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The world is shrinking, but not in the way we've been taught to expect. There was a time when we pictured the Asian travel industry on a relentless upward graph—with bigger planes annihilating distances from the U.S. or Europe faster than ever and cheaper tickets bringing in successively larger waves of dollar-toting visitors. That picture has now lost its luster; in its place Asia is seeing nervousness about travel in its long-haul markets as Western consumers opt to take holidays closer to home. Intercontinental travel, in fact, is firmly in the doldrums: with fewer people venturing beyond familiar territory, it's becoming a smaller world, after all.
Throughout the region, once booming businesses catering to long-haul travelers stand empty. Waiters at smart restaurants in Singapore, sarong salesmen in Bali, bar girls in Pattaya—all sit idle, hoping enough customers will straggle in for them to survive another deathly quiet season. Hong Kong is meanwhile gasping for oxygen, enduring its worst slump in leisure travel in anyone's memory. Flights are full only because carriers have cut back heavily on the frequency of service and cancelled many routes altogether.
It began in the summer of 1997 with the haze: Indonesian forests were burning, and Malaysia and Thailand choked in their smoke, a story the satellite news networks transmitted to the world in apocalyptic images, as they would the calamities that followed. Then, one after another, Asian currencies collapsed. In 1998, Indonesia was in chaos as the Suharto regime was brought down by street mobs; a year later, Ambon and East Timor were riven by appalling sectarian violence. Sri Lanka was rocked by waves of suicide bombers; in July 2001, Colombo's airport was hit. Then came 9/11, with anti-American demonstrations in its aftermath. Last October, bombs in Bali killed 202 people and wiped out much of what was left of tourism there. By early 2003, Burma was a recrudescent human-rights disaster; more than 2,000 drug suspects were gunned down in the streets of Bangkok, and Cambodians went on a violent rampage against the Thai. Armchair audiences overseas might as well have contemplated a holiday in hell.
And then came SARS. Unlike previous crises, which remained relatively focused in their impact, the contagion tarred every destination in East Asia with the same brush. In the late 1990s, Thailand and Hong Kong benefited from Indonesia's turmoil as travelers went to those two places in search of a safe haven. But with SARS, everybody lost. Although Thailand and Indonesia were virtually untouched by the virus, they suffered almost equally with the worst-hit destinations.
It's hard to put reliable numbers on the phenomenon. According to the World Travel Organization, a booster trade association that relies upon the governments of member nations for its figures, international tourism receipts in 2001, the last year for which statistics are available, were down 2.6% compared with 2000. Industry executives say that number should be multiplied by 5 to 10 in order to approach reality. More-reliable figures come from the airlines: American Airlines says passengers on trans-Pacific flights in June fell 22% compared with June 2002 (as opposed to a less than 1% drop across the Atlantic); meanwhile, Continental's traffic to Asia fell 30% year on year. The news is no better from Europe: the Association of European Airlines reports that one recent week's business to the Far East was 23% below its equivalent in 2002.
Panicky layoffs and reduced schedules have followed, but the market for mass leisure travel is built on unshakeable optimism—the macroeconomic equivalent of a Coke and a smile. Holiday destinations have attributes that exist only in the dreams of focus groups and tourism executives: no one actually needs to go to Langkawi or Lombok; vacationers in the U.S. and Europe have the sunny beaches of Hawaii, the Caribbean or Greece, all within a medium hop. Yet the urge to holiday far from home, plus a desire to feel adventurous or chic, continues to be tapped to endow places many Western travelers have never heard of with irresistible allure.
Just a generation ago, long-haul travel belonged almost exclusively to the rich or the most diligent of savers. For ordinary, middle-class wage earners, a trip beyond the nearest continent was a once-in-a-lifetime splurge—something aspired to as the crowning extravagance in a modest career. Then in the 1980s, an era of cataclysmic change in the airline industry, overseas fares came tumbling down. As air traffic grew, hotels were built at a far quicker pace than before. Asian tourism boards launched huge, well-funded publicity campaigns, and Western travel media obliged with extensive coverage. In the 1990s, as the stock-market bubble unloosened discretionary loot for workers in virtually every economic bracket, long-haul travel took off like a rocket. According to Rob Langtry, a P.R. consultant who was advising the Indonesian government at that time, "annual growth in the upper teens got to be taken for granted."
As the amazing gold in them thar tourists became evident, Asia greedily tore down barriers to foreign travel. Over a decade, China went from being a xenophobic recluse to a tourism junkie . Vietnam pursued a parallel course; visas for travel there, formerly very difficult to obtain, were suddenly not a problem. The Western boom in Thai cuisine and a massive promotional campaign made the Thai kingdom a hot destination; the buoyant rise of tourism in Bali in the early 1990s encouraged the building of resorts in new destinations in the Indonesian archipelago, such as in neighboring Lombok. Even creepy Burma tried to polish its image and let in private tourism companies.
However, seven years of unrelenting bad news, and the resulting decline in income from foreign tourists, are turning the handsome prince of travel back into a toad. Governments that once talked about building satellite international airports to handle the crowds of foreign visitors are now erecting new barriers to keep them out. Indonesia has decided to abolish tourist visas on arrival, citing reciprocity: if Western nations won't give us visas on arrival, why should we make it easy for them? (It remains unclear when the new regulation will go into effect, if ever.) Travel advisories posted by the U.S. and other governments have also had a long-term dampening effect on the markets in Indonesia, the Philippines, Sri Lanka and elsewhere.
One conclusion in the World Travel Organization's annual report receives a resounding endorsement from executives on the ground: "Tourists shifted their travel habits during this period of time; they chose closer and less-expensive destinations." Philip Yong, a leading tour operator in Sarawak, says, "If it weren't for domestic travelers from peninsular Malaysia, [hotel occupancy] would be in single digits here." Gert Kopera, general manager of the Dharmawangsa, the Rosewood-operated boutique hotel in Jakarta, predicts that "hotels at the top end, like us, will do all right and so will the hotels at the bottom." In other words, travel is returning to where it began—an hourglass market, a place with no middle.
Back to basics isn't all a bad thing—for consumers at least. As the industry retools for a cheaper but more reliable domestic and regional market, short-term prices in many destinations (but by no means all) are falling to almost unbelievable lows. Post-SARS, regional visitors appear to be returning to Hong Kong faster than anyone expected; Arthur Kiong, director of marketing at the Peninsula Hotel, says that in recent weeks he has seen "a huge upsurge in the market from mainland China and Taiwan," where most of Hong Kong's tourism growth has come from since the handover in 1997. Perhaps Hong Kong is uniquely lucky to have large markets on its doorstep; in any case, travelers from those places are in no position to be too fussy about SARS.
The recovery of tropical Southeast Asia may take years, however, and depends on more than spin and gloss: comeback strategies must begin with the sobering admission that a very large bubble has burst. Won't Western travelers who put off trips to Asia year after year—to avoid being suffocated by haze, menaced by anti-Western mobs, blown up by terrorist bombs or sickened by weird plagues—simply forget why they wanted to come in the first place? Because compared with all that, a Greek villa or a Caribbean condo is starting to look really rather attractive.
- Jamie James
- Is long-haul travel in irreversible decline?