Tourism in Chiang Mai, 2007: Lethargic After the Horticultural Show (Business Daily No.1966)

The Royal Flora Ratchaphruek 2006 Exposition, November 1, 2006 – January 31, 2007, was a great magnet that drew local tourists to Chiang Mai. During the final two months of last year, the number of domestic travelers that went to that northern city more than doubled, prompting Chiang Mai tourism to experience leapfrogging growth in 2006. Tourist arrivals to Chiang Mai last year totaled 5.59 million, up 40 percent over-year. Of that number, 63 percent were Thai visitors, totaling 3.54 million, rising by 64 percent over the same period of 2005; while foreign tourist arrivals grossed 2.05 million, a y-o-y increase of 12 percent.

Tourist spending in Chiang Mai in 2006 generated THB39.785 billion in revenue to related businesses in the city, rising by 28 percent, over-year. Of this revenue, 52 percent, or THB20.699 billion came from foreign tourist spending, up 9 percent over the year earlier, whereas THB19.086 billion was derived from domestic tourists, increasing 57 percent over 2005.

However, the finale of the Royal Flora Ratchaphruek 2006 Exposition on January 31, 2007, brought down the curtain on that flourishing tourism episode in Chiang Mai, as seen from the final two months of last year through to January this year. The sluggishness could be attributed partly to a return to normalcy in the local tourist market as well as the thick haze that smothered the upper North, including Chiang Mai, throughout March. This smog is dealing a severe blow to Chiang Mai tourism, March-April – which is normally the Thai domestic tourism high season.

The problem of dense smog in northern Thailand has been easing. Tourism in Chiang Mai now stands to benefit from scores of favorable factors including a higher number of high-end tourists as a result of the presence of leading international hotel chains with large customer bases and marketing-related competitiveness.

Meanwhile, cooperation between concerned public and private agencies helping to expand tourist arrivals from the Middle East and offsetting lower arrivals from Europe and Asia during the international tourism low season will also be a boon to tourism up there. On top of this, development of new tourist facilities including new routes leading to Royal Projects and other royally-initiated development projects plus ‘Unseen' tourist attractions in Chiang Mai and nearby provinces are part of the major effort to push the number of tourist arrivals to reach 500,000 as targeted.

KResearch forecasts that for the entire 2007, Chiang Mai will have totally 4.8 million tourist arrivals, which falls 14 percent from 2006. In this amount, 56 percent of them are Thai tourists or totally around 2.7 million, falling 24 percent from 2006 and generate tourism income dispersing in Chiang Mai around USD16 billion, dropping 16 percent from 2006. It is projected that around 2.1 million foreign tourists will travel to Chiang Mai, increasing 2 percent over 2006. They would generate THB22 billion in revenue to Chiang Mai, rising 6 percent and account for 58 percent of the total tourism income of around THB38 billion projected to be spent in Chiang Mai in 2007.

Earnings from tourism income of around THB38 billion expected for Chiang Mai in 2007, would likely be apportioned among the following important tourism-related businesses:

- Thirty-two percent, or around THB12 billion will be spent in souvenir shops.

- Twenty-one percent, representing a value of around THB8 billion, will be spent with hotel or other accommodation where there are around 350 venues and totally around 19,000 rooms in Chiang Mai.

- Sixteen percent, or a value of around THB6 billion will be spent with restaurants and food outlets mostly concentrated in downtown Chiang Mai.

- Twelve percent, THB4.5 billion, will be spent with recreation and entertainment related businesses, including sports services e.g., golf (with special promotions) and Lanna style spa services, etc.

- Eight percent, around THB3 billion, will be spent on transportation in Chiang Mai.

- Seven percent, around THB2.6 billion, will be spent on tours in Chiang Mai.

Chiang Mai is a tourist destination with high potential to develop further into a fully integrated health-related tourism venue to support the high-end market with high purchasing power. This is due to the city's preparedness in support services, e.g., luxurious hotels, restaurants and quality services that have been upgraded to serve the high-end market, which still has room to grow, plus hospitals and health-related diversions, e.g., golf courses, Thai massage and spas.

However, environmental problems, such as air pollution from the recent appearance of smog in 2007, plus traffic problems and flooding that generally occurs in Chiang Mai due to the rapid growth of the city. Moreover, such problems tend to obstruct the development of Chiang Mai toward becoming a hub for complete health services. Because high-end tourists are highly sensitive to health and safety issues, related authorities will have to seek measures to solve those environmental problems and restore the cultural image of Chiang Mai and attract tourists. In addition, the authorities should continue to develop the 470-rai area where the Royal Flora Ratchaphruek Exposition was held in order to arrange activities promoting tourism in Chiang Mai. Such activities should continue to stimulate tourism all year. As a result, there will be handsome income for tourism business in Chiang Mai.

------------------------------

Disclaimer: This research paper is arranged for public information, which has been obtained from sources believed to be reliable. KResearch does not warrant its completeness, reliability or accuracy for commerce or fitness for a particular purpose. The information contained herein may be subject to change at any time without notice. Reliance upon any information contained herein shall be undertaken at a user's own risk KResearch shall not be liable to any user, or anyone else for any damage occurring from the use of any content herein. Nothing in this research paper shall be counted as containing any advice, recommendation or opinion for decision making in business.