Thailand’s bold move to revive tourism to take years: Analysts

Thailand‘s plan to end quarantine for vaccinated visitors is “a fight to win foreign tourists”, Tourism and Sports Minister Phiphat Ratchakitprakarn said on Tuesday (Oct 12).  But analysts and industry executives see it as a long road to recovery fraught with risks of periodic virus resurgence and unpredictable travel trends.

Minister Phiphat said Thailand’s reopening plan coincides with many other nations’ efforts to allow easier cross-border travel and is a fight to win foreign tourists in the next few months.

His ministry wants to attract travellers from China the most, and may seek travel bubbles with Asean nations if they are low-risk countries and travellers have been fully vaccinated.

A return to the pre-pandemic levels of tourist arrivals and spending will likely take a few years, according to Marisa Sukosol Nunbhakdi, the president of the Thai Hotels Association.

It is unlikely that large groups of visitors will immediately head to Thailand, given the volatile nature of global travel and the coronavirus situation, she said.

“The light at the end of the tunnel is here, but at the same time it will be a slow climb back to the levels seen before the pandemic,” Marisa said. “Travel is still so volatile so we have to manage our risks. Keeping costs low will still remain a key strategy for all the hotels in Thailand.”

Thailand will end quarantine for vaccinated visitors from low-risk nations from Nov 1, joining a growing list of nations reopening to cross-border travellers ahead of the year-end holiday season, Prime Minister Prayuth Chan-Ocha said on Monday.

The surprise announcement saw the nation’s currency surge the most in more than two weeks, and stocks of airport operators, hotels and airlines rally to lift the benchmark index to a one-month high.

Ekasit Kunadirekwong, an analyst at Krungsri Securities, said that with the “bold move”, tourism recovery is expected to accelerate in the fourth quarter along with rising vaccination rate and roll-out of booster shots.

Thailand’s low vaccination rate of 32 per cent could lead to a spike in new cases upon reopening for inbound travellers and easing of restrictions for business activities.

Krungsri expects Thailand’s population to reach 70 per cent vaccination rate by year-end with tourist arrivals forecast maintained at 300,000 this year, 14 million in 2022, 34 million in 2023, and a rebound to pre-pandemic levels of 40 million by 2024.

Sunthorn Thongthip, an analyst at Kasikorn Securities, said the latest move will help remove the barriers preventing tourists from coming to Thailand and to stimulate economic activity during the New Year festive period.

Sunthorn sees an upside to Bank of Thailand’s 2022 GDP forecast of 3.9 per cent which is based on tourist arrivals estimate of 6 million next year. Every 3 million tourist arrivals in Thailand is expected to create 1 per cent upside to GDP growth.

Sunthorn expects the baht to rise to 32.75 vs US dollar by end-2021.

Kasikorn Securities is positive towards the Thai equities market as the reopening should benefit domestic, tourism related sectors.

Kampon Adireksombat, deputy managing director of SCB Securities’ Chief Investment Office, said the economic recovery still faces many downside risks and there is a need to monitor how many tourists actually come in, especially from China, the biggest source of visitors pre-Covid.

Supant Mongkolsuthree, chairman of the Federation of Thai Industries, said the reopening is necessary to boost the Thai economy as tourism accounts for more than 10 per cent of GDP.

“Thailand needs to reopen to gain more income and benefit from global economic recovery. If not, the nation will only suffer from higher costs due to rising oil prices,” Supant said.