A visa exemption for Chinese travellers could provide a strong boost to the local tourism industry, though arrivals are likely to be significantly below the 2019 level this year given the mainland's economic constraints, says a Thai brokerage owned by the Chinese government.
CGS-CIMB Securities (Thailand), which is 75% owned by China Galaxy International Financial Holdings, believes a slow visa application process has been a key constraint in Thailand's tourism recovery this year.
Removing the visa requirement could lead to a strong influx of foreign tourists, especially group travellers, said the company.
"We believe now is a good time for the new government to implement measures to maintain Thailand's economic recovery momentum, given the increased competition from regional peers," the brokerage said in a research note.
China lifted restrictions on outbound tour groups to several countries including South Korea and Japan last month, while the Indian government plans to increase the outbound remittance tax from 5% to 20% for overseas tours, including payments for air tickets and hotels starting next month.
"If a visa exemption scheme is implemented by the new government, we expect tourist arrivals from China and India to accelerate, as the combination of both markets made up nearly one-third of Thailand's total foreign visitors in 2019," said the brokerage.
According to data from the Tourism and Sports Ministry, Thailand welcomed 15.4 million foreign tourists in the first seven months of 2023.
"We project foreign arrivals in Thailand will reach 28 million this year, compared with 11 million in 2022," said the securities firm.
"Our base-case scenario projects 35 million arrivals next year, accounting for 85% of pre-Covid levels."
The brokerage maintained its estimate of 6 million Chinese arrivals this year, a significant decline from the 11 million recorded in 2019.
"Given the economic slowdown at home, mainly because of turmoil in the property sector, the Chinese have low purchasing power and not as much budget to travel abroad," CGS-CIMB Securities chief executive Patcharanon Cheevakrianggrai said in an interview with the Bangkok Post.
The brokerage expects Chinese tourist arrivals to return to 80% of pre-Covid levels by early next year.
As of July, tourist arrivals from China were at 40% of the corresponding period in 2019.
The figure is projected to recover to 50-60% by the end of the third quarter, rising to 60% in the last three months as group travellers return and the visa process is eased, said the brokerage.
Companies that stand to benefit the most are those with large business exposure to foreign tourism in Thailand, including Erawan Group, Central Plaza Hotel, Airports of Thailand and Minor International, according to the securities firm.