MAri Kishigawa’s family has been in the tourism business for decades. In the remote Pacific country of Palau, on an even more remote archipelago, Mari operates the 11-room Carp Island Resort, a 30km boat ride from Palau’s commercial hub of Koror.
But under the palm trees, lined with crystal clear water, Mari considers her future.
“If I had financing, I would have switched my business to renting houses instead of a tourism-related business.”
The Covid-19 pandemic and the rising cost of living have taken a toll on their business.
“Even though the border is open, we are still struggling to get customers. Our resort uses a generator for electricity, so even without customers I need money to buy diesel and take a weekly speedboat to the island – for food, diesel, gas.”
Prior to 2020, Palau welcomed an average of 118,000 visitors per year, with tourism being the main contributor to the economy. This year, however, fewer than 10,000 visitors came, according to the Ministry of Finance.
It’s a pattern repeated across Asia-Pacific, where governments have struggled to reverse the sharp drop in visitor numbers caused by the pandemic. Hopes are high that tourists will return during the holiday season, but concerns over the cost of living and China’s strict zero-Covid policy threaten to hamper progress.
Visitor arrivals are recovering only slowly
International arrivals and hotel occupancy rates across the region are still well below pre-pandemic levels, although European hotspots like France and Greece saw heavy visitor traffic over the northern hemisphere summer.
The tourism industry in some countries has been hampered by restrictive Covid-19 measures that have only been lifted in recent months.
The Japanese government is aiming to attract 5 trillion yen ($34.5 billion) in annual tourist spending after reintroducing visa-free travel to dozens of countries in October. But analysts predict spending by overseas visitors will reach just 2.1 trillion yen ($14 billion) by 2023 and won’t surpass pre-Covid levels by 2025.
Even in countries that lifted Covid-19 restrictions early, visitor numbers are still well below previous levels.
Thailand began reopening its borders in November 2021 and hopes to attract 15 million visitors in 2022. It has since revised those numbers downward: Tourist arrivals are expected to be closer to 10 million this year, compared to nearly 40 million visitors in 2019.
The Indonesian island of Bali is one of the most popular travel destinations in the world, but its visitor numbers are still far lower than before the pandemic. In August 2022, 276,000 foreign tourists arrived in Bali; that’s compared to 606,000 in the same month in 2019.
Numbers like these are at odds with some European destinations, which experienced a renewed boom in the northern hemisphere during the summer. In July and August this year, occupancy rates in French hotels were even higher than the level of the same month in 2019.
Monthly visitor arrivals in Australia are still around a million below their pre-pandemic peak, but as the weather warms up in the southern hemisphere, Tourism and Transport Forum Australia CEO Margy Osmond is looking forward to a busier 2023.
“Our region certainly took longer to recover from the international tourism front than Europe. We have had stricter travel restrictions than in the northern hemisphere for longer.”
“Another important factor in the recovery has been restrictions on travel to China, which has traditionally been a major source market for many destinations across Asia and Australia. However, we must continue to leverage other markets such as India to fill this gap in the meantime.”
The Pacific nations bear the costs
In Palau, the decline in visitors from China was devastating. In 2019, Chinese travelers accounted for about a third of all visitor arrivals. Only 57 Chinese nationals have arrived this year. With health officials in China recently announcing they would be “steadfast” in their adherence to the zero-Covid policy – making international travel almost impossible – the outlook for Palau’s tourism sector remains bleak.
Ron Leidich, founder and manager of kayak tour operator Paddling Palau, is blunt: “The market in mainland China no longer exists.
“The Taiwanese market will start to trickle back later this month and the Japanese are filtering in small numbers. So I think if we take a holistic view of Palau’s tourism market, this will still be a slow gradual recovery.”
However, Ron finds a blue sky among the clouds. While Covid-19 hurt the local tourism industry, it was a huge win for the environment.
“I’ve been here for three decades and I’ve never seen a vibrant environment in Palau the way I see it now,” he says. “But as a tour operator, it was a real kick in the butt financially.”