Key Takeaways * Travelers are opting for closer destinations due to geopolitical tensions. * Interest in emerging and local destinations continues to rise. * Average room revenue growth in some areas outpaces major hubs, leading to higher travel costs.

Phu Quoc, Vietnam – March 20, 2026: People stroll on Bai Khem Beach. Vietnam welcomed a record 21.2 million international tourists in 2025. Geopolitical tensions and rising travel costs are prompting tourists to choose destinations closer to home, leading to a significant increase in travel to secondary and tertiary cities across the Asia-Pacific region this summer. The Allianz Partners "Global Travel Confidence Index" reveals that nearly half of global travelers have scaled back their travel plans, with many opting for domestic trips. The survey, published in May and based on approximately 11,000 responses, found that about 60% of respondents from China and India plan to travel within their own countries. This trend is driving increased visitor numbers to destinations popular with domestic tourists but less known internationally, such as Goa and Xiamen. Rajeev Menon, President of Marriott International, Asia Pacific (excluding Greater China), noted in a May 21 interview that while some travelers are still planning international trips, their destinations are now confined to Asia. "Travelers have adjusted their plans, keeping their travel within Asia," he said, which has boosted the popularity of emerging destinations like Phu Quoc in Vietnam. "A few years ago, the hot spots were basically Phuket, Bali, and maybe Langkawi," he stated. "Now, many cities in Vietnam are becoming popular choices." He also mentioned a shift in the flow of Chinese outbound tourism, with more travelers heading to Southeast Asia. "People are not prioritizing the Middle East or Europe anymore," Menon said. "But the numbers to Vietnam and Malaysia are significant, and Thailand is also seeing a return of Chinese tourists." Menon explained that in the initial stages of the escalation in Iran, many travelers who had layovers in the Middle East canceled their trips, causing a dip in Revenue Per Available Room (RevPAR) for Marriott's hotels in India. However, as travelers rebooked for domestic and regional trips, hotel revenues recovered. "From May onwards, we are back to double-digit growth, and the momentum remains strong," he added.

Travel demand in Japan's secondary cities is also robust. Marriott International's hotel operations now cover 30 of Japan's 47 prefectures. Bookings for cities beyond Tokyo, Kyoto, and Osaka have been growing for years. Data from online travel platform Agoda shows that in 2025, travel searches for Takamatsu, Japan, increased by 63%, Matsuyama by 44%, Sendai by 32%, Okinawa by 27%, and Sapporo by 26%, with Takamatsu showing the fastest growth. Agoda data also indicates that cities like Shizuoka, Nara, and Nagano (host of the 1998 Winter Olympics) are attracting more tourists, with Japan remaining a top travel destination in the Asia-Pacific. A Visa survey shows that among travelers planning a trip to Asia this summer, one in four intends to visit Japan.

Rising Returns and Investment As the popularity of secondary and tertiary travel destinations soars, their biggest advantage—affordable travel prices—is diminishing. Menon stated that due to hotel room supply growth lagging behind tourist demand, the growth in RevPAR for hotels in Asia-Pacific's secondary and tertiary cities is now outpacing that of some major international gateway cities. Real estate services firm JLL notes that rising revenues and profit margins are attracting investors to well-connected secondary and tertiary cities in the Asia-Pacific region. Marina Bracciani, Senior Vice President and Head of Hotels Research, Asia Pacific at JLL, said that prime hotel assets in core first-tier cities like Tokyo and Mumbai are becoming increasingly scarce, a phenomenon particularly evident in Japan and India.

"Cities like Fukuoka, Sapporo, and Nagoya are increasingly coming onto investors' radars," Bracciani said. "As investment yields compress in Japan's first-tier markets, capital naturally flows to regional cities offering more attractive returns." In 2024, half of India's hotel transactions were in secondary and tertiary cities, including locations like Amritsar, Kolhapur, Shirdi, and Tirupati. This proportion fell to 40% in 2025, but the quality of transactions improved, including a luxury resort in Rishikesh and a high-end resort hotel in Goa. "The core drivers of this trend in both countries are similar: rising domestic tourism, growth in religious and cultural travel, and significantly improved accessibility due to ongoing infrastructure development," Bracciani stated. She added that most secondary and tertiary travel markets still have untapped demand, offering a first-mover advantage to early investors.