Indonesia’s travel industry is approaching a notable milestone, with the country expected to overtake Thailand as Southeast Asia’s largest travel market in 2026. The latest forecast from Phocuswright places Indonesia just behind Thailand in 2025, but changing travel patterns, strong domestic demand and evolving regional connectivity are helping reshape the competitive landscape.
The Indonesia travel market recorded $17.7 billion in gross bookings in 2025, only slightly below Thailand’s $17.9 billion. Phocuswright now expects Indonesia to move into the top position during 2026, even as the wider Southeast Asia tourism market faces slower growth and pressure from higher airfares.
Indonesia Closes the Gap on Thailand
Thailand has traditionally held a leading position in Southeast Asia’s travel economy, supported by its established international tourism infrastructure, globally recognized destinations and strong visitor demand. Indonesia, however, has been steadily expanding its tourism base, with Bali complemented by destinations across Java, Sumatra, Lombok and other parts of the archipelago.
The scale of Indonesia’s domestic market is also an important factor. OECD data shows that Indonesia recorded around 1 billion domestic visitors in 2024, while international arrivals reached 15.4 million in 2025, an increase of 10.8% from the previous year. Travel receipts reached $16.7 billion in 2024.
These figures highlight a tourism economy supported by both international visitors and a substantial home market.
Thailand, meanwhile, continues to attract travelers from across Asia and other global regions. The country is also actively strengthening its connection with Indonesian travelers. From January through July 2026, Thailand welcomed 376,337 Indonesian visitors, with an average stay of six nights, according to the Tourism Authority of Thailand.
Higher Airfares Reshape Regional Travel
The projected shift comes at a challenging moment for Southeast Asia. Phocuswright estimates that regional gross travel bookings grew 6% to $63 billion in 2025, but growth is expected to slow significantly in 2026. The research attributes much of the pressure to higher jet-fuel costs, which have pushed airlines to increase fares and led some low-cost carriers to reduce routes.
Air travel bookings are nevertheless projected to increase from $33.5 billion in 2025 to $34.4 billion in 2026. However, the increase is expected to come primarily from higher prices rather than a major rise in passenger volume.
The changing aviation environment is also encouraging travelers in markets such as Indonesia and Malaysia to consider domestic holidays more frequently. For Indonesia, this could further strengthen a market that already benefits from substantial domestic tourism activity.
Online Travel Continues to Gain Ground
Digital distribution is becoming another important part of the region’s travel transformation. Phocuswright projects that online bookings across Southeast Asia will increase from $41.2 billion in 2025 to $51.6 billion by 2029. Online travel agencies are expected to account for 42% of total bookings by that point.
The shift creates opportunities for airlines, hotels, destination management companies and tourism boards to reach travelers directly through digital platforms.
Indonesia’s large population and expanding digital travel ecosystem give the country an important base from which to benefit from this trend. At the same time, established markets such as Thailand are continuing to invest in digital marketing, airline connectivity and partnerships with major travel platforms.
Thailand Remains an Important Regional Competitor
The expected change in market leadership does not mean Thailand is disappearing from the region’s tourism equation. Thailand continues to maintain strong international recognition and is developing partnerships designed to increase connectivity and attract visitors from neighboring markets.
In August 2026, the Tourism Authority of Thailand signed agreements with TransNusa Airlines and Traveloka to strengthen air connectivity, digital promotion and tourism cooperation between Thailand and Indonesia. The initiatives include support for routes such as Jakarta–Bangkok and Bali–Phuket.
Hotel demand across the region, however, is expected to remain relatively subdued. Phocuswright forecasts hotel gross bookings at $28.4 billion in 2026, unchanged from the previous year, as higher airfares and additional accommodation supply put pressure on demand and room rates.
A New Chapter for Southeast Asian Travel
Indonesia’s expected rise above Thailand in 2026 is less about a single destination replacing another and more about how quickly Southeast Asia’s travel landscape is evolving. A market that once revolved around a handful of established tourism powerhouses is becoming increasingly influenced by domestic demand, digital booking behavior, new air routes and travelers looking beyond traditional destinations.
For Indonesia, reaching the top of the regional travel market would underline the growing scale and diversity of its tourism economy. For Thailand, the changing numbers highlight a competitive environment in which connectivity, digital reach and varied visitor experiences remain central to maintaining demand.
The coming years could therefore bring a more evenly distributed Southeast Asian tourism landscape, with Indonesia and Thailand continuing to compete while also benefiting from the growing movement of travelers throughout the region. For travelers, airlines and tourism businesses alike, the shift signals a market that is becoming more connected, more digital and increasingly diverse.
