in Bali to Christmas shopping in Singapore.

Southeast Asia is a travel and tourism economic goldmine. The region has a lot to offer in terms of tourism products and at the same time it is its own market. Asean saw tourist arrivals at 105 million in 2014, a staggering 42.4 percent increase from close to 74 million tourist arrivals in 2010. Of those 105.1 million visitors, 49.22 million came from within the Asean.

Of all the tourism revenue that Asean receives, about 48 percent comes from tourists from Southeast Asia. This market is likely to keep growing as the middle class in the region continues to expand and with changes in lifestyle and increase in spending power. Between 2012 and 2020, the middle class in Southeast Asia is expected to more than double from 190 million to 400 million.

This is driving growth in areas like leisure travel, spa and wellness sector, dining and retailing, catering to the demands from the well-heeled traveller to those opting for Airbnb services. Internal tourist consumption was US$230 billion in 2014 and is expected to grow to US$385 in 2025, according to World Travel and Tourism Council.  SEA Tourism Industry Key Facts

Tourism in Asean still growing

Impiana Hotels Group through its hospitality arm Impiana Hotels & Resorts Management Sdn Bhd, is seizing the opportunity to expand within the region. The group plans to triple the number of rooms under its management to 3,151 by 2018, expanding its portfolio in Malaysia, Indonesia, Thailand and Maldives. Malaysia-based Impiana has four hotels in the country and three in Thailand. Six new ones are being built and two existing hotels are being expanded.

Group Chief Operating Officer Azrin Kamaluddin says: “Asean and the efficiencies it promotes for commerce and industry make Asean a good investment for a hotelier. The more intra-Asean business is generated from these efficiencies, the more Asean businessmen will travel on business.”

“Growth will be rapid and substantial. We have a long way to go before ‘maturity’ creeps in to the Asean hospitality sector,” he tells Asean Today in an email response.

Malaysia Impiana Group

Impiana Hotels Group CEO Azrin Kamaluddin.
Photo courtesy of Impiana Hotels Group

The hospitality sector has a long way to go before peaking and maturing, and just like many other travel and tourism linked industries, and it would be unwise to refrain from ambitious or strategic expansion.

The wellness travel industry has a firm footing in Thailand and the country is referred to the Spa Capital of Asia. Its spa and wellness industry, which brought in one million tourists in 2014, is one of the four main sectors in the tourism industry. Indonesia and Malaysia are the two other Asean countries that get sizeable revenues from this industry that is worth more than US$3 trillion globally.

Then there is health tourism. Malaysia, Thailand and Singapore are among the world’s top destinations. For Malaysia, this would be an area which a lot more attention will be given so it can be a stronger income earner for the country, now that revenue from commodities have taken a nose-dive.

Cashing in

Azrin says that one of the challenges as a hotelier at this point in time is the foreign exchange risk “given the multi-currency scenario of borrowings, rates, local cost, imports and such”. But he feels these risks will be naturally hedged. “Our rates outside Malaysia are loosely pegged to the USD and our overseas expansion is funded by USD borrowings.”

He adds: “Meanwhile, local costs are of a lesser concern since local currencies are not expected to perform better than the USD for a while. And as long as western currencies are strong, intra-Asean travel and tourism will make far more sense compared to travel to the west.”

The efforts of industries related to travel and tourism need to be complemented by government policies. The Philippines is starting to focus on a niche travel market. The government has plans to position the country as one of the world’s preferred destinations for Muslim tourists. The Philippines sees a huge Muslim market potential in its neighbours, namely Indonesia and Malaysia. Globally, the Muslim travel market is a key growth tourism sector and is projected to be worth US$200 billion by 2020. It is presenting valued at US$145 billion.

The Indonesian government has plans to increase tourist products. The government is designing and setting up 10 new world-class tourist destinations while being careful not to remove the shine away from the “oversold” Bali.

The 2006 ruling allowing Asean citizens to travel within the region for up to two weeks without a visa was a huge boost to intra-Asean tourism. Prior to this, Asean countries had separate bilateral free-entry agreements.

Tourism in Asean – Outstanding issues

Intra-Asean travel and tourism will be a lot smoother once the Asean Open Skies Policy lifts off. Regional carriers will be give direct access to any airport within the bloc, resulting in a shorter travel time and cheaper travel. The region is waiting for the two most populous nations in the region, Indonesia and the Philippines, to ratify the agreement.

The Federation of Asean Travel Associations wants Asean countries to waive entry visa requirements for travelers among the 10 nations, as well as from China, Japan and South Korea, to boost the regional tourism industry.

Rather than wait for a regional effort, Indonesia has recently relaxed its visa policy to pave the way for a bigger inflow of tourists from China. Indonesia is expecting two million of them this year, from 1.3 million in 2015. Earlier, other Asean countries like Thailand, Malaysia and Vietnam did the same.

The numbers from China are too big to ignore. In 2014, about 117 million Chinese nationals travelled out of their countries and more than 80 percent went to other Asian countries.

China Outbound Tourism 2014

Another step Asean needs to take is creating the Asean brand in tourism. Now is a good time as any to start talking about an identity where the region as a whole is being projected as a tourist destination.  At least for intra-Asean visitors, there is visa free travel and this being such a large group, perhaps it might actually be worth setting up a separate lane for these travellers, both as a gesture to their large share of the market as well as to Asean’s growing identity as an economic community.