By 2025, online travel and tourism in Southeast Asia will amount to approximately $43 billion USD, up from $13 billion USD in 2021. Travel technology (traveltech) will play a significant role in the revenue increase, as it revolutionises the industry and provides convenient solutions for tourists. The travel tech startups in Southeast Asia are not resting on their laurels as they innovate new services and incorporate new products into their offerings.
According to research from travel intelligence specialists ForwardKeys, one of the critical trends for post-pandemic travel is tapping into the pent-up demand worldwide from tourists who have had to deal with global lockdowns and restrictions. Travellers are now gearing up to visit countries in the Association of Southeast Asian Nations (ASEAN), which are gradually lifting COVID-19 quarantine requirements and other guidelines.
State of tourism in Southeast Asia
After the pandemic broke out, the worldwide tourism industry was one of the hardest-hit industries.. According to a report by the United Nations World Tourism Organization (UNWTO), the tourism sector will lose $2 trillion USD in 2021, which is similar to the figure in 2020. Due to inconsistencies in vaccination rates and the development of COVID variants like Omicron, countries were forced to revert to restrictions and lockdowns.
Can a hospitality and travel VC fund save the industry in Southeast Asia?
Many countries’ travel and testing rules differ, leaving travellers unsure of what they must do to enter. Travellers’ budgets were also slashed by mandatory quarantine time, which required individuals to stay at a house or hotel for a period of time before beginning their holiday.
According to UNWTO, international tourist arrivals in 2021 were 70-75% lower than in 2019, resulting in a revenue decline similar to that of 2020. As the region shut down, only allowing essential travel, arrivals in Asia-Pacific (APAC) fell by 95% in 2019 numbers, and 65% in 2020.
As APAC began opening up towards the end of 2021, , news emerged that China’s stringent travel restrictions would not be lifted until at least the second quarter of 2022. As a result, prominent tourist destinations such as Phuket in Thailand, have lost billions of dollars and have lost 25-30% of their pre-COVID tourism numbers. China’s strict lockdowns continue in areas like Shanghai, forcing Southeast Asian countries to look for other sources of visitors, such as Europe, and begin marketing to them.
Finally, the Russia-Ukraine war has further exacerbated global supply chain issues, disrupted global trade of critical goods, raised fuel and gas prices, and affected tourism from the Eastern European region to ASEAN.
Role of technology in travel and tourism recovery in ASEAN
Traveltech will help ASEAN’s tourist industry recover and revolutionise, making it more agile, accessible, convenient, and sustainable. Contactless payments, virtual experiences, data collection and insights, digital tools for COVID testing and tracing, and online vaccine passports have all become popular because of technology, according to the ADB’s COVID-19 and Future of Tourism in Asia and the Pacific research.. Moreover, Southeast Asia’s internet usage in 2020 soared by 40 million users, making the region more connected and open to digital solutions.
AirAsia’s strategic partnership deal with Google Cloud to enhance digital growth and convenience in Southeast Asia is a significant step in traveltech. It is a five-year collaboration that will use its super-app to offer a variety of services, including hotel and flight bookings, ride-hailing, financial and health services, eCommerce, on-demand education, and more. The app will benefit businesses, particularly micro, small, and medium-sized enterprises (MSMEs), and will make services accessible to everyone, including those in rural areas.
Malaysia Airports Holding Berhad (Bhd.) introduced innovative technology when it officially began implementing the facial recognition software announced in January of last year. The new system is being used at the Kuala Lumpur International Airport (KLIA) to allow passengers to scan their faces and proceed through the entire airport to the boarding gates without having to produce their boarding passes. In the future, it is planned that customers will be able to purchase things or visit lounges without touching anything..
The travel tech startups Southeast Asia will make a significant contribution to the region’s travel and tourism resurgence. Travellers all over the world appreciate quick, flexible, and convenient services that make visiting new places easier. Many tourists will choose domestic tourism over international travel since it is more convenient to know the COVID-19 guidelines in one’s own country than to deal with the ever-changing restrictions in other countries.
China’s lockdowns will have an impact on post-pandemic travel in ASEAN as its population makes up a significant majority of tourists in the region and globally. Other challenges, such as the Russia-Ukraine war, will drive up energy costs, but governments are exploring alternatives to counter oil and gas shortages and demand. The tourism industry in Southeast Asia may be able to sustain itself in the long run as a result of the pent-up demand for travel.