Will Rising Visa Fees Stifle a Full Travel Recovery?

Last week, Indonesian tourism leaders rose up after reports that the government was moving to triple the cost of visa on arrival from $35 to $105, clearly deterring tourists wishing to travel again.

the Bali Post reported the news for the first time but Indonesian officials have now refuted this, but Hannah Pearson, director of Pear Anderson – a research and tourism consultancy – feared the damage had already been done in the short term, with budget travelers possibly considering that they are overpriced. trip to bali.

“Post-Covid travelers around the world are definitely feeling the pinch due to an increase in general cost-of-living expenses, so every little extra adds up,” Pearson said.

Indeed, visas are once again proving to be a double-edged sword for the travel industry.

The shift to visa-free travel led to a 16.6% growth in global travel demand, while the introduction of new types of visas led to an 8.1% increase, according to a 2018 study by World Travel & Tourism Council (WTTC).

Visa policies therefore often have a direct influence on travel decisions. However, does the pricing of visa fees also play an equally important role in facilitating international travel?

“Visa fees, especially in the age of Covid, are becoming a real consideration for travellers, especially those traveling in large family groups or travelers on a budget,” Pearson noted. “Travel in general has become more expensive, with increased expenses, as well as additional incidental costs, such as tests and higher levels of medical insurance.”

Where Indonesia scored

Indonesia’s 30-day visa fee waiver for its source markets in 2015 led to an increase in annual visitor arrivals from a compound annual growth rate of 9% in the three years to 2015 to 15.5% in 2016 and around 22% in 2017.

It is important to note here that a visa fee waiver does not exempt a person from obtaining a visa or permission to travel. Travelers still need to go through the travel authorization application process, only the payment part is exempt.

India Tryst Visa

India reopened its borders to international tourists in March 2022, but the country announced free tourist visas for the first 500,000 visitors as early as June 2021.

The Indian Association of Tour Operators (IATO), the supreme body of incoming tour operators in India, had mobilized for such an initiative to encourage inbound travel to India for the reopening of borders.

“Besides providing relief to travellers, a visa fee waiver is more of a marketing mechanism. The publicity it generates also helps travelers recognize that a particular destination prioritizes tourism,” said Rajiv Mehra, President of IATO.

While a $10 per person visa fee may not make much difference for a family of four traveling to India for vacation, but the goodwill it carries sends a positive message to the world that this country is serious. on tourism, Mehra noted, adding that the visa fee waiver is only for the 30-day tourist visa, which costs $10.

What really worked to help India increase arrivals was the introduction of an e-visa policy in 2014. The policy which was initially launched for 40 countries, has now been extended to cover the bulk of source markets with nationals of 156 countries now eligible for e-visa.

Following the change in visa policy, the growth of international arrivals accelerated from 5.8% in the three years to 2014 to 10% in 2016 and around 15% in 2017.

Much greater economic impact

Visas have always been an inconvenient part of travel, especially one where travelers have to go to an embassy and spend hours gathering supporting documents.

Visa policies also seem to have an impact on the demand for air travel. When a country relaxes visa policies and allows visitors to enter without a visa or with a simple visa on arrival, there is often an increase in the number of visitors as well as the number of passengers, said Brendan Sobei, independent analyst at Sobie Aviation. “We have seen this in recent years in countries like Vietnam and Uzbekistan.”

An increase in the cost of visas is impacting demand, especially for price-sensitive travellers, causing the destination to lose some visitors to other destinations who do not have visas or arrival fees, noted Sobei.

“An increase in visa fees could lead to a reduction in the number of visitors, which would create a far greater economic impact than the additional fees could generate,” he warned.

Thai visa saga

In November 2018, Thailand announced it would waive the $60 visa-on-arrival fee for 20 nationalities, including China and India, its two main source markets.

“At the time, Thailand was experiencing a downturn in tourism, and the government hoped the move would boost tourism and make it more attractive as a tourist destination,” Pear Anderson’s Pearson noted.

However, she pointed out that it is difficult to see a significant impact of the policy on the number of arrivals in 2019. The growth rate of international visitors in 2019 was around 4% year-on-year, in contrast to 2017 and 2018, each of which recorded a percentage increase of approximately 8% year-on-year.

“When we look at arrivals in China, the percentage growth slowed in 2019, to 4% yoy, from 7% yoy in 2018,” Pearson said, noting there were other factors that came into play for the Chinese market which was already influencing the decision of travelers to visit Thailand.

Where this could have had a positive impact is for India, where 2019 saw a 25% year-on-year growth in arrivals, compared to 13% in 2018.

“Again, it’s hard to attribute this entirely to the visa fee waiver – it could also be attributed to greater accessibility to Thailand, with more air connections from India – but I guess that the visa fee waiver certainly helped,” Person said.

The Turkish outlier

While Turkey’s decision in 2013 to introduce an electronic visa system to replace the pre-arrival visa was a positive policy change, but the impact was limited due to visa volatility in the country and the already existing visa on arrival scheme.

While international arrivals to Turkey averaged 3.4% between 2012 and 2015, the resulting declines, particularly in 2016, were due to geopolitical factors, including a significant reduction in arrivals from Russia. However, this number increased in 2017 and 2018 with more than 20% year-on-year growth in tourist arrivals.