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Tourists are flocking back to Southeast Asia — but the robust recovery is showing signs of cracks

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After more than two years of lockdowns and border controls, Southeast Asia is finally experiencing some semblance of the old days of travel.

Flights are steadily returning to 2019 levels in the region’s major economies, with Singapore, Thailand and Malaysia being the most popular destinations this year, according to the flight data analytics firm Cirium.

In Singapore, which had the most inbound flight bookings in the region this year, bookings rose from around 30% of 2019 levels in January to 48% by mid-June. The Philippines also saw a sharp uptick in bookings, from about 20% at the start of January, to almost 40% by mid-June, according to Cirium.

Tourism is a key moneymaker for Southeast Asia, a region which saw international visitors more than double from 63 million in 2009 to 139 million in 2019, according to the United Nations World Tourism Organization.

The industry accounts for around 10% of gross domestic product in Vietnam, Singapore and Malaysia and between 20% and 25% of GDP in Thailand, Cambodia and the Philippines, according to a May 2022 report published by the Asian Development Bank.

Cirium’s chart on the absolute number of flight seats booked in 2022 in Southeast Asia and Nepal.

The pandemic “was probably more devastating in Southeast Asia than the rest of the world [because] governments kept the borders closed for almost two years,” said Gary Bowerman, director of the travel research firm Check-in Asia. “There were even restrictions on domestic travel.”

“If you compare that to North America or Europe, for example, in both years 2020 and 2021 … they had some tourism and travel flows,” he said.

Changing travel habits

Most countries in Southeast Asia — including Singapore, Thailand, Indonesia, Malaysia, Vietnam, and the Philippines — have stopped requiring fully vaccinated travelers to take Covid-19 tests before traveling.

After Singapore dropped its pre-travel testing requirement in April, business has been “picking up fast and furious,” said Stanley Foo, founder of the local tour operator Oriental Travel & Tours. He said travelers are booking longer trips and spending more than before too.

Before the pandemic, the company received around 20 tour bookings a week, mostly for tours lasting three to four days. Now, its handling 25 bookings a week, some for trips up to 10 days long. Average expenditures on customized tours rose from around $2,000 per person before the pandemic to $4,000 to $6,000 today, said Foo.

“It’s because of the revenge traveling,” Foo said. “They have saved up enough for the past two years.”

Since tourists are spending more time in Singapore, Foo and his team of tour guides are taking clients to places outside the usual tourist itinerary — to the suburbs to watch residents do tai chi and to order coffee at hawker centers “the Singaporean way,” he said.

Joanna Lu of Ascend by Cirium, the company’s consultancy arm, said people are spending more time planning their journeys too. They are “making sure they’re covered for unexpected changes,” she said.

Not your usual tourists

With China largely closed, tourism operators in Southeast Asia will target Japanese, South Korean, and in particular, Indian, tourists to make up for the shortfall of Chinese visitors, said Check-in Asia’s Gary Bowerman.

Sajjad Hussain | Afp | Getty Images

In 2019, visitors from China made up more than 30% of tourists to some Southeast Asian nations, according to the Asian Development Bank, a fact which makes China’s prolonged border closure even more painful for the region.

“The traffic decline in China has deepened in April as strict travel restrictions limit air travel in, to and from the country,” said Lu, adding she doesn’t expect the situation to change soon.

John Grant, chief analyst at the travel data company OAG, said Asia’s travel recovery lags behind other continents’ because of its reliance on international visitors, particularly from China, as well as the varying reopening strategies in the region.

Southeast Asia has about 66% of flight capacity — measured by scheduled airline seats — compared with pre-pandemic levels, according to OAG. Europe and North America are back to around 88% and 90% of pre-pandemic capacity respectively, OAG’s data showed.

Cloudy skies ahead

Southeast Asia’s travel recovery faces other global headwinds too: rising costs and interest rates, inflation and a potential recession.

Jet fuel prices in early June were up 128% from a year ago, according to the International Air Transport Association. Airlines are increasing fares as a result, but “at least to date it does not appear to have impacted demand since people have two years of pent-up demand,” said Grant.

But that could quickly change if fuel surcharges coincide with inflation eating into travelers’ discretionary spending, he said.

Rising interest rates will likely devalue emerging economies’ currencies against the U.S. dollar, making imports more expensive and reducing how much travelers can spend on non-essentials like holidays, said Bowerman.

Where are the workers?

Even if Southeast Asia continues to attract streams of tourists, air carriers may have to turn them away if they cannot find enough workers to service their flights.

Many workers in the air travel industry left or were laid off during the first two years of the pandemic. The aviation industry had 50% fewer jobs at the end of 2021 compared with pre-Covid times — from 87.7 million to around 43.8 million — according to the global air transport association Aviation Benefits Beyond Borders.

Flight cancelations, delays and crowded airports are frustrating the summer travel season in Europe and North America. Low wages have made working at airports and airlines unattractive, and workers in Europe are striking against low pay and poor working conditions.

The travel chaos in other parts of the world that has yet to hit Southeast Asia is a situation officials in the region hope to avert.

Singapore’s Changi Airport Group wants to fill 250 vacancies by year-end, according to the agency. Singapore Airlines has selected more than 800 cabin crew from several thousand applications, which is “three to four times more” than it received in pre-Covid days, the airline said in an email to CNBC.

The Malaysian Aviation Commission told CNBC that local airlines are “actively seeking to recruit,” but “demand for air travel remains uncertain as Malaysia progresses into the endemic phase of Covid-19.”

Singapore Airlines said passenger capacity averaged around 61% of pre-pandemic levels in the first quarter and expects a rise to 67% in the second quarter of 2022, the airline said in a statement in May 2022.

Roslan Rahman | Afp | Getty Images

But there were signs of cracks. In April, Changi Airport Group had to retime some flights over a four-day long weekend because of a staffing shortage, according to local media reports.

Malaysian media reported that about 1 in 10 domestic flights that flew during the Hari Raya Aidilfitri celebratory period in late April and early May were delayed, partly because of a lack of workers.

Mayur Patel, OAG’s regional sales director for Japan and Asia-Pacific, said airlines have been denied additional slots to land or take off because airports did not have enough manpower to accommodate the extra flights.

“I think the plan is to get back to pre-Covid levels but with [the] China uncertainty, this will be … tricky,” said Patel.

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Necessity Retail REIT declares $0.2125 dividend (NASDAQ:RTL)

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Necessity Retail REIT declares $0.2125 dividend

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Russian missile strikes on building near Odesa kill at least 18, says Ukraine

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Russian missiles struck a residential building near Odesa early on Friday, Ukrainian officials said, killing at least 18 people in the country’s biggest port, as Moscow ramped up attacks on Ukraine’s civilian infrastructure.

The latest missile strikes came a day after Ukraine said its bombardment had forced Russian troops to abandon Snake Island, a strategic outpost in the Black Sea close to Odesa that had been seized by Russia early in the war. Moscow said its withdrawal had been a “gesture of goodwill”.

Kyrylo Tymoshenko, a senior official in President Volodymyr Zelenskyy’s office, said 18 people had been killed in the strikes near Odesa, including two children. Another 30 were wounded.

“Terror is a common tactic of Russia,” said Tymoshenko on his Telegram channel. “First, they cover their criminal actions with an ‘act of goodwill’, and then launch rocket attacks on our peaceful cities.”

The latest attack will damp hopes that Russia is ready to end its blockade of Ukrainian seaports and allow grain exports through the Black Sea, amid concerns about global food shortages caused by Moscow’s invasion.

The strikes near Odesa marked another escalation in a week of Russian attacks on civilian targets across Ukraine, some of them hundreds of miles from the conflict raging in the east of the country.

Russia fired more than 40 rockets at cities in Ukraine last weekend, including a cruise missile strike that hit a residential building in central Kyiv.

On Monday, a rocket struck a shopping mall in the central Ukrainian city of Kremenchuk, killing more than 20 and demolishing the building. On Friday, Russia missiles again targeted the southern city of Mykolayiv, according to its mayor Vitaliy Kim.

Ukrainian officials said the missile strikes near Odesa struck at 1am, destroying the first to ninth floors of a residential building and damaging a recreation centre in the town of Serhiyivka, in the Bilhorod-Dnistrovsky district.

Images posted on social media showed emergency workers trying to rescue people from the rubble left by the collapsed buildings.

The latest attack comes just days after Zelenskyy implored western countries to provide Ukraine with more aerial defences, amid signs that Moscow is seeking to widen the conflict again as it makes incremental gains in the east.

Mykhailo Podolyak, a senior adviser to Zelenskyy, said Russia was deliberately targeting civilian buildings to inflict “mass casualties”. “To protect people we need anti-missile systems,” he wrote on Twitter.

Ukrainian forces in recent days retreated from the eastern frontline city of Severodonetsk under heavy Russian artillery fire and are battling to keep hold of Lysychansk, the last city in the Luhansk region still under Kyiv’s control.

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UK government faces new boozy scandal as deputy whip quits

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LONDON (AP) — Britain’s government is facing another boozy scandal after the deputy chief whip resigned from his post following a drunken incident this week, with Prime Minister Boris Johnson facing calls on Friday to expel him from the Conservative Party.

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Chris Pincher, whose role was to maintain discipline among Tory members of Parliament, submitted a letter of resignation to Johnson on Thursday.

“I drank far too much” on Wednesday night, Pincher said in his letter. “I’ve embarrassed myself and other people which is the last thing I want to do and for that I apologize to you and to those concerned.”

But he said he would remain as a Conservative lawmaker and continue to support Johnson from the back benches of Parliament.

Pincher’s resignation as deputy chief whip added to Johnson’s woes, which have included other scandals like ” partygate ” and a Conservative lawmaker resigning over watching pornography on his phone in the House of Commons.

Johnson, who also recently survived a no-confidence vote, had just returned from the Group of Seven and NATO summits and was looking to put those embarrassments and two recent byelection defeats behind him.

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British tabloid The Sun reported that Pincher groped two men Wednesday night at a private members club in London for the Conservative Party. It was the second time that Pincher quit a government whip job. In November 2017, he resigned as a junior whip after a complaint that he made an unwanted pass at former Olympic rower and Conservative candidate Alex Story.

But Pincher was eventually brought back into a government position by Prime Minister Theresa May in 2018 as deputy chief whip. When Johnson took over in July 2019, Pincher was moved to the Foreign Office as a junior minister before returning to the government whips office again.

Britain’s opposition Labour Party said that Johnson’s government had questions to answer about why Pincher was put into the position in the first place.

“This latest episode shows how far standards in public life have been degraded on Boris Johnson’s watch,” Labour deputy leader Angela Rayner said. “The Conservative Party is so mired in sleaze and scandal that it is totally unable to tackle the challenges facing the British people.”

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