The recent appreciation of the baht and severe flooding have become crucial factors for the tourism industry for the rest of this year, with the high season approaching quickly.
The final quarter will be a critical period in determining whether Thailand can rebalance its tourism market deficit with Japan, after losing out to the country last year.
As of August, 706,500 Thais had travelled to Japan this year, while the number of Japanese visiting Thailand tallied 668,221.
The gap of around 38,000 in the first eight months was narrower than the whole of 2023, when Japan had a surplus of more than 189,000 tourists, as it attracted 995,558 Thai visitors compared to 805,768 Japanese arrivals in Thailand.
Chuwit Sirivejkul, regional director of marketing for East Asia at the Tourism Authority of Thailand (TAT), said the agency is confident that the 1 million mark would be the minimum benchmark the tourism industry could anticipate from the Japanese market this year.
The projection was similar to the forecast from the Thai Travel Agents Association, which expects the Thai outbound market to exceed 1 million visitors for the first time.
However, the final quarter is typically known as a busy period for the Thai outbound market, as they often flock to Japan to see the autumn foliage and experience snowy weather.
"We can look forward to a growing market during this high season. Heated competition for airline seats should return," said Mr Chuwit.
"This could result in a spike in airfares, as occurred last year, as available seats have recovered to just 65% of the 2019 level."
He said the strong baht alone would not discourage the Japanese from planning trips to Thailand, but they would now have strict budget plans and disciplined spending.
The greater concern is declining travel demand from the aged population, as 30% of Japanese are now older than 65, said Mr Chuwit.
He said this group is more sensitive to volatile exchange rates and would prioritise their budget for health over travel, as seen from the fact that out of a population of 125 million, only 20 million have a passport.
He said since the pandemic, most older Japanese have not renewed their expired passports, prompting the Japan Association of Travel Agents to offer a discount of ¥8,000 on the passport application's full fare of ¥15,000.
"Last year, TAT launched privileges for Japanese who visited Thailand as the first country for their renewed passports. We decided to continue this project in the fiscal year 2025, starting from this month, in a bid to accelerate the growth of the young generation. This group is less affected as they're willing to spend," said Mr Chuwit.
Last week, TAT also took part in the 35th Tourism Expo Japan 2024 at Tokyo Big Sight, which was joined by 13 tourism operators from Thailand, with the aim of capturing new business opportunities.
Mr Chuwit said while the young generation accounted for only 20% of Japanese visitors to Thailand in 2023, the trend was promising.
The growing number was attributed to student trips, tourists who attend fan meetings and concerts in Thailand, and first jobbers who felt more pressure from working amid intense economic conditions.
However, Mr Chuwit said Japan is already a mature market, meaning it could not expect a tremendous surge in numbers like China.
Instead, they are considered as a quality market with steady average spending of more than 50,000 baht per trip, and the average length of stay at 9.25 days.
Kajorndet Apichartrakul, director of TAT's Tokyo office, said the young generation, especially digital nomads, has helped to improve the market this year and would remain a key contributor for the 10% growth rate anticipated for 2025.
Despite a strong baht and a weak yen, he said the Japanese viewed Thai tourism products as affordable, and this could help compensate for the exchange rate deficit.
With average Japanese salary growth hitting a 33-year high in 2024, positive sentiment among young workers was improving.
"Another factor to watch is natural disasters, not only flooding in Thailand, but also flood-hit areas in Japan," said Mr Kajorndet.
"Severe weather forecasts always discourage people from looking for trips away from homes. Normally the market needs 4-6 months to pick up."
As there has been overtourism in some Japanese destinations, he said this could persuade locals to opt for overseas trips.
"This year, Thailand was still ranked as the fourth most visited destination for the Japanese, following South Korea, the US, which includes Hawaii, and Taiwan," said Mr Kajorndet.
