The tourism industry posted underwhelming results for the first four months this year as the international market contracted by 0.2% year-on-year.
In response, last week the cabinet approved a series of measures aimed at reassuring the industry of the government's commitment to rescuing it from a downturn.
As the Tourism Authority of Thailand (TAT) prepares to downgrade its target for foreign arrivals this year, while retaining the goal for higher revenue growth, significant challenges remain.
Many of these obstacles cannot be resolved through marketing efforts alone, requiring cooperation and commitment from multiple ministries to achieve the desired goals, particularly reassuring potential tourists about safety measures.
THE CHINESE FACTOR
The economy usually has an impact on outbound tourist flows from China. However, last year differed as the number of Chinese travelling abroad surged to 146 million despite a dismal economy.
The Chinese outbound market was predicted to reach 155 million travellers this year, the same level as in 2019.
Thai tourism operators took note as the figures confirmed Chinese still have strong demand for international travel, but are looking beyond Thailand.
Dithanop Vattanawakin, an analyst with Krungsri Securities (KSS), said while outbound Chinese tourists have surged, their arrivals in Thailand are plummeting.
Between April 30 and May 6, outbound Chinese flight routes soared 16% year-on-year, with strong growth in flights from China to Japan (up 43% year-on-year) and South Korea (increase of 28%).
However, China-Thailand flight routes declined 25% on an annualised basis, marking the 13th consecutive week of decline.
Chai Iamsiri, chief executive of Thai Airways International (THAI), said air travel has rebounded to pre-Covid levels in most regions, with Asia-Pacific the lone exception.
"We initially observed this growth as pent-up demand from the Covid era, but it has proven to be permanent," said Mr Chai.
The main reason Asia-Pacific lags other regions in terms of air travel is China.
"China is causing a slower recovery than expected as it struggles to revive its domestic economy," he told the Bangkok Post.
The flag carrier anticipates Asia-Pacific air travel can return to the pre-Covid volume next year, said Mr Chai.
THAI flies to five Chinese cities with five flights daily. The carrier reduced its Chinese flights to 35 per week, significantly lower than the 80 flights weekly before the pandemic.
Japan and South Korea are now the top revenue generators for the airline in North Asia, replacing China, which has less appetite to travel abroad.
"As far as we know, the Chinese government has yet to encourage citizens to travel overseas, focusing instead on domestic trips," he said.
Tassapon Bijleveld, executive chairman of Asia Aviation, the majority shareholder of Thai AirAsia, said the downturn in the Chinese market is not solely due to declining safety confidence.
He said economic uncertainties exacerbated by the US tariff hikes also played a significant role, suggesting it would take a long time to restore this market.
Mr Tassapon said the overall outlook in the second and third quarters is particularly worrisome if no attractive measures are introduced to lift international markets and their spending.
He urged the government to swiftly implement initiatives that directly encourage foreign tourists to visit and spend in Thailand, such as a nationwide grand sale involving hotels, accommodations and retail stores.
The government should also subsidise tourism operators, allowing them to offer discounted prices to visitors using those funds, said Mr Tassapon.
"Despite generating trillions of baht for the country, the Tourism and Sports Ministry typically receives an annual budget of less than 10 billion baht. With the industry sinking, it's time to invest in this key economic engine," he said.
Tourism operators are calling for measures to restore the market during the low season. (Photo: Pattarapong Chatpattarasill)
TARGETS TURNED COMPETITORS
Pattaraanong Na Chiangmai, deputy governor for international marketing for Asia and South Pacific at the TAT, said the agency recently completed a roadshow to three Chinese cities: Xiamen, Wuhan and Chengdu.
The Chinese market slightly increased during the Labour Day holiday earlier this month, but she said the East Asian market including Japan may not revive until the school holidays in July and August.
As the Chinese market over the first four months plunged by 30%, Ms Pattaraanong said five TAT offices in China reported sentiment towards Thailand remains severe, attributed to the negative perception concerning security issues, which require government-to-government initiatives to address.
In the TAT's worst-case scenario, the Chinese market could plummet to 4 million this year, generating 240 billion baht, less than half the revenue earned in 2019, she said.
If the stimulus measures planned for the coming months prove successful, Thailand could earn 370 billion baht from 6.2 million Chinese tourists, according to the TAT.
Another challenge this year is intense competition from within Asia. Key markets that once generated significant revenue for Thailand, such as China, Japan and Vietnam, are now considered major rivals for revenue.
In 2024, Japan welcomed 6.9 million Chinese tourists, surpassing Thailand, which ended the year with 6.7 million.
In the first quarter of this year, Vietnam edged out Thailand as the most-visited destination among Chinese tourists, recording 1.5 million visitors, nearly half of the 3.7 million it received in all of 2024.
China is aggressively promoting tourism, offering both 240-hour visa-free transit and increasing tax refunds to 13% for foreign tourists.
"The Chinese market previously made up 25% of foreign arrivals. This year, its portion could decrease to 17%, but they are still considered an important market for us," said Ms Pattaraanong.
FACING THE TRUTH
Thanet Supornsahasrungsi, president of the Association of Chonburi Tourism Federation, said the number of foreign arrivals is unlikely reach state targets of 36.5-38.5 million this year unless a clear measure can guarantee tourist safety and a stimulus scheme is enforced.
The association is part of the Federation of Thai Tourism Associations (Fetta).
One Fetta member, the Association of Thai Travel Agents, submitted a proposal to the Tourism and Sports Ministry encouraging the government to host a familiarisation trip for Chinese travel agents and media, as well as allocate subsidies for 1,000 chartered flights from Chinese second-tier cities as soon as possible.
Mr Thanet said the government should ensure incentives offered for chartered flights are attractive enough for Chinese travel agents to prioritise selling Thailand over other destinations, as restoring tourist flow is a more crucial strategy than spending on one-time events and activities.
If this measure proves successful, he said the government should apply it to other markets that are shifting to Vietnam, such as South Korea and Russia.
Mr Thanet insisted the Chinese market remains crucial for the Thai tourism industry, particularly three- and four-star hotels located outside prime locations that still rely on bookings from tour groups.
To offset the sluggish Chinese market, many hotels have adjusted their focus to other potential markets, such as Europe and India, he said.
They competed for those markets with heavily discounted prices to increase occupancy during the low season, including the association's recent "Hotel x Attraction meet Indian DMC 2025" sales event.
Mr Thanet said at the sales event, a themed family hotel sold their rooms at around 5,500 baht per night including dinner, though typically it would cost 8,000-10,000 baht for such products.
Safety concerns about Thailand are not limited to the Chinese market -- some Indian travel agents raised similar worries.
He said the government should increase the volume of the Indian market, which has high potential based on its large population, and encourage Malaysian tourists to travel to other destinations beyond the deep South.
"Enhancing tourism is not only about marketing and stimulus campaigns. We need safety measures to regain tourists' confidence," said Mr Thanet.
While the government claimed the new Thailand Digital Arrival Card would help improve transnational crime screening, he said it only partially addresses the problem because a loophole is the reporting of tourist information for people who stay at unlicensed accommodation.
Tourists from Western countries are still the main target for the Thai tourism industry. (Photo: Chanat Katanyu)
FRESH CONCERN
If tourism growth continues to lose steam throughout the year, policymakers should be concerned as Thailand struggles to avoid an economic downturn with the looming impact of Washington's reciprocal tariff policy, according to the Federation of Thai Industries (FTI).
FTI chairman Kriengkrai Thiennukul cited this concern recently at a Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) meeting discussing the decline in foreign tourist arrivals.
"Chinese tourists were expected to drive the tourism sector, but their arrivals plunged during the first four months this year," said Mr Kriengkrai, who chaired the JSCCIB meeting on May 7.
The group acknowledged there are several factors for the decrease, notably a concern over travel safety in Thailand.
The Thai economy depends on revenue from foreign tourists, in addition to exports and foreign direct investment. The prospects for exports are not good, as Washington plans to impose a 36% tariff on Thai imports.
Many industries selling products and services related to tourism want Thailand to maintain its attractiveness to draw foreign tourists and revive revenue, according to the JSCCIB.
A dip in foreign tourist arrivals, especially from China, is among the factors that could lead to a drop in motorcycle manufacturing, Surapong Paisitpatanapong, vice-chairman of the FTI and spokesman for its Automotive Industry Club, said earlier.
Foreign tourists and motorcycle production are linked, as tourism activities lift motorcycle production because some tourists enjoy riding a motorcycle when visiting the country, noted the club.
Mr Surapong said economic circumstances, including the impact of US tariffs, could cause Thai motorcycle manufacturing to contract this year.
The club is considering downgrading its 2025 manufacturing projection of 0.1% growth year-on-year and 2.1 million units.
AIMING FOR QUALITY
Panit Kannasut, owner of Krua Kun Kung, a restaurant near the Grand Palace in Bangkok, said the number of Chinese tourists has not yet returned to levels before the pandemic.
In May 2024, Thai diners made up roughly 70% of the restaurant's customers, with the rest foreigners.
Among international diners, 60% are from China, 30% from other Asian countries and 10% from Europe.
Typically in May, she said there are fewer European guests, with some Chinese and Asian travellers due to school holidays. However, this year Ms Panit noticed a drop in both Thai and Chinese customers.
"Since mid-March, I have observed about a 20% sales decline for all customers. I have never seen anything like this before," she said.
Fewer Thais are dining at the restaurant, and those who do are spending less. This indicates Thai customers are being more cautious about their spending, said Ms Panit.
She speculated the decline in Chinese tourists could be linked to the kidnapping of the Chinese actor earlier this year, the earthquake in late March and the sluggish Chinese economy.
"Roughly 5-10% of our customers are Chinese, and perhaps some of those are expats living in Thailand," said Ms Panit.
She said European holidaymakers could also be affected by the sluggish economy.
These challenges have prompted restaurant operators to tighten their costs and seek new customers, such as tour groups.
Ms Panit encouraged the government to find new markets, such as Southeast Asia, as people from these nations share a culinary culture and have spending patterns comparable to Thais.
"The focus should shift to attracting quality foreign arrivals rather than just quantity. Finding customers who are willing to spend more is key," she said.
As the upcoming high season may have fewer foreign arrivals, the government should promote tourism before that period, particularly as travellers begin planning their year-end trips, said Ms Panit.
PROJECTION DOWNGRADE
Parin Kitchatornpitak, an analyst with KGI Securities (Thailand), said the brokerage lowered its forecast for foreign arrivals to 36.5 million this year, down from 38 million due to a slower recovery of the Chinese market than expected.
KSS also projects Chinese tourist arrivals to remain weak this year, accounting for only 43% of pre-Covid levels and 13% of total arrivals in 2025.
"If this trend persists, we estimate total foreign arrivals this year could fall to 35.4 million, down 1% from 2024," said KSS analyst Sirilak Konwa.
Maybank Securities (Thailand) also cut its tourist arrival estimate to 37.5 million this year from 40.5 million. Of the total, 6.5 million are from China.
BofA Securities downgraded its foreign arrival forecast again from 37.2 million to 36.2 million.
Chinese tourists often wore Thai student uniforms during their trips here last year. Apichart Jinakul
