Domestic tourism is still struggling with weak purchasing power because of higher costs of living and soaring debt, leaving small hotels and regional operators with financial burdens, says Kantapong Thananerngroth, president of Thai Tourism Promotion Association.
He said domestic tourists are travelling less frequently and spending less than in recent years, especially the mass market as they confront household debts and a higher cost of living.
Thailand's household debt tallied 90.6% of GDP in the first quarter, while non-performing loans are projected to increase.
Mr Kantapong said many local businesses and second-tier tourism destinations are still hoping for a stronger flow of domestic travellers, but it is unlikely to happen this year.
Given the sluggish domestic tourism, tour operators have gained minimal profit compared with before the pandemic, leading a number of them to remain shuttered, he said.
Some operators can sustain their businesses by pivoting to middle to high-end tourists, who still have sufficient budget for travel, such as retirees, said Mr Kantapong.
Many customers are from the central region and Bangkok, as this segment has recovered faster than other regions, he said.
Udom Srimahachota, vice-president of the Thai Hotels Association's western chapter, said Hua Hin and Cha-am tourism have been directly affected by increasing household debt, as 80% of tourists in these areas are local travellers.
Mr Udom said three-star hotels and those with lower ratings are suffering the most as they depend more on the mass market than five-star hotels, which can rely on high-spending customers.
With small and medium-sized enterprises across all sectors facing high operational expenses, workers are saving money for daily costs and spending less on tourism, he said.
Domestic trips are mostly occurring during long holidays, with fewer trips on weekends, said Mr Udom.
He said the average room rate in Hua Hin and Cha-am is 25% lower than the pre-pandemic rate and will remain at that level for the remainder of the year because hotels are reluctant to increase prices while consumer purchasing power is weak.
Last month, the occupancy rate for Hua Hin and Cha-am was 40%, while the projected rate for July and August is 45%, mainly attributed to European markets travelling during summer holidays, said Mr Udom.
He said the new government should help stimulate domestic consumption as soon as possible, appealing to locals to spend on tourism.
Incentives such as a sixth phase of the "We Travel Together" scheme should also be considered to improve domestic tourism, especially in second-tier destinations during the low season, said Mr Udom.