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28 Mar 2011


Japan Earthquake: Hurting Thailand’s Outbound Tourism (Business Brief No.2248)

Thailand's outbound tourism, which has exhibited impressive growth since 2009,is suffering a severe setback in the aftermath of the massive earthquake, tsunami and nuclear crisis in Japan, as prospective Thai visitors to Japan have cancelled trips due to safety concerns with regard to possible aftershocks, radiation leaks, and transportation impediments.
KResearch expects that the number of Thai visitors to Japan this year will decline below our forecast made before the disaster. We earlier projected that some 300,000 Thais would visit Japan this year with spending will probably reach about THB12 billion.
Meanwhile, KResearch sees the impact of the latest disaster on Thailand's outbound travel to Japan in two scenarios (as compared to our pre-disaster projection):
Base scenario: If the Japanese government is able to control the radiation leaks and expedite rebuilding programs, it is expected that Thailand's outbound travel to Japan will recover in 4Q11. As a result, the number of Thai tourists travelling to Japan in 2011 will drop by only 100,000 visitors and a decline in spending by THB5 billion.
Second scenario: If the radiation control and reconstruction programs are delayed, it is expected that Thailand's outbound travel to Japan will be lackluster until the end of 2011. As a result, the number of Thai visitors to Japan in 2011 would decline by as many as 150,000 visitors, with a drop in spending by some THB7 billion.
Aside from the disaster in Japan, other negative factors may undermine our outbound tourism this year, too. As a result, this travel segment may grow only 3.7-8.4 percent YoY, which would be lower than our pervious growth projection of 12.1 percent YoY.

That decline will likely hurt overall outbound tour operations (only a few will be spared as operators focus on specific destinations); thus they are urged to adjust their marketing strategies by offering tour packages to interesting and safer destinations in response to growing demand from the family market that tends to travel abroad during school breaks. In addition, operators should shift their focus to the domestic tourism market to offset income shortfalls from fewer outbound tourists to Japan.