India’s Growing Middle-Class Fuels Tourism Boom in Southeast Asia, Creating Opportunities for ASEAN Economies
BANGKOK/NEW DELHI – In the wake of China’s slower-than-expected reopening, Southeast Asia has become a magnet for Indian tourists, solidifying the region’s position as a pivotal growth market for the travel and tourism sector. With the increasing spending power of India’s burgeoning middle class, airlines like IndiGo and Thai Airways, as well as hospitality chains offering thousands of rooms, are capitalizing on this trend. Analysts and industry executives predict a significant shift in the tourism landscape, as Southeast Asia reaps the benefits of India’s outbound tourism growth.
Prior to the COVID-19 pandemic, the travel and tourism industry accounted for approximately 12% of Southeast Asia’s gross domestic product, employing over 40 million people in the region, according to the Organisation for Economic Cooperation and Development. While the sector had been heavily reliant on Chinese tourists for years, recent data from four Southeast Asian countries reveals a weak recovery, with Chinese visitor numbers in May at least 60% lower than those in the same month in 2019.
Industry members are now witnessing early signs of a recalibration in airline capacity, hospitality offerings, and tourism operators to accommodate the influx of Indian tourists. The Asian Development Bank (ADB) predicts that India could emerge as the next China in terms of outbound tourism growth over the next decade, although connectivity may be constrained due to fewer airports in India, as stated in a May report.
Thailand, a country heavily reliant on tourism, has seen a remarkable 14% decline in Indian tourist arrivals compared to pre-pandemic levels, which is significantly lower than the decline in Chinese tourist arrivals. The Tourism Authority of Thailand expects 1.6 million Indian visitors to grace the kingdom this year. Singapore, too, has witnessed more Indian tourists than Chinese tourists in May, and Indonesia welcomed nearly the same number of Indian and Chinese visitors during the same month.
Chief Executive Officer of Thai Airways, Chai Eamsiri, emphasizes the strong demand for Indian routes, leading the airline to operate 70 flights per week to India, while the number of flights to China has been reduced to 14 per week from around 40 before the pandemic. IndiGo, a major Indian budget carrier, has reported a significant increase in routes between India and Southeast Asia, with over 100 flights per week connecting the regions. The airline plans to introduce flights to Jakarta in August and increase frequencies to Singapore.
While seat capacity on scheduled flights between China and Southeast Asia remains 57% below pre-pandemic levels as of June, flights from India to the region have recovered to about 90%, according to aviation analyst Brendan Sobie. The sustained rebound of Indian tourists has also been a boon for hospitality chains like Minor Hotels, which operates 45 properties with over 6,000 rooms across Southeast Asia. Minor Hotels’ CEO, Dillip Rajakarier, expresses the Indian market’s significance as one of their top source markets, leading to intensified marketing efforts in India.
Indian Visitors Help Sustain Post-Pandemic Rebound as ASEAN Embraces India as a Key Growth Market
For Indian tourists like Pratyush Tripathy and his friends, the allure of Southeast Asia lies in its affordability and accessibility. Tripathy, a software professional, explains that a trip to Southeast Asia is not only cost-effective but also time-saving, as Indians find it easier to obtain visas for Southeast Asian countries compared to Europe and the United States. Flight bookings from India to Bangkok have surged by 270% between January and June this year, compared to the same period in 2019, according to Indian online travel portal Cleartrip.
Thailand’s central bank expects 29 million visitors this year and 35.5 million in 2024, showing a positive trajectory for the tourism sector. To fully leverage this surge in Indian tourists, the Thai tourism industry must understand their preferences, particularly in terms of food and entertainment, says Somsong Sachaphimukh, Vice President of the Tourism Council of Thailand. Adapting quickly to cater to Indian visitors’ needs will ensure that Thailand maximizes this significant opportunity and maintains its appeal as a top tourist destination.
As India’s influence in the global tourism landscape grows, Southeast Asian countries, particularly those in ASEAN, stand to benefit immensely from the influx of Indian visitors. The sustained growth in Indian outbound tourism presents an opportunity for ASEAN economies to diversify their tourist markets and forge stronger ties with India, ultimately bolstering regional economic growth and fostering closer ASEAN-India relations in the long term.