The looming summer season poses challenges for Southeast Asia’s tourism-reliant economies due to the conflict with Iran. Nations such as Thailand and Vietnam face difficulties as increased jet fuel prices and uncertain ceasefire conditions lead to flight cancellations and rising ticket costs.
The tourism sector in Asia has not fully rebounded from the COVID-19 pandemic. Now, the repercussions of the war are negatively impacting global energy supplies and prices, initially hitting Asia the hardest. Many families are rethinking travel plans as fuel and grocery prices surge worldwide. The once-bustling tourist spots now see fewer visitors.
A tuk-tuk driver from Siem Reap, Cambodia, Siv Pech, expressed concern, saying that tourism and gasoline price challenges hinder economic opportunities. Tourism is critical for these countries, contributing significantly to GDP in Thailand (13%) and Vietnam (9%), and sustaining millions of jobs in Cambodia. Additionally, tourism provides essential foreign exchange for import-dependent nations like the Philippines and Nepal.
“With gasoline prices rising and tourism declining, how can we make money?” asked Siv Pech, a 58-year-old tuk-tuk driver.
Rising oil prices due to the conflict are difficult for economies that rely on oil imported via the Strait of Hormuz. The war’s trajectory may determine which tourism businesses manage to last until travelers return, notes Jitsai Santaputra of The Lantau Group, an energy industry consulting firm.
The heightened costs have led to flight adjustments by carriers such as Vietnam Airlines and Cathay Pacific. Airfares have increased significantly, with Cathay Pacific raising their fuel surcharge for medium- and long-haul flights.
Lavinia Lau, Cathay’s chief customer and commercial officer, acknowledged the elevated jet fuel prices and resulting cost pressures. This environment makes travelers hesitant to book trips far in advance.
Sandra Awodele, a travel writer from Washington, shared how her plans to visit Thailand halted when confronted with high airfare prices. Ground transportation costs in Southeast Asia are climbing as well, burdening drivers like Pech, whose earnings have dwindled substantially.
Tourism forms a substantial part of regional economies, accounting for nearly 11% of GDP in the Association of Southeast Asian Nations in 2019. Moody’s Analytics anticipates that the ongoing conflict could reduce Asia-Pacific’s economic growth by 0.1 to 0.4 percentage points by 2026.
The conflict strains growth through increased production costs and higher consumer prices, coupled with reduced trade and tourism demand, according to Albert Park from the Asia Development Bank.
A United Nations Development Program report warns that high airfare costs and declining travel confidence can significantly impact jobs, income, and public revenue. Le Tuyet Lan, with properties in Vietnam, noted that economic distress shifts travelers towards lower-cost lodging, affecting the entire tourism industry.
Southeast Asian countries like Thailand are feeling the impact. Tourism Ministry statistics from April show visitor numbers dropping, particularly from Europe and the Middle East. In Cambodia, business owners like Sokha Sambo face increased costs, affecting profitability.
In the initial months of 2026, Siem Reap saw a 37.5% decline in visitors compared to the previous year, impacting businesses considerably.