A Turbulent Year for Asia's Tourism Industry

The 1st of April 2026 should have been a milestone date, but memories will not be fond. It marked four years since South East Asian nations began reopening borders after two years of Covid travel lockouts. Japan, South Korea and China would restore international travel over the subsequent 10 months. Back in April 2022, hopes were high for a dynamic Asian tourism recovery that could quickly convert to growth. Instead, forty-eight months later, Day 31 of the Middle East War radiated economic warnings across Asia, and the travel industry feared a tourism slowdown that could disrupt a still-fragile post-Covid recovery.

The year started positively. In mid-February, Lunar New Year – a popular holiday period viewed in Asia as a benchmark of travel demand for the year ahead – saw tourists criss-cross regional skies for festive vacations. Within two weeks, the US and Israel were bombing Iran and Lebanon, and Iran was firing missiles and drones at US allies in the Gulf, such as UAE, Qatar and Bahrain. The pulsing transcontinental airport hubs of Dubai, Abu Dhabi and Doha closed, and the globally connected Gulf carriers, Emirates, Etihad and Qatar, slashed flights. Even worse, Iran effectively shut the Strait of Hormuz strangling the supply of crude oil – which is refined into jet fuel – that supports flight-centric tourism economies across Asia

The ensuing fuel shock has dominated discourse about Asian economics, geopolitics and travel. Inhibited supply and a skyrocketing price of jet fuel and export controls imposed by nations with refining capacities, such as China and Thailand, forced low-cost carriers like AirAsia, Cebu Pacific and Batik Air to cut flights, while air fares rose sharply for regional and long-haul air travel. These impacts are ongoing as the US and Iran continue to trade air attacks. This week, Thai AirAsia cut nine domestic flight routes in Thailand until October.

Meanwhile, the fuel price shock impacted airline financial performance. Korean Air recorded a KRW145.4 billion net loss in the first half of 2026 compared to a KRW589.1 billion profit in the same 2025 period. China’s three largest carriers, Air China, China Southern and China Eastern, warned of a combined half-year net loss of RMB8.3-RMB9.9 billion. Despite record quarterly revenue from April-June, Singapore Airlines posted an SGD75.8 million quarterly net loss largely because its fuel costs increased by a staggering 78.5% year-on-year.

Thai Turbulence & Myanmar Makes a Tourism Play

In volume terms, 2026’s biggest story in Southeast Asia so far is the continued post-Covid tourism turbulence in Thailand. In May, the government downgraded its forecast for 2026 from 36.7 million to 33 million foreign arrivals. This would represent a 17% retraction from Thailand’s record of 39.9 million arrivals in pre-pandemic 2019 – a scenario certainly not anticipated back in April 2022 when Thailand celebrated the return of holidaying tourists.

Thailand was also at the centre of another tourism downturn, in Cambodia. Spiteful relations continued between the two governments over a border dispute near the ancient temples of Preah Vihear and Ta Muen Thom that had resulted in a brief but deadly military conflict in July 2025. In June 2026, Cambodia referred a separate maritime dispute with Thailand relating to 26,000 square kilometers of the Gulf of Thailand – which contains untapped hydrocarbon reserves – for conciliation under the United Nations Convention on the Laws of the Sea (UNCLOS). The process is expected to take between 12 and 18 months.

Meanwhile, the 800km Thai-Cambodia border stayed closed, and Thai media published photos of a new border wall the Thai government is constructing. Thai visitors to Cambodia fell by 96.2% in the first five months of 2026, triggering Cambodia’s overall decline of foreign visitors from 3.36 million in January-June 2025 to 1.75 million in 2026. Fears about personal safety and reputational damage caused by Cambodia’s scam centres saw tourists also stay away from key markets like Vietnam (-28.0%) and China (-23%).

Thailand’s border with Myanmar is three times longer than its disputed divide with Cambodia but is fraught with historic enmity. A series of wars were fought from the 16th century onwards between the kingdoms of Burma (now Myanmar) and Siam (Thailand). Myanmar has been isolated from ASEAN since the military coup in February 2021, and its people have suffered civil war, political violence, economic hardship and the devastating Mandalay earthquake in March 2025. Tourism has been far from the minds of the nation. Until now.

From 16-18 June, Yangon hosted the 2026 Mekong Tourism Forum, a regional gathering of tourism ministries, national tourism boards and private sector travel operators from the six countries of the Greater Mekong region – China, Cambodia, Laos, Myanmar Thailand and Vietnam. The event provided a public relations window for the military junta to start marketing Myanmar as – from its viewpoint – open for tourism.

Myanmar faces immense challenges to resurrect tourism in a war-torn nation where the safety of visitors is far from guaranteed and the “economy remains under significant strain,” noted the World Bank in June. Nevertheless, the second half of 2026 will bring more tourism promotions by the military junta as it pushes its claim of democratic legitimacy as a result of the partial December 2025 election that the United Nations said took place “in a climate of fear, violence and mass repression”.

The China-Japan-South Korea Triangle

Asia’s post-Covid tourism success story, Japan – which hosted a record 42.7 million visitors in 2025 – is engaged in a bilateral stand-off with China following comments related to Taiwan by Japan’s Prime Minister Sanae Takaichi in November 2025, which Beijing argues crossed its red line on external interference. International arrivals to Japan fell 2% across the first six months of 2026, although it weathered a 56.4% slump in tourists from China. This summer, China’s government ordered thousands of flight cuts on 25 routes to Japan. To offset China’s stayaway tourists, Japan’s top visitor market, South Korea, sent 18.6% more visitors than in the same 2026 period, and its third-largest source of tourists, Taiwan, was up by 20.9%.

South Korea has been a beneficiary as Chinese tourists re-routed their planned Japan trips elsewhere. It welcomed more than 10 million visitors in the first half of 2026, a milestone achieved one month earlier than in 2025. Leading the way was China, whose tourists spent a staggering 214% more in May 2026 than in the same 2025 month. The Korea Tourism Organisation is targeting a record seven million Chinese tourists in 2026.

In China, the government published a five-year tourism plan identifying two key priorities: firstly, attracting “190 million inbound tourist visits a year by 2030”, and generating USD150 billion (approx. RMB1.02 trillion) in foreign tourism spending. The 2026-2030 plan confirms where the real money is made, however. A targeted 8.3 billion domestic trips in 2030 are expected to generate RMB7.7 trillion in revenue, or roughly four times the size of New Zealand’s economy.

Finally, Vietnam was Asia’s breakout star in 2025, as its thriving tourism sector created regular headlines. This carried over into 2026, but the government’s ambitious travel infrastructure development timelines are under pressure. The army was called in to assist frantic attempts to complete construction of Vietnam’s largest airport, Long Thanh International near Ho Chi Minh City, by the end of 2026. Meanwhile, a feasibility study for the 1,541km high-speed railway from Hanoi to Ho Chih Minh City may not be finalised until 2028, placing in question the 2035 deadline to complete engineering and construction work.

Regardless, in a first half-year dominated regionally by air travel challenges, Asia’s most eye-catching aviation story involved an aggressive low-cost carrier from Vietnam. In late June, Vietjet applied to Australia’s Civil Aviation Safety Authority regulator to set up a new domestic airline, with the Sydney touted as a potential base.

It is a reminder that even in a year marked by war, geopolitical tensions and economic uncertainty, Asia's tourism industry continues to adapt and look for new opportunities. But as 2026 has shown, the sector's recovery is no longer shaped by travel demand alone. It is increasingly tied to the wider political and economic forces reshaping the region.

-Asia Media Centre

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