Thailand reopens -- what next?
A full tourism recovery anytime soon is looking increasingly unlikely
International airports in Thailand have come alive over the past week, with more than 12,000 travellers flying in, mostly from 63 countries which have been exempted from quarantine or area restrictions.
If this momentum continues, the total number of incoming travellers this month is likely to overtake the total for the past 19 months, which saw zero tourists during the first nationwide lockdown in the second quarter of last year.
It will also be a big leap from the four months of sandbox programmes, which have seen Phuket and Koh Samui attract 12,000-18,000 international tourists per month.
The current flow of tourists might create a positive vibe for the travel industry, but it is still in stark contrast to the pre-pandemic era, which saw over 3 million tourists on average visit Thailand every month.
Before the sandbox programme kicked off on July 1 this year, the government vowed to bring back at least 100,000 international tourists through this scheme during its first three months.
However, after four months of countless hiccups from unsettled regulations, the total number turned out to be far below expectations, with around 63,000 foreign visitors coming through this scheme.
The sandbox, therefore, helped shape the minimal requirements of the new entry scheme, called "Test & Go", that removes both mandatory quarantine and area restrictions for travellers from countries on the exempted list. The eligible countries will be updated biweekly, meaning more countries might be added in the future.
Fourteen of 15 countries that contributed the most revenue to Thai tourism in 2019 are on the list, with just Russia, which is still overwhelmed with new cases, missing.
As a result, the tourism outlook should be promising thanks to the relaxation of regulations. But in reality, bookings nationwide have not dramatically picked up, which is in line with many experts' forecasts that a full tourism recovery might not be seen any time soon.
Moreover, as more countries start to loosen travel restrictions, Thailand might not be the only option for tourists to choose from, but will become one of several options for those who want to venture overseas.
SLOW LEISURE MARKET
This year has turned out to be a tumultuous time for the Tourism Authority of Thailand (TAT), which was forced to revise its tourism target three times.
The lowest forecast of 100,000 international tourists was announced in early October after it became clear that the sandbox programme was attracting fewer guests than expected.
Tracking back to the beginning of this year, 3 million tourists was set as the target, before it was revised down to 1 million when there were flare-ups from the Thong Lor cluster, which originated from entertainment clubs packed with VIP guests.
Even though prospects for the last two months of this year look brighter, this time TAT has erred on the side of caution as many uncertainties lie ahead.
Thanet Phetsuwan, TAT deputy governor of marketing for Asia and South Pacific, said there are two different types of national tourism policies that have been observed during the pandemic.
The first group are countries that learned to live with Covid-19 by reopening themselves to global travellers, while the other group severely limited travel activities from outside, such as China, Taiwan, Hong Kong and Singapore.
"With tourism generating 15-20% of GDP, we had to choose the first path. However, we estimate that the tourism recovery may gradually resume with no brighter prospects until the second half of next year," Mr Thanet said.
The main reason is that policies and regulations need to be ironed out, with the November reopening considered as merely the first step towards recovery.
Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association (THA), said that online travel agents reported that their forward bookings were slow for November, before gradually rising to much stronger growth in December and January, but from a very low base.
With limited numbers of tourists, hotels still cannot fully reopen. The Hotel Business Operator Sentiment Index in October suggested that 67% of hotels are back in business, but with the average occupancy having only slightly improved to 25% in November, from 23% in October.
Mrs Marisa said 42% of the hotels said their sandbox performance was lower than expectations as travellers' costs surged to off-putting levels in part due to the pricey RT-PCR tests.
"It remains difficult for hotels to cash in from international tourists during the early stage of reopening as the number of flights and flows of tourists are much lower than pre-pandemic levels. There are just a few hotel chains that have strong loyalty programmes that can secure consistent and large portions of bookings from foreign guests," she said.
Following the reopening on Nov 1, new bookings are rising by 20%, which is slower than expected, while large tour operators have plans to bring charter flights to Krabi but have not yet given a commitment or confirmation, said Sasithorn Kittidhrakul, president of the Krabi Tourism Association.
She said that even if Thailand offers quarantine exemptions for many nations, as long as there is mandatory quarantine on tourists' return to their home countries it will be difficult to persuade them to commit to a holiday.
Suthiphong Pheunphiphop, president of the Thai Travel Agents Association (TTAA), agreed that the leisure market's recovery has not yet arrived.
He said many countries in Asia might have recently eased their entry regulations, but it has been mostly for necessary purposes or for business travellers and students.
"The leisure market might revive next year as we can see movement from global travellers, particularly in the countries that require no quarantine on arrival and offer hassle-free entry to facilitate tourists," said Mr Suthiphong.
Tourists relax at Patong beach, Phuket, which opened to fully inoculated tourists under its sandbox scheme in July this year. Dusida Worrachad-dejchai
ONCE BITTEN, TWICE SHY
Ms Sasithorn said a number of tourism-related businesses in Krabi face re-employment problems as many workers lost their jobs during the crisis and no longer want to come back to insecure work after having already settled down with new occupations.
She said wages for the tourism industry in Krabi were already higher than average. To resume business, operators must prepare extra budgets for employment, hotel maintenance, and health and safety, to meet the SHA Plus standard.
Ongoing uncertainties have made many hotel operators reluctant to dust off their businesses after months-long closures.
Most hotels still have to rely on the Thai market, which has seen significant improvements with six daily domestic flights to the province at present.
"Hotel margins are not high, due to such high operational costs. Some operators have also had to raise salaries to lure back skilled workers. We hope that 70-80% of 25,000 rooms in Krabi will reopen in December," said Ms Sasithorn.
Bhummikitti Ruktaengam, president of the Phuket Tourist Association, said there was no labour shortage in Phuket at the moment as tourist demand is still in line with the active workforces they currently have.
However, if demand rapidly increases in the coming months, there is the possibility that Phuket could face such a labour crisis.
"We can maintain the same payment rate for employees, but many of them have chosen not to return because they are uncertain about the tourism situation," he said.
Meanwhile, Mr Thanet said tourism operators have to learn how to maximise the domestic market as local tourists are important to sustaining the businesses, as witnessed over the past year when borders were closed.
In the past, the contribution from the domestic market was only 30% compared with 70% from foreign tourists, but the country must now turn to this local market to boost its share to 50%.
However, the main challenge is how to generate more revenue for local communities or agricultural communities than in the past, and how to leverage the tourism industry as the mechanism for minimising inequalities in society.
"The private sector in Thailand is resilient. They have fought hard in the past two years to maintain business and employment. Unfortunately, we have to accept that not all of them can return as many small and medium-sized operators who ran out of liquidity have already exited," Mr Thanet said.
He said another challenge during the recovery is labour shortages, which have already occurred in the south as many employees left their jobs during the lockdowns.
In some areas the minimum wage doubled as operators have been desperate to fill vacant posts as soon as possible to welcome new flows of tourists.
Mr Thanet said there's a long way to go to see how far the government can create a new national tourism structure that prioritises quality spending over head count.
In 2022, TAT aims to attract 1.9 trillion baht, or 50% of 2019 revenue levels, from 10 million international tourists, or only 25% of the 40 million annual travellers seen prior to the pandemic.
"It was already the end of large tour groups packed in big tour buses. There will be no more influxes of over 40 million tourists, but we have to keep the revenue contribution at the same level to cushion the impact on natural resources," Mr Thanet said.
For instance, Chinese tourists haven't completely disappeared in the past year, as there were business travellers that kept coming. And Chiang Mai has started to welcome golfers flying direct from South Korea -- they are an example of the quality segment the country is eyeing.
Mr Bhummikitti said that when Phuket launched its sandbox programme in July, tourists had few options at the time.
However, the landscape has changed recently as many countries or cities have implemented similar policies to bring back visitors, such as Langkawi in Malaysia and Bali in Indonesia.
He said entry regulations might not be decisive factors anymore as Thailand was already a step ahead by offering a more simplified process from November. But to sustainably attract the international market, Phuket must return to its core strength since before the pandemic -- outstanding tourism products.
Mr Bhummikitti said the tourism transformation fund slated for next year could help the private sector set up projects to develop local tourism products. He believed tourism operators would not object to this idea.
However, he said the most important aspects relied on strategic planning, as authorities needed to create a proper development roadmap to let businesses follow the same path.
"We should be thankful that the government has a solid plan to prepare sources of funds for sustainable project developments, but the direction from the central body should be clear enough to let us implement the successful transformation and win back tourists in the long run," said Mr Bhummikitti.
Mrs Marisa also agreed that the concept of creating high-value tourism with lower volumes was feasible for the country, but the government should not forget that this policy might cause inequalities among local communities.
"It's the right direction to promote quality over quantity. But how can we be assured that the benefits will circulate equally to local communities when fewer tourists visit the country?" she said.
To avoid such an outcome, she said the government should promote local communities to the domestic market in order to let the provinces gain more sustainable income, since the pandemic has already proved that Thai tourism can use the domestic market as a reliable source of income.
NO CHINESE ON THE RADAR
"There's no chance Chinese travellers will travel en masse by the next Chinese New Year in February," said Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents. "The next best hope for this market lies with the Golden Week in October, but nothing can guarantee that this market comes back by then."
He said that as the government in Beijing maintains a zero-Covid policy, it is hard to know when their people will be allowed to make overseas leisure trips again.
Mr Sisdivachr said that as the Chinese market was an important source of Thailand's tourism, making up about a quarter of the overall pre-pandemic market, the government should not let the opportunities slip away without putting in any effort.
"Travel bubbles with China are essential for our tourism industry. If negotiations for the whole mainland are impossible, we should try to initiate bilateral agreements with provinces that have a good track record of curbing the pandemic," he said.
The November reopening might see Chinese travellers arriving along with other nationalities, but Mr Sisdivachr said most of them were businessmen or professional experts, not part of the leisure market that could help strengthen the tourism industry in Thailand.
- Chinese New Year