In the current climate of global economic slowdown, geopolitical risks and trade tensions, what does the year ahead have in store? We ask travel industry chiefs to give their take on how South-east Asia’s tourism sector is shaping up in 2020.
OUTBOUND TRAVEL:
STRONG OUTBOUND DEMAND FROM ASIA
SINGAPORE
Ongoing socio-political unrest in Asia and beyond has limited impact on the travel confidence of Singaporeans, a market that does not typically shy away from riskier destinations.
For instance, following the Easter Sunday attacks in Sri Lanka, groups from Singapore continued to travel there without worry, as “they feel safe because security is really tight”, said Maleha Maarof, sales manager of Prime Travel & Tour.
However, this mindset has not applied to travel to Hong Kong. As riots rage on in the once-popular destination, Singapore’s travel agencies are reporting mass cancellations, triggered in part by heightened travel advisories from the Ministry of Foreign Affairs.
“Tourism to Hong Kong has definitely been impacted by declining numbers, especially for the leisure travel segment. Forward enquiries and bookings have dropped significantly due to the local political unrest,” shared Alicia Seah, director, public relations & communications, Dynasty Travel.
Euro-Asia Holidays’ managing director Maggie Tay agreed, explaining that while a few still dare to brave the city despite ongoing protests, the vast majority are shunning it altogether.
Instead, Singaporeans are fulfilling their wanderlust in other Asian destinations like Japan, where smaller unknown prefectures are capturing the attention of travellers.
Diana Ho, general manager of Royal Wings Travel, said: “Our focus next year will be on Japan. Singaporeans will travel around the Olympic Games or avoid Tokyo, so we will promote more tours into Kochi Prefecture and Aomori Prefecture.”
Longhaul destinations, including Eastern and Northern Europe, and the Balkans, are also attracting Singaporeans as the euro weakens against the Singapore dollar.
To ensure safety and quality in their tours, agencies are doubling down on efforts to build and maintain strong relationships with in-destination partners.
Dynasty Travel, for example, is involving its suppliers and partners in product development and planning, as well as inviting them to travel events as presenters. Come 2020, Dynasty Travel will launch even more exotic products, such as the first-ever Svalbard Expedition Cruise and packages for Iran. – Pamela Chow
MALAYSIA
Malaysia’s outbound travel sentiment remains strong in 2020, fuelled by new packages and destinations to whet travellers’ appetite, despite the US-China trade war uncertainty and a weak ringgit.
Sheikh Awadh Sheikh Abdullah, managing director, Gotz Travel & Tours, revealed that demand for longhaul holidays remained strong for the Chinese New Year period, with Turkey, the Balkans and Western Europe being popular destinations. For Muslim families, he said programmes to Spain and Morocco were in demand.
The company will be promoting the Caucasus region this year, namely Armenia, Azerbaijan and Georgia, as Sheikh Awadh believes that these destinations would appeal to the luxury and middle income travellers seeking new destinations beyond Europe. The Malaysian Association of Tour and Travel Agents Kuala Lumpur chapter, of which Sheikh Awadh is also a committee member, will be organising fam trips for its members to visit the three countries in 1Q2020.
Overall, he expects outbound business in 1Q2020 to increase by two to three per cent from the corresponding period in 2019.
Raaj Navaratnaa, general manager, New Asia Holiday Tours & Travel, shared that the company was seeing stronger demand from millennials travelling regionally to off-the-beaten-track areas in 2020.
“Millennials love soft adventure and discovering new places, but with limited disposable income, they focus on regional travel. They love venturing off the beaten path, exploring beyond the normal attractions,” he said, adding that there is strong demand for travel to Myanmar, Laos, Cambodia, Vietnam and India.
He added that NGOs and clubs in Malaysia are also showing increased interest in volunteer tourism, which are mainly community-based projects in the region such as helping with repairs and upgrading of rural school facilities.
William Chu, director, VIP – Corporate Travel & Tours, noted a keener interest to visit Japan in 1Q2020 as Malaysian travellers wanted to shun the higher ground rates during the 2020 Summer Olympics in Tokyo. – S Puvaneswary
INDONESIA
Indonesian outbound travel companies are expecting brighter market prospects in 2020, driven by a positive confluence of factors including aggressive marketing and promotions by international NTOs and inl airlines.
Pauline Suharno, managing director of Elok Tour and secretary general of the Indonesian Travel Agents Association (ASTINDO), said: “Travelling has become a lifestyle for Indonesians. They even take a short break or a long weekend to travel out of town.”
With the re-election of Joko Widodo as the Indonesian president during the recent election, the market’s interest in travel has risen.
Meanwhile, high domestic airfares have also given impetus to the outbound push. “With domestic airfares remaining high, we expect to see higher outbound traffic in 2020,” Pauline said.
While Japan and South Korea remain top of the list, travellers now have many more choices, thanks to promotions from various NTOs.
The Taiwan Tourism Information Center opened an Indonesian representative office in Jakarta in 2019 to grow outbound traffic from Indonesia, while India has launched its charm offensive in the country, starting with visa-free facilities.
Likewise, Sri Lanka, Nepal, Butan and Uzbekistan are stepping up their destination marketing efforts in the country. Uzbekistan Airlines also recently started direct flights between Tashkent and Jakarta, boosting connectivity between the two countries.
Anton Sumarli, director of Travelux Travel Services and ASTINDO board member said: “Sri Lanka is a visa-free destination for Indonesians and the country is eager to grab the outbound market from here. They have invited (agents) for a fam trip, participated at travel fairs here and is planning to organise photo exhibitions to create more awareness among Indonesians.”
Pauline added: “Nepal and Bhutan are high-end destinations that are likely to attract Indonesia’s younger travellers who are more enthusiastic to walk and hike, rather than the mature ones who like exotic destinations but still enjoy luxury and comfort.”
Sharing similar sentiments, Anton said: “Sri Lanka, Nepal and Bhutan have the potential to attract special interest tourists, especially those who like adventure or photography.”
Meanwhile, the memorial complex of famous theologian Imam Al-Bukhari in Uzbekistan is expected to attract Indonesian Muslim travellers, according to Anton. – Mimi Hudoyo
INBOUND TRAVEL: ASIA PROPS UP REGIONAL TOURISM
MALAYSIA
Inbound agents specialising in European markets are banking on stronger demand on the back of Tourism Malaysia’s more aggressive promotions in Europe over the last two years, coupled with the increased budget allocation to promote the Visit Malaysia 2020 campaign.
Asian regional markets are also expected to see a pick-up this year, thanks to improved air connectivity, visa relaxation for Chinese and Indian tourists, and the anticipated opening of Resorts World Genting’s outdoor theme park.
Saini Vermeulen, executive director, Within Earth Holidays, shared that the company has received strong bookings from Western and Eastern Europe, resulting in a 30 per cent hike in forward bookings over 2019. He said that this was partly due to the company’s efforts to conduct more sales calls in Europe last year, as well as Tourism Malaysia’s initiative of being partner country at ITB Berlin 2019 which generated further interest in Malaysia from Europe.
He noted that Qatar Airways’ flights to Penang and Langkawi have also triggered the interest of European tourists to visit both destinations, so the company has created more tour packages in both destinations to capture the European market.
Manfred Kurz, managing director, Diethelm Travel Malaysia, remarked that while travel demand from Central Europe and North America was strong, he expected bookings from the UK to be slow due to the uncertainty of Brexit. He said: “Once Brexit is solved, we expect demand from the UK to pick up. With the current uncertainty, the British people are reluctant to plan too far ahead.”
Ganneesh Ramaa, vice president, Destination Explore, projected a 10 per cent increase from Indian and regional markets this year, partly due to the recent relaxation of the visa rules for Indian nationals. He shared that the main challenge in 2019 was the Indian election in May which coincided with the peak summer travel period to Malaysia, resulting in a drop in Indian arrivals. He is upbeat that the upcoming summer travel season will fare better in 2020.
He opined that once Resorts World Genting’s outdoor theme park becomes operational, it will further boost arrivals from Asian markets. His company is also working closely with Sarawak Tourism Board to promote Sarawak packages to its Asian clients. For European markets, the company has created new packages highlighting nature and beach stays in Johor. – S Puvaneswary
INDONESIA
Indonesian inbound players are forecasting growth from countries in the Asia-Pacific as bookings from Europe and the US slow down.
INA Leisure is expecting the growth in inbound arrivals from the Indian and Middle Eastern markets in 2019 to continue into 2020, according to its owner and executive director Jongki Adiyasa.
“Most Indian travellers are still attracted to Bali, but Middle Easterners have started to venture beyond Bali to Lombok and East Nusa Tenggara,” he said.
Aneka Kartika Tours is also seeing a spike in visitor arrivals from South-east Asia in 2020, on the back of more direct flights between Indonesia and its neighbouring nations.
Its operations manager, Adjie Wahjono, said: “The South-east Asia market is quite promising for us. We are in the process of bidding for big incentive groups (over 100 pax) from the Philippines and Vietnam, which is a new market that has opened for us, thanks to Vietjet’s and Vietnam Airlines’ recent launch of (five-times weekly) direct flights between Ho Chi Minh City and Bali.”
Adjie said that his company’s foray into the Vietnam market four years ago started bearing fruit towards the end of last year when group enquiries rolled in, with scheduled arrivals between December 2019 and February 2020 at press time.
“Malaysia Airlines is offering competitive airfares from Vietnam to Bali via Kuala Lumpur, which also opens up more options for travellers from Vietnam to visit Indonesia,” Adjie said.
However, both Jongki and Adjie are seeing a slow start to inbound bookings from the longhaul markets of Europe and the US.
Jongki said: “Summer bookings from Europe are not looking promising yet. The beginning of the year seems to be very quiet and we expect to see the market start moving from April onwards and grow stronger after June, provided that the (social and political) conditions in Indonesia continue to stabilise.”
Adjie added: “On one hand, we have seen the market’s confidence, as our business partners have extended their contracts and new accounts added. We have also started to get group bookings, but there haven’t been many FIT bookings, which usually start pouring in between November and February, so I have not been able to project how summer 2020 will be like.”
While Panorama Destination’s director of business development Ricky Setiawanto said it’s too early to predict the longhaul market’s performance, the company has received positive feedback from its European business partners on its 2020 outlook.
He said: “Generally, our business partners, particularly from the Netherlands, are optimistic that our performance in 2020 will be better than 2019. However, we should see a clearer picture in January or February. Vakantiebeurs (a travel fair taking place in the Netherlands in January) is usually a (barometer) to see how the market will perform during the year.”
Meanwhile, a promising market is Denmark, whose extensive airline capacity to Asia reflects the market confidence in this part of the world.
Emirates, for example, offers extensive flights to Asia, including Indonesia; as well as a daily A380 service between Copenhagen and Dubai. Meanwhile, Singapore Airlines and Turkish Airlines also fly to Copenhagen. As well, South Africa is another longhaul market which is faring well, according to Ricky.
“The country has been performing well in 2018 and 2019, and should the economic situation in South Africa remain stable, we expect the market to grow even bigger in 2020 – both in volume and spending,” he said. – Mimi Hudoyo
HOSPITALITY:
SPOTLIGHT ON DESTINATIONS OFF THE BEATEN PATH
Asian destinations that sit off the well-trodden tourist trail will shine in 2020, predict hospitality leaders.
Interest in Vietnam has shown no sign of waning as a swathe of international hospitality brands gear up to expand in the country’s established and emerging destinations.
Javier Pardo, vice president of operations for Avani Hotels & Resorts, said: “Vietnam is developing rapidly and is improving its air and land infrastructure, allowing more developments into other destinations within the country.”
The brand plans to open properties in Doc Let, Nha Trang, Ho Chi Minh City and Cam Ranh by 2022.
Vietnam is also on the radar of Michael Issenberg, Accor’s chairman and CEO for Asia-Pacific. Besides Vietnam, he believes that India, Cambodia and the Maldives will be some of 2020’s “hottest” spots.
Added Issenberg: “Destinations like Phu Quoc, Inle Lake, Jaipur and Udaipur are going to grow in 2020 as people seek places that are a little bit less touristy.”
Despite travellers’ growing appetite for off-the-beaten-track destinations, Issenberg said that “places like Singapore, Bali, Bangkok, Sydney and Melbourne will continue to perform well”.
Even in the established tourist destination of Thailand, secondary cities are now growing in prominence among international travellers, noted Paul Wilson, executive vice president of commercial at Cross Hotels and Resorts.
“Kanchanaburi, for instance, is becoming a hotspot. Hotel infrastructure is getting better with more five-star hotel openings, including our two properties there, which come on top of existing attractions like the Death Railway, as well as easier access to the destination,” he remarked.
Neo Soon Hup, executive vice-president, operations, for Pan Pacific Hotels Group, said that Asian source markets will continue to drive business across the region come 2020, with China leading the pack.
Despite a slowdown in the Chinese economy, Issenberg said that this will not impact business due to the size of China’s population and fast-growing middle class. He added that Asia’s hospitality industry will be eyeing up some of 2020’s fastest-growing outbound markets – India, Indonesia, Malaysia and Vietnam.
As well, India is a market that “cannot be ignored,” said Wilson, as Cross Hotels plans to open a GSA in the country soon. “Although we don’t have that many guests from India yet, we want to be ahead of the curve in tapping business from the country.”
In spite of a healthy outlook, challenges remain. Pardo said that human resources is the biggest hurdle to overcome, alongside retaining staff in an industry where competition is rapidly growing.
He said: “Looking for passionate hospitality (staff) and preparing young hoteliers for future career progression is difficult. Maintaining the talent is the next challenge, as the industry is quite competitive now with all the major consolidations, so turnover is quite fast.” – Marissa Caruthers and Xinyi Liang-Pholsena
AIRLINES: CAUTIOUS OPTIMISM
Asian airlines are bracing for slower growth in 2020 amid softening Chinese outbound travel demand and economic uncertainty owing to the ongoing US-China trade war, but industry leaders also say it is not all doom and gloom.
That was the common consensus among airline chiefs at the CAPA Asia Aviation Summit and Corporate Travel Summit held last November in Singapore, who said they saw pockets of opportunities in growing ancillary fees, focusing on untapped inbound traffic and market segmentation.
For regional LCCs, Jetstar Asia and Thai AirAsia both reported that revenue for ancillary fees was growing – at about one to two per cent annually – and now constitute between 18 per cent and 30 per cent of revenue.
Jetstar Asia’s CEO Barathan Pasupathi said that there are opportunities for airlines in the “vertical chain” and sharing platforms where passengers not only book air tickets, but also rides to and from the airport via a car-hailing service, and booking of hotel rooms, etc.
Ancillary fees for Jetstar Asia have jumped from the “tens” to around 30 per cent, he noted.
Thai AirAsia’s executive chairman Tassapon Bijleveld said that OTAs were “not selling ancillary (products and services)” and that the airline would have to drop big OTAs in China and work with those willing to sell ancillary products and services.
Chinese traffic has been slowing down over the last two years, he added, and despite a two per cent pick up, the market was not what it used to be.
Tassapon added: “The Thai baht is very strong and there are no fundaments to explain why. We are suffering because of the exchange rate.”
AirAsia group CEO Tony Fernandes said that he remains “very, very optimistic” about 2020. “We see further growth in network and passengers in 2020 and beyond, both in the domestic and international sectors,” he said, citing the carrier’s purchase of 353 Airbus A321neo aircraft as the backbone for its expansion plans.
The A321neo, which has a 27 per cent increase in capacity compared to the present fleet of 180-seat Airbus A320 and 186-seat A320neo, will eventually replace AirAsia’s existing fleet throughout the network.
For IndiGo, the Indian LCC is betting big on the potential of East Asia, with the launch of new services to Chengdu, Guangzhou, Yangon, Ho Chi Minh City and Hanoi, according to the airline’s CCO Willy Boulter.
Boulter said that the airline was changing its domestic focus, going international and tapping the Chinese inbound market to India, both for leisure and business. He added that IndiGo was also eyeing more outbound traffic to Thailand, with the introduction of visa fee waivers.
For full-fledged airline Garuda Indonesia, its strategy is to work with companies that provide services for travellers looking for a luxury experience such as private jet services.
Elsewhere, Tamas Hanyi, Finnair’s general manager for Asia-Pacific, was optimistic with forward bookings for 1Q2020.
He said: “Bookings on the Singapore-Helsinki route in 1Q2020 are looking really good, and hopefully, we can maintain it,” despite acknowledging headwinds as the result of the ongoing US-China trade wars and the uncertainty of Brexit.
Finnair will further expand its network in North Asia, by offering daily flights to Haneda from March 29 and three weekly flights between Helsinki-Busan from March 30.
Hanyi told TTG Asia at the recent ITB Asia in October that overall passenger growth on its Singapore-Helsinki route had increased by seven per cent year-to-date over last year, while group travel had increased by 30 per cent for the same period. He believed the reasons for this were the continuous education to consumers and travel partners that flying via Helsinki is geographically the shortest way between Europe from Asia as well as its high consistency and reliability of its product offerings.
Indonesia is an increasingly consolidated market where the government set a cap for the selling price of airline tickets, said Garuda Indonesia’s CEO I Gusti Ngurah Askhara Danadiputra.
Meanwhile, CAPA – Centre for Aviation chairman emeritus Peter Harbison said that the industry would face four game changers in the coming decade.
He said that there would be environmental headwinds caused by “flight shaming” and the impact on corporate travel; distribution and technology change due to data analytics and big tech companies that know more about the customer; new aircraft technology revolutionising route planning; and partnerships and foreign ownership changes, where individual airlines have to respond to bilateral agreements because of market needs and groupings like Star Alliance, Oneworld and SkyTeam being challenged. – Caroline Boey and S Puvaneswary
CRUISES: CHARTING NEW WATERS
To draw more Asians on board cruising holidays, industry players are churning out more immersive and pampering products that regular travel cannot offer.
With new ships and infrastructure in the region – such as Royal Caribbean Cruises’ Quantum of the Seas homeported in Singapore until April 2020 and Dream Cruises’ Global Dream launch in 2021 – Asia’s cruise industry is set for an uptick in growth momentum starting 2020-2021, expressed Dream Cruises’ president Michael Goh.
The cruising experience has also been redefined by personalised guest engagement. Goh explained: “Global Dream will be equipped with state-of-the-art digital technology, such as facial and speech recognition, as well as climate and mood lighting controls via a mobile app. It will be optimally designed to meet the advanced digital requirements of the Asian cruise market.”
For Uniworld Boutique River Cruise Collection & U River Cruises, that personalisation is exemplified in afternoon tea gatherings with guests and handwritten postcards with personal greetings post-trip that create “a very good relationship between consumers and cruise liners”, explained Henry Yu, director, Asia.
Some companies have also collaborated with partners and authorities to enhance the off-ship experience. For example, Royal Caribbean International (RCI) recently entered into a five-year multimillion-dollar marketing partnership with Singapore Tourism Board and Changi Airport Group (CAG) to promote fly-cruises.
Under this partnership, RCI will tap on CAG’s seamless intermodal transfer service for passengers flying into Singapore and sailing out on cruise lines and ferries. RCI guests sailing out of Singapore from China will have their bags delivered from their arriving flights to their departing ship and enjoy facilities of the Changi Lounge located in Jewel Changi Airport, before being transferred to the cruise terminal.
RCI is also looking into drawing in more multigenerational travellers. Angie Stephen, managing director Asia-Pacific, Royal Caribbean Cruises, said: “We’re also working on a new children’s programme that we hope to announce next year. We’re also looking at themed cruises – for instance, we’re partnering a local radio station in March 2020 – and we’ve also successfully completed a halal-certified cruise for a partner in Malaysia with 500 guests on Voyager of the Seas (in November 2019).”
