Consumer confidence dropped for the first time in three months in March as people fretted about political instability after the general election.
According to the latest survey by the University of the Thai Chamber of Commerce (UTCC), the consumer confidence index fell to 80.6 last month after rising to 82 in February from 80.7 in January.
"Consumers are increasingly concerned about the domestic political situation as the formation of a new government remains uncertain," said Thanavath Phonvichai, vice-president for research at the UTCC. "The world's economic slowdown because of the ongoing trade row between two giant economies also dampened consumer confidence."
Mr Thanavath said the pollution problem in Greater Bangkok and the North also affected decisions to travel during the upcoming Songkran holiday.
"Tourism is considered the only sector that will help boost the country's economy during the transition period," he said. "We believe it is necessary for the current government to introduce measures to shore up the domestic economy until a new government is formed."
The Thai Hotels Association's northern chapter, whose members are hotels in Chiang Mai, Chiang Rai and Mae Hong Son, said the haze in the North led to a plunge in hotel bookings in several northern provinces for Songkran, lowering the expected occupancy rate during the holiday to 60% from the typical 85%.
The projection is based on average bookings for Songkran, April 11-15, of some 10,000 rooms at hotels in the three provinces.
The massive amount of dust pollution in the North is caused mainly by forest fires, prompting authorities to issue health warnings to people suffering respiratory ailments and suggesting residents wear masks when going out.
Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT), also voiced concern about the situation, especially regarding hotels located in Chiang Dao, Mae Rim and Fang districts, which could see a drop in bookings to 50%. These districts sit close to forest fire sites.
The TAT forecasts 546,000 international tourists visiting Thailand for Songkran, while locals are seen making 3.1 million trips during the holiday.
The festival is expected to generate 20 billion baht in tourism income.
The UTCC forecasts GDP growth of 3.5-3.8% this year, with exports rising 4% after a 6.7% gain in 2018.