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31 May 2023


A surge of tourist arrivals is expected for the rest of 2023 to reach the full-year target of 28.5 million… Related businesses still face challenges, especially labour costs (Current Issue No.3416)


        Tourism is currently a key driver of Thailand’s economy. Despite the tourism sector’s present revival, it remains below pre-pandemic levels. The number of tourist arrivals is expected to increase for the rest of 2023, with a full-year projection of 28.5 million. Yet the industry still faces multiple challenges such as limited flight capacity, and a new e-visa application system that will affect the short-haul Chinese market – especially large tour groups. Tourism operators thus need time to adjust to the new system. Additional factors include the high-risk global economy, and the Russia-Ukraine conflict that could impact the tourism market’s recovery during the remainder of this year.

        Several challenges lie ahead for tourism-related businesses, especially the hotel industry. International tourism receipts are expected to reach THB 1.33 trillion in 2023. However, spending per trip remains less than pre-pandemic levels. The recovery remains uneven and is mainly in major tourist cities. More importantly, business costs have increased, particularly labour costs amid higher wages and labour shortages.

        KResearch holds the view that business costs, especially labour costs will be a key challenge for the new government in the short term. This issue has been raised since before the general election. It remains to be seen whether or not a daily minimum wage would be hiked as promoted by political parties on the campaign trail. Additional workers are needed to support the recovery of businesses whereas workers expect to see higher wages even though not all employers hire workers based on the minimum wage. To cope with these challenges, improvement of labour productivity is essential. The new government may consider offering tax incentives or other schemes to encourage operators to bolster labour productivity at a faster rate than the minimum wage hike, while also deploying technologies at low costs, etc.

        In addition to business costs, other key challenges include tourism-related policies, such as development of value-added tourism products to increase spending per trip of foreign tourists, promotion of secondary tourist cities to ensure income distribution, and issues related to the environment and natural resources. The public sector must support tourism operators to develop eco-friendly tourism with a focus on ESG operation in order to reduce greenhouse gas emissions.

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