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Thailand Tourism Report Q2 2010
Business Monitor International, April 2010, Pages: 54
The Thailand Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Thailand's tourism industry.
Tourism Arrivals Fall In 2009
Preliminary figures released by the Tourism Authority of Thailand (TAT) in January 2010 show that the country’s tourism industry experienced a decline in 2009, with full-year arrivals totalling 13.5 million, down by 7.4% year-on-year (y-o-y). However, given that arrivals fell by 16.2% y-o-y in H109, we believe that the full-year total demonstrates that the industry is beginning to pick up. Arrivals began to post annual growth towards the end of Q309 and this continued into Q4, with arrivals growing by 26.3% y-o-y in November. This growth figure reflects a statistical rebound from poor arrivals numbers in November 2008, when People’s Alliance for Democracy protests closed Suvarnabhumi Airport in Bangkok. Thailand is set for a gradual recovery in 2010, with arrivals growth picking up strongly towards the end of the year. Minister of Tourism and Sporrt Chumpol Silpa-archa predicted in late 2009 that tourist arrivals would recover to 15.5 million in 2010, which would be growth of 14.8% y-o-y. While this appears ambitious for an industry that is still suffering from the after-effects of the economic downturn and ongoing domestic political turmoil, Thailand’s fundamentals are strong and we expect growth rates to return to pre-2008 levels from 2011.
Thai Airways Returns To Profit
Confirming the early stages recovery in Thailand’s tourist industry, state-owned airline Thai Airways said in January 2010 that it expects to post a profit in 2009, after positive preliminary Q409 figures. The airline was suffering from a downturn in passenger arrivals, posting a net loss of THB1.57bn in the first three quarters of 2009 and a net loss of THB21.4bn in 2008. It carried out a major restructuring programme with the aim of cutting costs and increasing efficiency. President Piyasvasti Amranand said that the airline expects profits to reach THB4bn in 2010.
Focus On Phuket Province
Phuket is one of Thailand’s most popular provinces and most well known tourist destinations. The region is in the south west of the country, touching the Andaman Sea. It is an unusual province in that it is comprised of islands: the main island Phuket and a number of smaller islands along the coastline.
This makes it a perfect tourist destination, with visitors able to be based on Phuket or explore the other islands, which are very lightly populated.
The island of Phuket is the arrival point for many tourists, and the place where most will spend their holidays. Much of the centre of the island is mountainous and woody, with most tourists preferring to base themselves along the beaches, which are famous for their long stretches of white sand, particularly along the western coast of the island. Despite being relatively small, Phuket provides a number of different tourist experiences. It is famous for its nightlife, which is largely concentrated in and around Patong Bay. South of this beach, the coastline becomes emptier and the smaller beaches are popular with families and visitors to high-end luxury resorts.
The province’s main industry is tourism and the surging influx of visitors has made it one of Thailand’s wealthiest provinces. As a result, the hospitality industry has been booming, even t during he economic downturn. The island has a wide variety of accommodation, from budget to luxury resorts. It is also a popular destination for package holidays and domestic tourists, which has particularly been the case during the 2008-2009 downturn when Thai holidaymakers have been less willing to travel abroad. With international tourist arrivals starting to pick up towards the end of 2009, Phuket should help lead the sector recovery in 2010.
Special Focus: Southern Insurgency Continues
Despite speculation that the tenure of the military government in 2006 might herald a shift in policy towards the disturbed southern region, little change was initiated. Since early 2004, the southern provinces of Yala, Pattani and Narathiwat have experienced bouts of significant unrest, which are often attributed to Islamist secessionists seeking to win independence for the region. This conflict has claimed more than 3,500 lives since 2004 and is characterised by the use of co-ordinated bombings and direct attacks 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 neither side had any real incentive to begin talks. Instead, the military government followed the Thaksin administration’s policy of launching security initiatives in the south as a means of shoring up domestic support. In June 2007, the military launched a programme of security sweeps on areas in Yala, Pattani and Narathiwat as part of Operation Defend the Southern Border. The security operation was intended to reduce violence in these areas ahead of the December elections. Although there have been some improvements, such as a decrease in bomb attacks on military patrols, the level of violence has not decreased significantly.
For some time BMI has warned of the possibility that militants could attempt to strike targets in Bangkok or key tourist areas to pressure the government, and there were widespread concerns that the Bangkok bomb attacks on December 31 2006 marked an escalation of the insurgency. However, no group has yet claimed responsibility for the attacks and there have been no further suggestions that the insurgency has spread. Also, targeting areas such as Bangkok or major tourist sites would be counterproductive for insurgents, 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. This regional concentration of activity lends weight to argument that the southern insurgents were not responsible for the New Year’s Eve bombings and should reduce fears of an expansion of the southern bombing 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 on the performance of Thailand’s tourism sector. Although the south is relatively tourist-free, heavily publicised bomb attacks in the south would have negative implications for the sector as a whole. In this regard, an attack in March 2008 demonstrated that the insurgents retain a strong military capability. A car bomb was set off outside the CS Pattani Hotel in the southern province of Pattani, where tourists and local politicians are frequent visitors. This may have been a response to the military government’s crackdown on the insurgency in 2007, which has been maintained by the civilian government. The shift towards attacking 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.
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