With the economic recession stretching across the globe, travel markets in practically every country are feeling the heat. The Asia Pacific region is no exception. According to PhoCusWright’s Asia Pacific Online Travel Overview Third Edition, there will be an overall 6% decline in the APAC travel industry in 2009. All major segments—air, hotel and car rental—are being impacted.
However, it is important to resist the temptation to lump all the empty hotel rooms in the Asia Pacific region (APAC) into a single recessionary basket. Not all markets are created equal, and this is especially true in APAC, where the economic slowdown has impacted each country differently. In light of this, PhoCusWright predicts that the countries which together comprise the APAC region will emerge from the recession at different speeds and strengths. Those pursuing opportunities in the APAC travel space (and particularly the highly dynamic online travel space), should throw out the “APAC plan”, in favor of developing a China plan…a Japan plan…an Australia plan…and so on.
Highlighting a few examples from PhoCusWright’s Asia Pacific Online Travel Overview Third Edition helps illustrate some of the key factors that are shaping online travel markets in the region, and how they are coping with tough economic realities. One of the quickest ways to predict the impact of the recession on any country’s travel market is to examine the extent to which it is dependent on Western economies (and the U.S. economy in particular). For instance, places like Hong Kong, Singapore and Malaysia all have relatively small domestic markets, and rely heavily on inbound travel. Hence, these markets have been swiftly—albeit temporarily—crippled by the recession. On the other hand, countries such as Australia and India, while far from immune to the downturn, have proven to be more resilient in the face of economic adversity.
Government involvement in the APAC travel industry is not to be overlooked. Regulation provides a safety net for the industry in hard times yet it dampens growth in good times. The Chinese government owns the three airlines that together control more than two thirds of the aviation market. In addition, the country has a complex regulatory mechanism that discourages new entrants and entrepreneurship. As a result, online travel agencies have not flourished in China, with the notable exception of Ctrip, the nation’s dominant online travel agency.
The APAC region has so far fared better than other markets in coping with the global economy. While PhoCusWright projects a 6% drop in the region’s total travel market in 2009, here is another statistic worth mulling over: despite the slowdown, the overall APAC online travel market is expected to grow (that is right…grow!) by 17% this year. Not too shabby for a recession.
Check out PhoCusWright’s Asia Pacific Online Travel Overview Third Edition for detailed analysis of some of the key forces at work in each of the major APAC markets, and projections for recovery and future growth.
Asia Pacific Opportunities: PhoCusWright Connect has compiled a series of articles and exclusive analyst commentaries about the vast opportunities present in the Asia Pacific online travel market—read more.