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9 May 2014

Tourism

Chiang Mai and Chiang Rai Tourism to Thrive Despite Recent Earthquake (Current Issue No. 2499 Full Ed.)

Hotel and resort businesses in Chiang Mai and Chiang Rai continue to thrive, thanks to infrastructure and transportation developments, especially the R3A highway (Chiang Rai-Lao PDR-Kunming) that is making it more convenient for southern Chinese tourists to travel to these provinces than ever before. In addition, cheap airfares on special promotions offered by many low-cost airlines and a growing number of charter flights have helped bolster the number of Thai and international tourist arrivals entering Chiang Mai and Chiang Rai, while more direct flights have been provided for holiday makers without a stop-over in Bangkok.
Moreover, hotel and resort businesses there have not been affected much by China's recent law enforced in 2013 to control the service quality of outbound tourism because most Chinese tourists visiting Chiang Mai and Chiang Rai are free independent travelers (FITs). However, hotels and resorts in Chiang Mai and Chiang Rai will be facing a long period of low hotel occupancy during the low travel season between May and September.
KResearch is of the view that the earthquake that struck Chiang Rai on May 5 will force Thai and international tourists to delay travel plans to Chiang Mai and Chiang Rai. Nevertheless, we expect that the number of Thai and international tourists visiting Chiang Mai in 2014 will reach some 8.1 million, up 6.6 percent YoY, generating some THB68 billion in revenues, up 7.9 percent YoY, to travel-related businesses there. However, that amount of revenues would be lower than the THB71.5 billion projected before the earthquake, meaning that Chiang Mai may lose about THB3.5 billion in tourism income, or about 4.9 percent of its total 2014 tourism income assessed before the earthquake. Of that total, 26 percent, or around THB900 million, would have gone to local hotel and resort businesses.
As for Chiang Rai, it is expected that the total number of Thai and international tourists visiting the province will reach approximately 3.15 million, up 3.3 percent YoY, generating some THB22 billion, up 4.8 percent YoY in revenues to the province. That amount would be lower than the THB23.1 billion projected before the earthquake, so travel-related businesses there might see a shortfall of about THB1.1 billion in expected revenues, or about 4.8 percent of the expected total tourism income for 2014 assessed before the earthquake. Of that total, 24 percent, or about THB260 million, would have gone to local hotel and resort businesses.
We at KResearch expect that such losses would be heightened by declines in the number of tourist arrivals to those provinces during the low season (May-September), though tourism in Chiang Mai and Chiang Rai would recover later during the high season (October-December).

In summary, KResearch has assessed that losses to tourism businesses in Chiang Mai and Chiang Rai during the low season (May-September) as a result of the recent earthquake may amount to perhaps THB4.6 billion, or about 4.9 percent of their total tourism revenues projected before the earthquake at about THB94.6 billion. It is expected that hotels and resorts in Chiang Mai and Chiang Rai will likely lose THB1.16 billion in revenues during the period. However, the loss could be lower than our estimate if relevant agencies accelerate plans to restore tourism and tourist confidence before the upcoming high season at the yearend.

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