Malaysia Joins Indonesia, Thailand, Vietnam, Cambodia, Philippines, Myanmar and More Countries as Iran War Hits Tourism, Driving an Asia Tourism Crisis Fueled by Strait of Hormuz Energy Disruptions, Soaring Jet Fuel Prices and Rising Travel Costs

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Malaysia has joined Indonesia, Thailand, Vietnam, Cambodia, the Philippines, Myanmar, and other tourism-dependent Asian countries in facing a severe travel crisis as the ongoing war in Iran disrupts the region’s aviation and energy sectors. The conflict has led to closures and blockades around the Strait of Hormuz, a critical conduit for oil and gas supplies, triggering a dramatic surge in jet fuel prices and widespread shortages. Airlines including Vietnam Airlines, AirAsia, and Cathay Pacific have reduced flights or adjusted schedules, while fares and fuel surcharges have risen sharply. The combined effect of soaring operational costs, flight disruptions, and travel uncertainty is squeezing tourism-dependent economies, threatening millions of jobs, and dampening summer visitor numbers across Southeast Asia .

Asia’s tourism industry, long a critical driver of economic growth and employment across the region, is facing a sudden and severe disruption as the ongoing conflict involving Iran drives up global energy costs. The Strait of Hormuz, a vital maritime corridor for much of the world’s oil and gas, has become a focal point of global supply instability. This disruption has pushed jet fuel prices to record levels, inflated airfares, and introduced a new layer of uncertainty for travellers and tourism-dependent economies. As summer travel season approaches in 2026, countries across Asia are bracing for a potential slowdown in tourism, with both long-haul and regional travel severely affected.

Tourism in Asia is not only a cultural and social driver but a significant economic lifeline. It contributes substantial portions of GDP in countries like Thailand and Vietnam, while supporting millions of jobs in Cambodia, Indonesia, and the Philippines. The sudden increase in fuel costs and travel expenses threatens both the industry and the livelihoods dependent on it. Below, we examine the situation country by country, highlighting the impact of the Iran war and the resulting energy crisis on Asia’s tourism sector.

Countries Most Affected:

• Malaysia
• Indonesia
• Thailand
• Vietnam
• Cambodia
• Philippines
• Myanmar
• Other Asia-Pacific destinations affected by rising costs and reduced travel demand

• Malaysia: Tourism Stress Amid Rising Airfares

Malaysia, despite strong infrastructure and diverse tourism offerings, is experiencing pressure from rising flight costs linked to jet fuel price surges. As the Strait of Hormuz disruption drives global energy prices higher, airlines servicing Malaysia have introduced fuel surcharges, making long-haul travel more expensive. Domestic tourism has partially offset losses from international visitors, but the overall economic impact remains significant, especially for coastal destinations like Langkawi and Penang, which rely heavily on foreign arrivals. Transport operators, tour guides, and small hospitality businesses are facing declining revenues due to fewer visitors and higher operating costs.

• Indonesia: Fuel Costs Curtail Travel Demand

Indonesia, an archipelagic nation highly dependent on air connectivity, has also felt the shock of soaring fuel prices. The conflict in Iran has forced airlines to impose additional surcharges and adjust flight schedules. For tourism-heavy regions such as Bali, Lombok, and Yogyakarta, this has translated into reduced international arrivals and lower occupancy rates in hotels and resorts. Cruise tourism has similarly been impacted as higher operational costs make itineraries less economically viable. Domestic tourism has seen a minor uptick, but it cannot fully compensate for the loss of long-haul visitors.

• Thailand: Visitor Numbers Decline

Thailand, a global tourism hub, has experienced notable reductions in international arrivals. Bangkok, Phuket, and Chiang Mai have all reported lower occupancy rates in early 2026, particularly from European and Middle Eastern markets. Rising airfares, partly due to higher jet fuel costs and longer routing to avoid conflict zones, have discouraged travel. Tourism operators are focusing on regional visitors from nearby Asian countries, but the loss of high-spending long-haul tourists has affected revenue and employment. Local tourism-dependent businesses, including transport providers and cultural attractions, are seeing immediate economic strain.

• Vietnam: Operational Costs and Reduced Flights

Vietnam, previously on a strong recovery trajectory, has seen disruptions in aviation operations as a result of higher fuel costs. Airlines servicing major tourist cities like Hanoi, Ho Chi Minh City, and Da Nang have reduced seat availability and raised ticket prices. The increased cost of travel has led to a slowdown in long-haul arrivals, while domestic and regional trips continue to provide partial mitigation. Hospitality, tour operators, and transport services are under pressure, with rising operational expenses eroding profit margins.

• Cambodia: Economic Pressure on Tourism Workforce

Cambodia’s tourism economy, particularly in Siem Reap and around Angkor Wat, is heavily reliant on international visitors. Rising fuel costs and reduced flight connectivity have led to fewer arrivals, and tourism-dependent workers are seeing their daily incomes drop dramatically. Transport operators, guides, and small businesses face lower revenue while fuel and operating costs remain high. This scenario illustrates how global energy crises can directly affect local economies that depend on tourism.

• Philippines: Inter-Island Travel Costs Rise

In the Philippines, higher fuel prices are affecting both aviation and maritime transport. Long-haul flights have become more expensive, while domestic inter-island travel costs have risen due to increased fuel and operational expenses. This has discouraged both foreign and domestic visitors from planning extended trips, impacting hotel occupancy, resorts, and local tour operators. Regions reliant on leisure and adventure tourism, such as Palawan and Cebu, are particularly vulnerable to declining international arrivals.

• Myanmar: Reduced Mobility and Rising Costs

Myanmar’s tourism sector, already constrained by limited infrastructure in certain regions, has been further affected by rising fuel costs linked to the Iran war. Increased prices for transportation and reduced mobility within the country have discouraged international and regional visitors. As a result, tourism-dependent towns and heritage sites, including Bagan and Inle Lake, are experiencing lower footfall and revenue, affecting local employment and ancillary industries.

• Other Affected Countries

Other destinations across Asia and the Pacific that rely on international travel are also experiencing indirect impacts:

• Sri Lanka, Laos, and Nepal: Increased fuel prices and air travel costs are curbing discretionary travel.
• Japan, South Korea, and China (outbound to Southeast Asia): Flight route disruptions and higher surcharges are leading to reduced travel bookings to neighbouring ASEAN countries.
• Middle Eastern travellers redirected: Previously high-spending Gulf tourists are reconsidering long-haul flights to Asia due to higher costs and logistical uncertainties.

Root Cause: Iran War and Strait of Hormuz Disruption

The Iran war has severely affected energy flows via the Strait of Hormuz, which handles a significant portion of the world’s oil and gas shipments. Intermittent closures and shipping delays have sent global energy prices surging, particularly jet fuel, which directly affects airlines servicing Asia. Longer flight routes, higher operational costs, and elevated surcharges are forcing travellers to rethink international trips, slowing tourism recovery in countries dependent on foreign visitors.

Economic and Social Impact

1. Revenue Losses: Tourism-dependent countries are experiencing significant declines in foreign exchange inflows.
2. Employment Strain: Jobs in hotels, transport, tours, and ancillary services are at risk.
3. Airline and Travel Industry Pressure: Airlines are operating at reduced capacity and applying fuel surcharges.
4. Domestic Adjustment: Governments are promoting short-haul regional travel to mitigate losses, but cannot fully offset declines from long-haul tourists.

Forecast and Outlook

• Short-term recovery depends on resolution or stabilisation of global energy markets and reopening of safe and cost-efficient flight routes.
• Regional travel within Asia is expected to recover faster due to proximity and lower relative costs.
• Tourism-dependent economies must diversify their visitor base and adjust operational strategies to withstand external shocks like geopolitical conflict and energy price volatility.

Malaysia, along with Indonesia, Thailand, Vietnam, Cambodia, the Philippines, and Myanmar, faces a severe tourism crisis as the Iran war disrupts the Strait of Hormuz, driving soaring jet fuel prices, flight cuts, and rising travel costs across Asia.

The Iran war’s effect on global energy prices, particularly through disruptions in the Strait of Hormuz, has highlighted the vulnerability of Asia’s tourism sector. Countries like Malaysia, Indonesia, Thailand, Vietnam, Cambodia, the Philippines, and Myanmar face immediate revenue losses, operational challenges, and workforce pressure. While regional travel offers some relief, the sector’s recovery is contingent on stabilisation of fuel prices, resumed connectivity, and regained traveller confidence. Asia’s tourism landscape in 2026 serves as a stark reminder of the intricate links between geopolitics, energy markets, and the global travel economy.