Testing hobbles tourism recovery

Testing hobbles tourism recovery

Travel sector among last to improve, says economist

Hotel operators are clamouring for RT-PCR testing upon arrival for foreign visitors to be eliminated from requirements to avoid a tourism collapse as the resumption of the Test & Go scheme alone is not enough to create momentum.

Adding perspective at "Bangkok Post Conference 2022: Omicron Crisis", a chief economist believes the tourism industry will take longer to recover than other sectors.

Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, said feedback from the new Test & Go scheme is slower as the current programme cannot compare to its initial launch last November because the high season is close to ending.

Another critical obstacle for the industry is tourists are required to take a second RT-PCR test at hotels five days after arrival, which means additional costs for travellers and results in a higher burden for hoteliers.

Speaking at the conference, Mrs Marisa said RT-PCR tests upon arrival should be removed to entice tourists and enhance the country's competitiveness after the Philippines, Vietnam, Cambodia and Australia all moved to simplify travel rules.

Many countries, particularly in Europe, haven't mandated RT-PCR tests.

The Maldives, which welcomes tourists without such testing requirements, already saw its tourism figures in 2021 surpass 2019 levels, she said.

Given the current rules, hoteliers have to hire more staff to provide additional health services, said Mrs Marisa.

Hoteliers can now only break even with a 45% occupancy rate, up from 30-40% in normal times, she said.

Hotels could stay afloat with occupancy rates of 50% if there is further relaxation of travel rules and travel bubble agreements, said Mrs Marisa.

The government should offer domestic travel stimulus to support the tourism business, particularly meetings and seminars by state agencies, she said.

"We have to create more momentum for the industry to take off from its historic low," Mrs Marisa said.

"If the testing requirement for the Test & Go scheme cannot be relaxed, tourism will surely face further collapse as operators already drew their last breath."

She said the ongoing Covid-19 outbreak is incomparable to the financial meltdown or Tom Yum Kung crisis in 1997, which only affected investors.

The pandemic also widened the gap between hoteliers who can manage an adequate cash flow and smaller hotels still struggling to operate, said Mrs Marisa.

Competition will be even more critical in the future and cause an uneven recovery, she said.

According to data from the Interior Ministry, the number of registered hotels in Thailand was 16,282, but dipped to 15,072 as some surrendered their hotel licences amid the tourism slowdown.

Thailand tallied only 427,869 tourist arrivals last year.

Half of hotel workers lost their jobs during the third quarter last year because of the fresh wave of the Delta variant. This could mean a labour shortage in the near future, said Mrs Marisa.

Former hospitality veterans who already found more secure jobs in other sectors may not return to the business if they are unsure of a sustainable recovery, she said.

Planned training programmes cannot guarantee Thai hospitality can return to the same high standard in a short period, said Mrs Marisa.

She said tourism solutions need to become a priority for every ministry. They need to have the integrity to develop the supply side of tourism as it is crucial to the country's economic growth, said Mrs Marisa.

LONG ROAD TO RECOVERY

Amonthep Chawla, chief economist at CIMB Thai Bank (CIMBT), said at the seminar the bank forecasts the Thai economy will recover to the 2019 level in the first quarter of 2023.

The recovery would be supported by the export sector, in line with a global economic recovery led by developed economies, especially the US, Europe and China, he said.

The Thai economic recovery will also rely on the tourism industry, though this sector is expected to take longer to rebound than the country's overall economy, said Mr Amonthep.

Cross-border travel measures for both Thailand and other countries are essential to improving the sector and supporting the country's economic recovery, he said.

Possible Covid-19 outbreaks create uncertainty in the tourism sector. In particular, Chinese tourists are expected to delay visiting Thailand as they favour domestic tourism, said Mr Amonthep.

"Although we assess the Thai economy will reach the same level as before the pandemic in the first quarter of next year, the country's tourism recovery will take more time," he said.

"Hotels targeting high-end customers will recover first, while those below four stars and tour agencies would take longer to rebound."

Mr Amonthep said the bank plans to monitor the government's Test & Go measures and forecast both the country's tourism and economic outlook again.

The research house expects foreign tourist arrivals will gradually start to improve in the second half of this year.

The severity of the Omicron variant has been weaker than previous assessments, he said, while the government has not needed a lockdown for containment.

Even though new Omicron cases have been rising, the impact on the public health system is still manageable and it should not severely impact the Thai economy, said Mr Amonthep.

CIMBT predicts economic growth in 2022 of 3.8%, with continued growth in 2023.

However, Thailand's economic growth after the pandemic is contained could be lower than its potential growth rate and that of regional peers given several structural problems, he said.

Thailand needs to prepare to handle the economic rebound to prevent another possible crisis, said Mr Amonthep.


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