The return of quarantine and lockdowns in many countries, combined with the massive disruption of international air travel late last year, is clouding the outlook for the besieged tourism industry, according to Fitch Ratings.

In their industry update for Q4 2021, Asia Pacific Sovereign Ratings Manager Stephen Schwartz and Associate Director George Xu paint a grim picture as the Omicron variant spreads around the world.

“International travel remains moderate throughout Asia-Pacific (APAC) as border restrictions are reimposed amid the Omicron Covid-19 variant. APAC economies have been slower to ease cross-border travel restrictions than other regions, even before Omicron, due to local outbreaks and the slow roll-out of vaccination, especially in South Asia and in ASEAN, ”they said.

The Maldives were the first Asian country to end the quarantine for vaccinated travelers, in July 2020 Sri Lanka followed in January last year and in July Thailand launched the “Phuket Sandbox” program, which enabled vaccinated tourists to visit the island without quarantine. Singapore introduced a Vaccinated Travel Lane program in September last year, expanding it from two countries to 10 the following month and to 24 countries in November.

Indonesia opened the resort town of Bali to vaccinated visitors from 19 countries in October.

Following the success of its sandbox program, Thailand reopened its borders to visitors from 63 countries in November. Additionally, that month, Vietnam lifted the quarantine for vaccinated visitors to Phu Quoc Island, and Malaysia reopened Langkawi to tourists from some countries.

In Cambodia, foreign travelers returned from November 15, with the end of the 14-day quarantine for fully vaccinated visitors and the resumption of 30-day tourist visas.

Last month, the Philippines joined the tourism revival, reopening to vaccinated visitors.

“The emergence of Omicron has shaken up reopening plans for the time being in some economies,” Fitch said. “Japan has banned foreign visitors since the end of November, while Thailand has tightened non-quarantine entry requests for inbound travelers for a two-week period in mid-December, with the exemption from the” Phuket Sandbox “program. ”Launched in July 2021. Singapore has temporarily suspended sales of airline tickets for the“ vaccinated travel route ”program. However, not all economies have put their reopening plans on hold. Australia extended its travel bubble program to Japan and Korea in mid-December, despite a short delay. “

International tourism will be slow to pick up across Asia-Pacific this year despite higher vaccinations and larger reopening efforts, Fitch said.

“The evolving global epidemiological situation poses a high degree of uncertainty and a resumption of tourism in destinations with low vaccination rates, such as the Philippines and Indonesia, will remain vulnerable to setbacks. The pent-up travel demand has yet to be diverted to the country, as we believe it will take time to restore confidence in the safety of cross-border travel. We expect China to maintain its “zero-Covid” policy for most of 2022, with non-quarantine travel lanes put in place only for Macau and Hong Kong. China was a key source market for tourism dependent economies like Thailand before the pandemic, ”said Xu and Schwartz.

Fitch is the third largest credit rating company in the world. It is rated AAA / Stable sovereign on Singapore and Australia and A + / Stable on China (Macao AA / Stable and Hong Kong AA- / Stable). Thailand and Malaysia are rated BBB + / Stable, BBB / Negative for the Philippines, BB / Positive for Vietnam and B- / Stable for the Maldives.

AAA is the highest credit quality with the lowest default expectations in Fitch’s rating system. The B rating is defined as “highly speculative” with a significant risk of default and a limited margin of safety. Fitch considers bonds rated BBB- or higher as investment grade.

Fitch does not assign a sovereign rating to Cambodia, which is rated B2 / Stable by Moody’s Investors Service, the world’s largest credit rating agency. Cambodia plans to issue a $ 300 million sovereign bond in the first quarter of this year.