For years, Thailand’s tourism boom has been a happy problem. To mitigate the overcrowding in Bangkok, the government looks at second-tier cities.
In recent years, Thailand has been becoming more reliant on the tourism industry. Tourism contributes 12% of the nation’s gross domestic product. Its 2017 international tourist arrival is equivalent to half of its population size. The nation welcomed close to 35.4 million tourists from all over the world. Back in 2010, tourist arrival was not even half of today’s volume. Thailand still sees a boom in its tourism sector. It expects to receive around 37.6 million tourists this year.
Tourism is susceptible to any instability in the nation. There were many uncertainties from the change in monarchy and terrorism threats. These uncertainties do not seem to affect the growth in tourism. International tourist arrivals grew 8.8%. Overall occupancy and room rates rose. Central Thailand’s occupancy rate rose to 74.6% in 2017.
Source: Ministry of Tourism and Sports
Thailand paid the price to enjoy strong tourism growth
To boost tourism, the nation granted visa exemptions for tourists from 21 countries. During the six months of exemption in 2017, tourists from the 21 countries rose by 4.5%. However, the government lost 7.19 billion baht (US$230 million). This is not the first time the government lost money from visa exemption and adjustments. In 2016, there was a 50% reduction in fees for visas on arrival.
Additionally, Thailand’s natural attractions are degrading. The reason points to over-pollution. Authorities had to order a temporary closure of popular Maya beach. Mass tourism has damaged the coral reefs and the islands’ fragile ecosystem. If Thailand chooses to exploit its natural resources, it will suffer in the future. The nation needs a sustainable and steady stream of tourism receipts.
Second tier cities may be the solution to the problem
This year, Tourism Authority of Thailand (TAT) has launched its Go Local campaign. The campaign wants to divert more of its international visitors to secondary cities. It will monitor the ratio of visitors to main cities as compared to secondary cities. The current ratio stands at 64:36 and the aim is to bring it to 60:40. If this campaign succeeds, secondary cities will see additional 10 million tourists. They will generate an estimated 10 billion baht (US$312 million) in tourism revenue in 2018. It will be a win-win situation for Bangkok and the growing secondary cities. Bangkok, the capital city, is plagued with traffic congestions and overcrowding. With this campaign, the government does not have to curb tourism arrival. It will still be able to earn revenue from tourism in secondary cities. At the same time, it will accumulate more funds for the capital’s infrastructure.
The Thai government is also dangling tax deduction benefits. The focus is to grow Meetings, Incentives, Conferences and Exhibitions (MICE) events. Companies will enjoy corporate tax exemptions for events held in the 55 provinces. Travellers will also enjoy personal income tax exemption. It applies to expenses paid to selected tourism operators. These tax benefits may be enough to draw crowds into secondary cities.
The transport ministry also plans to promote certain secondary provinces into aviation hubs. For instance, Krabi, Ranong, Chumphon and Samui in the South will evolve into aviation hubs. Thailand will also be engaging the ASEAN transport ministers in their upcoming meetings. The proposal is for ASEAN airlines to operate direct flights to secondary cities. This would help Thailand to cope with travel industry growth. But, the execution of new flight route will take time.
Thailand cannot afford to fail
The volume of tourists in Thailand will continue to increase. It is in the government’s interest to boost tourism throughout the country. Thai Prime Minister Prayuth Chan-ocha even ordered the Royal Thai Airforce to help. He will not stand congested immigration and customs.
According to Yuthasak Supasorn, “tourism is the primary economic activity of Thailand”. He is the TAT Governor. Under his leadership, TAT will move its focus to the niche segments of travel. The niche segment ties in with Thailand’s need for quality tourism. The number of tourists entering Thailand is not the key. Their expenditure is what matters.
Tourists from China contributed almost half the rise in 2017 visitor arrivals. They are spending 15% more in 2017 as compared to 2016. As China grows, the spending power of Chinese tourists will rise. Despite the influx of Chinese tourists, Thailand woos tourists from India. It introduced direct flights to Bangkok from lower-tier cities like Jaipur.
On one hand, Thailand needs the tourism sector to fuel the nation’s development. The tourism industry creates jobs and income for its citizens and military junta. On the other hand, Thailand struggles to support the accelerating growth in tourism. A fine balance is needed, and it is time for action. Refocusing on secondary cities will help Thailand alleviate some of its tourism woes.