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Domestic tourism in Southeast Asia: Opportunities and pathways

SOUTHEAST ASIAN COUNTRIES have been particularly cautious in opening their borders to international travelers amid the coronavirus disease 2019 (COVID-19) pandemic, and international tourism has collapsed as a result. The economic and social consequences have been severe. In Thailand, for example — where tourism contributed close to 18% of gross domestic product (GDP) in 2019 — the Tourism Authority of Thailand predicts just 6.7 million tourists in 2020 and 8 million in 2021. Similar figures abound in other countries.

To provide relief for the battered sector, Southeast Asian countries have tried to promote domestic tourism with support programs, travel deals, and marketing support until international tourists return. In May, for example, the government of Vietnam launched the “Vietnamese people travel in Vietnam” campaign, encouraging locals to explore their own country with discounted fares and increased domestic flights. Promoting domestic tourism builds on an existing trend. It has grown steadily in Southeast Asia over the past decade as the middle classes expanded and showed greater interest in leisure travel. In Vietnam, for example, domestic tourists reached 80 million in 2019, compared to 15 million foreign tourists in the same year.

What are some of the most promising pathways for domestic tourism?

Many tourist businesses that traditionally focused on foreign travelers have had to reorient their offers to cater to the domestic market. This has often entailed investing in new products and services, targeting existing domestic segments, or discovering and even developing new ones. In Cambodia, for example, demand for adventure travel among the young population has sharply increased, amplified by social media. Similarly, in the Lao People’s Democratic Republic, the “Lao Thiao Lao” campaign targets young Laotians and promotes nature-based sites for adventure. These investments can also become beneficial when international travelers return with changed habits and preferences post-COVID-19.

Another interesting group often neglected are expatriates. As a large population in many countries, with disposable income and interest in their host cultures, expatriates are a lucrative niche market. However, any offers and packages should meet their preferences, lifestyles, and values based on research. Rather than replicating domestic tourism packages, it might include elements such as exploring authentic street foods, spas, and wellness. For example, the Tourism Authority of Thailand actively targets its many expatriates with deals and discounts.

The pandemic has also accelerated demand for rural and nature-based tourism, as people seek to recover psychologically and physically from the pandemic, restrictions, and lockdowns. A recent ADB study found that domestic tourists in the Republic of Korea and Thailand discover less densely populated areas instead of cities. In many countries, rural tourism can be further developed especially around agritourism, gastronomy tourism, and wellness tourism. Rural tourism can also contribute to destination diversification strategies and holds substantial potential for poverty alleviation and to help protect natural resources and cultural heritage. Recognizing the significant opportunity for rural tourism, the Tourism Authority of Thailand recently launched rural tourism awards, with a large investment fund to support diverse local communities that preserve arts, culture, heritage, and cuisine.

As tourists will demand more small-scale and community-based destinations, small and medium-sized enterprises (SMEs) will become more significant in building longer term resilience and sustainability in tourism. Governments and authorities should support SMEs to survive in these difficult times and assist in this transition. Government interventions can include tax relief and cash transfers, which can become essential for SMEs to stay in business. This requires support for the digital transformation of their online business and domestic platforms that can become new sources for foreign revenues.

The pandemic brought forward great creativity in the travel and leisure sectors. Startup businesses have been booming in the region catering to the demand for people longing to travel. For example, in Thailand, cafés started offering an in-flight dining experience in an old aircraft for people who miss flying. Supporting these efforts could be crucial for boosting and revitalizing the domestic economy.

Domestic tourism is often very under-investigated. The United Nations World Tourism Organization has reliable numbers on the volume of domestic tourism for less than a quarter of its member countries. To optimize the full potential of domestic tourism, more data and research is needed on domestic tourists’ behavior and preferences. While governments and academic research have focused on international tourists, multiple segments within domestic tourist markets need to be better understood. The pandemic provides an opportunity to better understand the differences between international and domestic tourists’ travel behavior, consumption habits, preferences, and activities.

It is time to use COVID-19 as a reset and seek a better balance between domestic and international tourism, so they complement each other and lead to a robust and sustainable tourism industry. For inbound tourism to be successful and sustainable in the long-run, domestic tourism needs to thrive as well. Domestic tourism helps to increase the respect for the environment, attract young people to work in the sector, and attract entrepreneurs and investors. While recognizing that domestic tourism cannot fill the gap from the absence of foreign currency earnings, it is crucial to explore the full potential of domestic tourism for economic livelihoods, while providing locals confidence in investing in the sector. Countries can also use this pause for improving infrastructure, such as airports, road systems, and tourism facilities, as well as implementing more sustainable features and measures. Historically, crises have shaken up existing institutions and prevailing structures. It is hoped this pandemic can lead to a more sustainable tourism sector, both internationally and domestically.


Matthias Helble is an Asian Development Bank (ADB) Economist, and Jaeyeon Choe is a Senior Lecturer at Bournemouth University.

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