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Thailand Tourism Report Q4 2009Published by: Business Monitor International Published: Sep. 28, 2009 - 48 Pages Table of Contents
AbstractH109 Arrivals Figures SlumpBearing out our gloomy prognosis for the Thai tourism industry in 2009, tourist arrivals have fallensharply in the first half of 2009. Figures released by the Office of Tourism Development (OTD) showedthat tourist arrivals fell by 16.2% year-on-year (y-o-y), to arrivals of only 6.6mn. This followed a declineof 2% y-o-y in 2008 as a whole, with Thailand being one of the first countries to be affected by the globaleconomic downturn. Thailand’s tourism attractiveness continues to be damaged by external and domestic factors. With regardsto the former, the economic slowdown continues to act as a deterrent to international visitors, althoughdomestic tourism benefits during a downturn. The industry, in common with many other countries inAsia, has suffered following the outbreak of the H1N1 (swine flu) virus in Mexico in April, which swiftlyspread to Asia and further discouraged visitor arrivals. It is notable that visitor arrivals fell particularlystrongly in Q209 even though the industry might have been expected to benefit from the spring holidayseason. Arrivals fell by 16.6% y-o-y in Q209 to 2.96mn, an 18.7% quarter-on-quarter (q-o-q) decline. Tourist arrivals totalled 3.64mn in Q109. As well as the swine flu outbreak, this sharp decline is also linked to a resurgence of political protest inThailand, which is has disrupted transport, including the blockade of Suvarnabhumi International AirportBangkok in November 2008. In particular, riots in Bangkok in April led to the declaration of a state ofemergency in the capital and five other provinces by the government. Given these negative factors, webelieve that Thailand will continue to be one of Asia’s poorest performing tourist industries in 2009, andmaintain our full-year arrivals forecast of 12.9mn. Thailand Turns To Domestic Tourism With international arrivals slumping so dramatically, the government is turning to domestic tourism as ameans of shoring up revenue during the downturn. Domestic tourism has been steadily growing and in2008 totalled more than international visitors. However, Thai tourists tend to make shorter visits, such asweekend breaks, and spend less. In order to bolster domestic tourism, the Tourism Authority of Thailand(TAT) have launched a number of marketing campaigns to attract tourists to less well known parts of thecountry. For example, in mid-2009, TAT launched the 5 Region Thai Travel Fest, a touring travel fairtargeting the provinces of Chonburi, Ubon Ratchathani, Phitsanulok, Nakhon Si Thammarat and PhraNakhon Si Ayutthaya. Thai Airways Experiences Positive Q1 Despite the slowdown in tourist arrivals, national carrier Thai Airways International succeeded inposting a profit in Q109. Net profit totalled THB7.87bn (US$228mn), up from THB2.22bn in Q108. Thisfollows the airline’s significant losses in Q408, when it posted a loss of THB14.8bn (US$411mn). ThaiAirways has managed to turn this situation around by implementing a wide-ranging restructuring and costcutting plan, as well as by agreeing a US$1bn loan from financial institutions. One sign of the airline’sdetermination to reduce costs was the reaching of an agreement with Airbus to delay the delivery of sixAirbus A380s from 2010 until 2012. However, the airline is unlikely to repeat such a positiveperformance in Q209, with the impact of swine flu and political unrest continuing to weigh on revenues. Special Focus: Thai Political Crisis Thailand has experienced extreme political instability since the military coup in September 2006 thatdeposed former prime minister Thaksin Shinawatra. This appeared to briefly resolve the conflict betweenThaksin supporters and opponents, which had spilled over into frequent protests and violence, particularlyin Bangkok. However, subsequent elections returned Thailand to its pre-coup situation, with Thaksinsupporters winning a majority under new leader Somchai Wongsawat, Thaksin’s brother-in-law. The conflict reignited in 2008, with opposition to the government coalescing behind an umbrella groupknown as the People’s Alliance for Democracy (PAD), led by Sondhi Limthongkul. The PAD haveorganised repeated anti-government protests, which worsened in H208 and became more violent. Whilethis did not physically affect tourism, which is largely away from Bangkok on the coast, it furtherdamaged Thailand’s international reputation. Travel advisories issued by countries, including the US andthe UK, warned against travelling to Thailand, providing a significant disincentive for potential tourists.The protests peaked with the occupation of Bangkok’s Suvarnabhumi Airport on 26 November 2008,which left about 3,000 passengers stranded. No tourists were hurt in the protest, which was largelypeaceful. The PAD protesters were demanding the resignation of Somchai, prompting rumours of a freshcoup. Somchai resigned on 2 December. Abhisit Vejjajiva became Prime Minister’s on 17 Decemberafter winning a special parliamentary vote. This airport protest will have a major negative effect on Thailand’s tourism prospects. This was the firsttime that the industry had been directly targeted, and the protesters’ use of this tactic suggests that theyconsider attacking the lucrative industry as a highly effective way of putting fiscal and political pressureon the government. Despite the eventual peaceful resolution of the occupation, the direct effort to disrupttravel sets a worrying precedent and will act as a disincentive for tourists considering a holiday inThailand in 2009. Special Focus: Southern Insurgency Continues Despite speculation that the tenure of the military government in 2006 might herald a shift in policytowards the disturbed southern region, little change was initiated. Since early 2004, the southernprovinces of Yala, Pattani and Narathiwat have experienced bouts of significant unrest, which are oftenattributed to Islamist secessionists seeking to win independence for the region. This conflict has claimedmore than 3,500 lives since 2004 and is characterised by the use of co-ordinated bombings and directattacks on police and military bases. Initial suggestions that the military government might attempt to open negotiations with insurgent groups- who are primarily seeking autonomy or independence - were abandoned as it became clear that neitherside had any real incentive to begin talks. Instead, the military government followed the Thaksinadministration’s policy of launching security initiatives in the south as a means of shoring up domesticsupport. In June 2007, the military launched a programme of security sweeps on areas in Yala, Pattaniand Narathiwat as part of Operation Defend the Southern Border. The security operation was intended toreduce violence in these areas ahead of the December elections. Although there have been someimprovements, such as a decrease in bomb attacks on military patrols, the level of violence has notdecreased significantly. For some time BMI has warned of the possibility that militants could attempt to strike targets in Bangkokor key tourist areas to pressure the government, and there were widespread concerns that the Bangkokbomb attacks on December 31 2006 marked an escalation of the insurgency. However, no group has yetclaimed responsibility for the attacks and there have been no further suggestions that the insurgency hasspread. Also, targeting areas such as Bangkok or major tourist sites would be counterproductive forinsurgents, since this would strengthen public opinion against the secessionist movement. Instead, insurgents are continuing to target areas in the south that are not major tourist destinations. Thisregional concentration of activity lends weight to argument that the southern insurgents were notresponsible for the New Year’s Eve bombings and should reduce fears of an expansion of the southernbombing campaign across the country in the medium term. However, the strength of the insurgency remains a low-level threat and will continue to act as a drag onthe performance of Thailand’s tourism sector. Although the south is relatively tourist-free, heavilypublicised bomb attacks in the south would have negative implications for the sector as a whole. In thisregard, an attack in March 2008 demonstrated that the insurgents retain a strong military capability. A carbomb was set off outside the CS Pattani Hotel in the southern province of Pattani, where tourists and localpoliticans are frequent visitors. This may have been a response to the military government’s crackdownon the insurgency in 2007, which has been maintained by the civilian government. The shift towardsattacking commercial premises, as well as the more usual clashes between insurgents and security forces,may act as a further deterrent to potential visitors despite the south’s relative unimportance to tourism. Get Full Details About This Report >> |
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