“Bangkok Shutdown” and State of Emergency Likely to Dent Inbound Tourism Revenues by THB20-50 Billion in 2014 (Current Issue No. 2455 Full Ed.)

We at KResearch expect that Thai tourism will continue to grow in 2014, thanks to:

1) Brighter economic prospects seen in major international tourist markets, especially China –where the authorities have eased outbound travel restrictions – and Europe;

2) Expanding low-cost flight services to Thailand's primary and secondary tourist destinations in response to growing demand from free individual and budget travelers; and,

3) The upcoming ASEAN Economic Community (AEC) in 2015 that will help draw international investors and travelers into the region.

However, escalating political turmoil here after the government imposed a 60-day state of emergency on January 22 to cope with an attempted shutdown of Bangkok by anti-government protestors will likely undermine Thai tourism, with growth falling below the latest projections that had already taken a hit from China's new tourism laws, aimed at improving the quality of tourism services. Given this, KResearch expects that the number of international tourist arrivals in 2014 will reach 29 million, up 8.5 percent YoY, helping generate around THB1.4 trillion in foreign exchange revenues.

KResearch has assessed the impact of politics on Thai inbound tourism this year as being:

Case 1: If domestic political situations return to normal in 1Q14, the number of foreign tourist arrivals will reach perhaps 28.5 million, generating about THB1.38 trillion in tourism income.

Case 2: If the political turmoil is prolonged into 2Q14, the number of foreign tourist arrivals will total only 28.0 million, generating some THB1.35 trillion in tourism income.