ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Travel & Leisure

Thai hotels court Indian and local tourists to fill China void

Europeans top returnees but cannot match Arab and Chinese spending

Reviving Thailand's tourism industry will involve reduced dependence on the China market, more arrivals from new markets, and maintaining attention on domestic travelers.   © Reuters

BANGKOK -- In a bid to reduce its dependence on any one country as it revives its once tourism-dependent economy, Thailand is luring visitors from India, the Middle East and its neighbors in Southeast Asia.

"We aim to exceed pre-COVID revenue by 2024," Phiphat Ratchakitprakarn, the minister of tourism and sports, said last week. "Although the number of tourists will not be as high as pre-COVID levels, the emphasis will be on quality tourists who respect our environment."

The minister was speaking at a hotel strategy announcement by a leading conglomerate. It was an unusual appearance that signaled how closely the public and private sectors are joining hands to resuscitate tourism.

Phiphat is tasked with reviving the tourism industry that comprises about 12% of Thailand's gross domestic product. That will involve reducing dependency on China -- which provided more than a quarter of arrivals in 2019 -- by attracting tourists from other markets, and maintaining the attention of domestic travelers.

Even before COVID, Thailand has tried without much success to diversify from the sheer number of Chinese arrivals. If the strategy succeeds, it could set the model for Southeast Asia's other tourism-dependent economies as local and regional populations continue to grow in numbers and spending power.

"We want to break down the old concept that when you think about hotels, you're thinking about international tourism only," said Wallaya Chirathivat, chief executive of Central Pattana, which unveiled its midterm plans on Thursday.

The retail property development arm of Central Group on Thursday announced 37 new hotel projects in Thailand spanning three price-segmented brands, in addition to 49 existing properties in nine countries. Central Pattana is aiming for hotels to generate 10% of revenues within five years, catching up with retail, residential and office property earnings, Wallaya said.

"Many have asked why Central Pattana started a hotel business at this time," said Phoom Chirathivat, the company's head of hotels.

"The domestic tourism market is still growing and can recover faster than the international market," he said.

As an example, the domestic market kept occupancy in Indonesia afloat throughout COVID, accounting for more than 90% of rooms sold by French hotel group Accor last year.

"One thing we taught ourselves is to work heavily in that domestic market to make sure we don't lose that in the future," said Garth Simmons, chief executive of Accor Southeast Asia.

In Thailand, 30 million Thais traveled around the country last year, nearing the 38 million seen in 2019. "Vacation, staycation and digital nomads -- these are the groups that are likely to grow," said Phiphat.

Minister of Tourism and Sports Phiphat Ratchakitprakarn, center, appeared at Central Pattana's recent press conference to announce its hotel investment strategy. (Photo by Francesca Regalado)

Hoteliers have seen more stable performances during the pandemic in destinations easily reached by car from major metropolises like Bangkok and Jakarta. The first new Central hotel to be opened will be in the city of Nakhon Ratchasima, known as Korat, 220 km northeast of Bangkok.

An industrial park in the province has attracted several Japanese manufacturers, including Canon, bringing along business travelers. Central said its nationwide development projects will create 3,900 jobs, a particularly urgent need in Thailand's underdeveloped northeast.

"We found that the hotel market of Nakhon Ratchasima province has great potential, and average occupancy tends to be longer," said Phoom.

Stays in Thailand have grown longer as Europeans, who stayed an average of 16.82 days in 2019, topped international arrivals this year and last. But European spending has not matched that of Chinese tourists who remain locked down at home.

Tourism receipts are at a third of pre-COVID levels and may only grow to half by year's end without Chinese arrivals, said Somprawin Manprasert, the chief economist at SCB Economic Intelligence Center.

As summer temperatures peak in the Middle East and India, the tourism ministry has held roadshows for potential tourists there to meet the minister's revenue target of 1.5 trillion baht this year. Kuwait, Egypt, U.A.E. and Saudi Arabia led in per capita expenditure in 2019, with average spending of more than 6,800 baht per day.

Tourism will be a major growth engine in the Thai economy in the near term, according to SCB, as the signs of recession in the U.S. and Europe cloud the Thai export forecast. The research house raised its projection for international tourists this year from 5.7 million to 7.4 million thanks to pent-up travel demand in Southeast Asia, India and Europe.

But roadblocks remain in Thailand's path to tap into this demand, including inflation eroding travel budgets and constrained airline capacity.

Phiphat said last week said he will propose to the cabinet removing Thailand Pass, the last COVID-era barrier to entry. The online pass requires only flight and accommodation details and a vaccination record, with no need for a negative COVID test.

"It's another requirement that makes you less desirable as a destination," said Simmons.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more