Geopolitical tensions are on the rise, coupled with the continuous increase in travel costs, leading many people to scale back their summer travel plans and opt for destinations closer to home. As a result, there has been a significant surge in travel demand to smaller “second-tier cities” in the Asia-Pacific region.
According to a report by CNBC, the latest Allianz Partners’ Global Travel Confidence Index shows that nearly half of global travelers have reduced their travel plans, with approximately 60% of Chinese and Indian nationals planning domestic travel.
This trend is expected to boost tourism in second and third-tier cities in the Asia-Pacific region like Goa in India, which are popular among domestic tourists but relatively less known to international visitors.
Rajeev Menon, President of Marriott International for the Asia Pacific region (excluding China), recently mentioned in an interview that some individuals are keeping their international vacation plans but choosing Asian countries, which is likely to generate interest in emerging destinations like Phu Quoc Island in Vietnam.
Menon noted that in the past, destinations like Phuket, Bali, or Langkawi were the most popular, but now many tourist spots within Vietnam are gaining popularity. Chinese tourists are also shifting their interest towards Southeast Asian countries, rather than flocking to the Middle East or Europe as before. Particularly, the number of Chinese tourists visiting Vietnam and Malaysia has been robust, with a noticeable rebound in Chinese tourist spending even in Thailand.
Following the outbreak of the Iran war, a significant number of travelers passing through the Middle East canceled their plans, leading to a decline in room revenue for Marriott hotels in India. However, as travelers adjust their plans and opt for domestic and regional travel, room revenue has quickly rebounded with double-digit growth rates since May, and the future growth momentum remains strong.
Marriott International has hotels in 30 out of Japan’s 47 prefectures. Menon highlighted the strong demand in second-tier cities in Japan, with booking volumes in cities outside Tokyo, Kyoto, and Osaka steadily increasing over the years. Data from the online search platform Agoda shows a 63% increase in bookings for Takamatsu in 2025, a 44% increase for Matsuyama, a 32% increase for Sendai, a 27% increase for Okinawa, and a 26% increase for Sapporo.
Japan remains one of the most attractive tourist destinations in Asia. Agoda data reveals that second-tier cities like Shizuoka, Nara, and Nagano are also attracting a growing number of tourists. According to a recent survey by Visa, one-fourth of those planning to travel to Asia this summer are choosing Japan as their destination.
The rising popularity of second-tier travel destinations has led to an increase in travel costs, weakening their inherent advantages. Menon pointed out that due to oversupply, room revenue growth in second-tier markets has surpassed that of some major cities.
Real estate services company JLL indicated that the rise in revenue and room profitability has attracted a large number of investors considering investing in convenient transportation in the Asia-Pacific region, especially in Japanese second-tier cities like Fukuoka, Sapporo, and Nagoya, as the profitability of primary markets relative to tourism is shrinking, making second-tier cities increasingly appealing.
Data shows that in 2024, hotel transactions in second and third-tier cities in India accounted for half of the total transactions, including cities like Amritsar, Kohalpur, Haldia, and Tirupati. Although this figure dropped to 40% last year, the transaction quality has increased, such as transactions involving a luxury resort by Ritz-Carlton and a high-end resort in Goa.
Experts point out that the fundamental driving factors in Japan and India are similar, including the growth of domestic tourism, the rise of religious and cultural tourism, and significant infrastructure developments that greatly enhance transportation convenience.