its relatively small geographic size, Southeast Asia is one of the world’s most
diverse regions, and with 650 million people, its population is larger than
defined as the 10 member states of the Association of Southeast Asian Nations -
Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Laos, Myanmar,
Cambodia and Vietnam - Southeast Asia has a wide range of languages, religions,
cultures and economic development.
the overall picture is one of growth.
At a meeting
of the ASEAN economic ministers in August 2018, the association reported
that if the region were a single country, it would be the
world’s fourth-largest economy by 2030.
reason for this upward trajectory: a very young population that’s giving the
region a huge labor force, estimated to be second only to China and India. As
of 2017, more than half of the region’s residents were between the ages of 20
and 54, with another 34.5% below 20.
figures are, in part, the reason travel and tourism predictions for the region
are generally positive, forecasting increases in both intra-ASEAN travel and
to GlobalData’s March 2019 report, Tourism Destination Market Insights: ASEAN,
the region is one of the fastest-growing destination regions in the world.
report predicts a compound annual growth rate of visitors of 4.72% between 2018
and 2022, from 129.2 million to 155.4 million people.
disposable incomes rise, solo travelers, families and couples are all attracted
to the ASEAN region for its beauty, range of activities and friendly locals.
Backpacking, medical and wellness travel and food tourism will be some
important trends for the countries to embrace in order to increase their appeal
further,” says Laura Beaton, travel and tourism analyst at GlobalData.
October, we're examining the travel landscape in Southeast Asia, beginning with an
overview of market characteristics and followed by a look at the startup scene,
regional brands and emerging issues.
report published Thursday from Google, Temasek and Bain & Company, “E-conomy SEA 2019,”
highlights the value and continued growth of the internet economy in Southeast
Asia’s six largest markets - Indonesia, Malaysia, the Philippines, Singapore,
Thailand and Vietnam - and its impact on travel.
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report says online travel in the region grew to $34.4 billion in 2019, up from
$19.4 billion in 2015, and it’s predicted to more than double to $78 billion by
means online travel, one of five sectors analyzed, currently represents
one-third of the total internet economy in the region, which has now crossed
$100 billion in value. The other sectors are online media, ride-hailing,
e-commerce and digital financial services.
the six markets studied, Indonesia has the largest online travel market, currently
worth $10.2 billion and estimated to grow to $25 billion by 2025. Second is
Thailand, now at $7.2 billion but on track to reach $20 billion by 2025.
The Southeast Asian Traveler
Phocuswright's The Southeast Asian Traveler from 2017 provides insightful research and analysis into what drives these travelers, from dreaming and destination selection through planning, purchasing, experiencing and sharing.
Mobile, not just first, but only
to Phocuswright analyst Chetan Kapoor, despite the region’s diversity in many
characteristics, there is one consistent theme.
thing unifying them is when it comes to online, they are so overwhelmingly
mobile driven, anything and everything to do with it,” he says.
Google study underscores that point.
to the report, “Just
over a decade ago, four in five Southeast Asians had no internet connectivity
and limited access to the internet. Today, Southeast Asians are the most
engaged mobile internet users in the world. There are 360 million internet
users in the region and 90% of them connect to the internet primarily through
their mobile phones.”
They are doing so for many hours each
day. In its Digital in 2019 report,
We Are Social and Hootsuite list Thailand as first, the Philippines second and
Indonesia fourth in the world for time spent per day using mobile internet.
high mobile adoption is impacting how consumers in this region research and
young population and the smartphone penetration is increasing, so younger people
who are tech savvy are moving to book travel online,” says Phocuswright analyst
increasing rapidly. Indonesia is one of the fastest online travel markets in
the world. And it’s not small; it’s the fourth most populous nation in the
world, so the share of millennials is more and them taking up online travel is
a huge trend in the region.”
For many of these young consumers coming online, “super apps” such as Go-Jek and
Grab are becoming their platforms for all interactions and e-commerce.
began with a focus on ride-hailing and has now expanded to dozens of services including
food delivery, financial services, on-demand video and, as of April of this
year, hotel booking through partnerships with Agoda and Booking.com. Shortly
after that announcement, Go-Jek launched hotel booking called Go-Travel in
partnership with Tiket.com.
super apps have certainly changed the way people in Southeast Asia move around,
order food and pay for local services, but it’s too early to say whether
customers are actually booking travel through apps such as Grab,” says Yeoh
Siew Hoon, founder of WebInTravel.
“But it is clear these
super apps are where the customers are, and travel marketplaces have to make
themselves available where the customers are. In this regard, it’s not that
different from other markets - travelers now have a plethora of choices of
where to book, and apps that have high-frequency usage, such as messaging or
ride-hailing or payments, have the advantage.”
The Google report echoes this idea that
super apps are a strategy to win the consumer engagement battle: “Companies are
switching their focus from acquiring new customers to driving engagement. Their
goal is to convince users to stay on their platforms for longer, in the belief
that purchases will follow. ... This has ignited more intense competition, while
providing users with more choices and lower prices.”
both air travel and accommodations, budget brands are critical parts of the
growth story for the travel industry.
...these super apps are where the customers are, and travel marketplaces have to make themselves available where the customers are.
Yeoh Siew Hoon - WebInTravel
Asia was the launchpad for low-cost carriers in Asia - Air Asia, LionAir - so Asians
in that context are pretty adept
to researching travel online, particularly flights,” Kapoor says.
“And airline providers command a fair
share of travelers’ attention because of the way they operate - they want to
minimize their distribution costs.”
to the Centre for Aviation,
seat capacity in Southeast Asia has more than doubled in the past decade, from
about 200 million seats in 2008 to nearly 530 million in 2018, and most of that
is attributed to low-cost carriers. These airlines now control at least 50% of
the capacity in the five main markets - Indonesia, Thailand, Vietnam, Malyasia
and the Philippines - driving a surge in domestic and regional travel.
IATA says Indonesia and
Thailand are two of the fastest-growing aviation markets in the world. By 2030,
Indonesia is expected to rank fourth in the world.
On the accommodations side, budget
hotels across the region are experiencing massive growth, led by Singapore-based
RedDoorz and India-based OYO Hotels & Homes, which are standardizing
operations and adding digital marketing for small, locally owned properties.
According to the Google report, “Queries
for selected budget hotel brands soared in 2019, up more than nine times
compared to 2015.
“These companies offer reliable
accommodation at a fraction of the price of international hotel brands, aimed
at youth and cost-conscious travelers from within and outside of Southeast Asia,”
the report states.
In fact, according to consultancy
Horwath HTL’s 2018 Asia Pacific Chains & Hotels Report,
only Singapore - the most westernized destination in Southeast Asia - has a
majority (55%) of rooms operating as part of chain brands. Most other markets
are substantially less, including Thailand (6.6%), Indonesia (6.5%) and Vietnam
Vacation rentals are also growing in
popularity in the region, with queries for “leading vacation rental brands [up]
more than threefold in 2019 compared to 2015,” according to Google.
The report say: “As a pioneer of vacation
rental services, Airbnb is an exemplification of the entire category. Online
aggregators Agoda, Expedia and Traveloka, however, have been building their
own suite of rental accommodations to challenge the leader.
"With clearer and
more supportive regulations on short-term property rentals, these services
could facilitate the development of the tourism sector across the region.”