This summer, a notable trend is emerging as travelers in the Asia-Pacific region are favoring secondary cities over traditional tourist hotspots. According to Allianz Partners' Global Travel Confidence Index, nearly half of global travelers are scaling back their plans, with a significant number choosing domestic trips.
The survey indicates that around 60% of respondents from China and India are planning to travel domestically, which is expected to boost tourism in lesser-known destinations like Goa and Xiamen. Rajeev Menon, president of Marriott International for APAC ex-China, noted that travelers are shifting their focus to destinations within Asia, with places like Phu Quoc in Vietnam gaining popularity.
This shift is also reflected in the changing dynamics of China's outbound travel market, which is increasingly directed towards Southeast Asia. Menon highlighted that while the onset of the Iran war initially caused a drop in revenue per available room at Marriott's properties in India, the recovery has been swift, with double-digit growth returning from May onwards.
In Japan, secondary cities are experiencing strong demand, with Agoda reporting significant growth in bookings for cities like Takamatsu and Matsuyama. The rising interest in these secondary markets is also attracting investors, as revenue growth in these areas is outpacing that of major cities.
Marina Bracciani from JLL noted that as prime assets in cities like Tokyo and Mumbai become scarce, investors are turning their attention to regional cities that offer better return profiles. In India, Tier 2 and Tier 3 cities accounted for half of hotel transactions in 2024, indicating a robust market for investment driven by domestic travel and improved infrastructure.
This trend suggests a promising outlook for both tourism and real estate investment in these emerging destinations