Tourists coming back - even more than expected

Thomas Hundt

Tourism is a pillar of the Thai economy. The good news is that tourists are flocking to the Land of Smiles again and the industry is investing.

The Tourism Authority of Thailand (TAT) estimates that more than 10 million tourists will visit the Thai kingdom in 2022. In the middle of the year, the TAT had assumed only 6 million visitors.

After the COVID-19 pandemic, the desire to travel to Asia is apparently stronger than expected. Thailand in particular is benefiting from the travel boom. The government had opened the borders gradually in 2021 and 2022. Then, in early July 2022, the last COVID-19 entry formalities were abolished.

The Kingdom is also considered a safe destination and has traditionally been one of the most popular destinations. Thailand ranked eighth among the world's most visited countries in 2019. At that time, nearly 40 million people entered on tourist visas.

The TAT calculates that tourism, including indirect effects, accounted for about 18 per cent of the gross domestic product (GDP) in 2019. In 2020, due to the pandemic, the share of GDP plummeted to 5.7 per cent. Spending by domestic tourists fell by about 50 per cent, while spending by international visitors plunged by 80 per cent.

HOLIDAYING IN THAILAND, NOW MORE THAN EVER!

The kingdom is profiting from the phenomenon of "Revenge Travel". After the restrictions of the pandemic, people want to go on holiday again all the more and as soon as possible.

In September 2022, 1.3 million tourists arrived. This was admittedly significantly less than the record 2.9 million visitors who arrived in the record year of 2019.

However, Japan, a major tourism contributor for Thailand, did not open its borders for inbound and outbound travel until October 2022. Before the pandemic, Japan was among the top five countries of origin for tourists. Number one was China. Every fourth visitor came from China in 2019.

Chinese visitors had essentially led the upswing in Thai tourism before COVID-19. However, the travel industry will have to do without Chinese guests for the unforeseeable future. Experts cannot forecast when and in what numbers the Chinese will be allowed to travel again.

From January to September 2022, most tourists came from Malaysia and India, followed by guests from Singapore, Vietnam, the Republic of Korea, the United Kingdom and the United States. German tourists ranked ninth in the same period with around 190,000 arrivals.

AMAZING NEW CHAPTERS

TAT is the country’s official tourism marketing organization and is currently advertising with the slogan "Visit Thailand Year 2022-2023: Amazing New Chapters". For years, the Ministry of Tourism and Sports has wanted to focus the industry more on medical and wellness tourism and wealthy customers; however, backpackers are also starting their Asia trips in Bangkok again.

The TAT forecasts approximately 18 million tourist arrivals in 2023. According to TAT estimates, these visitors are likely to spend the equivalent of around US$ 26 billion on site.

Tourists from home and abroad spent US$ 69 billion in 2019. The accommodation and catering industry accounted for around two-thirds of all expenditure. Other sectors also generate considerable income from holidaymakers.

About half of the tourists arrive at the capital's Suvarnabhumi Airport in Bangkok. The airport's capacity is to be expanded from 2023 to accommodate 15 million additional passengers.

BUSINESS CLIMATE AND INVESTMENT ON THE RISE

Since mid-2022, the business climate of tourism companies has been brightening, according to surveys by the industry association, the Tourism Council of Thailand. Although the business climate index in Q3 2022 was still a third below the pre-pandemic level, it is expected to return to pre-crisis levels in 2023. The hotel and restaurant industry is therefore renovating its premises and investing in new facilities.

The kingdom is profiting from the phenomenon of “Revenge Travel”. After the restrictions of the pandemic, people want to go on holiday again all the more and as soon as possible.”

Hotel projects in Thailand (selection)

The Board of Investment (BOI) can support projects in tourism. The investing companies then receive tax exemptions and other incentives. The BOI received 15 applications from industry players in 2021, who submitted investments totalling US$ 510 million.

The 2004 Hotel Act defines which establishments also need a licence. A hotel is defined as a lodging establishment that provides temporary accommodation to travellers or other persons for a fee. Pensions, resorts or hostels also require a hotel licence. However, a hotel licence is not required if the establishment has less than four rooms and can only accommodate a maximum of 20 persons. Accommodation set up for the purpose of monthly rental also does not require a hotel licence.

The licence fee depends on the size of the hotel and its facilities. Documents such as a building permit and other supporting documents must be submitted with the application and signed by a Thai hotel manager to be appointed.

A Foreign Business Act also restricts the rights of foreigners who want to own or operate a hotel business. Among other things, foreigners need a special permit, called a Foreign Business Licence, to register a company for certain service activities.

It is therefore advisable to consult law firms in advance. If a hotel licence is granted, it is valid for five years and can then be renewed in a simpler procedure.

Contact details: Thomas Hundt Director Thailand, Cambodia, Myanmar, Laos GERMANY TRADE & INVEST www.gtai.com