Last month, a new airline alliance was announced. Low-cost carriers – the same ones that traditionally eschew alliances – formed the world’s largest low-cost carrier group and named it the Value Alliance.
The airlines in the pan-regional union include Cebu Pacific (including its subsidiary Cebgo), Jeju Air, Nok Air, NokScoot, Scoot, Tigerair Singapore, Tigerair Australia and Japan’s Vanilla Air. Their networks pan across Southeast Asia, North Asia and Australia.
It is perhaps apt that this world’s first should take place in Asia. After all, the growth of Asia’s travel market is outpacing everywhere else in the world. As was noted during Phocuswright’s recent conference in India, Asia is no longer the future, but the now. In fact, it has been the world’s largest regional travel market, outdoing both Europe and the U.S. since 2013. “The global travel industry’s center of gravity has shifted,” said Douglas Quinby, VP of research at Phocuswright.
These air travel trends paint a colorful picture of how Asia’s hotel industry will evolve over the coming years. A new middle class will provide an attractive source of hospitality demand. As incomes rise, more Chinese cities will open for business. Hoteliers operating in China must stay nimble and be able to react quickly to change.
Air travel trends paint a colorful picture of how Asia’s hotel industry will evolve. Click To Tweet
Asia Travel by the Numbers
Statistics tell the story of what is and what is to come. Two-in-three Indian leisure travelers who took an overseas trip in 2014 did so for the first time. It is safe to say their first will certainly not be their last. In China, nearly half of the residents went abroad in 2015, and three out of four who didn’t, plan to.
China will likely continue to lead the way on this growth path. According to the Pacific Asia Travel Association’s Visitor Forecasts 2016-2020 Report, arrivals from China to Asia Pacific destinations will climb from an estimated 102 million in 2015 to more than 150 million by 2020. And, as such, this one source market will dominate the region’s international tourism landscape, generating close to 23% of all arrivals to Asia Pacific destinations by the close of this decade.
Chinese will travel with significantly more in their pockets as their wealth grows on a sharp trajectory. The per-household disposable income of urban consumers will double between 2010 and 2020, from about $4,000 to about $8,000, according to a McKinsey & Company report. And no doubt that will continue to rise.
The Future of APAC Travel
Such a development as the emergence of the low-cost carrier alliance will only encourage travel to continue its explosive growth path in Asia, especially as Asia’s middle class continues to gain economic power and strength.
McKinsey & Company, in its essay “Understanding ASEAN: Seven things you should know,” says the Association of Southeast Asian Nations has dramatically outpaced the rest of the world on growth in GDP per capita since the late 1970s. Income growth has remained strong since 2000, with average annual real gains of more than 5%.
Already some 67 million households in ASEAN states are part of the “consuming class,” with incomes exceeding the level at which they can begin to make significant discretionary purchases. That number could almost double to 125 million households by 2025, making ASEAN a pivotal consumer market of the future. According to the report, some broad trends have emerged, including a greater focus on leisure activities of which travel is definitely included.
The GDP of Malaysia, Indonesia, the Philippines and Thailand are expected to exceed $1 trillion by 2030, and are expected to be core growth markets. While other economies have experienced rapid growth — Vietnam doubled its per capita GDP between 1995 and 2006, for example — growth in incomes are a fundamental driver of air travel demand, according to the International Air Transport Association, and thus can be used as a fairly reliable indicator of where the most attractive (and sustainable) markets will emerge.
In conclusion, it is easy to see why the partners of brand-new Value Alliance, well positioned in the healthiest growth region, are optimistic about its proposition.
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Vera Lye, Contributing Editor, APAC
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Tags: APAC, Asia, Asia hotel industry, Cebgo, Cebu Pacific, Douglas Quinby, Duetto, Hotel Revenue Management, hotel revenue strategy, Japan’s Vanilla Air, Jeju Air, Nok Air, NokScoot, Phocuswright, Scoot, Tigerair Australia, TIgerair Singapore
