Strong baht, flooding impact Thailand’s tourism market deficit with Japan

The appreciation of the baht and severe flooding have emerged as pivotal factors for Thailand’s tourism industry, particularly with the High Season fast approaching. The final quarter is crucial in determining if Thailand can rebalance its tourism market deficit with Japan, which outperformed Thailand last year.

By August, 706,500 Thais had visited Japan, while 668,221 Japanese tourists had travelled to Thailand, creating a gap of around 38,000. This disparity was much smaller compared to the previous year when Japan had a surplus of over 189,000 tourists, attracting 995,558 Thai visitors against 805,768 Japanese arrivals in Thailand.

Chuwit Sirivejkul, regional director of marketing for East Asia at the Tourism Authority of Thailand (TAT), expressed confidence that the Japanese market would contribute at least 1 million visitors this year. The Thai Travel Agents Association also forecasts that the Thai outbound market will exceed 1 million visitors for the first time.

The final quarter is traditionally a busy period for Thai tourists, who often visit Japan to enjoy the autumn foliage and snowy weather, Chuwit said.

“We can look forward to a growing market during this high season. Heated competition for airline seats should return.

“This could result in a spike in airfares, as occurred last year, as available seats have recovered to just 65% of the 2019 level.”

Thailand tourism

Chuwit added that while the strong baht might not deter Japanese tourists from visiting Thailand, they would now have stricter budget plans and disciplined spending.

A greater concern is the declining travel demand from Japan’s aged population, with 30% of Japanese now older than 65. This group is more sensitive to volatile exchange rates and prioritises their budget for health over travel.

Since the pandemic, many older Japanese have not renewed their expired passports. In response, the Japan Association of Travel Agents is offering a discount of 8,000 yen on the passport application’s full fare of 15,000 yen, Chuwit said.

“Last year, TAT launched privileges for Japanese who visited Thailand as the first country for their renewed passports. We decided to continue this project in the fiscal year 2025, starting this month, in a bid to accelerate the growth of the young generation. This group is less affected as they’re willing to spend.”

TAT recently participated in the 35th Tourism Expo Japan 2024 at Tokyo Big Sight, with 13 tourism operators from Thailand aiming to capture new business opportunities.

Chuwit noted that while the young generation accounted for only 20% of Japanese visitors to Thailand in 2023, the trend appears promising. The increase is attributed to student trips, tourists attending fan meetings and concerts in Thailand, and young professionals feeling economic pressure.

Digital nomads

However, Japan is considered a mature market, meaning it cannot expect a significant surge in numbers like China. Instead, it is a quality market with a steady average spending of over 50,000 baht (US$1,535) per trip and an average stay of 9.25 days.

Kajorndet Apichartrakul, director of TAT’s Tokyo office, said the young generation, especially digital nomads, has helped improve the market this year and is expected to be a key contributor to the 10% growth rate anticipated for 2025.

Despite the strong baht and a weak yen, Japanese tourists view Thai tourism products as affordable, which could help mitigate the exchange rate deficit. Additionally, average Japanese salary growth hit a 33-year high in 2024, improving positive sentiment among young workers, Kajorndet said.

“Another factor to watch is natural disasters, not only flooding in Thailand, but also flood-hit areas in Japan.”

“Severe weather forecasts always discourage people from looking for trips away from homes. Normally the market needs four to six months to pick up.”

Kajorndet also mentioned that overtourism in some Japanese destinations could persuade locals to opt for overseas trips, reported Bangkok Post.

“Thailand was still ranked as the fourth most visited destination for the Japanese, following South Korea, the US, which includes Hawaii, and Taiwan.”