With almost 280 million international tourist arrivals in 2015, the Asia-Pacific macro-region is second only to Europe in terms of T&T market size. It is the most dynamic area globally with the largest percentage growth in arrivals and the most significant improvements in T&T competitiveness performance, with the majority of countries in the region showing progress.
Asia-Pacific consists of some of the economies that have flourished most in recent years, thanks to the expansion of the middle class and an increasing affordability and willingness to travel, particularly intra-regionally. The region’s economic development, which started decades ago, continues to positively impact the T&T sector. According to the World Travel & Tourism Council (WTTC), the sector will double in the coming decade, reaching almost 1.2 trillion in 2026 from its current 650 billion. 11
For the most part, the region can rely on outstanding natural resources, a highly-qualified labour force and governments that understand the potential and support the sector. Yet, environmental sustainability, which is paramount to the continued growth of the industry, remains a concern across the region. Beyond these commonalities, the vast Asia-Pacific region can be divided into three sub-regions that share more common characteristics.
East Asia, the most developed part of Asia, and Australia share several strengths and have historically been the best performers in the region. The nations in this sub-region boast strong safety and health conditions, have world-class infrastructure and are among the most ICT-ready globally, especially Hong Kong and South Korea. They are able to attract tourists by balancing offers on the basis of their natural and cultural resources. Yet, these nations are some of the most expensive destinations in the region.
Conversely, countries in South-East Asia (ASEAN) offer competitive prices and take advantage of their natural resources to attract tourists. While cultural resources are available, to date they have been less valued than natural assets. ASEAN nations are also particularly inclined to prioritize tourism in their development agenda as most of them are ranked above the 50th position in this specific pillar. Still, a large infrastructure (air, road and tourism service infrastructure) and ICT readiness gap remains between the most advanced in the sub-region, especially Singapore, and to a less extent Malaysia and Thailand, versus the rest. In addition, a handful of countries in the area continue to have declining security perceptions resulting from political developments in recent years, leaving tourists with a sense of unpredictability.
The price competitiveness that favours South-East Asia also benefits countries in South Asia. Yet, South Asia remains less developed on almost all other fronts, in particular on infrastructure, ICT readiness and health and hygiene conditions.
While the countries in the Asia-Pacific region are at different development levels, the majority of nations have shown steady growth and have experienced improvements across a number of T&T competitiveness pillars, especially international openness, with many projects to create visa-free areas, price competitiveness and ICT readiness. Going forward, this trend is expected to continue, with Asia on its way to becoming a tourism powerhouse.
Japan leads the Asia-Pacific region, improving five positions to take the 4th place globally. International tourists continue to visit Japan for its unique cultural resources and for business travel (4th). Japan boasts some of the most developed ground transportation infrastructure systems and ICT networks globally (both 10th), which guarantee seamless internal connections and access to information and services online. Air connectivity is also well developed (18th), and provides high-quality service (24th). In addition, Japan is, overall, open to T&T activities, with relatively welcoming trade and investment agreements (35th), though it does have a tight visa policy (112th). Moreover, despite being an industrialized country, Japan does not neglect its T&T industry. It invests almost 4.5% of the federal budget on activities related to the sector and has put into place effective marketing campaigns (27th). Japan has also managed to become more cost-competitive (94th, up 25) thanks to a substantial reduction of fuel prices and air-ticket taxes, which has reduced considerably the cost of travelling in the country despite a slight increase in the average cost of accommodation. The improvement in price competitiveness has been the main driver of Japan’s overall performance, combined with improvements in promoting cultural resources and preserving natural resources. Still, environmental sustainability remains the area where Japan has yet to achieve better results. High PM emissions (93rd), overfishing (71st) and increasing share of threatened fauna (129th) are serious concerns both for tourism and for Japan’s overall sustainability and biodiversity.
The Republic of Korea is one of the five most-improved countries, gaining 10 places to reach the 19th position. Korea has improved in 8 of the 14 index pillars, with extraordinary improvements on international openness (14th, up 39 places) and price competitiveness (88th, up 21 places). International openness has improved due primarily to newly signed trade agreements that have facilitated international transactions and investments, while its price competitiveness performance has benefitted from lower fuel and hotel prices. Korea has also upgraded certain aspects of its business environment (44th), such as the efficiency of the legal framework that has contributed further to the country’s climb in the ranking. There have also been advancements in the management of water and forestry resources, which have enabled Korea to reach 63rd, up 27 places. These improvements support Korea’s long-standing advantages including its cultural resources (12th), World-class ICT readiness (8th), and sound ground transport (17th). Korea still has space to improve its offering on the natural tourism segment (114th), with only 1 natural heritage site registered in UNESCO to date and very little international awareness of the country’s natural resources. A focus on sustainability would enhance the country’s T&T competitiveness, especially if combined with stronger protection of the environment, its fauna (117th) in particular, and reducing PM emissions (130th) and overfishing (84th).
India is also one of the most improved nations, gaining 12 places to reach the 40th position globally. The country has seen continued growth in international arrivals over the past 15 years, reaching the 8 million mark in 2015. India continues to charm international tourists with its vast cultural and natural resources (9th and 24th, respectively), and its price competitiveness advantage (10th). India continues to enrich its cultural resources, protecting more cultural sites and intangible expressions through UNESCO World Heritage lists, and via a greater digital presence. International openness (55th, up 14 places), through stronger visa policies implementing both visas on arrival and e-visas, has enabled India to rise through the ranks. The T&T sector benefited from improvements in the country’s ground transport infrastructure, which has traditionally been a challenge (29th). Health conditions are improving, though they remain inadequate (104th). Similarly, ICT readiness (112th), security concerns (114th) and human resources (87th) are improving, but remain weak. While further improvements are needed across these dimensions, India is taking small but important steps in the right direction. The Indian T&T sector presents significant opportunities that are yet to be reaped, especially in the provision of tourist service infrastructure (110th), and in terms of additional accommodation capacity, entertainment facilities and related services.
Indonesia ranks 42nd, climbing eight places. The country has made the most of its globally recognized natural resources (14th) at very affordable prices (5th). To build on its assets, Indonesia has emphasized its cultural resources (23rd) and prioritized the T&T sector as an important driver of economic development. Currently representing 6% of the country’s exports, the government recognizes the potential of T&T and is investing about 9% of its budget in the sector. Indonesia has further improved its international openness (17th, up 38 positions), becoming the country with the 2nd strongest visa policy. The country has further expanded the offer and promotion of its natural resources by increasing the size of protected areas and attracting more online interest on natural activities. Still, better protection of the environment (131st) remains a key risk factor for sustained development of the sector going forward. Being home of one of the most biodiverse habitat in the world, Indonesia must address deforestation (113th), insufficient treatment of wastewaters (109th) and augmenting species listed as threatened (127th). Indonesia should also focus on improving its tourism service infrastructure (96th), with the supply of hotel rooms still low (93rd). Combining development and environmental sustainability will be key for the future success of the sector and the wellbeing of Indonesian citizens.
Vietnam rose by eight places in 2017, ranking 67th globally. The main drivers of the country’s T&T competitiveness are its natural resources (34th), cultural resources (30th) and price competitiveness (35th). Vietnam has made significant progress on its human resources and labour market pillar (37th, up 18 places) scores, thanks to a better-qualified labour force (53rd) and partially simplified regulation to hire foreign labour(75th). 12 Vietnam has also made exceptional improvement to its ICT capacity and usage (80th, up 17). Today over 94% of the national territory is covered by a 3G signal, and individual internet usage rose from 44% to 53%, indicating that penetration of information technologies is proceeding at a sustained pace. Linked to the country’s increasing online presence, searches related to Vietnam’s natural tourism are growing, increasing the appeal of its natural resources (improving six places). At the same time, continued economic development has led to expanding business travels (further increasing three places). Security and safety perception (57th) are also making Vietnam an increasingly attractive destination for developing its T&T sector. To continue enhancing the sector’s competitiveness, Vietnam should focus on environmental sustainability (129th). Lax regulations (115th), high levels of emissions (128th), deforestation (103rd) and limited water treatment (107th), are depleting the environment and should be addressed, perhaps at a multilateral level, to build the foundation for a more sustainable development of the region.
