An improvement in the COVID-19 situation is being seen in Thailand as the number of new infections nationwide has declined steadily while no new cases were found in many provinces for many days. This represents a positive sign for the country and if no new infections are found, people and businesses should be able to gradually resume their normal activity going forward. Regarding domestic travel, the COVID-19 pandemic has dealt a big blow to local tourism supply chains amid substantial declines in the number of international and local tourists.
It is expected that domestic travelers will be a major tourist segment for Thailand's tourism in 2020. We at KResearch view if there are no new COVID-19 cases in Thailand, the government may gradually ease lockdown measures going forward. These include allowing more tourist attractions to reopen and travel-related businesses, such as airlines, to resume domestic flight services. This along with marketing campaigns to promote domestic travel by travel-related businesses will likely help reinvigorate demand for domestic travel further.
Domestic travel here, however, is plagued by many downside risks, such as lingering concern about the COVID-19 pandemic, sagging consumer confidence towards employment, and weakening consumer purchasing power after a majority of economic activities came to a halt. As a result, domestic travel may shrink approximately 52.3 – 46.4 percent in 2020 or there will be only 79.5-89.5 million domestic trips. Spending by Thais travelling domestically may reach THB485-545 billion, shrinking roughly 55.1-49.4 percent YoY (based on an assumption that the COVID-19 pandemic will not re-emerge during the remainder of 2020). Despite a bleak picture seen in the overall Thai tourism, KResearch views that the high-end tourist segment will bounce back faster than other segments.
Meanwhile, domestic travel post-COVID-19 pandemic will continue to experience challenges, in particular adjustments to new business norms as a result of changing environment, including a priority on hygiene and safety when offering services. Although this may hurt earnings of travel-related businesses, it is important to build confidence of service users. Since many travel-related businesses are facing liquidity squeeze, they are still careful about expenditures while ensuring that services will be the least affected. They are also cautious about investment in inventory, employment or marketing activities that are heavily dependent on technologies.