ForwardKeys’ China market expert shares some insights on the opportunities with emerging markets in South-east Asia as China’s continued absence from the international travel market leaves many destinations facing a huge shortfall in tourist arrivals.

Despite international travel to and from China having been restricted since the emergence of Covid-19, domestic travel has been permitted for some time. However, continuous lockdowns on major population centres, like Shanghai and Chengdu, following new coronavirus outbreaks, have created a volatile domestic travel landscape. Recovery is fast when restrictions are lifted, but changes are frequent and sudden, and each lockdown has a significant effect on demand.

Given the problems facing China’s domestic travel market, and the government’s recent affirmation that it would maintain its cautious approach to Covid-19, the chances of the country reopening to international tourism in the short-term appear slim. Nevertheless, similar policies, including travel bans, were widespread throughout South-east Asia until recently.

If local markets can keep Covid-19 rates under control now that much of the region has reopened, it may encourage China to reopen, gradually, in 2023. Ultimately, it will become increasingly difficult for the country to keep its borders closed when the rest of the region has returned to normality.

Yet even if China were to reopen next year, the economic challenges currently facing the country – including a property market crisis and issues relating to the pandemic – would result in a slow travel recovery, particularly in the longhaul segment.

Top outbound South-east Asia markets to consider
Until China’s outbound travel market fully reactivates, regional destinations that had developed a dependency on Chinese tourists in the years preceding the pandemic will need to shift their attention to other important markets.

Among the top-five outbound markets in South-east Asia before the global health crisis, India shows particular promise. Although India’s size as an international outbound market is largely attributed to its significant global diaspora, its middle-class population is growing, and the number of outbound leisure travellers from the country is increasing as a result.

Moreover, while India’s intra-regional outbound travel market is relatively small, it had experienced more growth (+10.4%) than any of the other major South-east Asia outbound markets – both international and intra-regional – over the five years before the pandemic. Now that the country has fully reopened, ForwardKeys expects its development as an inter-regional outbound market to accelerate.

The economic situation is also improving in Thailand, allowing more of its residents to travel abroad and thereby making the country an increasingly valuable source market for regional destinations.

Meanwhile, Japan and South Korea, the two top-performing outbound markets in South-east Asia (excluding China) before Covid-19, have recently reopened to travel and are expected to re-establish themselves as important source markets.

With China’s reopening seemingly still some time off, regional destinations need to adapt to the new environment, identifying markets and travel audiences to fill the gap left by China and contribute towards a long-term, sustainable tourism model.