The rebuilding of the travel and tourism sector is crucial for the wider economic recovery of the Asia-Pacific region due to its multiplier effect. James Lambert, director of Economic Impact Consulting, Asia, and Aran Ryan, director, Tourism Economics, explained how platforms like Airbnb can play a pivotal role in driving regional tourism revival.
In the past decade, the Asia-Pacific region established itself as the world’s largest, fastest-growing, and most diverse tourism market. In Thailand, the tourism sector supported almost 20 per cent of national GDP in 2019, and one in five jobs, according to the WTTC.
This year, of course, the tourism sector has come to face with its biggest-ever challenge – the coronavirus.
In Oxford Economics’ latest projections for the travel and tourism sector in Thailand, we expect the volume of international visitor arrivals to fall by more than half in 2020, compared with last year. In our central scenario, we do not see tourism spending recovering to 2019 levels until 2024. That means a 4.8 trillion baht loss of visitor spending in Thailand’s economy compared with our pre-pandemic outlook.
For tourism providers in Thailand and across Asia-Pacific, this is a devastating blow. Our modelling identifies 40 million “jobs at risk” in the wider Asia-Pacific tourism sector. For workers and business owners in this sector, a return of tourism expenditure could not come soon enough. What is increasingly clear is that the rebuilding of the travel and tourism sector will be essential for the wider economic recovery of the region.
Airbnb’s role in Thailand, as part of the wider short-term rental sector, provides a useful example of how tourism spending manifests itself broadly around the economy. We recently worked with Airbnb to estimate its total economic impact across 13 Asia-Pacific countries in the five years preceding the coronavirus travel disruption. This included detailed modelling of the direct economic impacts of the spending Airbnb facilitates, and the indirect economic impacts it creates through supply chain effects and wage expenditure.
A little more than one third of Airbnb’s total economic footprint in Thailand (worth around 44 billion baht in 2019) can be attributed to this “direct impact” – that’s the value added by businesses and workers in the first line of tourism activity: the bars and restaurants, retailers, and taxi drivers. The remainder is generated by the “indirect” value added along the supply chains of these tourism providers, and from the wage expenditure of those workers earning incomes from it. And these wider impacts fall widely across sectors and are spread widely across states and regions.
In Thailand, only one quarter of Airbnb’s economic impact falls in Bangkok (Airbnb’s biggest local market in Asia-Pacific). The lion’s share is distributed around second-tier and smaller tourism destinations, including those with no tourism footfall to speak of at all.
Similarly, the decline in tourism has not only been felt by the unfortunate staff and operators of those frontline tourism providers, but also in the transport, retail, manufacturing, and agricultural jobs that service this tourism demand indirectly.
As our study for Airbnb highlights, there are more than 925,000 workers in Asia-Pacific whose employment was supported by Airbnb-related tourism alone in 2019. More than half of these workers benefited through indirect impacts. They might not make the connection themselves, but their employment and prosperity are tied in part to the recovery and trajectory of the tourism sector.
So, how can a recovery in travel and tourism be accelerated? When producing our forecasts, we tend to closely observe three core obstacles: physical travel restrictions, depressed economic conditions, and lasting impact the coronavirus will leave on traveller confidence.
It is increasingly clear that the early revival of short-haul and domestic travel along safe and trusted, low-risk travel corridors will be key to recovery, before a broader normalisation of tourism flows can be established in the years to come.
In many ways, platforms like Airbnb are well placed to help accelerate Asia-Pacific’s tourism recovery. There are five reasons why:
- Facilitating and inspiring domestic trips: As households look to substitute longhaul for short-haul and international for domestic trips, platforms like Airbnb can help connect that demand with new and unique alternatives.
- Supporting a youth-led recovery: The coronavirus has disproportionately affected older travellers in terms of health impacts and the willingness to travel. Young people will be critical to tourism’s recovery, particularly in the early stages, and the majority of Airbnb’s users are aged under 30.
- Helping to rebuild international travel as an export sector: Airbnb’s community model helps sustain traveller interest through the restricted travel period, and therefore, smooth and catalyse their return to the market once conditions normalise.
- Leveraging analytics to adapt to a changing landscape: With such a rapidly shifting landscape, agility in the current market is key. Hosts and travellers will benefit from the platform’s ability to respond quickly to the shifting trends and preferences.
- Finally, agility and flexibility in supply: Early signs of travel recovery have indicated a shift in demand for travel destinations, compared with the pre-coronavirus norms. Anchoring accommodation supply too heavily to pre-coronavirus tourism infrastructure could therefore act as a drag on recovery. Airbnb’s agile and flexibly supply of hosts can help facilitate the return of tourism spending more swiftly, and the wide range of jobs and incomes it supports.
In a post-pandemic world, a full recovery of the tourism industry will likely take time. There have been some encouraging signs of recovery in short-haul and domestic trips, but industry players across the board will need to do their part to deliver the sector’s broader revival. Platforms like Airbnb can play a pivotal role in supporting these efforts and reintroducing the many gains of tourism to the Thai economy.