Indonesia Along Other Asian Countries Set to Overtake Thailand Tourism Dominance as Travel Rivals Gain Momentum in 2026

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Indonesia and Asian rivals are quickly catching up to Thailand’s tourism lead in 2026. Thailand’s longtime tourism dominance in Southeast Asia is being challenged in 2026 as Indonesia closes in on its travel market value, Malaysia attracts record visitor volumes and Vietnam accelerates its international tourism growth. A more competitive regional travel landscape is being created as higher airfares, changing airline schedules, domestic tourism growth and expanding tourism infrastructure are re-shaping where travellers spend their money.

Thailand continues to rank among Asia’s most important tourism destinations. However, its position is being placed under increasing pressure as neighbouring countries strengthen their tourism economies through different routes.

For Indonesia, the momentum is being driven by travel bookings and a powerful domestic tourism market. In Malaysia, visitor volumes and cross-border travel are supporting growth. In Vietnam, record international arrivals, domestic tourism and rising airline capacity are pushing the country deeper into the regional tourism race.

At the same time, the entire Southeast Asian travel industry is being confronted by higher operating costs. More expensive air travel and changes in airline networks are adding new challenges for hotels, resorts and tourism businesses.

Indonesia Moves Closer to Thailand in Southeast Asia’s Travel Market Race

Indonesia is projected to overtake Thailand as Southeast Asia’s largest travel market in 2026, according to the Phocuswright Research figures cited in the report.

The gap had already become extremely narrow by the end of 2025.

Thailand recorded approximately US$17.9 billion in gross travel bookings, while Indonesia generated about US$17.7 billion. Only around US$200 million separated the two markets.

Across the Southeast Asian markets examined by Phocuswright, gross travel bookings were reported to have increased by 6% to approximately US$63 billion in 2025.

However, slower growth has been expected during 2026.

Higher fuel costs have been identified as one of the major pressures affecting the regional travel market. According to the supplied research, increases in jet fuel prices have contributed to airline surcharges and higher passenger fares.

Some low-cost airline routes have also been reduced, making affordable connectivity more difficult in parts of the region.

Indonesia could benefit significantly from this situation because of its enormous domestic travel market. When international and regional airfares become more expensive, holidays closer to home can become more attractive.

This domestic demand has therefore been positioned as an important competitive advantage for Indonesia.

Malaysia Builds Momentum With 42.2 Million International Visitors

Strong tourism momentum has also been recorded in Malaysia.

The country received approximately 42.2 million international visitors in 2025, representing growth of 11.2% compared with the previous year.

The total was also reported to be around 20.4% higher than the 2019 level, strengthening Malaysia’s position ahead of its Visit Malaysia 2026 tourism campaign.

However, an important distinction must be made.

Malaysia’s headline visitor number includes both overnight tourists and excursionists, including visitors who cross the border without staying overnight. Thailand’s approximately 33 million international tourists in 2025 were measured differently.

The two totals therefore should not be regarded as a direct comparison of hotel-generating tourist arrivals.

Nevertheless, Malaysia’s tourism sector is being supported by strong regional connectivity.

Cross-border movement from Singapore and Thailand continues to play an important role, while easier entry arrangements for major Asian markets have also helped strengthen tourism demand.

Shopping, food, cultural tourism and family holidays are being combined with medical tourism and MICE travel, covering meetings, incentives, conferences and exhibitions.

These sectors can create demand beyond traditional holiday seasons and generate spending across hotels, healthcare, restaurants, transport and events.

Vietnam Emerges as One of Southeast Asia’s Fastest-Growing Tourism Rivals

Vietnam is becoming another major force in Southeast Asian tourism.

Nearly 21.2 million international visitors were welcomed in 2025, representing a new national record.

International arrivals were reported to have increased by 20.4% from 2024 and by approximately 17.8% compared with 2019.

Vietnam’s 2025 international arrival total placed the country ahead of both Singapore and Indonesia on that particular measure, although Thailand continued to receive more international tourists.

Domestic tourism has added another powerful layer of demand.

Approximately 137 million domestic tourism trips were recorded, creating a huge internal travel market capable of supporting hotels, resorts, attractions and transport businesses.

Total tourism revenue was estimated at approximately one quadrillion Vietnamese dong, equivalent to roughly US$38 billion to US$40 billion, depending on the exchange rate used.

That tourism revenue figure should not be directly compared with Phocuswright’s gross travel booking figures because different methodologies are involved.

Vietnam Briefly Moves Ahead of Thailand in Airline Seat Capacity

Vietnam’s expanding tourism position has also been reflected in scheduled aviation capacity.

During July 2026, approximately 7.4 million scheduled airline seats were recorded for Vietnam, compared with around 6.9 million for Thailand.

Vietnam also remained ahead of Thailand during August.

Indonesia, however, continued to hold the largest aviation market position in Southeast Asia on this particular measure.

The ranking changed again during September 2026, when Thailand returned to second place.

These monthly changes demonstrate how closely tourism and aviation markets are now competing across the region.

Vietnam’s resort destinations are also receiving greater international visibility.

Places such as Phu Quoc, Da Nang and Nha Trang are increasingly being positioned as alternatives to established beach destinations elsewhere in Southeast Asia.

Additional accommodation, tourism development and improving air connectivity are helping these destinations reach a wider international audience.

Country-by-Country Tourism Competition in 2026

The regional tourism race can be viewed through several separate indicators rather than a single ranking:

• Indonesia: US$17.7 billion in gross travel bookings were recorded in 2025, compared with Thailand’s US$17.9 billion. Indonesia is projected to move ahead on this travel-market measurement in 2026, while its huge domestic tourism base provides additional resilience.
• Thailand: Approximately 33 million international tourists were welcomed in 2025. The country remains one of Southeast Asia’s biggest tourism destinations but is facing stronger pressure from rising costs, competing destinations and shifting airline capacity.
• Malaysia: Around 42.2 million international visitors were recorded in 2025, up 11.2% year on year. This figure includes excursionists as well as overnight visitors. Tourism growth is being supported by regional travel, shopping, medical tourism, cultural attractions and MICE demand.
• Vietnam: Nearly 21.2 million international arrivals and approximately 137 million domestic tourism trips were recorded in 2025. Tourism revenue approached one quadrillion dong, while scheduled airline capacity temporarily moved above Thailand during July and August 2026.
• Singapore: Vietnam’s 2025 international arrival figure was reported to have moved above Singapore’s, illustrating the changing hierarchy of major Southeast Asian destinations.

How Southeast Asia’s Main Tourism Markets Compare

Higher Airfares Put Southeast Asian Hotels Under Pressure

Competition is intensifying at the same time that travel costs are rising.

Regional hotel gross bookings have been projected to remain broadly unchanged at approximately US$28.4 billion in 2026.

Several pressures have been identified.

Higher airfares can reduce discretionary spending once travellers reach their destinations. Airline route reductions can limit access to some markets. Travellers can also become more price-sensitive and search more aggressively for discounts.

At the same time, additional hotel rooms are being introduced across Southeast Asia.

More supply can increase competition between existing resorts and newly opened properties, particularly when visitor growth does not increase at the same speed.

Established hotels may therefore be required to invest more heavily in service, facilities, pricing and guest experiences.

Thailand Responds With Premium Travel, Wellness and Longer Stays

Thailand’s tourism strategy is increasingly being directed towards higher visitor spending and longer stays rather than relying only on arrival volumes.

Premium accommodation, wellness tourism, food experiences and cultural attractions have been placed at the centre of this approach.

Visa policy has also become an important part of the tourism landscape.

Thailand previously expanded visa exemptions to 93 countries and territories. Revisions were later approved during 2026, with shorter exemptions and changes to eligibility being outlined in a July government announcement.

Implementation was linked to publication in the Royal Gazette.

The policy changes were presented in the supplied material as being connected with economic considerations, security concerns and possible misuse of entry privileges.

Meanwhile, the Destination Thailand Visa continues to support longer stays for eligible applicants.

Qualifying travellers can receive stays of up to 180 days per entry, with the programme covering groups including remote workers and people participating in eligible cultural or medical activities.

Tourism Development Continues Despite Setbacks

Not every tourism development proposal in Thailand has progressed.

The proposed casino entertainment complex bill was withdrawn by Thailand’s Cabinet in July 2025 following political complications and public opposition.

That decision interrupted plans under which integrated entertainment and casino developments could have been introduced into Thailand’s tourism offering.

Airport development, however, remains an important longer-term component of the country’s tourism ambitions.

Additional airport capacity and easier passenger connections could help support future visitor growth and improve access to major destinations.

Southeast Asia Enters a More Competitive Tourism Era

Thailand has not disappeared from the top tier of Asian tourism. Instead, a more evenly contested Southeast Asian tourism market is being created.

Indonesia is approaching Thailand on the value of gross travel bookings. Malaysia is generating exceptional visitor volumes. Vietnam is expanding international arrivals, domestic tourism, tourism revenue and aviation capacity.

These countries are advancing through different tourism indicators, meaning no single statistic can determine an absolute regional tourism leader.

What has become clear in 2026 is that Thailand’s once-comfortable regional advantage is being challenged from several directions.

As higher airfares, airline capacity changes and stronger neighbouring destinations reshape travel decisions, competition for visitors and tourism spending is expected to become increasingly intense.

For Thailand, maintaining its position will depend on strong connectivity, competitive hotels, easier travel, distinctive experiences and higher-value tourism.

Indonesia and Asian rivals are closing in on Thailand’s tourism lead in 2026. Rising travel bookings and stronger visitor growth are intensifying competition in Southeast Asia.

For Indonesia, Malaysia and Vietnam, rising demand for tourism is an opportunity to capture a bigger share of Southeast Asia’s rapidly evolving travel economy.