Tourism faces new battle ahead

Tourism faces new battle ahead

Russia's Ukraine invasion likely to hit visitor numbers from both countries

Away from home: Tourists wearing face masks walk along a beach in Pattaya, a favoured destination for people from Eastern Europe, in December.
Away from home: Tourists wearing face masks walk along a beach in Pattaya, a favoured destination for people from Eastern Europe, in December.

The first shelling by Russian troops against Ukraine has reverberated all the way to Thailand, sending a shockwave to tourism businesses in Phuket and Pattaya, the favourite playgrounds for visitors from the two countries.

The attack on Ukraine is feared to rub salt in the wound for tourism operators reeling from the assault of the Covid-19 pandemic. They were counting on a rebound in visitors from both Russia and Ukraine.

However, the military tension half the world away looks set to upset tourism both here and further afield.

In particular, tour agencies in Phuket and Pattaya and hotels are bracing for aftershocks from Russia's attack.

Tourists from Russia and Ukriane have contributed a great deal to the local economies. For Phuket, Russians have make up the biggest arrivals since the province, along with the rest of the country, reopened to tourism in November last year.

Knock-on effect

Bhunanan Patanasin, president of the Pattaya Business and Tourism Association (PBTA), said Russian and Ukrainian visitors have been the mainstays of the tourism sector in Pattaya.

The onset of the pandemic two years ago saw visitor numbers from the two countries fall significantly. The conflict between Russia and Ukraine is likely to hurt tour agencies and hotels, which are the backbone of the tourism industry.

Mr Bhunanan said several hotels have urged the government to zero in on the Russian market in its tourism promotion campaigns.

Many tour agencies in Pattaya had booked hotels for clients, including Russians and Ukrainians, on credit. The agencies would use money they charged the next group of overseas tourists to settle the debt owed to the hotels.

This pattern was repeated until it was disrupted by the pandemic when no new visitors came, which left the tour agencies' credit reserves dry and the hotels with a mountain of outstanding debts.

Being able to welcome back many Russians and the Ukrainians, who form a large segment of visitors, would make a big difference to the agencies' and the hotels' balance sheets.

He estimated the combined debts accrued by the agencies to hotels in Pattaya to be shy of 100 million baht. The amounts of debt are proportionate to the size of the hotels.

"The Covid-19 crisis sent tourist numbers tumbling and now the tourism industry here is expected to suffer a further freefall with war breaking out," he said.

Hotel bookings are already down and so is the local economy, he added.

The PBTA president said tour agencies survive on the financial credit extended them. They have 10-15 days in which to honour their debts. "Imagine what two whole years of zero business have done," he said.

Big hotels are owed 30-40 million baht each and smaller hotels about 10 million baht each.

Many tourism-related businesses are beyond desperate, he said. They wrote to the Tourism and Sports Ministry to voice their grievances and sought help to restart the country's tourism and lift restrictions that might put off visitors.

Wooing back enough overseas tourists would be key to dealing with the debt issue in the hospitality sector, which would lift up other businesses in the supply chain.

Mr Bhunanan said that before the pandemic, a million visitors from Russia and nearby countries headed to Pattaya a year on average. Now, only a fraction have returned.

Since Nov 1, 48,000 visitors from these countries have travelled to Pattaya.

"The problem is the attack on Ukraine is bound to make tourism stagnation persist," he said.

He said many of the condominiums, previously rented by long-stay Russian tourists, were also deserted. Some were booked as quarantine accommodation under the Test & Go programme although it is only for a few days.

Damrongkiat Pinijkan, secretary of the Pattaya Entertainment and Tourism Association, said Russian and Ukrainian tourists prefer to visit pubs and bars which remain closed at the moment unless they operate in an open-air environment.

Large groups of tourists from the two countries opted to stay at big hotels including the Ambassador City hotel in Pattaya. Since Nov 1, they have helped to fill the void left by tourists from Asian countries.

He said that for many Russians, Pattaya is their second home as they have taken up permanent residency.

Thanet Supornsahasrangsee, acting president of the Chon Buri Tourism Industry Council, said Russia's attack on Ukraine is likely to affect Ukraine more than it does Russia.

But the pandemic has altered the pattern of Russians' travel to Thailand. Russian tourists previously came mostly on chartered flights but now visitors arrive on scheduled flights.

Some were also here on business trips and stayed in the kingdom for a few days. Russian tourists usually spend 7-14 days in Pattaya.

Conflict hitting tourism

Meanwhile, Russian visitors have topped the arrivals chart at Phuket Airport.

Bhummikitti Ruktaengam, president of the Phuket Tourist Association, said the conflict between Russia and Ukraine has so far spared tourism in the province.

According to the Tourism Authority of Thailand's Phuket office, between Nov 1 last year and Feb 24, 277,924 people arrived at Phuket Airport. Of them, 116,870 checked in via the Test & Go programme and 160,331 via the Sandbox scheme.

A breakdown by nationalities puts Russian visitors at the top with 51,186, followed by 25,793 Germans, 15,516 French, 14,030 Swedish, 11,643 Kazakhs, 11,165 Israelis, 10,553 Americans and 8,296 Australians.

Russian tourists tend to be big spenders, he said, adding a protracted conflict could push up the price of oil and hurt travel confidence. However, it might not have repercussions on Phuket tourism, at least in the immediate term.

Kongsak Khoopongsakorn, president of Thai Hotels Association (Southern Chapter), said the impact of the tension involving Russia and Ukraine will be unavoidable.

"People's travel confidence will take a battering. They might wait and see how the situation unfolds and put off travelling.

"Economic sanctions (on Russia) could result in fewer people going places and taking leisure trips," Mr Kongsak said.

Hotel bookings from overseas visitors have dropped this month. However, the shortfall has been shored up by domestic tourists. "So, it's more or less stabilising," Mr Kongsak said.

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