The Thai economy’s reliance on international tourism has made challenges for the country when the pandemic happening. However, Thailand has made efforts to boost the recovery of the tourism industry with gradual reopening strategies. In the context that global international tourism is gradually resuming, the lesson from Thailand could be a case study for countries in the region.
In November 2021, McKinsey released an overview report mentioning the damage Thailand’s tourism industry has suffered from the pandemic and its efforts to revive the country’s leading economic sector.
In 2019, Thailand ranked eighth globally in terms of international tourist arrivals with 40 million arrivals, of which China is an important source market for the country. However, the pandemic has caused the Thai tourism industry indexes to drop seriously. The number of passengers on international flights to Thailand fell by 95% in September 2021 compared with the previous year. Hotel occupancy rate in September 2021 was only 9%.
With F&B and shopping being two of the top three spending categories of international tourists in Thailand, the decline in international arrivals not only has posed challenges to the tourism industry but also strongly impacted other retail industries as well as domestic small and medium enterprises. Tourism spending by international tourists in 2019 was 62 billion USD, much higher than the amount from domestic tourists (35 billion USD). But by 2020, the spending of international tourists decreased to only 11 billion USD, the spending of domestic tourists was 15 billion USD.
Thailand’s efforts to stimulate demand and reopen
In the first months of 2020, when the infection rate in Thailand was still below 1000 cases/day, the Thai government stimulated domestic tourism demand with accommodation subsidies and flights for tourists. With a budget of 640 million USD, in August 2020, the Thai government launched the We Travel Together program to promote domestic tourism. The government subsidized 40% of the regular room rate for 6 million nights of stay and subsidized other services with an appropriate subsidy limit per night. With airlines, domestic tourists are subsidized by the government 40% of the ticket price, limited to 1,000 baht/ seat with a quota of 2 million seats. Within 7 months, the program reached its quota of 6 million nights and added at least 1 billion USD to the Thai economy.
However, small improvements from domestic tourism alone cannot offset the losses of Thailand’s tourism industry. The recovery of the country’s tourism industry depends mostly on the return of inbound tourism. Thereby, Thailand has launched many other efforts to promote inbound tourism.
In July 2021, Thailand launched the Phuket Sandbox model with the hope of attracting tourists in the year-end season from Thailand’s source markets such as Asia, Europe, and America. The Phuket Sandbox program allows fully vaccinated travelers to be exempt from quarantine when visiting Phuket at least 14 days before traveling to other parts of Thailand. Tourists are only allowed to stay at facilities that have been certified by the competent authorities of the Thai government.
After Phuket Sandbox, other Thai localities also joined and applied the same model to reopen such as Samui Plus, Andaman Sandbox. From the beginning of July to August 31, Phuket welcomed about 26,400 tourists with spending at least 48.8 million USD.
From the experience from the sandbox model, Thailand has gradually reopened in phases, allowing fully vaccinated travelers from 63 low-risk countries to visit Thailand, with quarantine and entry regulations relaxed. The number of provinces reopening to international tourists gradually increased to 17 provinces as of November 2021. Instead of focusing on the former main source market, China, the Thai government has been working to attract tourists from new markets where international tourism demand has recovered more quickly. In which, the majority of tourists come from the US, Germany, UK, Japan, Korea, Russia…
Thailand also realizes the resilient nature of premium tourist groups and aims to attract this quality group of tourists. The Thai government has relaxed certain regulations to improve and stimulate premium travel experiences. At the same time, Thailand is also preparing to launch a long-term residence program to attract foreigners to Thailand through a new Long-Term Residence visa with a validity of up to 10 years, targeting the wealthy global citizen, the wealthy retiree, the work-from-Thailand professional and the high-skilled professional. Thailand hopes from 2022 to welcome more than 1 million people from these groups and generate more than 1 trillion baht in domestic spending in the next five years.
Although the pandemic is still complicated and there are many uncertainties in the future, Thailand’s innovative measures have helped the tourism industry to partly overcome the crisis. The dare to change quickly and pioneer in opening up tourism has won a great advantage for Thailand compared to other countries in the region when countries in the world are preparing to reopen, Thailand has welcomed the first arrivals. In the first 10 months of 2021, Thailand welcomed 106,117 international tourists. And with clear market plans for the next phase, Thailand promises to continue to prove its position as a leading Southeast Asian destination in its tourism revitalization.