ILTM was lucky enough this week to get some time with the ever-enlightening Dr Parag Khanna, Managing Partner of FutureMap, seasoned ILTM speaker and authority on globalization, to ask him about the impact of COVID-19 on APAC destinations.
It was clear long before COVID-19 reared its ugly head that locations within APAC were huge catalysts for growth in the luxury travel market. Now, in the wake of the crisis, many people have their eyes on APAC to deliver some much needed, confidence boosting signs of recovery.
We asked Dr Parag Khanna for his insight on the current situation in the APAC region, as well as some insight as to what the future might hold for these lucrative countries.
- Pre COVID-19, HNWI wealth and travel from APAC was a huge engine of growth for the luxury travel industry. Do you still see this on track?
The total number of HNW travellers out of APAC may well continue to grow, but its national composition and destinations of travel will be the real story of the next couple of years. Other than some notable and high-profile cases of fortunes being lost, APAC nations have done well to preserve their wealth amidst the pandemic.
- We know APAC loves APAC and the region’s HNWI spend a huge amount on travel and experiences within the APAC region. Are we likely to see the first signs of recovery happening within inter-APAC travel first? And what does this mean for quarantine policies? Are there any regions within APAC that are quarantining/closed to other APAC countries?
The past few weeks have witnessed Chinese return to Thailand and Vietnam in decent numbers. At the same time, most Chinese have remained in China, resulting in very high occupancy in early May. Rather than individual quarantine policies, it is a positive sign that pairs of Asian countries are working together to allow for free mobility between them such as Australia and New Zealand, Singapore and South Korea, and so forth.
- Do we think the rest of the world will lose out with quarantine policies towards APAC or do you believe by the time the APAC HNWI traveller is ready to travel outside of APAC again, it will be in 2021 and quarantine will be over?
If Asia continues to move quickly in testing out “immunity passports” -meaning some kind of certification of health – then it is very likely that other regions will accept them given their desire to bring in Asian tourists and business travellers.
- What do you think will be the impact on China? How critical is attracting these Chinese HNWI back to APAC and the rest of the world?
Given how many countries depend on Chinese tourists, they will be eager to lure them back. Soft competition is already underway in that regard. At the same time, there’s a realization that countries have to diversify as well, and are seeking to attract more Japanese and Indians.
- Do we have any way to predict where APAC HNWIs will want to go? And on what kind of trips?
It’s already evident that because of the restrictions on inter-regional travel, HNW travellers in APAC will mostly stay within the region. Countries like Singapore will try to capitalize on those who want to have multi-stop trips in the region. It could be that the cancellation of the Tokyo Olympics and Dubai Expo could bring more travellers to other parts of Asia instead over the summer and fall months.
- Which destinations are likely to come back as options for travel the quickest?
It looks like China itself is coming back, including both Hong Kong and the mainland as people see life return to normal in Shanghai. Thailand and Vietnam appear to have coped well with the virus and branded themselves successfully as healthy destinations. Once they allow foreigners back in, Australia and New Zealand will do very well.
- Are there any destinations that will see increased demand because they are better suited to the new demands of HNW travellers?
HNW travellers in the post-COVID context may fall into two categories: Those that want to take long holidays off the grid on safe and distant islands such as New Zealand or Lombok, or those that want to be in connected cities such that there is access to top-quality medical care and the option to immediately return home if needed. Holidays may therefore either be very short or very long!
- Are there some destinations that need the support of HNWIs more than others that it would be safe to advise people to travel to?
I believe that with the right precautions, most places will soon be safe to travel to. The COVID experience has taught countries that they must improve their health systems and have the social discipline to be considered reliable societies to engage with. I can imagine that concierge services that offer an extra degree of healthcare-related precautions in various destinations will be in demand by HNW travellers.