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Indonesia’s tourism leaders last week were up in arms after reports that the government was deciding to triple the visa-on-arrival cost from $35 to $105, clearly a deterrent to tourists looking to travel again.
The Bali Post first reported the news but Indonesian officials have now refuted that, but Hannah Pearson, director of Pear Anderson — a research and tourism consultancy — feared the damage may have already been done in the short-term, with budget travelers perhaps considering that they are being priced out of a trip to Bali.
“Post-Covid travelers worldwide are definitely feeling the crunch due to an increase in general cost of living expenses, so every little fee adds up,” said Pearson.
Indeed, visas are once again revealing themselves as a double-edged sword for the travel industry.
A shift to visa-free travel led to a 16.6 percent growth in global travel demand, while the introduction of new types of visas resulted in an 8.1 percent increase, according to 2018 research from the World Travel & Tourism Council (WTTC).
So visa policies often clearly have a direct bearing on influencing travel decisions. However, does visa fee pricing also play an equally important role in facilitating international travel?
“Visa fees, particularly in the Covid-era, becomes a real consideration for travelers, particularly those traveling in larger family groups, or budget travelers,” Pearson noted. “Travel in general has become more expensive, with increased airfares, plus additional incidental expenses, 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 had resulted in the annual visitor arrivals increasing from a compound annual growth rate of 9 percent in the three years prior to 2015 to 15.5 percent in 2016 and an estimated 22 percent in 2017.
It’s important to note here that a visa fee waiver does not exempt an individual from getting a visa or an authorization to travel. Travelers still need to go through the process of seeking a travel authorization, only the payment part is exempted.
India’s Visa Tryst
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 apex body of inbound tour operators in India, had been rallying for a move of this kind to incentivize inbound travel to India for when borders reopen.
“Besides giving some relief to travelers, a visa-fee waiver is more of a marketing mechanism. The publicity that it generates also helps travelers acknowledge that a particular destination prioritises tourism,” said Rajiv Mehra, president of IATO.
While a visa fee of $10 per person may not make much difference to a family of four travelling to India for a holiday, but the goodwill that it carries sends out a positive message to the world that this country is serious about tourism, remarked Mehra, 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 that was initially started 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 in international arrivals accelerated from 5.8 percent in the three years prior to 2014 to 10 percent in 2016 and an estimated 15 percent in 2017.
Far Bigger Economic Impact
Visas have always been a troublesome part of travel, particularly those for which travelers need to visit an embassy and spend hours amassing supporting documents.
Visa policies are also seen having an impact on air travel demand. When a country relaxes visa policies and allows visitors to enter without a visa or with a simple on arrival visa there is often a surge in visitor numbers as well as passenger numbers, said Brendan Sobei, an independent analyst at Sobie Aviation. “We have seen this in recent years in countries such as Vietnam and Uzbekistan.”
A visa cost increase does impact demand, particularly for price sensitive travelers, making the destination lose some visitors to other destinations that do not have any visa or arrival fees, noted Sobei.
“An increase in visa fees could lead to a reduction in visitor numbers which would create a far bigger economic impact than the additional revenues an increased fee may generate,” he warned.
Thai Visa Saga
In November 2018, Thailand announced that it would waive the $60 visa on arrival fees for 20 nationalities, including China and India — its two key source markets.
“At the time, Thailand was experiencing a slowdown in tourism, and the government hoped that the move would stimulate tourism, and make it more attractive as a tourist destination,” noted Anderson from Pear Anderson.
However, she pointed out that it’s hard to see a significant impact from the policy in the 2019 arrival numbers. The 2019 growth rate for international visitors was around 4 percent year-on-year, in contrast to 2017 and 2018, which each saw a year-on-year percentage increase of around 8 percent.
“When we look at China’s arrivals, the percentage growth slowed in 2019, to 4 percent year-on-year, from 2018’s 7 percent year-on-year,” said Anderson, clarifying that there were other factors that came into play for the Chinese market which were already influencing travelers’ decisions to visit Thailand.
Where it could have had a positive impact is for India, where 2019 registered a 25 percent year-on-year growth in arrivals, from 2018’s 13 percent.
“Again, it’s hard to put this down entirely to the waiving of visa fees — it could also be attributed to a greater accessibility to Thailand, with more flight connections from India — but I would imagine that the visa fee waiver certainly helped,” said Anderson.
The Turkish Outlier
While Turkey’s decision in 2013 to introduce an e-visa scheme to replace the prior visa on arrival, had been a positive policy shift, but the impact was limited as a result of volatility in the country and the already-exisiting visa-on-arrival scheme.
While international arrivals to Turkey averaged 3.4 percent between 2012 and 2015, subsequent declines, notably in 2016, were due to geopolitical factors, including a significant reduction in arrivals from Russia. This number however, picked up in 2017 and 2018 with over 20 percent year-on-year growth in tourism arrivals.
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