Economic Update

Published 08 Apr 2021

– As of July 1 vaccinated travellers to Phuket will be exempt from mandatory quarantine

– The strategy is being combined with mass vaccinations to trigger a recovery in tourism

– The plan could provide a blueprint for the successful resumption of international travel

– Governments are increasingly looking to travel bubbles and quarantine exemptions

As part of plans to stimulate a rebound in tourism, some countries have moved to waive compulsory quarantine for international travellers who have been vaccinated against the coronavirus.

In late March it was announced that, as of July 1, foreigners visiting the popular Thai holiday island of Phuket will be exempt from quarantine upon arrival if they have received two vaccine doses.

Local officials also stated that after one week in Phuket without showing symptoms – and testing negative – tourists would then be able to travel to the rest of the country.

The decision marks a significant turnaround in Thailand’s pandemic strategy. The implementation of strict two-week quarantine measures for overseas visitors and Thais returning from abroad has been central to the country successfully limiting the number of Covid-19 cases and deaths to 29,000 and 95, respectively.

Restrictions were already eased somewhat in April, with the quarantine time reduced to 10 days for travellers from most countries and one week for fully vaccinated arrivals.  

This forms part of a broader roadmap to opening tourism across the country. According to the Tourism Authority of Thailand, the quarantine-exemption measures implemented in Phuket will be extended to five other key tourism destinations – Krabi, Phang Nga, Surat Thani (Ko Samui), Chonburi (Pattaya) and Chiang Mai – from October 1.

The strategy is also being accompanied by a mass rollout of vaccinations across the region. While medical workers, the elderly and government ministers were the first to receive vaccinations, officials have sought to prioritise Phuket over other parts of the country, and hope to build an immunity of 70-80% on the island by July 1.

As OBG has detailed, the rollout of vaccines has long been seen as key to the resumption of widespread travel and tourism.

Importance of tourism

The focus placed on Phuket reflects the importance of tourism to Thailand’s overall economy.

While it accounted for around 11-12% of pre-pandemic GDP, the sector has been devastated by the virus, with an estimated 1.45m people losing their jobs since the outbreak early last year.

Many hotels and resort towns bore the brunt of the damage, with normally busy tourism hotspots largely abandoned during peak seasons.

Further demonstrating the economic impact of Covid-19 on the Thai tourism industry, last year just 6.7m foreign tourists visited the country and spent an estimated $11bn, down from 40m arrivals and $61bn in spending in 2019.

The government is aiming to welcome at least 100,000 foreign visitors through the Phuket pilot scheme in the third quarter, and is hoping that the increase in vaccinations worldwide will boost demand towards the end of the year. It has a year-end target of 6.5m visitors and $11bn in tourism expenditure.

Global efforts to kick-start the sector

If successful, Thailand’s plan to reopen Phuket to foreign visitors could provide a blueprint for other countries looking to kick-start their respective tourism industries.

Since the outbreak of the pandemic last year, governments and tourism operators around the world have implemented a series of strategies designed to encourage travel.

Following the closure of borders and restriction of international travel, many countries initially sought to turn to domestic tourism as a way to offset some of the economic damage of the virus.

Vietnam, Thailand, the Philippines and Egypt were among those to encourage domestic tourism in the second and third quarters of last year, with hotels and resorts offering a series of discounts and implementing increased hygiene and social-distancing measures to help combat the spread of the virus.

However, a rise in coronavirus cases, combined with limited domestic markets in many cases, hindered the impact of local tourism.

Other countries, such as the UAE, have been more successful in attracting foreign tourists.

Since reopening its borders to tourists in July, Dubai has been a world leader in incentivising travel. The emirate does not have mandatory quarantine for incoming tourists, but does require foreign travellers to have a negative polymerase chain reaction test – more commonly known as a PCR test – before departure or upon arrival.

Similarly, neighbouring emirate Abu Dhabi has been a key player in the rebound of tourism. In December local tourism authorities published a “green list”: people arriving from countries on the list do not need to quarantine.

The list currently consists of 14 countries and territories, including Australia, China, Iceland, Israel, Morocco, New Zealand and Saudi Arabia.

Travel bubbles pop up

Another highly publicised strategy is the so-called travel bubble – a mutual agreement that allows for international travel between different countries and territories.

Although a number of travel bubbles have been mooted, the implementation of such a strategy has yet to be realised on a large scale.

In early April a travel bubble between Taiwan and the Pacific island nation of Palau was launched. As part of the plans, Taiwanese tourists who have been vaccinated do not have to quarantine upon arrival in the tourism-dependent country, where around half of the 21,600 residents have already received a Covid-19 vaccine.

This was followed by an announcement from the New Zealand government that Australian citizens would be free to travel to the country without undergoing quarantine as of April 19. New Zealand citizens had been free to enter most Australian states without quarantine since October last year, with the latest announcement completing the travel bubble between the countries.