analysis:-singapore,-thailand,-cambodia-lead-hopes-for-asian-tourism
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 Spare a thought for retailers, food and beverage operators, and hotels in tourist destinations throughout Asia. They mostly had an horrific year in 2021, on top of a shocker in 2020. Things can only get better in 2022. Right?

Data from the Mastercard Global Cities Index shows that, as of 2019, the top 10 cities in Asia for international tourist visits were, in order: Bangkok, Singapore, Kuala Lumpur, Tokyo, Seoul, Osaka, Phuket, Pattaya, Bali, and Hong Kong. 

I estimated at the beginning of last year that these 10 cities earned US$49 billion less in retail, food and beverage spending in 2020, compared with 2019, because of international border closures. Their lost revenue was even greater in 2021, since at least 2020 had the benefit of tourism in the first quarter; therefore, we can say with some confidence that the retail, food and beverage sector in the 10 cities suffered more than US$100 billion ($142.9 billion) in lost revenue over the two years.

In some places, the adverse effects are much more visible because the dependency of the local economy on foreign visitors is so great. Three cities in the top 10 that fall into this category are in Thailand: Bangkok, Phuket, and Pattaya. Collectively, retailers and eateries in those three lost more than US$30 billion of international tourism sales in 2020-21 and the knock-on effect on their local economies has been profound. Whole neighbourhoods in these cities have been turned into near ghettos after two years of border restrictions, closures of businesses, strict and constantly changing rules for businesses that remain open, and now a shortage of labour to staff them.

Somewhat offsetting this has been the stoicism of many shop owners, who have used the downtime to renovate, or have sold out to new owners who have opened new businesses in the space.

Under what kinds of conditions are these tourist meccas around Asia now operating and what is their outlook for 2022?

The good news is that several of the national governments are treating the situation with more urgency and are clearly shifting their priority toward opening up for business. The bad news is that policies have been inconsistent and messaging to the general public confusing, resulting in lower inbound tourist numbers, protracted business closures, and labour shortages, the latter due largely to the fact that workers are discouraged and hesitant to return to jobs until there is more security about the economy opening up. 

Retail and hospitality trade groups are becoming more vocal in demanding greater clarity, speed, and singularity of purpose. They now have the politicians’ ears, but that has been slow to translate into action on the ground.

Two-speed reopenings: slow and very slow

Singapore suspended its Vaccinated Travel Lane (VTL) system for a month on 21 December but reopened it on 21 January for visitors from about 20 countries. Vaccinated tourists from most, but not all, of these countries can enter without quarantine, provided they undergo pre- and post-arrival testing.

Neighboring Malaysia still has onerous quarantine requirements, except for travellers from Singapore, and is pretty much still off-limits to all except those who enjoy being corralled in a hotel room at their own expense. This means KL retailers and eateries, which had to forgo nearly $10 billion in international tourist spending over 2020-21, continue to suffer. Ditto for Bali, ninth on the list of Asia’s tourist destinations, whose retailers have suffered a shortfall of approximately US$7 billion over the past two years.

Further north, in Thailand, the plot is thickening. Things were slowly beginning to look up as quarantine restrictions were eliminated for vaccinated tourists and replaced with a more simple “TEST&Go” system that enabled them to circulate freely in the country after testing negative upon entry. This, however, was abandoned on 22 December and replaced with a frustrating complexity of rules accompanied by baffling messaging. The Tourism Authority of Thailand’s own website introduced the changes, somewhat comically, as follows: “For new registrations under the Exemption from Quarantine TEST&GO and Living in the Blue Zone Sandbox programs, except Phuket Sandbox and Happy Quarantine.” Run that by me again?

But there is good news. That reversal of the opening up process is being re-reversed as of 1 February: For Bangkok, Phuket and Pattaya, TEST&GO is being reinstituted and it promises to bring relief to tourist businesses in all three cities. This opening of the borders for visitors to key tourist areas is being supported by a relaxation of rules for retailers and food and beverage operators, including longer hours of operation.

The news from neighbouring Cambodia is even better, with the country now being open to vaccinated tourists with relatively simple visa requirements. This will enable Cambodia to attract visitors from countries whose nationals are discouraged from entering other countries in the region, or unable to do so. 

Vietnam, Japan, and Korea are still either closed completely to foreign visitors or have onerous quarantine restrictions. Vietnam is not particularly tourism-dependent and most retailers are relatively unaffected by the country’s protracted border closure. Tokyo, Seoul, and Osaka, which are four, five and six on the list of most touristed Asian cities, continue to miss out. Retail food and beverage operators have lost approximately US$35 billion in 2020-21 and the pain goes on. No sign yet of when restrictions will be eased.

Finally, there’s Hong Kong, but you can forget that for now. The European Chamber of Commerce there is reported to be of the opinion that under China’s zero-Covid policy, Hong Kong will not end its isolation this year or perhaps even next. This would not only keep out foreign visitors but may make Hong Kong much less appealing for foreign executives and other professionals who live and work there.   

The outlook

The speed of reopening around the region then, it’s fair to say, has been disappointing, despite genuine efforts in a few countries such as Singapore, Thailand, and Cambodia, which are blazing a trail for the rest.

Of course, there have been some offsetting increases in domestic tourism within Asian countries, often supported by government fiscal programs. These have made a material positive impact, although they have also been subject to scamming.

The continued complexities of cross-border travel, including frequent chopping and changing of rules, also create an obstruction to new-to-market retail. Where retail and property executives can’t put boots on the ground they are unwilling to make investments, or at a minimum those transactions occur at a much slower speed and only if they have local tie-ups.

The outlook then is gloomy, for the first quarter at least. The hope is that successful reopening programs in countries like Thailand and Singapore will quickly be emulated by the rest, and that by the second quarter we will begin to see some real progress. Retailers in tourism-dependent regions are depending on it. 

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