Targeting China Market

Thailand

Economic News

22 Jul 2010
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Thailand's tourism sector continues to grow steadily despite facing adversity. With oil prices and a slowdown putting a squeeze on Western wallets, Thailand is focussing on Chinese visitors, specifically targeting the wealthier segment, moving its tourism offerings up the value chain.



According to preliminary figures from the Tourism Authority of Thailand (TAT), 14.46m "international tourists" (foreign tourists, including foreign-based Thais) visited the country last year, an increase of 4.65% on 2006, and more than a third up on 2002. TAT estimates that international tourist spending was approximately $123 per day, and the average length of stay was just over nine days. Overall, revenue from international tourism reached $16.34bn, an increase of 13.5% on the previous year.



TAT also published figures for internal tourism, an important part of the sector that is often overlooked. Some 83.23m trips were made by Thais in their own country last year, up 2.14% from the previous year and almost a third up on 2002. Domestic tourism trips tend to be briefer than overseas visits - at an average 2.14 days in 2007 - and expenditures lower at $52.81 per day. This is due to the fact that many Thais stay with friends or in guesthouses rather than in hotels.



TAT forecasts the two leading markets for Thailand's tourism to be Malaysia and Japan. Some 1.4m visitors came from each country last year, representing 8% growth in visitor numbers from Malaysia, and 3.8% from Japan. Korea, China and the United Kingdom were the third, fourth and fifth largest markets respectively, with more than 1m visitors from each last year.
The number of tourists from China topped 1m for the first time last year, and Thailand is aiming to build on Chinese tourism.



This month, TAT launched "Wonderful Thailand 2008", a campaign aimed at encouraging affluent Chinese tourists to visit the country, and attracting them to five-star hotels and resorts away from the budget packages they have traditionally purchased.



A further aspect of the programme is to promote repeat visits from Chinese tourists, which are relatively common among European visitors. A core of regular Chinese visitors could act as "ambassadors" for Thailand in their home country, a strategy that has been successful for growing tourism markets in the past.



Another reason for appealing to Asian tourists is that rising oil prices have put pressure on flight prices, which, combined with economic slowdowns in Europe and North America, may well hurt long-haul tourism to Thailand.
Concerns persist about falling numbers of visitors to Thailand from the West, yet the country remains a popular destination for European and North American travellers, which is why a drastic drop in arrivals seems unlikely.



Nevertheless, the sector faces challenges over the short to medium term. One of these is a perception of political instability in the country. According to local officials, tourism revenues have dropped by around 10% in Si Sa Ket province, in the east of the country, due to a dispute between Thailand and Cambodia over the Preah Vihear temple, a UNESCO world heritage site claimed by both countries. While the disagreement has rumbled on for years, it has recently generated some negative publicity for Thailand, as the country recovers after a year of political uncertainty in 2007.



Despite the tension, Thailand has a strong recent history of bouncing back swiftly. After the December 2004 Indian Ocean earthquake and subsequent tsunami killed 5400 people in the country, including many holidaymakers on the beach, international visitor numbers dropped a modest 1.51% in 2005 and rebounded 20% the following year.



The next big challenge will be competition. Most countries in South East Asia are looking to expand their tourism industries, and many are looking to lure more visitors from China and other fast-growing economies. Thailand is therefore concentrating on consolidating its already strong Chinese market, rather than using competitive pricing to encourage new tourists. Nonetheless, it will have to compete with destinations further afield, including the Middle East and North America, which are attracting increasing numbers of wealthy Chinese citizens.

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