Retail in Asia


APAC tourism is making a comeback, with travellers prioritising experiential retail

Japan cherry blossoms

The APAC region is witnessing a remarkable resurgence in tourism, according to a new report by the Mastercard Economics Institute.

“Consumers in the Asia Pacific region have an intense desire and willingness to travel and are becoming increasingly savvy to ensure they get the best value and unforgettable experiences from their trips,” said David Mann, chief economist, Asia Pacific, Mastercard.

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“For tourism authorities, retailers, the hospitality and F&B sectors, the bottom line is that costs matter. In today’s economy, foreign exchange rates and spending power have become vital components in driving a traveler’s assessment of value when they are making their plans,” Mann continued.

The report, which analyses aggregated and anonymised transaction data, highlights several key trends in the Asia Pacific region.

Asia Pacific destinations lead the way

Source: Mastercard Economics Institute

The report reveals that half of the top 10 trending tourism destinations globally are located in APAC.

Based on the change in share of tourism transactions over the past 12 months, Japan emerges as the number one trending destination worldwide.

In March 2024 alone, Japan welcomed a record-breaking 3,081,600 international visitors, benefiting from a weak yen and a favourable exchange rate. The report predicts that Japan will maintain its position as a frontrunner throughout 2024, boosting the local economy and businesses catering to tourists.

Short-haul trips on the rebound

Passenger traffic within the Asia Pacific region is rebounding, particularly for shorter intra-regional trips.

For example, popular destinations for Singaporean travellers this summer include Bangkok, Kuala Lumpur, and Perth.

Inbound flight traffic from South Asia and the ASEAN region is nearly 20 percent higher than in 2019, indicating a positive trajectory for the region’s tourism industry.

Mainland Chinese travellers’ travel patterns see shifts in preference

Travellers from mainland China appear to be inclined toward domestic tourism over international travel.

Domestic air passenger traffic has fully normalised and even exceeded 2019 levels to the benefit of local businesses, while outbound tourism has reached 80 percent of 2019 levels.

Visa exemptions in the Asia Pacific region and increased international flight capacity contribute to the anticipated growth in 2024, favouring destinations like Singapore, Malaysia, and Thailand.

India’s expanding middle class means more consumers taking to the skies

India’s expanding middle class, increased route capacity, and a strong desire to travel have resulted in a record number of Indians traveling internationally in 2024.

In the first three months of the year, 97 million passengers passed through Indian airports, a significant increase compared to a decade ago. Domestic passenger traffic is up 21 percent compared to 2019 levels, while international passenger traffic has risen by 4 percent.

Notable increases include a 53 percent rise in visitors to Japan, a 248 percent increase to Vietnam, and a 59 percent increase to the United States.

Taylor Swift concertgoers in Singapore queue at Marina Bay Sands. Source: Shutterstock

The ex-factors: Extended vacations and experiential spending

Travellers in the Asia Pacific region are opting for slightly longer vacations, motivated by affordable destinations, warm weather, and favourable exchange rates.

On average, tourists are extending their trips by 1.2 days compared to 2019, reaching a total duration of 7.4 days. Longer stays not only provide more opportunities for exploration but also contribute to increased spending per trip, benefiting local economies.

Global consumers are increasingly prioritising experiences over material goods, a trend reflected in the travel sector.

The report indicates that spending on experiences and nightlife accounts for 12 percent of tourism sales, the highest in at least five years.

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Retail shopping, on the other hand, is recovering at a slower pace. Australian tourists are leading the way in experiential spending, allocating 19 percent of their travel budgets to experiences and nightlife, significantly higher than the global average of 12 percent.

As the travel industry continues to break boundaries in 2024, the Asia Pacific region is poised to capitalise on the growing demand for meaningful experiences.