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14 Jul 2005

Tourism

Bombings in London: Impact on Tourists from Europe - Remaining Hope for Thailand's Tourism in the Latter Half 2005

The "tsunami" disaster and other negative factors have adversely affected international arrivals to Thailand during the first half this year (H1-2005), standing at a total of 5.23 million visitors, down 5.0 percent from the corresponding period of 2004. In H2-2005, Thailand pins its hopes on visitors from distant lands during the peak tourism season in Q4/2005. This is due to the fact that the number of tourists from neighboring countries, especially those from within East Asia, have been dropping continuously as a result of the "tsunami" disaster.

However, the recent blasts in London, on July 7, 2005, will likely deal a blow to Thailand's hopes for visitors from countries in Europe, seen as the main hope for rejuvenating Thailand's tourism in H1-2005.

Tourism, H1-2005: Fewer Tourists due to "Tsunami" and Southern Unrest

The 'tsunami" disaster along the Andaman coast on December 26, 2004, has vastly impacted Thailand's tourism industry since January 2005. Total international arrivals totaled 849,931 in that month, down 30.1 percent from the same period of last year, when the number of international arrivals reached 1,216,783.

Thereafter, in the first quarter, the number of international arrivals increased somewhat, thanks in large part to visitors from Europe, and the effective marketing promotions by both public and private sectors concerned. In general, in the first quarter 2005, there were 2,673,732 foreign visitors coming to the Kingdom, down 10.1 percent from Q1/2004.

The number of foreign visitors dropped slightly in April, due to another earthquake on March 23, very close to the Sumatra - the same area from which the first waves came. Worse still, the southern unrest still remains unresolved, with further bombings in the Hat Yai and Muang districts of Songkhla province. The number of foreign visitors recovered later, reaching a total of 2,561,000 foreign visitors to Thailand by Q2/2005, up 1.0 percent over the same period of 2004.

From the above trend, it is expected that the market for foreign visitors will remain in recession in the first half of 2005, with the total number of foreign visitors of only 5.23 million, down 5.0 percent from the same period last year.

Trend for H2-2005: Slow Growth Projected Due to the London Blasts

Earlier, it was expected that the market for foreign tourists in Thailand would gradually recover in the third quarter, thanks to public-private sector cooperation in launching marketing promotions in East Asia, and that thereafter a growing number of visitors from Europe would arrive in the last quarter of the year. Such hope has begun to dwindle, due to significant hindrances, i.e.:

- A second earthquake on July 5, 2005 after the original "tsunami", coming from a spot very close to the epicenter of the December quake.

- The intimidating bomb blasts in London on July 7, 2005.

- The soaring oil prices in the world market, resulting in higher travel costs from distant nations

- Many countries of Europe, seen as the main tourist market for Thailand, especially, Germany, France and Italy, are facing unfavorable economic conditions for leisure travel.

These factors will bear unfavorable impacts on Thailand's tourism in the latter half this year. KASIKORN Research Center (KRC) anticipates that the total number of foreign visitors to Thailand in H2-2005 will reach a total of 6.29 million, up 2.4 percent over the same period of last year. A year-on-year comparison will likely show total international arrivals to Thailand of 11.52 million or so, down 1.1 percent from last year's 11.65 million. Total tourism revenue should reach Baht400 Billion on average, up 5.3 percent.

Proper Remedies: Extensive Promotional Campaigns Needed

Under the many unfavorable conditions as above, both the public and private sectors concerned should extensively launch marketing promotions throughout the remainder of the year, thereby leading to rapid expansion in the number of foreign visitors and earnings for the country.

The government has set a tourism revenue target of Baht450 Billion for 2005. But due to the above factors, the government has allocated an additional budget of Baht 2.5 Billion for additional tourism promotions to help reach the target of 13.38 million visitors, and foreign exchange earnings of Baht450 Billion. Part of this budget, or Baht800 Million, will be allocated for overseas marketing promotions by the Tourism Authority of Thailand (TAT), promoting Thailand's tourism abroad, to help offset the falling number of foreign visitors in the first half.

Furthermore, relevant public and private sectors should enhance their cooperation in certain areas:

- Expedite the development of an effective early warning system for tsunamis that is at international standards, in order to restore confidence among foreign visitors while visiting the southern coasts.

- Try to maintain the existing tourist markets in every region.

- Hasten tourism promotions for specific target groups, i.e., niche markets that still have high purchasing power.

- Urgently resolve the problem of 'Zero-Dollar' tours from China to Thailand, in order to upgrade the quality of tourism and pave the way for the premium tourist market segment of China.

- Urgently resolve cheating and fraud perpetrated against foreign tourists in the country, especially cheating by jewelry shops, in order to enhance the shopping potential of Thailand, and attract more spending by foreign visitors.

Tourism