Geopolitical tensions stemming from the Iran war are altering travel choices in the Asia-Pacific region this summer. Executives from several organizations and the hotel industry say some travelers are reducing long-haul trips and opting for domestic or intra-Asian travel, benefiting second-tier cities in Japan, India, and Southeast Asia.
Passengers shift to nearby destinations
A global travel confidence index released by Allianz Partners shows that nearly half of global travelers are scaling back their travel plans, with more opting to travel within their own countries. The survey, which covered approximately 11,000 respondents, was released in May. Among respondents from China and India, about 60% planned domestic travel.
Rajeev Menon, President of Marriott International Asia Pacific (excluding China), stated that travelers who still have outbound travel plans are more inclined to choose destinations within Asia rather than the Middle East or Europe. Emerging destinations such as Phu Quoc Island in Vietnam are therefore gaining more attention. Chinese outbound travel is also increasingly flowing into Southeast Asia, with Vietnam, Malaysia, and Thailand showing particularly strong performance.
Search growth in second-tier cities in Japan
Japan remains a popular summer travel destination in Asia. A Visa survey shows that one in four people planning to travel in Asia this summer will choose Japan.
- Searches for Takamatsu increased by 63%.
- Search volume for Songshan increased by 44%.
- Search volume for Sendai increased by 32%.
Agoda data shows that, in addition to the cities mentioned above, Okinawa saw a 27% increase, and Sapporo a 26% increase. Cities such as Shizuoka, Nara, and Nagano also attracted more tourists. Marriott stated that it has hotels in 30 of Japan's 47 prefectures, and demand from regional cities continues to strengthen.
Housing prices and investment rose in tandem.
As demand rises, the previously lower price advantage of second-tier cities is diminishing. Menon stated that revenue per available room (RPM) growth in these markets has surpassed that of some gateway cities, as demand is growing faster than room supply.
Similar changes have occurred in the Indian market. Following the outbreak of the Iran-Iraq War, some travelers transiting through the Middle East cancelled their trips, causing Marriott's revenue per available room (RevPAR) in India to decline. However, growth resumed as travelers adjusted their routes and shifted towards domestic and regional travel. Menon stated that related business has returned to double-digit growth since May.
JLL points out that higher revenue and room profit margins are driving investors to reassess hotel assets in well-connected secondary cities in the Asia-Pacific region. The firm believes this is particularly evident in Japan and India, as prime assets in core cities like Tokyo and Mumbai are becoming increasingly difficult to acquire, leading to a shift in investment towards regional cities such as Fukuoka, Sapporo, and Nagoya.
Additional information:JLL also noted that domestic tourism growth, religious and cultural tourism demand, and infrastructure improvements are key reasons why these cities attract investment; for early investors, there is still untapped demand in some second-tier destinations.
