Hoping for a miracle
Even as Phuket plans to reopen in July, there are valid reasons to believe it will be a while before foreign tourists return
published : 5 Apr 2021 at 06:30
newspaper section: Business
The long-awaited reopening to foreign tourists is likely to take shape in July, led by Phuket as the pilot area for a tourism sandbox -- the first initiative to remove mandatory quarantine from entry requirements.
The Andaman beaches once bustling with foreigners have been left deserted for over a year, able to draw a limited number of local guests who prefer a short-distance trip rather than roaming too far from home.
Phuket's tourism income of 442 billion baht in 2019 evaporated to 108 billion last year because of the pandemic, with 98.8 billion of that total coming from the first two months before the nationwide lockdown.
From June to December 2020, local guests generated only 1.3 billion baht per month for the province, a stark contrast to the 32.7 billion earned from the mostly foreign market in the pre-pandemic period.
Despite having a more concrete plan than previous efforts to reopen to the international market, tourism authorities admit the sandbox is not a panacea as obstacles remain, the most prominent a mass vaccination campaign in Thailand and visitor origin countries.
An unpredictable outbreak of the virus could spring up at anytime, washing away the sandbox's carefully constructed plans, as happened in several countries last year.
The government's target to generate 348 billion baht in tourism revenue from the foreign market this year remains a stretch for a country struggling to increase GDP growth to 4% in 2021.
Patong beach, which is usually full of tourists, is nearly empty amid the covid-19 pandemic. Achadtaya Chuenniran
LONG AND WINDING ROAD
"I pledge to bring 950,000 Covid-19 vaccine doses to Phuket and inoculate 70% of the local population by June. If we cannot reach this target, the tourism sandbox will not occur," Phiphat Ratchakitprakarn, the tourism and sports minister, told more than 300 hotel operators at a meeting last week.
That June deadline makes it a race against time as the province has now only booked 100,000 doses.
The government is maintaining its target of 1.2 trillion baht in revenue from both the international and domestic tourism market this year, but that may require some bilateral agreements.
Mr Phiphat said Thailand recently held a discussion with Hong Kong on a travel bubble scheme and seeks similar dialogues with other areas. A travel bubble is a bilateral agreement that allows inoculated tourists from the two locations to travel freely without quarantine.
The deal has to be reciprocal, meaning citizens of both countries can take outbound trips and not be restricted by quarantine upon their return home.
As of March 31, Hong Kong still requires a 21-day quarantine for all arrivals.
An agreement with low-risk countries such as Taiwan is feasible, but analysts have suggested Thailand could face roadblocks in dealing with China, a major trading and investment partner that wants greater influence in the region.
Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT), said the tourism industry likely will not see a revival until the final quarter, when five more destinations -- Krabi, Phangnga, Koh Samui, Pattaya and Chiang Mai -- are added to the sandbox.
The number of international arrivals to Phuket from July to September could be as moderate as 100,000 because tourists from Asia, a major target of Thai tourism campaigns, may not be ready to take outbound trips.
Some countries are slow in their vaccination progress, while a number of governments are prohibiting their people from cross-border travel to curb spread of the virus.
Mr Yuthasak said European countries may achieve herd immunity by the third quarter, but could disregard the Far East for travel because that period is summer holiday season in Europe.
"When travel restrictions in Europe are lifted, people there may travel within the region first during summer. Thailand is the next choice when winter approaches," he said.
NO SEA SWIMMING = NO HOPE
From April, the Thai government shortened the quarantine period from 14 to 10 days for international arrivals (except those from countries with Covid-19 variants), and seven days for vaccine certificate holders.
It also introduced the "Area Quarantine" scheme that allows tourists to check in at designated hotels and leave the room to use other facilities within the hotel area. But hoteliers raised concerns about some restrictions, particularly the prohibition against swimming in the sea, which have made some markets such as the Russians think twice about coming to Thailand in the second quarter.
Under the current regulations, tourists can only play in open water if those hotels have a private beach. Only a few hotels have that privilege.
Mr Phiphat said the ministry acknowledges this regulation is a weakness, but it is likely to remain until at least June.
Moreover, any mandatory quarantine, even a shorter period or looser restrictions, is still a hindrance to tourists wanting to visit, he said.
A TAT e-survey of 18 markets found most prefer destinations that already lifted mandatory quarantine.
For instance, 84.5% of Chinese and 97.9% of Russians opt for quarantine-free overseas trips, meaning there's minimal hope for the Thai sector in the second quarter, said Mr Yuthasak.
Woranate Laprabang, chief executive of Thai Vietjet (TVJ), said those countries that can vaccinate the majority of their population and achieve herd immunity first will be in control of negotiations over cross-border travel.
When communities are safe from Covid-19, they have the privilege to choose with whom they want to partner, said Mr Woranate.
"Singapore has been outstanding in terms of vaccination progress. If the country inoculates 70-80% of the population by August, it can pick which countries it wants to open up to for travel," he said.
Mr Woranate said while Thailand will not achieve herd immunity as fast as neighbouring countries, the partial reopening of the Phuket sandbox may help mitigate the impact.
TVJ, like other airlines in Thailand, is queuing for vaccine administration. When its 740 staff are inoculated, the company will restart international flights that have tourist demand, he said.
Last year TVJ carried 3 million passengers. This year it hopes to increase the number to 6-7 million, with 1-2 million international guests.
BET ON THE FUTURE
Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC), said the government plan to reopen the country to foreign tourists is expected to help the economy from the third quarter.
On Feb 15, the NESDC predicted Thailand would draw 3.2 million foreign visitors, generating 320 billion baht in revenue this year. The prediction assumes foreign visitors are allowed to visit Thailand by the fourth quarter.
Kattiya Indaravijaya, chief executive at Kasikornbank (KBank), said tourism recovery depends largely on three factors: the government's reopening policy; the policies of tourist origin countries towards international travel; and vaccination progress.
"The vaccine passport is an important tool to help Thai tourism recover, but implementation of such a scheme takes time, depending on the speed of vaccine rollouts globally, vaccine effectiveness and Thailand's procedures in accommodating international visitors," she said.
KBank predicts the country's tourism recovery takes place in three phases. The first is driven by domestic travel during 2021-2022, while the second phase is bolstered by short-haul travel within the region, primarily for business purposes.
The third phase is supported by global travel, with more leisure travel to Thailand while business travel substantially declines as more business transactions are carried out virtually.
"It will take more than three years for Thai tourism to recover. The hospitality sector is expected to generate 2.7 trillion baht in 2024, close to the pre-pandemic level of 3 trillion in 2019," said Ms Kattiya.
She said the pandemic began in December 2019 and has dragged down global tourism to the lowest level in 33 years.
The crisis sent shockwaves throughout tourism supply chains, from accommodation, restaurants and souvenir shops to car rentals at tourism hubs, said Ms Kattiya.
In 2020, Thailand lost more than 2.1 trillion baht in tourism revenue, representing 13% of GDP.
The resurgence of Covid-19 late last year also hindered a potential recovery in tourism. The pandemic cost the tourism sector more than 55 billion baht during the first two months of 2021, she said.
According to Ms Kattiya, the tourism industry contributed 3 trillion baht to the Thai economy in 2019, representing 18% of the country's GDP, of which 2 trillion came from foreign tourists, representing 12% of GDP, and 1 trillion from domestic travel, or 6% of GDP.