Asia’s expanding middle class, quicker visa approvals and improved connectivity have led travel and tourism revenues to grow 5.5% to USD2,971 billion in 2019, accounting for 9.8% of the region’s gross domestic product (GDP).


Fig. 1: Travel and tourism account for large share of Asian economies


Research indicates that a total of 21.5 million new tourism jobs were created in the region from 2014 to 20191. Within Asia, China and India had the highest numbers of people employed in the travel and tourism sector in 2019, while the sector’s share of total employment was highest in the Philippines and Thailand. See Fig. 2.

Fig. 2: Countries with the highest employment in travel and tourism

The importance of the travel and tourism sector to many Asian economies underscores the challenges brought by the Covid-19 outbreak. Travel restrictions caused international tourist arrivals in Asia Pacific to plunge 51% between January and April 2020, compared to the same period in the previous year - the sharpest decline globally.

Together with local lockdowns and social distancing measures, this may result in a loss of 69.3 million tourism-supported jobs (or USD1,137 billion in GDP) in Asia Pacific in 20202.

Going local

With the timeframe for a vaccine unknown, and international flights staying suspended, Asian travellers have turned to ‘staycationing’ to satisfy their pent-up demand for leisure travel.

Following the successful containment of the outbreak in China, the government has been actively relaxing lockdown measures. While the upturn in Chinese air travel is lagging behind road travel, Chinese airlines are still ahead in the recovery compared to their American and European counterparts, as they benefit from the recovery in domestic air travel.

Fig. 3: Global air traffic activity (YoY %)

In Thailand, in a move to revive domestic tourism, the government has approved three stimulus packages worth THB 22.4 billion (USD 723 million)3. Meanwhile in Malaysia, where the outbreak is currently under control, inter-state short trips are gaining traction.

Besides domestic travel, the next step in aiding the recovery for the travel and tourism sector is to facilitate regional tourism through various “travel bubbles”. This will likely have a significant effect given that almost 80% of the tourists to Asia Pacific come from within the region.

Fig. 4. Regions of origin (2019)

80% of the tourists to Asia Pacific come from within the region, while 90% of tourists traveling from China stay within Asia

Opportunities in Asian tourism

Within Asia, travel and tourism businesses with higher exposure to recovering domestic and regional traffic should be more resilient, and may even benefit in the short-term by gaining visitors who would normally have opted to travel abroad. These businesses include selected travel services and duty-free retailers. With companies facing varying degrees of pressure, selectivity and local expertise remain key to identifying attractive long-term investment opportunities in the region.

Across the region, while strategically important airlines have received financial support from governments, those less fortunate face significant obstacles to raising funds as ongoing losses deplete their capital positions. The latter could even end up as acquisition targets for cashed-up airlines seeking opportunities amidst the crisis.

As for other key players in the aviation ecosystem, the fundamental performance of airports will move hand-in-hand with a recovering demand for air travel, along with airport operators. Aircraft manufacturers and the broader global supply chain feeding into their operations will be the last stakeholders to regain their pre-Covid footing.

In the meantime, efficient health and safety protocols will need to be adopted to provide a safe and seamless experience for travellers. Even with all the initiatives mentioned above, it could take years for travel and tourism in Asia to return to pre-Covid-19 levels. Even then, we may never travel the same way again.

[1] World Travel & Tourism Council and Oxford Economics

[2] Forecast by the World Travel & Tourism Council.

[3] Bangkok Post: Domestic tourism gets triple booster, 17 June 2020.