Travel industry girds for weak low season amid cost and weather challenges

The travel industry is bracing itself for an exceptionally weak low season, with predictions of stagnant demand, escalating operational costs at popular destinations, and the impacts of tropical storms.

The president of the Thai Travel Agents Association, Charoen Wangananont highlighted that the season’s sale rate for outbound packages significantly lags behind the comparison period recorded before the pandemic. He cited hesitancy and prudence shown by both individuals and executives, reducing their expenditure on travel.

A notable shift has arisen within group travel. Government agencies, historically a key market sector for tour companies, have grown concerned about budget allocation amid political uncertainty, added Charoen. Several agencies have decided to curb overseas trips to dodge potential criticisms of opulent spending.

Despite the downturn, Charoen noted that a select demographic with high purchasing power is maintaining their international travel plans, reflecting an emerging trend in the aftermath of the pandemic.

Obstacles have arisen for potential destinations previously offering competitive prices, such as South Korea. A drop in package sales can be attributed, in part, to worries surrounding Typhoon Khanun, which impacted South Korea last week.

As a result, availability on routes to South Korea has decreased to between 60% and 70% of the capacity observed in 2019. In response to this weaker demand, airlines have reduced fares dramatically, and tour operators have cut package prices to just 75% of the standard rate applied before the pandemic. Charoen further observed that corporations have avoided organising incentive programmes in South Korea, due to complications in the K-ETA application system.

Looking to the future, while predictions forecast a recovery in outbound travel starting next month, the increasing cost of trips to popular locations such as Japan could deter Thai tourists. Charoen revealed that a rise in service items’ prices in Japan, such as transportation and hotels, could elevate package prices by 15% to 20% in the upcoming high season, reported Bangkok Post.

The outbound market for the travel industry this year is estimated to shrink to 6 to 7 million from 11 million in 2019. Charoen speculated it would require two to three years to regain the volume of outbound tours recorded in 2019, acknowledging that every destination now carries a heftier price tag, often exceeding what the average Thai can afford. Trips to sought-after destinations like Europe, for example, could reach up to 100,000 baht per person.