Iran conflict hitting Southeast Asia tourism

By Saskia O’Donoghue with Associated Press —

Tourism across Southeast Asia was finally recovering from the pandemic. Now, soaring fuel prices, flight disruptions, and growing economic uncertainty linked to the Iran conflict are threatening to slow demand just as the region enters its crucial summer travel season.

Cheap flights, backpacker hostels and beautiful beaches have helped make Southeast Asia one of the world’s most resilient travel regions.

Now, though, as the fallout from the Iran conflict ripples through global energy markets, that identity is far less stable.

From rising airfares and fuel costs to falling visitor numbers in tourism-dependent economies such as Thailand, Vietnam and Cambodia, the region is discovering just how vulnerable summer travel remains to events unfolding miles away.

The equilibrium of its upcoming peak tourist summer season is in doubt, as ceasefire uncertainties continue to prompt flight cancellations and higher ticket prices.

Tourism in Asia has yet to fully recover from the Covid-19 pandemic, which hit the region particularly hard.

Just a few years later, Southeast Asia is finding the ongoing war’s repercussions for global energy supplies and prices particularly difficult.

Tourism is an economic lifeline for many developing nations. In Thailand, it contributes nearly 13% of gross domestic product, and nearly 9% in Vietnam, and underpins millions of jobs in Cambodia.

Recently, though, the Thai Ministry of Tourism and Sports reported that the number of visitors to Thailand fell 7% year-on-year in April, while European arrivals fell almost 16% and Middle Eastern arrivals sank 57%.

In neighbouring Cambodia, the tourism department says that, in the first four months of 2026, the number of recorded international and domestic visitors to popular Siem Reap dropped by 37.5% compared to the same period last year.

Travellers also bring in much-needed foreign currency for import-dependent economies such as the Philippines and Nepal.

Experts say that the conflict will determine which tourism businesses can survive long enough to benefit from the eventual return of travellers.

“This, happening within five years of each other, first the pandemic and now the war, is horrible for the tourism industry,” Jitsai Santaputra of The Lantau Group, an energy industry consulting firm, told the Associated Press.

The Iran war hits travel costs hard

Jet fuel shortages and surging costs have led Vietnam Airlines, the Malaysia-based AirAsia group, Hong Kong’s Cathay Pacific and other carriers to cut flights or re-adjust schedules.

European carriers, which ferry passengers to Asia, often via the Middle East, face a squeeze from similar issues.

Airspace closures across the Persian Gulf early in the war and the intermittent closures of certain airports cut off key layover locations for Asia-bound flights or forced commercial aeroplanes to take longer, costlier routes.

At the same time, airfares have jumped – and stayed high – with airlines like Air India and Cathay Pacific implementing sharp increases in fuel surcharges, often double the previous amounts.

That’s causing significant unease among travellers, Lavinia Lau, Cathay’s chief customer and commercial officer, told the AP.

She says that travellers are booking closer to their departure dates than before – something that indicates real uncertainty.

On the ground in Southeast Asia, rising fuel costs in tourism-dependent areas are also squeezing taxi and ride-hailing app drivers, with some recording significantly lower profits since the war began.

The United Nations Development Programme has warned that higher airfares and weaker travel confidence can quickly spill over into household livelihoods and public revenues in economies where visitor arrivals are a major source of jobs, income and foreign exchange.

Travel is often the first expense people cut when the economy worsens, said Le Tuyet Lan, who runs bed-and-breakfast properties in Vietnam’s Hanoi and Ho Chi Minh City.

In times of crisis, luxury travellers tend to shift toward midrange options, midrange travellers move toward budget hotels, and the cheapest tier of the market becomes the most vulnerable.“This will disrupt the whole industry,” Le Tuyet Lan told the AP.

1 June 2026

Photo : Phang Nga retains its natural beauty for quiet beach holidays ( Tatnews )