Thailand’s tourism – stormy weather ahead

Thailands tourism industry finds itself in stormy weather as a falloff in visitors spook trade, even forcing candid admissions from some of Thailand’s tourism chiefs.

Thailand has suffered a slump in tourism figures since the beginning of the year as hoteliers and tourism trade leaders have confirmed a huge 20 to 30% drop for June in tourist numbers and trade in Pattaya and Phuket this week in separate media interviews.

The slump is a startling and quite sudden drop, just seven months after the end of a record tourist year in 2018 and a good start with Christmas, New Year and January numbers. In December of 2018, the number of Chinese visors arriving in Thailand was over 838,000, a nearly 3% increase year-on-year at the time. A third of tourist arrivals into Thailand in 2018 were mainland Chinese.

But a perfect storm has now beset Thai tourism – emerging nearby tourist markets, a high baht, the US-China trade wars and ongoing fallout from the Phuket Boat Tragedy.

Locally there are other issues such as over-development of accommodation causing too much new competition, poor infrastructure and systemic tourist turn-offs never being addressed (Phuket taxi prices is one example).

All this is now broadly accepted, even officially. Figures for tourist arrivals show a slump following January this year. In April and May 2019 the figures for monthly arrivals dropped to 3,195,006 and 2,726,808. These arrival numbers were a big drop from, say, December last year.

The TAT governor, Yuthasak Supasorn, recently spoke to a meeting in Thailand’s north-eastern city of Udon Thani. He outlined plans by tourism chiefs to develop niche markets for Thai tourism for secondary locations in the country targeting affluent tourists seeking lifestyle and wellness experiences, including LGBT travellers. He predicted that tourist revenues for 2020 would reach 3.7 billion baht with a 10% growth. The authority is, officially, still holding out hope that 2019 can rebound.

The optimism is based on hopes and prayers rather than any of the ‘problems’ actually being fixed.

Meanwhile, hotel owners and managers staring down the low-season in Phuket and Pattaya have been raising the alarm highlighting reported drops of 20-30% compared to last year. Some hotels have admitted occupancy rates as low as 10-20% as the price wars continue to drive down room rates. They admit it’s an unsustainable situation fear that July and August could be as bad as June.

Kongsak Phupongsakorn is the head of the Thai Hotels Association for southern Thailand. He gave a wide-ranging interview this week to Manager Online and frankly addressed the situation.

‘There are hopes that Asian and Australian travellers will take up some of the slack in July and August. But that is all they are, hopes. Most people are expecting July to be just as bad as June.”

He blamed the problems not only on external factors but also on shortcomings in Thailand. One was the political uncertainty sparked in the run-up to the election in Thailand and the long process afterwards to form a new government.

The Phuket hotelier also criticised a lack of clarity in government policy and strategy regarding tourism.

Kongsak explained that Phuket has seen what he described as ‘leapfrog’ investment in the tourism industry on the island driven by a massive increase in tourist arrivals in five years from 9 million arrivals to 14 million.

“This poses a major problem for operators who find themselves competing for a shrinking market.”

He suggested that some rooms in Phuket were on sale at 50% of the low reason rate for June last year as desperate hotel operators try to recoup income on their investments. He also believes that there are now heightened tensions caused by the US-China trade war that is suffocating the tourist trade. This is most notably seen in a dramatic fall-off in Chinese tourists.

Kongsak also acknowledged the growing competition from other Asian tourist locations, especially Vietnam and Cambodia. He described a tourist industry in Phuket currently stranded with too many hotel rooms and not enough visitors.

A woman from Northern Ireland arrived in Phuket this week to repatriate the remains of her husband who drowned a week before before at the popular west-coast Surin beach. Just days before his drowning local beach users and surfers had highlighted the dangerous rip tides and the lack of lifeguards or warnings at the beach.

Read that story HERE.

In another rush of candor, Damrongkiat Phinitkar, the Secretary-General of the Entertainment and Tourist Industry of Pattaya told Sophon TV that the number of tourists and trade for June was between 20-30% down on the same month last year.

“Compared to last year, there are between 20-30% fewer tourists this low season.’

He blamed the absence of European tourists from the resort city. The tourist boss said that this had now become a long term trend but that in past years, the influx of Chinese tourists and travellers from other Asian countries had filled the gap. He hoped that European and western travellers are still more likely to arrive at high season.

Damrongkiat echoed other industry operators and confirmed that the glory days of the huge numbers of young and middle-aged European tourists crowding out the beer bars of Pattaya have come to an end. They have gone elsewhere or else they are put off by the high Thai baht and adverse economic conditions at home.