Hat Yai Bomb Blasts: Biting into Nearly THB1 Billion in Tourism Income (Business Brief 1865)

A series of bomb blasts in the heart of Hat Yai on the night of Saturday, September 16, 2006, have made worse the sluggish tourism there. The Hat Yai tourism market has seen the most serious setback since the three simultaneous bombings at Hat Yai and Muang district of Songkhla on April 3, 2005, as well as the flooding experienced late last year. Therefore, all related parties should beef up security measures as part of their efforts to restore confidence to tourists, which, in return, will reinvigorate tourism in the city during the final quarter of this year.

Over the past few years, tourism in Hat Yai has been undermined by many negative factors, particularly, the unrest in the three southernmost provinces that has so far broadened, and which lately included the center of Hat Yai. Recent severe flooding in many areas of the lower part of the South, including Hat Yai, were also another downside to tourism. However, tourism in Hat Yai was quite resilient throughout 2003-2005. Tourist arrivals there totaled 2.34 million in 2003, and rose to 2.36 million in 2004, up 1 percent, over-year. However, in 2005, the number of tourists visiting the city totaled 2.35 million, slightly lower than the year earlier.

Tourism-related revenue in Hat Yai deteriorated markedly in 2005, grossing THB11.715 Billion, down by 16 percent from the year before, blamed on declines in the average spending of both local and foreign visitors.

In 2006, the Hat Yai tourism market grew slightly, thanks to expansion in the local tourist market. KASIKORN RESEARCH CENTER (KResearch) made a pre-bombing incident prediction that tourist arrivals to Hat Yai would reach some 2.37 million in 2006, up one percent over the year before. Of this, 1.72 million persons would have been Thai tourists, rising by 6 percent over 2005, while the rest, some 650,000 would have been foreign visitors, a year-on-year increase of 10 percent. This would have generated some THB10 billion in tourism-related income to Hat Yai in 2006, down 15 percent from 2005.

The blasts last Saturday will have a drastic impact on Hat Yai's tourism over the remainder of 2006, dropping considerably from the pre-bombing projection wherein we predicted that around 650,000 foreign tourists would travel to Hat Yai and generate tourism income of around THB3.3 Billion. The market of foreign tourist arrivals -- which account around 30 percent -- will likely decline more than the domestic Thai tourist market.

However, with the city's experience in overcoming many previous crises, including the major flooding at the end of 2000 on through to the present difficulties, if concerned agencies of both the state and private sectors in Hat Yai expedite cooperation to correct the situation, it is forecast that Hat Yai tourism will recover to normalcy rapidly. KResearch projects that during the remainder of 2006, there will be totally around 490,000 tourist arrivals to Hat Yai, falling 25 percent from the former forecast before the recent bomb blasts. This will consist of around 360,000 Thai tourists, falling 20 percent from the former forecast, and foreign tourists dropping 35 percent to 130,000 persons, who together will generate tourism income of THB2.4 Billion, 27 percent less than the former projection.

The lost tourism income of Hat Yai, which is projected to be around THB900 million, should generate to souvenirs shops and on purchases of goods and services of many categories, including hotel business, entertainment venues, restaurants and food outlets, and transport services to and within Hat Yai, plus tours and other tourist attractions there. These service businesses will be directly impacted by a downturned tourism atmosphere as a result of the blasts, and it is possible that they will lose a significant portion of their income from tourism over the remainder of 2006.