Consumer

David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Holidaymakers like to spend their time away from work free from worldly cares. Images of extrajudicial killings and blood-soaked bodies lying in the streets can take the fizz right off that poolside mojito.

That doesn't appear to be a concern for the government of Philippine President Rodrigo Duterte, whose anti-drug war has seen more than 3,000 people killed by police and vigilantes in less than three months.

Visitors who aren't bringing narcotics into the country have no reason to fear the campaign, Duterte's tourism minister Wanda Teo told a press briefing last month. Local media seem more concerned about proposals to change the country's official tourism slogan and plans for staging next year's Miss Universe beauty pageant.

At first glance, it may seem this confidence is well-placed. Tourist arrivals reached a record 560,872 in July, suggesting little drop-off in visits in the two months since Duterte was elected. Arrivals from South Korea and China, the Philippines' two biggest markets, rose 20 percent and 23 percent respectively from a year earlier, while numbers from third-placed U.S. were up 15 percent.

Street's Like a Jungle, So Call the Police
Philippines tourist arrival numbers appear to have brushed off Rodrigo Duterte's anti-drugs campaign
Source: Philippine Statistics Authority, Bloomberg

Don't count on that dynamic holding. Holidays are a lagging indicator, typically booked months in advance. Thai visitor arrivals actually increased year-on-year in February 2003, when former Prime Minister Thaksin Shinawatra began his own bloody war on drugs. It was only in May, the same month that Thaksin declared victory in the campaign, that arrivals hit rock bottom -- driven in no small part by Asia's SARS epidemic -- falling 50 percent from a year earlier to their lowest level since at least 1997.

I Don't Wanna Holiday in the Sun
Thailand's visitor arrivals fell off a cliff during Thaksin's anti-drugs campaign
Source: Bank of Thailand, Bloomberg

Holidaymakers' tendency to shun regional bloodbaths shouldn't come as a surprise, because tourist destinations are highly substitutable. In 1995, people wanting to experience coastal resorts, bustling cities and a glimpse of the historic cultures of the eastern Mediterranean spent about 50 percent more money in Egypt than in Turkey, according to World Bank data. Terrorist attacks reversed that pattern: By 2014, Turkey's tourist receipts were 57 percent higher.

Duterte's government, and some local tourism operators, appear to hope that the anti-drug campaign will encourage tourists who fear criminality. Evidence suggests otherwise, because holidaymakers are highly sensitive to a country's public image. A substantial increase in human rights violations deals an even bigger blow to tourism than terrorism or general violence, according to a 2004 paper by London School of Economics and Political Science professor Eric Neumayer, causing visitor numbers to fall 32 percent.

Workers sitting at their desks dreaming of dropping out of the rat race for a few weeks tend to let their thoughts drift to palm-fringed islands and white-sand beaches. They'd like to think of tropical fish darting between coral pinnacles on a snorkeling trip, rather than the specimens Duterte boasts will grow fat on the bodies of drug dealers dumped in Manila Bay.

Even setting aside the tragedy of those slain in Duterte's anti-drugs campaign, it's an own goal for the Philippines economy. Tourism receipts between January and July totaled 148.6 billion pesos ($3.1 billion), making the sector a bigger export earner than any merchandise product barring semiconductors.

Wish You Were Here
Philippines tourist arrival numbers have long lagged Thailand, Malaysia, and Singapore. Now Myanmar, Laos and Cambodia are threatening to overtake as well
Source: ASEAN, country tourist authorities

The Philippines has long trailed Thailand, Malaysia and Singapore in terms of tourist arrivals, despite a splendid endowment of natural wonders and the highest level of English fluency in East Asia. Now, it's fighting outright relegation, with former fringe destinations such as Myanmar, Cambodia and Laos threatening to overtake.

The one bit of good news for Duterte is that visitor arrivals tend to bounce back rapidly after government-sanctioned bloodletting ends, according to Neumayer's study. The bad news, for both tourist operators and the victims of his crusade, is that he's vowed to continue the campaign "until the last day of my term." That isn't until 2022.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Law-and-order populism and beauty pageants aren't the only connections between the political images of President Duterte and his would-be U.S. counterpart. Philippines feminists have called for the Miss Universe show to be canceled, citing "chauvinism, brutal shaming, rape jokes and a sweeping disregard for women" by the country's president. After he was filmed earlier this year making light of the 1989 rape and murder of an Australian missionary, Time magazine quoted him dismissing the controversy by saying: "This is how men talk."

To contact the author of this story:
David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at knicholas2@bloomberg.net