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30 Nov 2016


Domestic Travel, December 2016: Businesses Welcome Tourism Stimuli (Current Issue No. 2795)

Domestic tourism is an important economic activity in the Thai economy. Domestic tourism receipts typically total around THB800 billion per year, or about 5.7 percent of Thailand's GDP. Thais thus also generate significant tourism revenues for the economic system.
On November 29, the Cabinet approved new stimuli for domestic tourism, allowing taxpayers to submit their tourism expense receipts for accommodation, tour and travel services to obtain tax deductions up to the actual expense incurred, but not exceeding THB15,000 per taxpayer. KResearch expects that this tax break will support domestic tourism, but the results may be limited because most domestic tourists plan holidays in advance of the high season in December. Those encouraged by the travel stimulus this season may not, as such, be able to make a booking during the busiest periods at places they truly wish to visit.
However, we expect that this tax incentive will generate additional revenue of THB2.0-4.0 billion to hotels and tour service providers above what they would normally achieve, thus should help drive December tourism receipts upward to about THB82.0-84.0 billion, growing 8.8-11.5 percent YoY, versus the 13.4-percent growth over last year. In any case, tourists planning trips this season should benefit from the measure, and may even increase overall spending because of the tax deductions realizable on their tax returns early next year.

We at KResearch view that this stimulus measure will benefit tour service providers such as hotels (with legit registration) that may still have vacancies, as well as other local accommodation businesses that have been affected by a drop in some tourist segments. Moreover, tour operators may use this opportunity to promote their services throughout December and should seek to increase awareness towards this cost incentive, which could encourage those without holiday plans to consider a vacation domestically.