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The resilience of Asia-Pacific’s economy will continue to support the region’s leading performance in the tourism sector.

The first nine months of 2016 saw about 956 million international tourists travel globally, and according to the UN World Tourism Organization, Asia-Pacific led the growth with international tourist arrivals (overnight visitors) up 9.3% to September. Many destinations reported double-digit growth, headed by South Korea (34%), Vietnam (36%), Japan (24%) and Sri Lanka (15%).

Most leading source markets reported increases in international tourism expenditure: China up 19%, the UK 10%, Australia, South Korea and the US 9%, Germany 5% and France 3%. So let’s review growth drivers.

First, the regional economy as the main driver of tourism expenditure is sustainable and should continue to support tourism spending. Growth is projected at 5.7% from 2017 to 2018, remaining positive with weakness in global growth and external demand offset by robust domestic consumption and investment.

Second, with the UN having designated 2017 as the International Year of Sustainable Tourism for Development, it is expected that Asia’s tourism industry will continue to enjoy progressive development. Action includes promotion of sustainable tourism, capacity building and knowledge dissemination. This should boost demand for Asian destinations, and thus related services such as airports, airlines, hotels, transportation and retail businesses.

Third, the commercial aircraft industry is also supporting tourist travel as part of travel infrastructure. Boeing projects south-east Asian traffic to increase by 7.7% over the next 20 years, with the low-cost carrier market having an order book of 900 aircraft.

With Asia tourism resilient until 2018, the hotel outlook is similar. Hotel investors focused first on Tokyo, Sydney, Singapore and Hong Kong and next on resort destinations. Japan is one of the most active and largest hotel markets in Asia, with many investments outside Tokyo. This is due to a surge in inbound tourism, a chronic hotel shortage, the government increasing building floor area ratio by 1.5 times and a 300% increase in hotel construction to prepare for the 2020 Tokyo Olympics.

In China, due to a lack of hotel debt financing, domestic investors are investing elsewhere, especially into Australia. Malaysia hotel investment was inactive due to a significant cut in inbound tourists following the Malaysian airline disasters, with inbound visitors growth below 5%. Singapore’s inbound tourists grew 11.5%, mostly from China.

The Australia and New Zealand hotel sectors are resilient due to currency fluctuation, which attracted inbound tourists. Thus, Asia’s tourism and hotel sector remains positively resilient.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services. Email: lawrence@asiabizstrategy.com

This article is sourced from fDi Magazine
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