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JAKARTA, INDONESIA, 3 August 2023 - Brett Henry, President Director and William Newley, Vice President Director of MG Group, recently conducted a compelling livestream discussion on the key macro level issues affecting the hotel industry's recovery in Southeast Asia in 2023. They covered six areas impacting the regions performance in 1H 2023 as well as provided five areas that will drive the regions hotel performance in 2H 2023.


Asia's Over-Reliance on Airlines Hinders Hotel Industry Recovery

William highlighted Southeast Asia airline capacity is returning slower than that of other regions from around the world. While domestic capacity is largely back on track, international air travel capacity is still 20 to 25% behind pre pandemic levels. This slow return of international capacity was a major factor impacting hotel production in the first half as SE Asia has a greater reliance on air travel to drive booking than to other global regions.

"The aviation industry's recovery is not uniform across all regions and markets," remarked William. In comparison to Europe and the USA, he pointed out that the road and rail sectors have been significant growth engines for USA and European travel - but these modes are unfortunately not as meaningful in Southeast Asia - a region with a large reliance on Air Travel to drive hotel booking volumes.”

B2C Businesses Shift priorities from Growth to Profitability.

William highlighted a positive trend in B2C leaders shifting priority from only growth to profitability as the region matures in both B2C distribution. This shift has led to more rational pricing and reduced discounting, benefiting all stakeholders in the distribution chain during the first half of 2023.

OTA’s Work to Leverage Scale to Increase Commissions

Some of the region's strongest B2C players began to work to leverage their scale positions to increase commissions. This macro trend is linked closely to the B2C players shift to focus on profitability. Small and medium sized independent hotels have been most impacted by these moves as they have little leverage to negotiate and in many cases have developed an over-reliance on distribution with B2C channels. William suggested these hotels ensure they are maximizing B2B distribution channels to regain control and balance their sales between OTAs, offline, and direct channels.

Longer and Deeper Ramadan and Eid Slow-down

Brett highlighted that the 2023 Lebaran and Ramadan holiday which typically results in a travel slowdown in the region was both longer and deeper than in past years.

“Typically the holiday slowdown lasted 3 weeks and resulted in a slowdown during the period of 20-30%. This year the slowdown lasted 7 weeks and the slowdown was at the high end of the historical range.” said Mr. Henry.

China's Opening and Volume Return Disappoints

China was Southeast Asia’s biggest inbound travel market pre-pandemic. Hopes were high that Chinese travelers would return in big numbers in the first half of 2023. Unfortunately that didn’t happen due to a number of factors but mainly a slower than expected opening of the market and return of air capacity into the region.

India Outperforms in SE Asian Markets

While China fell short of expectations, India was a powerful force in SE travel volumes in the 1st Half of 2023. India was in the top inbound markets for Singapore, Malaysia and Thailand during the first half of 2023. Brett also highlighted India’s strong performance in Bali. India was Bali’s #2 inbound market in the first half of 2023 despite having no direct air service. India was the 3rd largest inbound market for Singapore.

Singapore Arrivals from India in 1H 2023.


Brett and William highlighted five key Macro level trends that would shape the performance of the hospitality sector during the second half of 2023.

Pent-up Demand Still Strong for Many Travel Corridors

Many trips have been pushed back or canceled due to flight availability and prices. As airlines continue to build back capacity prices should continue to move down. This will be a positive dynamic and drive additional growth for 2H as many travelers had postponed trips due to airfares that have been 2 to 3x of pre-pandemic levels in some key SE Asia corridors such as Jakarta-Singapore

B2B is the new black (again)

Hotels will more aggressively engage with B2B distribution, ensuring a balance in their distribution mix. William also highlighted a longer term opportunity for B2B growth tied to recent developments in AI tools. He suggested these tools will empower and create an infinite number of virtual travel consultants - something that could help to strengthen B2B channels.

Hotels and chains consolidate supply

In an effort to drive efficiency and reduce cost and a greater focus on profitability hotels will distribute a smaller number of more trusted partners both within b2c and b2b channels..

China volumes will accelerate - SE Asia and an early winner.

China disappointed in the 1st half - but expect China to roar in the second half of 2023. Evidence of this can be found in the acceleration of direct service into key Southeast Asia markets. There is already direct service from seven Chinese cities into Bali:

Flights currently operating China to Bali

And from more than 17 Chinese cities into Bangkok

India regional strength will continue to grow

India was a regional top performer in the 1st half and we expect the market to continue to outperform across the region in the 2H of 2023. Capacity is increasing into key markets…of special note is the addition of direct service into two Indonesian markets - Jakarta and Bali.

Watch the replay on Linkedin or Youtube


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We do this by leveraging technology platforms to provide distribution and marketing services that drive sustainable, profitable growth for our hotels, corporations, and travel retailers. We are technology focused, but customer driven.

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We have thousands of direct hotels contracts across SE Asia and hundreds of thousands of global hotels via partners all dynamically distributed to our global retail network using the industry's first microservices based platform, MG Jarvis.

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