The Asean Tourism Edge

In this new segment of ACE, we shall embark on a journey to uncover stories from SMEs as well as relevant stakeholders in the hope of arriving at a deeper appreciation and understanding on the key drivers and enablers who shape the industry they operate in. We kickstart our endeavour with the tourism sector.
How important is the tourism sector for the ASEAN economy? It is a question that many would be able to answer without much hesitation. After all, the region attracts over 100 million tourists each year, contributing 12% to its gross domestic product (GDP)and 3.7% to employment in 2015. In addition, the sector has proven to be resilient in the face of the current challenging economic climate. It comes to no surprise that the tourism industry was selected as one of the priority sector to be given special attention in the implementation of the ASEAN Economic Community (AEC)

Southeast Asia is blessed with rich natural resources and culture. This is evidenced by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) which has pinpointed 37 World Heritage Sites in the region. Many entrepreneurial SMEs in the region have tapped on this huge tourism potential to develop diverse tourism products ranging from accommodation, transportation services, food and beverage (F&B) services, retail trade, recreational industry, and travel agencies.

Among the key catalysts for the growth of the sector is the increase of new middle class within the emerging economies in the region with more disposable income for travel. A closer look at the numbers reveals that over 75% of the international arrivals to the region come from Asia, out of which, more than half comprise of intra-ASEAN travelers.

The emergence of low-cost carriers plying routes in the region such as Air Asia, Jet Star, Tiger Airways and Cebu Pacific had also served as game-changer in boosting the tourism sector by making air travel more affordable. Capitalising on the massive tourism opportunity in the region has made Tony Fernandez, the founder and CEO of Air Asia a regional entrepreneur icon and a global household name.

Moreover, advances in the telecommunication sector with wider broadband and mobile network penetration, coupled with innovative online travel solutions have also served as enabling factors that has made traveling more hassle free. Today’s consumers are always connected and enjoy making their travel planning and booking arrangements online or via their mobile phones.

Indeed, SMEs in this sector would be missing out if they do not take advantage of this development by having their products listed on popular travel websites such as Agoda, Expedia and TripAdvisor, among others. Social media sites like Facebook and Instagram are also must-have business tools for promoting and engaging with customers. These two-way engagement tools are important for SMEs to monitor online enquiries and feedbacks and respond to them in a timely manner.

In the accommodation sub-sector, today’s travellers place high importance to reliable Internet access. The TripAdvisor Global Travel Economy Report 2015 reveals that 74% file “free-wifi” as a key factor in deciding their accommodation. Certainly, the numbers would be higher among the Gen-Y and millennial travellers. As people are increasingly comfortable in sharing their travel experiences online, it is also important to ensure that the free-wifi service is up to speed and reliable to avoid negative feedback.

As we desire to develop the tourism sector further, it is important to preserve the ASEAN tourism edge. The World Economic Forum’s Travel and Tourism Competitive Survey 2015 reports that nature and heritage are key competitive strength of the region’s tourism sector. The Philippines, Indonesia and Malaysia are among the world’s 17 countries identified by Conservation International as mega-diverse countries that harbour a majority of the Earth’s species as well as a high number of endemic species.

With tourist arrivals to ASEAN expected to increase by 123 million by 2020 and 187 million by 2030, it is important that the SMEs strive to strike the right balance between profit, people and planet to ensure long-term sustainability of the industry. This does not necessarily have to be a trade-off between profitability and cost. Today’s consumers are more inclined to businesses that are sensitive to the environment in which they operate in. TripAdvisor reports that more than half of travel consumers indicate eco-friendliness and sustainablity as factors impacting their decision when booking accommodation. In fact, both elements ranked higher than brand name of the accommodation, special offer and loyalty programmes.

Naturally, many pioneering SMEs in the region have embraced eco-tourism as the model of their business venture. The International Ecotourism Society (TIES) defines eco-tourism as “responsible travel to natural areas that conserves the environment and improves the well-being of the local people”. This type of tourism brings together conservation, communities and sustainable travel.

This commitment on sustainability and inclusivity is affirmed in the vision of the ASEAN Tourism Strategic Plan 2016-2025 which envisages that come 2025, ASEAN will be a quality tourism destination offering a unique, diverse ASEAN experience, and will be committed to responsible, sustainable, inclusive and balanced tourism development, so as to contribute significantly to the socio-economic well-being of ASEAN people”.

Muslim friendly or halal tourism, which caters to the faith-based needs of Muslim travellers also presents huge potential for SMEs in the region. The global Muslim travel expenditure is estimated to be worth US$142 billion in 2014 or 11% of the total global travel expenditure with only China (US$160 billion) and the United States (US$143 billion) ranking higher. By the year 2020, this segment is expected to grow to US$233 billion. Countries in the region, including non-Organisation of Islamic Countries (OIC) members like Singapore and Thailand, are well-positioned to draw Muslim guests as a result of strong halal governance and their proximity to neighbouring Muslim countries.

In essence, ASEAN definitely has the edge in the tourism sector. With its rich natural and cultural resources, coupled with strategic government support in term of infrastructure investments and business-friendly policies, the stage is set for the SMEs in the region to set sail and embark on their journey to success.