BANGKOK -- Thailand's hospitality industry faces a shakeout as it confronts the prospect of a long decline in Chinese tourists.
Official data published this week revealed that the number of Chinese tourists fell 8.8% in the third quarter, contributing to lower than expected economic growth in the period. Chinese tourists make up about a third of all visitors to Thailand. But they have been put off by a series of incidents, including a deadly ferry accident that left 46 dead.
As a result, a growing number of small hotels and hostels in the city of Chiang Mai, one of the most popular destinations in Thailand, are seeking buyers. Property agents say they are dealing with an unusually high level of sales as the downturn hits smaller businesses hardest.
More than 10 websites for Chiang Mai properties are posting hotels for sale. Many boutique hotels that closed recently are offered at prices ranging from over 50 million baht ($1.52 million) down to even a few million baht.
"Owners launched small hotels a few years ago, expecting to tap into a tourism boom," a local property agent who requested anonymity told the Nikkei Asian Review. "But this year, many of them have been hit hard by falling tourist arrivals, particularly Chinese visitors, before they broke even. Hotel owners are forced to go out of business because they cannot absorb the impact from the falling number of bookings."
Another agent told Nikkei: "We have more than 10 resort properties on sale on our website, and there are more handled by rival websites. I have been in this business for seven years, and this has never happened."
The sharp decline in Chinese visitors followed the capsizing of a passenger ferry at the famous beach town of Phuket in July. Most of those killed were Chinese tourists.
Then came a viral video showing a Thai security guard slapping a Chinese tourist in the face at the Bangkok area's Don Mueang International Airport on Sept. 27.
Tourism and related industries generate about 20% to 30% of Thailand's gross domestic product. The number of Chinese visitors fell 0.9% in July and plunged 11% during August and 15% in September, slashing revenue for tourism-related companies.
"Hotels and restaurants in famous destinations including Phuket and Chiang Mai have suffered declines as the number of chartered flights from China has halved [on the year] since July," said Ittirit Kinglake, president of the Tourism Council of Thailand.
Restaurants that rely on group tours from China have been hit particularly hard, said Chavarit Chonjaron, president of the Chiang Mai Restaurant Club.
Airlines have also suffered. National carrier Thai Airways logged a third-quarter net loss twice as big as the one a year earlier. CEO Sumeth Damrongchaitham blamed the 3.7 billion baht loss largely on a decline in Chinese passengers and the major storms that hit Japan and Hong Kong, cutting flights to those lucrative routes.
Asia Aviation, the operator of budget carrier Thai AirAsia, reported a net loss of 358 million baht for the three months ended Sept. 30, compared with a profit of 260 million baht in the year-ago period.
"We can't stand still" while tourism worsens, "so we try to do something in order to bring [Chinese visitors] back," said Chavarit. His club and the provincial government are planning a food festival and other special events to attract Chinese and other foreign tourists.
The Tourism Authority of Thailand has not revised this year's targets of 38 million arrivals and 3 trillion baht in revenue, despite the drop from China.
The Thai cabinet last week approved waiving a 2,000-baht visa fee paid on arrival by travelers from 21 places, including mainland China, Taiwan, India and Saudi Arabia. The fee will be waived during December and January.
"The measure has helped increase the number of Chinese tourists gradually in Phuket, and we hope that it will rise further," said Bhummikitti Ruktaengam, president of the Phuket Tourist Association. Chartered flights and group tours from China rose by 10% to 20% in early November, the president said.
But most operators of tourism businesses say the visa discount is unlikely to completely restore the number of Chinese arrivals by the end of this year, which is normally the high season for the industry.
"It is better than doing nothing, though the measure cannot help us 100%," Chavarit said.
The tourism agency aims to rely less on Chinese visitors, attracting more travelers from elsewhere to ensure sustainable long-term growth.
"We will focus more on the quality, not on quantity" of tourism, agency head Yuthasak Supasorn said. The authority will seek more tourists from Europe, Southeast Asia and India, which offer strong spending power.
Chinese tourists spend an average of 50,000 baht, the authority said, while those from India and Europe spend 60,000 to 70,000 baht.
While Chinese tourists declined by 15% in September, Thailand enjoyed increases from elsewhere, such as 5.5% from India, 40.1% from Malaysia, 11.8% from Vietnam and 9.5% from Laos.
That has encouraged the tourism authority and related agencies to make more presentations in Europe and India to boost visitors. Bhummikitti said he will team with the Phuket provincial government to hold such shows in England and Germany in March.
"We also will be holding a Thai tourism roadshow in New Delhi during Jan. 16 to 18, aiming to promote Thai tourist attractions among Indians," he said.