Chinese tourists boost Thailand’s hotel sector with rapid recovery

The number of Chinese tourists visiting Thailand is on a rapid recovery trajectory this month, a trend analysts predict will continue into the Chinese New Year on February 10. This resurgence is expected to provide a much-needed boost to local hotels during this peak season.

Statistics from December have shown a revival in visitors from key markets such as China, Russia, South Korea, and India, according to official data. In the first half of this month, average daily arrivals from China surged to 47% of the daily average during the same period in 2019, reported Boonyakorn Amornsank, an analyst at Maybank Kim Eng Securities (Thailand).

This analyst predicts that this upward trend will continue through to the Chinese New Year. However, he also points to the slow resumption of flight capacity for Chinese flag carriers as a potential risk to the Tourism Authority of Thailand’s target of 8.2 million Chinese visitors in 2024, compared to the 3.5 million projected for this year.

Maybank anticipates that key international tourist markets such as Europe, South Asia, Oceania, and the Middle East will fully recover in the fourth quarter of next year. Furthermore, the slow recovery of Chinese group tours is not expected to significantly impact hotels’ earnings forecasts.

Chinese travellers typically spend less on accommodation compared to other nationalities and their stays tend to be shorter. Despite these factors, the blended occupancy rate for listed hoteliers rose to 70% in the past two months, up from 68% in the third quarter and 69% in the same period in 2022, reported Bangkok Post.

“Growing leisure travel demand and recovery in the Mice meetings, incentives, conferences and exhibitions segment should continue to drive hotel sector earnings to surge 21% year-on-year to a record high in 2024,” forecasted Boonyakorn.

Central Plaza Hotel (CENTEL) is set to benefit the most from the rebound in Chinese arrivals, due to its high exposure to Chinese guests at its hotels in Thailand and the Maldives, Maybank noted. Minor International (MINT) was highlighted as the sector’s top pick for its strong earnings growth potential and attractive valuation.

Despite some industry headwinds, Kasem Prunratanamala, head of research at CGS-CIMB Securities (Thailand), still expects a 19% year-on-year increase in the number of tourist arrivals next year. However, he cautioned that a weaker global economy could pose a downside risk, while a strong surge in Chinese tourists and a healthy global economic outlook in 2024 could act as catalysts.

In September, the average occupancy rate of hotels was 65.2%, outperforming the rate of 62.7% in the same period of 2019, according to figures from the Bank of Thailand. However, the share of revenue from foreign tourists at hotels was only 21% for the month, still significantly lower than the 38% in 2019.

“We believed it may take a couple more years for the ratio to reach the pre-pandemic level,” predicted Kasem.