Thailand’s tourism industry gets jitters after currency surges, visitor numbers from China fall

Chinese tourists account for more than a quarter of all foreign visitors, but their numbers were down by 5 per cent in the first six months of the year
At the same time, over the past year the Thai baht has appreciated 12 per cent against China’s yuan – dissuading those who are price-sensitive

Thailand

Jitsiree Thongnoi

Published: 1:56pm, 29 Jul 2019

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Thailand’s tourism authorities are growing increasingly concerned that the country is losing its reputation as one of the most affordable destinations in Southeast Asia for Chinese tourists as its currency surges against the yuan.

Chinese tourists account for more than a quarter of all foreign visitors to Thailand, but their numbers were down by 5 per cent annually in the first six months of the year – from 5.9 million to 5.6 million – after a tour boat accident off the island of Phuket last July that left 47 Chinese visitors dead.

Salvagers retrieve the wreck of the ‘Phoenix’ tour boat, which capsized in July killing 47 Chinese tourists. Photo: EPA

Pipat Ratchakitprakarn, the newly installed minister of tourism and sports, has blamed the country’s surging currency for deterring tourists, with the Thai baht reaching a six-year high against the US dollar earlier this month.

“The baht has appreciated 12 per cent against the yuan in a year,” said Narit Stapoldecha, an analyst at Thai economic think tank TMB Analytics. “Thailand is [geographically] close to China, which makes it easy for Chinese tourists to cancel their planned trip and go to another destination.”

The Bank of Thailand recently introduced several measures to prevent baht speculation, including a 200-million baht cap on deposits in accounts held by non residents.

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But the currency’s recent appreciation puts Thailand at a disadvantage when it comes to attracting tourists, “especially those who are sensitive about prices such as family or budget travellers,” said Siwat Luangsomboon, an economic analyst at the Kasikorn Research Centre in Bangkok.

Another factor is the changing ways in which Chinese tourists are visiting Thailand, according to Narit of TMB Analytics, who said that tour groups, which used to account for about 60 per cent of Chinese visitors, have been replaced by so-called FITs – free, independent travellers – as a proportion of the total.

“They [FITs] are sensitive about prices and they could feel their money is worth more in closer destinations like Japan, South Korea and Hong Kong,” Narit said.

Two Chinese tourists with their luggage in central Bangkok. Photo: AFP

The effects of a surging baht have also been felt by tourists from other countries, such as Russia, Australia and those in Europe. In the resort town of Pattaya, for example, businesses catering to tourists have already begun to feel the pinch.

“A year ago a pound sterling was around 43 baht, now it is 38 baht, so if you have a budget of 300 pounds, you can now convert it to [less than] 15,000 baht,” said Ping, a souvenir seller in the town.

“Tourists ponder more on value when they spend on accommodation, transport and food. Bars and restaurants in Pattaya have reported losses in profit. Tourists no longer spend on tips at a restaurant. They’d rather buy food and drinks from a convenience store and eat on the beach instead.”

Ping added that she had noticed tourists looking for new destinations in the region to visit, especially places where they could “feel more comfortable to spend a longer period while enjoying similar holiday experiences”.

In Pattaya, a new breed of Chinese tourist emerges: meet the FITs

The Entertainment and Tourism Association of Pattaya City reported a year-on-year decrease in the number of visitors of about 20-30 per cent earlier this month, according to the Bangkok Post.

In Krabi, a southern resort town on the Andaman Sea coast known for its world-class diving spots, tourist numbers have fallen at around the same rate as Pattaya, according to Wat Reongsamut, head of the Krabi Tourism Association.

While a drop-off in visitor numbers is to be expected during the monsoon season, which usually lasts until October, Wat said his association and tour operators from the nearby island of Phuket were looking to launch new packages that deliver “high-standard services that include safety, cleanliness and professionalism at reasonable prices” as a means to cope.

Thai tourism authorities will focus more on high-spending visitors next year as they look to hit revenue targets. Photo: Big Blue Diving Resort

He added that the baht’s strength had not affected the region’s five- and six-star hotels and tourism operators, because “customers in that sector can still afford it”.

The Tourism Authority of Thailand said it would focus more on high-spending visitors next year in a bid to hit its revenue targets, after it lowered its estimate of international arrivals this year from 41 to 40 million.

Kasikorn Research Centre, meanwhile, urged Thailand’s tourism sector to keep adapting if it wants to take advantage of China’s growing middle class. The centre predicted a 2-4 per cent rise in visitor numbers to the country this year.

This article appeared in the South China Morning Post print edition as: Strong baht blamed for tourism dip in Thailand

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