The secret to being a good forecaster is to predict something often enough that in the long run it has a good chance of happening. Most of us in the retail industry were optimistic about the return of tourism two years ago, when mass vaccination programs kicked off. The year 2021 was, therefore, a disappointment, but that didn’t stop us from being flush with optimism a year later; the foot-dragging on unrestricted border openings had to end, or so we thought. Government hesitancy was entrenche
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d by this time though, and the expected flood of tourists in 2022 turned out to be barely a trickle, not even a quarter-turn on the spigot. So is 2023 finally the year when international tourists give retailers a belated big lift? The hype over China’s relaxation of travel rules for its citizens suggests that maybe this will be a tipping point. My estimates show retailers in the top 10 tourist destinations in Asia – based on rankings in the 2019 edition of the Mastercard Global Cities Index – lost US$46 billion ($66 billion) worth of potential sales in 2022 because of partial or complete closures of international borders in the region. That includes retailers in food and beverage. This brought the three-year loss for those destinations to an estimated $139 billion. The top 10, in descending order of visits: Bangkok, Singapore, Kuala Lumpur, Tokyo, Seoul, Osaka, Phuket, Pattaya, Bali and Hong Kong. A large part of the reason for the unexpected losses in 2022 was that although most countries had opened their borders to visitors by the end of the year – in most cases much earlier – Chinese tourists were still not getting out, leaving an immense gap in travel numbers and spending that others couldn’t fill. So on 9 January, anticipation of the first Chinese arrivals in Thailand was palpable as the first instalment of more than 250 passengers arrived at Bangkok Airport on a flight from Xiamen. High-ranking officials, including three government ministers, turned out in person at the airport, not just to welcome the visitors with hand-clapping and garlands of flowers, but to check that airport services were functioning smoothly. In a mild twist of irony, the popular public health minister, Anutin Charnvirakul, whose zealous Covid-19 containment policies had been instrumental in keeping visitors out for three years, was among them. The airport reportedly boosted staffing in anticipation of upward of 140,000 Chinese arrivals a day. Will they gamble instead? For tourist-oriented retailers and shopping centre operators in countries like Thailand and Singapore, it’s been a long time between drinks. The United Nations World Tourism Organization states that international tourist levels in the APAC region were still down 83 per cent from their pre-pandemic level by the end of September 2022. This figure may have looked a little better by the end of the year, after the high season, but still nowhere near the pre-pandemic level. Most affected over the three years have been Tokyo, whose retailers lost an estimated cumulative $24 billion, and Bangkok, which was left $22 billion short. Seoul (-$16 billion), Singapore (-$15 billion), Kuala Lumpur (-$13 billion) and Phuket (-$13 billion) were also heavily affected. With these dismal statistics in mind, the bar has been set low for gains from international tourism for retailers across much of Asia in 2023. Caution abounds, since high expectations have been dashed in the previous two years. And there is another reason for circumspection – many Chinese are more inclined to travel domestically now that restrictions are being eased, either to catch up with families in other parts of their own country or to hit the casinos in Macau and Hong Kong. There are two major caveats to keep in mind about the effects of international tourism. The first is that spending by international tourists has a knock-on effect across the whole economy of each city they visit, so the impact is greater than it appears when you simply look at retail and hospitality revenue. The other is that domestic tourism has taken up some of the slack since international travel dropped off, and appears likely to remain high for the foreseeable future, thanks to government initiatives in various countries. So, while the return of international tourism is undoubtedly a good thing for businesses, it’s worth asking whether it holds the same significance that it once did. Governments muddying their messages A feature throughout this difficult period for retailers heavily dependent on tourists is their stoicism. Many shrugged their shoulders and didn’t complain publicly, even as they went out of business. Others took the downtime to renovate and renew their premises, reopening them later with a fresh look. Others sold to new owners, who either did the renovations themselves or repurposed the space. Governments, unfortunately, still tend to be sending out inconsistent messaging that keeps a spanner in the works, a classic example is in Thailand, where the government abruptly announced one day that it would require all inbound tourists to show proof of vaccination, and an important segment of them (including visitors from China) were required to prove vaccination when outgoing. Just as abruptly, the directive was cancelled the day after, following the predictable uproar. A healthy dose of realism This year, among countries, the biggest beneficiary of normalisation in dollar terms could well be Thailand itself, which might get an increase in retail, food and beverage sales in the area of 5-8 per cent of gross domestic product. Japan, Macau, Hong Kong and India could also experience big increases. The potential gains in sales will drive a commensurate gain in employment. The president of the Thai Travel Agents Association, Sisdivachr Cheewarattaporn, recently dampened expectations for the short term, however, partly because of an ongoing shortage of flights, partly because of the temporary lack of preparedness of tour operators to launch group travel, and partly because domestic destinations, including Macau and Hong Kong, have been preferred by mainland Chinese in the first instance. “I think the tourists will return around the end of February or early March at the earliest,” he said. For retailers across the continent who have missed seeing the Chinese tourists out and about for three long years, a timeframe like late February-March is just a trifle, and they are licking their chops.