Pace of region’s tourism recovery slower than expected, Fitch says

TOURISM in the Asia-Pacific (APAC) will continue to recover this year, though at a slower-than-expected pace, Fitch Ratings said.

“We forecast visitation in APAC to hit 92% of 2019 levels, with nominal international tourism receipts exceeding that of 2019 by 6%. Most Fitch-rated APAC sovereigns have recovered from the services balance shock due to the collapse in tourism revenue,” it said in a commentary.

“The APAC tourism recovery has lagged than in other regions, where tourism arrivals and revenue have surpassed or recovered closer to pre-pandemic norms,” it added.

This tourism recovery will be driven by strong demand, economic resilience, additional flight capacity and depreciated local currencies, it said.

Fitch said it expects a full recovery of international visitor volume in the region by the first half of 2025.

“However, we expect recovery prospects to remain vulnerable to several risks, such as a slow restoration of international air traffic, elevated airfares and energy prices, and heightened geopolitical tensions,” it said.

“These could weaken traveler sentiment as they intensify cost pressures and create greater uncertainty in travel planning.”

It also cited other global shocks from climate change that could weaken demand for travel.

In Southeast Asia, visitor volume returned to the 70-80% range of pre-pandemic levels in 2023.

“The Philippines had a lower recovery rate at 61%, with a smaller share of intra-regional visitors than its regional peers,” it added.

The Philippine Statistics Authority reported that the tourism industry’s share of gross domestic product rose to 8.6% in 2023 from 6.4% a year earlier.

Fitch said that a surge in Chinese outbound tourism helped boost arrivals in APAC tourist hotspots in the first quarter.

“China has already reclaimed its position as one of the top visitor source markets in many APAC tourist destinations, such as Singapore, Thailand, Vietnam and the Maldives.”

“The Philippines remains an exception with a lower recovery rate of inbound Chinese tourists than its regional peers,” it added.

Last year, the Philippines attracted only 5.45 million international visitors. This was well below Thailand (23 million), Vietnam (12.6 million), and Indonesia (11.68 million). — Luisa Maria Jacinta C. Jocson