Thai hotels are likely to face secondary effects from the US reciprocal tariffs as slowing tourist arrivals may cause hoteliers to cut prices or introduce more aggressive campaigns at home, while their overseas operations cannot escape the impact of the global economic slowdown.
Spending per person in Thailand is expected to decline 1% next year and stay flat in 2027, attributed to the weaker global economic outlook, said CGS International Securities.
CGS International, a unit of Beijing-based China Galaxy Securities, cut its tourist arrival estimate to 34.5 million for this year from 39 million, down from 35.5 million posted last year. The brokerage's estimate for 2026 was downgraded to 36.3 million from 41 million.
Tourist arrivals amounted to 9.5 million in the first quarter of 2025, up 2% year-on-year, but 12% below the same period of 2019.
Chinese tourist arrivals plunged 24% for the period to 1.3 million from 1.8 million year-on-year, accounting for only 42% of the 3.1 million arrivals in the first quarter of 2019, according to CGS.
"We believe it will take a few more months before Thailand can see a meaningful turnaround in Chinese tourist arrivals. Together with the potential impact from the weaker global economic outlook given the US's reciprocal tariffs, we expect Chinese tourists to Thailand to total 5.1 million this year, down 25% from 6.7 million last year," said CGS head of research Kasem Prunratanamala.
"We believe the global slowdown is likely to affect tourist arrivals in other countries as well, not only Thailand. Thai hotels that have operations overseas are unlikely to escape the impact."
Weaker hotel demand could also intensify competition in the industry, resulting in lower margins, according to CGS.
Even though a weak baht may benefit Thai hotels, making it cheaper for foreign tourists, the brokerage believes the benefit would be more than offset by a weaker global economy and higher hotel competition, said Mr Kasem.
A Bloomberg consensus projects world GDP growth of 2.8% this year and 3% in 2026, compared with 3.2% in 2024.
"The impact of the tariffs could be prolonged unless the US president tones down the tariffs significantly. The tourism sector is likely to see a direct impact from the tariffs and a secondary impact from a slowdown in the global economy," said Mr Kasem.
KGI Securities (Thailand) said hotel performance normally declines in the second quarter because it is the low season for tourism.
"The sector outlook should improve if tourism stimulus schemes such as 'We Travel Together' are launched during the low season in the second and third quarters," said KGI analyst Parin Kitchatornpitak.
The brokerage reduced its foreign arrivals projection for 2025 to 36.5 million from 38 million due to the weak recovery of the Chinese and Korean markets, he said.
