ASIA Pacific (APAC) has seen a “sharp” recovery in outbound travel, according to the Mastercard Economics Institute’s Shifting Wallets report.
According to the statement released by Mastercard on Wednesday, among the key findings of the study is that spending on travel and experiences remains “strong” for consumers in the Asia Pacific region despite “personnel shortages and a surge in crude oil prices.”
In fact, the research noted that consumer spending in Asean is experiencing a recovery in the key categories of retail, travel and entertainment, with retail spend at 1.5 times pre-pandemic levels as of June 2022.
For travel, the study noted that “Singapore shows the greatest demand in APAC for international travel, with consumer flight bookings at more than 10 percent above 2019 levels as of June of this year, despite heightened logistical challenges and price pressures.”
Meanwhile, in Australia, long-haul flight bookings are up 92 percent in August 2022 compared to August 2019 and short haul flight bookings are up 155 percent, according to the research.
“Consumers in Asia Pacific are looking to make up for lost time after a challenging few years,” said David Mann, Chief Economist of Mastercard AP & MEA.
The chief economist divulged the reason behind the revenge-travel, noting that this is boosting demand among consumers.
“The pent-up demand to see new places and experience new things is influencing consumer spend in a big way. With the ongoing prioritization of getaways, dining, entertainment, and experiences, we are expecting to see even more rebound in the travel and entertainment sectors,” Mann added.
In addition, the chief economist stressed that there was also a shift in terms of where consumers purchase, adding that they are seeing new opportunities for online businesses as both goods and experiences spending “shifts away from the weekends.”
“As digital shopping and remote work continue to influence our daily habits, consumers will adjust and re-adjust their spending preferences to match the changing rhythm of our lives,” the chief economist of Mastercard AP & MEA noted.
With digital shopping, Mastercard noted that while small businesses show gains in online services, “globally, large businesses dramatically outperform smaller ones in the shift to digital—but small online service providers in APAC are still finding ways to thrive.”
In fact, the statement noted that in Singapore, small online business services—think tutoring, healthcare, and personal care services—rose over 3.5 times compared to 2019.
However, the global technology firm in the payments industry said the gap between large and small online businesses is “particularly evident” in the retail sector in more developed economies—e-commerce sales for Singapore’s large businesses grew 200 percent versus 59 percent for small online retailers in August 2022 compared to 2019. Likewise, for Australia, Mastercard said large businesses grew 93 percent versus 24 percent for small online businesses.
According to Mastercard’s study, working from home and the shift to digital have “blurred the lines” in terms of when consumers spend.
“Date night is any night, and leisurely shopping trips are no longer limited to Saturday and Sunday. This has significant staffing and supply chain implications for retailers, restaurants, and other businesses,” the statement of Mastercard read.
For instance, in “retail-loving” Singapore, “department store spending fell 2.80 percent and 2.46 percent on Fridays and Saturdays respectively, but increased 1.87 percent on Thursdays.”