Chinese tourist arrivals are recovering at a faster pace this month and the momentum is expected to persist through to Chinese New Year on Feb 10, helping local hotels during the high season, say analysts.
Official data showed tourist arrivals in December were recovering from key markets such as China, Russia, South Korea and India.
Average daily arrivals from China in the first half of the month accelerated to 47% of the daily average in the same period of 2019, said Boonyakorn Amornsank, an analyst with Maybank Kim Eng Securities (Thailand).
"We expect this momentum to persist through to Chinese New Year on Feb 10 next year," he said.
The slow resumption of flight capacity for Chinese flag carriers remains a downside risk for the Tourism Authority of Thailand's target of 8.2 million Chinese visitors in 2024, compared with 3.5 million projected for this year, said Mr Boonyakorn.
Maybank anticipates key international tourist markets including Europe, South Asia, Oceania and the Middle East to hit full stride in the fourth quarter of next year, with limited downside to hotels' earnings forecasts from the slow recovery of Chinese group tours.
Travellers from the mainland tend to spend less on accommodation compared with other nationalities, while the length of stay is relatively shorter for Chinese guests, he said.
From the brokerage's channel checks with management, the blended occupancy rate for listed hoteliers was at 70% in the past two months, up from 68% in the third quarter and 69% in the same period of 2022.
"Growing leisure travel demand and recovery in the Mice [meetings, incentives, conferences and exhibitions] segment should continue to drive hotel sector earnings to surge 21% year-on-year to a record high in 2024," Mr Boonyakorn said.
Central Plaza Hotel (CENTEL) stands to benefit the most from rebounding Chinese arrivals as it has the highest exposure to Chinese guests at its hotels in Thailand and the Maldives, noted the brokerage.
Minor International (MINT) is the sector's top pick for its strong earnings growth potential and attractive valuation, said Maybank.
Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), said despite some industry headwinds, the brokerage still expects a 19% year-on-year increase in the number of tourist arrivals next year.
Downside risk includes a weaker global economy, while catalysts are a strong surge in Chinese tourists and a healthy global economic outlook in 2024, he said.
The average occupancy rate of hotels was 65.2% in September, beating the rate of 62.7% in the same period of 2019, Mr Kasem said, citing figures from the Bank of Thailand.
The share of revenue from foreign tourists at hotels was 21% for the month, still well below 38% in 2019.
"We believe it may take a couple more years for the ratio to reach the pre-pandemic level," said Mr Kasem.
