Unlike Thailand, which is preparing to reopen its borders to international tourists by October this year, the Philippines is expected to focus on the domestic market to keep its tourism industry afloat for now while the country is still working to attain herd immunity from COVID-19.
Across the 10-member Association of Southeast Asian Nations (Asean), domestic travel is seen to kickstart the recovery of the tourism sector, with full recovery hinging on vaccination rates, according to panelists at Maybank Kim Eng’s “Is Asean Tourism Dead?” webinar last week.
Tourism Undersecretary Benito Bengzon Jr. said focusing on domestic tourism was a deliberate strategy for the Philippines, which has so far inoculated about 10 percent of its total population.
“But one advantage that the Philippines maybe can trumpet in a way is prior to the pandemic, we had a very large domestic tourism base,” Bengzon said during the forum.
Prepandemic, there were about 110 million annual domestic trips that generated revenues five times bigger than revenues from in-bound tourists, he noted.
Pent-up demand
“So we feel that the movement of domestic tourists will keep us afloat, will keep enterprises operating and ultimately bring back livelihood especially at the community level,” he said.
With the Philippines, Thailand, Indonesia and Vietnam expected to inoculate 70 percent of their populations by end-2021, based on data compiled by Maybank Kim Eng Research, the full reopening of Asean’s largest countries for tourism is expected by early 2022.
“When consumers come back, they come back for domestic first: the drivable markets around them, two to three hours outside of their capital city. But then very quickly, they are prepared to get back on airplanes. We saw that in Thailand, Vietnam and to a lesser extent, Malaysia, Tim Hughes, vice president for corporate development at online travel service provider Agoda said during the forum.
Hughes said these three markets had seen previously unpopular domestic destinations now attracting a lot of attention.
“People were keen to get out of cities and into the countryside, up into the highlands or to the beaches. We actually saw a surprising number of people shifting up a star rating. They weren’t necessarily looking for the cheapest trip,” he said.
The panelists cited pent-up demand for travel among lockdown-weary consumers.
“What we’ve seen over the last couple of months is that there’s been a lot of interest in opening up travel bubbles. We’ve been talking very closely, for example, with our partners in Korea. What we’ve found is that there continues to be very strong demand for our island destinations,” Bengzon said.
“This crisis taught us one thing: it had no impact on the long term desire of consumers to travel. Just the first announcement of the Singapore-Hong Kong travel bubble saw a 14-times spike in our searches for those destinations; while with the very brief Singapore-Australia bubble, we saw a three times increase. Even when something is just an idea or concept, we see a spike,” Hughes said.
Return of foreign tourists
But the eventual return of international visitors is seen important to the full recovery of the tourism industry in the Asean. This is especially true for Chinese tourists, who accounted for a quarter of total tourist arrivals in the region during pre-COVID times in 2019, based on Maybank Kim Eng Research data.
To support the return of international visitors, the panel was unanimous in saying that countries would be unlikely to wait for a return to zero cases before resuming travel. Instead, vaccination rates and health and safety protocols are seen as key to full reopening.
“If you find a single shoplifter in the supermarket, would you have to close down the whole store? In some ways, it’s the same case for tourism. All of us must do our best to keep the number of cases down and to make sure that the protocols are in place in the event we detect a positive case,” Bengzon said.
Asked about the possible post-pandemic changes in the pricing structure of travel services, Bengzon said the challenge would be to stay within a range of pricing acceptable to consumers.
“It can’t be priced [at] very astronomical [level] because they all know that they will price themselves out of the market,” he said.
But beyond the pricing, Bengzon said it was important for travel providers to better understand the changing behavior of consumers.
“For example, will they be more particular on the fineprint? Will they be looking at the terms and conditions? What kind of amenities will they be looking at? Perhaps internet connection will be a more important factor compared to years back,” Bengzon said.
“When it comes to the configuration, will they prefer high-density, vertical type of accommodation establishments or sprawling horizontal type? Whatever it is, it’s better to have a better understanding of changing preferences and changing behaviors.”