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Market trends: Expert insights into Asia Pacific recovery

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While the road to APAC’s full reopening remains paved with uncertainty, the acceleration of vaccine distribution is a promising indicator for the region’s long-term recovery

Recently, the rise of the Omicron COVID-19 variant has added an extra layer of complexity to Asia Pacific’s recovery. While the future of travel remains bright, reopening strategies vary widely across the region and have slowed in the face of uncertainty. 

“One of the biggest challenges we have right now is the uncertainty of how countries respond to the current and future variants,” says Laura Houldsworth, VP and Managing Director of APAC at Booking.com, noting that volatile and inconsistent reactions by governments result in a drop in traveler confidence. “People are eager to get back out there, but at the same time there’s fear about borders closing while travelers are away from their home country.”  

However, the acceleration of vaccine distribution across APAC is bolstering hope for the region. As a result of high vaccination rates, we’re starting to see the emergence of travel corridors—both intra- and interregional—representing an important step toward reviving international inbound tourism. We anticipate this recovery will continue to ramp up in the long term as guidance surrounding Omicron becomes clearer.

“Many countries in APAC now have an 80% or higher vaccination rate and have caught up to or surpassed the vaccination rate in other regions,” says Nuno Guerreiro, Regional Director at Booking.com. “The recent slew of travel corridor announcements is another positive indicator that governments in the region are feeling more equipped and prepared to welcome tourists as it becomes safe to do so.”

Travel corridors spark optimism 

The first international travel corridor allowing reciprocal quarantine-free travel started in Singapore, with the country launching vaccinated travel lanes with Germany and Brunei in September last year. Since then, the program has been extended to several major inbound markets including Canada, Australia, the UK, the US, and a number of countries in the EU. 

“Following the announcement of additional travel lanes between Singapore, the UK, Europe, and the US, we started to see an increase in searches based on those opportunities,” says Houldsworth. “Similarly, when interstate travel in Australia reopened for the first time in November, we saw this resonate in terms of interstate searches. It’s very clear that despite pandemic fluctuations, in the longer term we see people will continue to search for destinations that are open and safe for them to travel to.” 

For tourism-dependent economies, such as Pacific Island countries, travel corridors are the linchpin of recovery. For example, at the end of last year, Fiji opened its borders to a select number of countries, including Australia, which is giving local businesses a long-awaited boost. “Fiji’s finally started seeing people from Australia traveling for a long weekend away,” says Jesper Palmqvist, Area Director of Asia Pacific at STR. “The first couple of Saturdays in December, occupancy was up to 60% compared to barely 30% a month prior and not much weekend activity at all before that.” 

To proactively target international demand, Booking.com’s Houldsworth suggests setting up Country Rates for markets with travel corridors. Even if your destination has strong domestic demand, offering competitive rates can help you to rank better in our search results, setting you apart from competitors. To know which markets to prioritize, partners can analyze their search trend data on the Extranet. 



Sun and sandboxes

On Booking.com we’re seeing longer stays in resort markets, with long-haul travelers looking for opportunities to enjoy the remainder of the Southern Hemisphere's summer season. 

Helping to drive this demand is the “travel sandbox” model, which allows fully vaccinated foreign travelers to fly directly into certain destinations—such as Phuket in Thailand, Phu Quoc in Vietnam, and Langkawi in Malaysia—without quarantining. That said, there are still a number of technicalities that travelers have to follow, such as PCR tests on arrival and booking a pre-approved hotel for a set number of days. 

“When the Phuket sandbox launched in July, occupancy on the island grew from 3% to 20–25%,” says STR’s Palmqvist. Following this success, the model later expanded to more markets before the introduction of the ‘Test & Go’ scheme. After a pause in applications in January due to the spread of Omicron, the program will resume on 1 February.

Domestic travel continues to drive demand

In combination with the steady return of long-haul tourists where possible, the region continues to see demand for short-term domestic stays – a trend that’s forecast to continue in the new year. According to research from the World Travel and Tourism Council (WTTC), domestic spending is expected to experience a year-over-year rise of over 25% in 2022. For countries with a significant domestic market, this approach compensates for international travel to a certain degree. 

In some cases, the resurgence of restrictions means that domestic travel is the only option for nationals. “There are still a few countries like Australia, Japan, and New Zealand that are taking a more cautious approach to reopening despite very high vaccination rates,” says Booking.com’s Guerreiro. “They’re focusing on ensuring that the economy picks up domestically, while prioritizing public health and safety before they open up internationally. Moving forward, I expect that we’re going to continue to see a disparity across the region, but hopefully even countries that have been a bit more cautious will start to open up and deal with COVID in a more endemic way.”

Even markets that are historically tourist destinations, like Bali in Indonesia, are noticing an uptick in local demand due to prolonged border closures. “We see Indonesians traveling to Bali way more than ever before,” says Palmqvist. “Occupancy is up to 50% on weekends compared to single-digit levels as late as September 2021, and that’s only domestic travelers. That’s unheard of for an international tourist market like Bali.” 

Travel intent remains undeterred

Another promising indicator for the region is customers’ intent to travel, which is stronger than ever. “Since November, prior to news on the Omicron spread, the region overall saw more search demand compared to 2019,” says Houldsworth. This is a positive signal that in the long term APAC-based partners can expect a strong rebound driven by unleashed pent-up demand as it becomes safe to travel once more. 

“I’m extremely optimistic for the future of travel,” concludes Houldsworth. “We have all the right ingredients in the region to overcome continued challenges if we remain adaptable and collaborative as an industry. The desire to travel remains strong as we head into 2022, and together we can make sure we’re set up for recovery and success in a sustainable way.”


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What do you think of this page?

  • High vaccination rates paired with travel corridors are bolstering hope for Asia Pacific
  • The region’s recovery remains fragmented and volatile, with the Omicron COVID-19 variant adding complexity to reopening strategies 
  • Partners can capture existing international demand by proactively setting up Country Rates for markets with travel corridors. You can find tailored search and booking trend data on the Extranet to help you know which markets to target 
  • Despite green shoots in international travel, domestic tourism is continuing to drive demand in the region