Soaring prices and complications from the war with Iran are jeopardising the tourism recovery in Southeast Asian countries such as Thailand, Vietnam, and Cambodia, just as the peak summer season approaches. Elevated jet fuel costs and ceasefire uncertainties have led to flight cancellations and higher ticket prices, threatening economies that rely heavily on tourism.
Tourism in Asia has not yet fully recovered from the COVID-19 pandemic. Now, the war's impact on global energy supplies is hitting the region hard, with families cutting back on travel as fuel and food costs rise. In Siem Reap, Cambodia, tuk-tuk driver Siv Pech said his daily earnings have dropped from $20 to about $5, with half going on petrol.
Tourism contributes nearly 13% of GDP in Thailand and 9% in Vietnam, and supports millions of jobs in Cambodia. The war-driven spike in oil prices has increased import costs, particularly for countries reliant on the Strait of Hormuz. Jet fuel shortages have forced carriers such as Vietnam Airlines, AirAsia, and Cathay Pacific to cut flights or adjust schedules.
Airfares have surged, with Cathay Pacific's fuel surcharge for medium-haul flights rising from HK$264 to HK$633, and for long-haul flights from HK$569 to HK$1,362. Lavinia Lau, Cathay's chief customer officer, said travellers are booking closer to departure dates, indicating unease. Many potential tourists, like US-based writer Sandra Awodele, have abandoned plans due to high fares.
An analysis by Moody's Analytics estimates the war could reduce Asia-Pacific economic growth by 0.1 to 0.4 percentage points in 2026. Albert Park, chief economist at the Asian Development Bank, said the conflict will weigh on growth through higher production costs and weaker external demand from trade and tourism.
