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Trouble in Paradise as Chinese Tourism Numbers Drop Dramatically in Thailand

European budget travellers use to be the main driving force behind Thailand’s tourism industry for decades. But Chinese tourism took off starting in 2012 with the release of a hit Chinese comedy movie Lost in Thailand.

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BANGKOK – Phuket’s old town, is a favorite social media and selfie backdrop for tourists from China. The island, which has a year-round population of 500,000, typically attracts about 7m visitors a year, of whom 2m are Chinese.

Thailand’s biggest source of tourism since 2012

Chinese tourists can normally even be relied on to come to Phuket in the May to October rainy season. When Western Tourists mostly stay away.

But this month Thalang Road, in the heart of the old town, has been largely deserted.

Chinese groups cancelled trips to Phuket en masse last year after a boat carrying tourists capsized, killing 47 Chinese tourists.

This season, say tradespeople, things are even worse. According to the local hotel association, occupancy on the island is running at only 40-50 per cent.

Chutimon Konglao, a minivan driver, says this is the worst season she has seen in more than a decade of driving tourists around the island.

“After the boat accident, we could really see an impact, but this year is worse,” she says. “Nobody wants to spend money, and nobody knows what will happen.”

From Phuket’s old town to Chiang Mai’s temples and Bangkok’s backpacker hostels, visitor numbers are falling.

Thailand’s cornerstone tourist industry is heading into a slump.

This month Thalang Road, in the heart of Phuket’s old town, has been largely deserted, void of Chinese tourists. AFP Photo

For decades, Thailand has been a model of how to turn tourism into a national “brand” and a powerful motor of economic growth.

With beaches, nightlife, food, discount shopping and an air of spirituality, Thailand has managed to attract both backpackers and luxury tourists. In the past few years, Thailand has drawn in a record number of Chinese tourists. Who were — until recently — seen as a source of limitless growth.

European budget travellers use to be the main driving force behind Thailand’s tourism industry for decades.

Chinese comedy movie Lost in Thailand

But Chinese tourism took off starting in 2012 with the release of a hit Chinese comedy movie Lost in Thailand.

Budget carriers laid on flights from more than a dozen cities to Thailand. Chinese visitors, including many traveling abroad for the first time, became Thai tourism’s largest source of visitors and income.

The slowdown is beginning to hit related sectors. Thai Airways International, the flag carrier, recently reported that losses doubled in the second quarter. Blaming slowing visitor numbers and intense competition.

Senior executives have taken salary cuts to weather what chief executive Sumeth Damrongchaitham calls “this time of crisis”. Budget carriers Nok Air and Thai AirAsia reported second-quarter losses too.

Prayuth Chan-ocha’s government this week put tourism at the center of a $10bn stimulus plan. Extending free visas on arrival for another six months for several countries.

Vietnam is the Region’s Rising Economic Star

Some economists say Thailand risks falling into a “middle-income trap.” No longer poor but lacking the tools and momentum to become rich when digital, IT and other skills are in demand.

Nearby Vietnam is the region’s rising economic star. Its tourist numbers are growing in the double digits, drawing the kind of younger visitors who first came to Thailand two or three decades ago.

“Thailand is at risk of losing share in the low-budget holiday sector as the tourism markets develop in neighboring Vietnam and Cambodia,” Fitch Solutions said in a recent analysis.

According to Thai government statistics, tourist arrivals are up less than 2 per cent in the year to end-June, but arrivals from China are down by nearly 5 per cent.

Thailand’s main tourism promotion body insists the industry is on its way to setting another record of hosting more than 41m visitors this year.

However, foreign industry analysts and some Thai service providers say the sector is already in a downturn.

Source: Financial Times