Velocity Ventures and Pear Anderson’s 2H 2025 Strategy & Investment Outlook Report breaks down key trends shaping the region
Southeast Asia’s travel and hospitality sector enters the second half of 2025 with measured optimism, despite ongoing global macroeconomic uncertainty. According to the latest 2H 2025 Strategy & Investment Outlook Report by Velocity Ventures in partnership with Pear Anderson. Vietnam remains the region’s star performer, with international arrivals in March 46% above 2019 levels, and a record 6 million arrivals in Q1 2025.
Travel revenues also jumped 18% YoY to $860 million USD. In contrast, Thailand downgraded its international arrivals target from 39 million to 35.5 million due to a sharp drop in Chinese tourists, who cancelled over 4,500 room bookings in January alone. Meanwhile, Malaysia set an ambitious goal of 31.4 million arrivals ahead of Visit Malaysia 2026, and Singapore eyes a new record in tourism receipts with a 2025 target of S$29–S$31 billion.
Key catalysts & risks ahead:
Catalysts:
- GCC capital investment and Vision 2030-style mega-projects
- Agentic AI reshaping travel automation
- Growth in domestic travel and intermodal transport
Risks:
- Tariff wars, inflation, and weakened consumer sentiment
- Labour shortages and strained margins in travel supply chains
- Sluggish international travel amid global conflicts and economic tightening
However, the report outlines that regional outlook is tempered by geopolitical and economic tensions. Proposed US tariffs on ASEAN nations, especially Vietnam and Cambodia, have seeded uncertainty, while currency fluctuations and declining GDP forecasts across trade-oriented ASEAN economies pose additional challenges.
Thai Baht and Malaysian Ringgit appreciated by +5.2% against the USD at their peak, complicating inbound tourism pricing. Aviation players are also under pressure: VietJet signed a $200 million USD Boeing deal, Thai Airways ordered 45 new aircraft, and supply chain disruptions are causing delivery delays of up to 20%. Jet fuel prices are expected to rise again amid Middle East conflict, adding to the industry’s cost pressures.
On the digital front, regional OTAs are evolving rapidly. Traveloka launched a B2B platform, while AirAsia MOVE began a rebrand away from its airline roots. Booking.com and Agoda maintained dominance in hotel bookings, though Expedia climbed ahead of Agoda in Indonesia for the first time since 2019. Grab’s AI-powered tools now support 250,000 drivers, and Klook expanded its footprint in Malaysia, Thailand, and the Philippines, even partnering with hotels and bundling tickets for global concerts.
Meanwhile, food delivery surged to $19.3 billion USD in 2024, up 13% YoY, with Grab holding a 54% market share and Vietnam leading growth at +26% YoY.
The report highlights that sustainability and domestic travel are emerging as crucial levers for resilience. Singapore recorded 122 additional dangerous heat days in 2024 and is investing heavily in green infrastructure, including rainwater harvesting at Mandai Rainforest Resort and solar-powered MICE events. Governments are also pushing stimulus schemes and secondary city travel. Intra-ASEAN travel now accounts for 45% of the region’s arrivals, up from 37% in 2019, showing the importance of regional movement.
The report emphasises that while challenges remain – from tariff shocks to safety concerns – the region’s ability to adapt through digital innovation, diversification, and regional collaboration leaves room for guarded optimism in the months ahead.
Access the full report here.
