Indonesia set to overtake Thailand as Southeast Asia's largest travel market
A fuel shock from the U.S.-Iran War has slowed regional growth to 2% in 2026. Phocuswright's new report tracks the fallout through 2029., CredSpark is a powerful, interactive content platform that helps organizations maximize the potential
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What It Says
According to Phocuswright’s research report, Southeast Asia Travel Market Essentials 2026, a major shift is occurring in the Southeast Asian tourism landscape. Thailand maintained its position as the region's largest travel market in 2025, securing $17.9 billion in gross bookings. However, Indonesia followed closely behind at $17.7 billion.
Phocuswright projects that Indonesia will officially overtake Thailand to become the region's largest travel market in 2026. This transition is happening amid a broader cooling period for Southeast Asia, where overall gross travel bookings grew by 6% to reach $63 billion in 2025, with growth expected to slow further in 2026.
Why It Matters
For short-term rental (STR) operators and hospitality technology vendors, this geographic shift highlights where capital, marketing efforts, and expansion plans should be directed. While Thailand (anchored by destinations like Phuket and Bangkok) has traditionally been the default focus for regional STR investment, Indonesia’s rapid ascent—driven by Bali's enduring popularity and the development of secondary destinations—presents a massive, high-growth market. Technology vendors must adapt to Indonesia's unique payment ecosystems, localized guest preferences, and regulatory landscape to capture this expanding market share.
Useful Signals
- Market Sizing: Thailand hit $17.9 billion in gross bookings in 2025, while Indonesia reached $17.7 billion.
- The Pivot Point: Phocuswright projects Indonesia will claim the top spot in Southeast Asia by 2026.
- Regional Growth Slowdown: Total regional bookings grew 6% to $63 billion in 2025, but growth is projected to decelerate in 2026.
STR Tech Report Take
The rise of Indonesia as Southeast Asia's premier travel market signals a critical window of opportunity for STR property management systems (PMS), channel managers, and dynamic pricing tools. To successfully scale alongside Indonesia's growth, tech vendors must prioritize integrations with local online travel agencies (OTAs) and regional payment gateways. Operators should look beyond saturated markets and consider diversifying their portfolios into emerging Indonesian destinations, leveraging localized tech stacks to optimize yield as regional growth rates begin to normalize.
Original Source
PhocusWire: Indonesia set to overtake Thailand as Southeast Asia's largest travel market
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