The consequences of the situation in Ukraine and the sanctions imposed against Russia by the EU countries, the US and the UK have reached the beach resorts of Southeast Asia, where thousands of Russian tourists remain “hostages” of geopolitical events. Due to interrupted flights, travelers cannot return home. As reported by foreign media, tourism has stalled amid growing concern that events in Ukraine will hinder the recovery of the regional economy after the pandemic.
Thailand, the Philippines, Laos and Cambodia have recently reopened to vaccinated travelers, while Indonesia and Vietnam are preparing to receive tourists this month. Now the countries of Southeast Asia are striving to revive the tourism sector, which was destroyed in two years of border closures and covid restrictions.
Tourism in a Panic
Many Chinese tour groups cannot be counted on due to the strictness of the authorities in relation to the eradication of covid, so Asian tourism has switched to a significant Russian market. However, the plans were interfered with by events in Ukraine, which led to higher oil prices, flight bans and sanctions.
“This is going to be a really uncertain period for a sector that just hasn't had time to recover yet. This will certainly be an obstacle. Southeast Asia is at the very beginning of its renewal process and needs as many tourists as possible, especially without the Chinese market, which is a big oversight. The overall outlook is much bleaker than it looked a month ago,” Gary Bowerman, a tourism analyst from Kuala Lumpur in Malaysia, told Asian publications.
The effects are already being felt in popular tourist hotspots such as Bali and Thai island resorts. In the pre-Covid 2019, Thailand received 1.4 million Russian tourists, and in 2021 Russia entered the top three in terms of the number of tourists after the USA and Germany. In January, Thailand counted about 23,760 Russians out of 133,903 arrivals, according to the Ministry of Tourism.
Russians in Asian resorts
Since the start of a special operation in Ukraine, more than 7,000 Russians have found themselves in limbo in popular resorts such as Phuket, Koh Samui, Pattaya and Krabi. They remained closed due to canceled flights and the inability to pay bills with bank cards cut off from the SWIFT system and Mastercard and Visa payment systems, as well as the fall of the ruble.
The current crisis has not only left tourists in a difficult situation, but also can leave deprive hotels of money. “We have asked hotels to lower their prices and extend their stay,” explained Phuket Tourism Association President Bhummikitti Ruktaengam.
The Thai government also offered to extend visitor visas for free and discussed the idea of providing asylum to Ukrainians and Russians, as well as allowing the use of cryptocurrencies as an alternative payment system.
Will tourism become a privilege of the rich?
But beyond the immediate impact of Russian holidaymakers struggling to get home, he said the more important question is what will happen in the long run to the huge Russian market and the impact of rising jet fuel prices on the travel sector as a whole.
Russia accounts for about 10 percent of the world's crude oil supply, and markets have been spooked by the prospect of international restrictions on Russian oil exports and possible retaliation from Moscow.
“Jet fuel prices will continue to rise, and this will have such a huge impact on impact on the ability of airlines to offer flights. The recovery of the entire region is based on low-cost carriers, and they will not be able to compete as they used to because their costs will be very high,” the head explained.
The wave of financial fines and sanctions against Russia has already spread around the world and will affect the tourism industry in Asia in several ways.
“We already see that it is not only jet fuel prices that are rising. Commodity prices, wheat and food prices are rising too. This will have a huge inflationary impact. This will feed the entire tourism value chain – food producers for hotels, small shops, people who cook food on the streets – it will have a huge impact. It is worth remembering that these people have been incredibly hard hit over the past two years, and in most countries they have not even begun to recover, ”said the head of the tourism association.
Russia overtook Australia in the first year of the pandemic as the largest source tourists to Bali: according to the statistical office of Indonesia, in 2020, about 68,000 of its citizens flew to the paradise island. The Russians were among the first to return when the borders partially reopened last year.
Most recently, on March 1, Indonesian Minister of Tourism and Creative Economy Sandiaga Salahuddin Uno held on to Russia and Ukraine for their promising tourist flows. “We are also operating in the Ukrainian and Russian markets due to the potential demand for holidays in Bali, both in terms of length of stay in Bali and the quality of purchases. This has very good prospects,” he rejoiced.
But Russians in Bali, like in Thailand, are now fighting for cash. Those who chose a long-term stay during the pandemic – digital nomads and professional winterers – pack up and go home.
The drop in the number of Russian clients has already been noticed by local businessmen. So, foreign media cited the words of Vitto Cristaldi, a consultant for BWork coworking in Canggu, a resort village on the south coast of Bali. “Many have told us that their currency is down 50 percent, so they cannot afford to buy a full membership as usual,” he explained.
“This fear has been going on for the past two years. Now it's getting worse. The coronavirus is not over yet, not to mention the events in Ukraine… the prospects are getting bleaker,” said the owner of the holding company Bagus Discovery Group, which owns four resorts in Bali, and added that the last two years have already been very difficult, with 90 -percentage drop in tourism.
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