Thailand is making a faltering start to the return of tourists, with the first contingent of Chinese travellers set to arrive last week but who were delayed by a security chief who cited the Vegetarian Festival as a reason for the delay. That is a sorry start for an industry that previously contributed more than 18 percent to the country’s gross domestic product and which provides livelihoods for hundreds of thousands of people.
In 2019, Thailand had 39.8 million foreign visitors, the highest total in the region, a figure that is expected to skid to 14 million by the end of 2020, a 90 percent collapse. Covid-19 restrictions on foreign arrivals since March have turned once popular tourist destinations like Phuket, Koh Samui and Pattaya into ghost towns, with most tourism-based businesses, hotels, and other dependent businesses either temporarily or permanently closed.
Secondary destinations like Ko Samet, Koh Chang, Dannok, Ao Nang, and Chiang Mai, are devoid of foreign tourists, grinding local economies to almost a halt. Most formal and informal tourism sector workers have returned to their home provinces. A very few of the lucky ones have been able to take up new activities to survive.
Tourism has plunged around 60-80 percent internationally this year, but Thailand has been particularly susceptible to the downturn. Unemployment within the sector is estimated at a million people by several sources, where very few, due to strict job definitions, have received any assistance. With a loss of THB5.3 billion per day in foreign exchange, the catastrophe has reverberated across the country, as tourism sector workers have a high rate of elderly parent and child dependency.
With the crash in foreign tourism, along with a sharp decline in exports, particularly local cross border trade, the World Bank forecasts 8.3 percent negative GDP growth this year. The restrictions on foreign tourism have crippled companies set up to serve them in Thailand’s tourism belts. Restaurants, tour agencies, tuk-tuks – open-air taxis – vans and taxis, massage shops, souvenir shops have either gone bankrupt, or closed until foreign tourists will return once again.
The government feared a massive Covid outbreak, with 45,000 fatalities estimated through modelling, frightening authorities into prioritizing public health over the economy, thus reluctantly closing the borders to foreign nationals last April. Thailand was in almost complete lockdown for more than three months, with curfews, an alcohol ban, the forced closing of shopping centers and entertainment venues. Most hotels completely closed along with most domestic air traffic. Phuket closed its provincial borders to the rest of Thailand for almost two months. Land borders closed, except for cargo transit and repatriation of nationals.
Tourism and local trade along border towns is now non-existent. Foreigners on long-term visas, marriage, and privileged entry (Thaielite) visas were originally barred from re-entry but are now beginning to return in small numbers, under very stringent requirements, and not to overrun quarantine capacity.
The calamity never happened. As of writing, there were 3,636 reported cases of Covid-19, most linked to quarantine cases, with no local transmissions reported for more than 110 days. These cases required few hospitalizations and resulted in a mere in 59 deaths. Thailand’s success of containing local transmissions of Covid-19 has cost the country US$60 billion in lost foreign tourism income, with authorities finding it very difficult to develop any reopening strategy.
There have been a number of underlying tourism issues since well before the pandemic. The overvalued baht, at THB31.3:US$1, has eroded Thailand’s comparative advantage as an international destination. Accommodation and fine dining costs in areas like Patong Beach in Phuket are almost as expensive as alternative tourist destinations within Europe. For many European tourists it is become cheaper to vacation at home in the mid to upper market segments.
General infrastructure within areas like Pattaya and Phuket still needs improvement to compare to competitors. Important attractions like the Grand Palace in Bangkok suffer from visitor overcapacity, detracting greatly from the ambience. National parks, beaches and coral reefs have suffered environmental damage from overvisitation, leading to the closure last year of Maya Beach of Leonardo Dicaprio fame, the scene of the 2000 film “The Beach.”
With the rapid rise of Chinese tourism over the past decade, Chinese tourists made up 27.5 percent of all international arrivals in 2019. With the Tourist Authority of Thailand (TAT) focused in increasing raw tourist numbers as a major KPI, zero-dollar tourism has become an issue. Approximately 30 percent or 3.2 million Chinese come in organized tours, most of them organized by Chinese owned tourist agencies, with most of the money going to Chinese-owned firms, often through proxy transport companies, hotels, restaurants, and even shops. As a result, very little money paid by Chinese to organized tour operators actually flows into local economies.
The government tried to clamp down on this practice in 2016, closing three large tour agencies, confiscating more than 2,000 tourist buses and arresting a number of operators for money laundering. The operators were escaped conviction as it was found no actual breaches of the law could be proved by government prosecutors.
Over the past six months, authorities have floated a number of concepts about how to reopen foreign tourism including negotiated travel bubbles with low-risk countries, allowing foreign tourists to small designated enclaves such as Phuket and Pattaya, and a general opening of the country to tourists from low risk countries, with visitors required to wear tracking wristbands, and/or Covid tracker apps on their mobile phones.
To date, only a few selected categories of foreigners are allowed back. Even members of the expensive ThaiElite privileged visa program, operated by a company owned by TAT, have only recently been granted permission to return in limited quotas, because of the limited quarantine facilities available. Foreigners must first get approval from their local Thai diplomatic mission to obtain a certificate of entry, obtain a fit-to-fly certificate 72 hours before flying and take out a US$100,000 insurance policy with a local Thai company in addition to THB400,000 inpatient and THB40,000 outpatient health coverage. Foreigners are quarantined on arrival in a hotel for 14 days costing THB60,000-230,000.
The government devised a Special Tourist Visa (STV) program in September, open to only foreign-nationals of a few countries. China and Scandinavia were the first two regions targeted for the limited reopening. Requirements are also very stringent with all accommodation requiring pre-payment, in addition to a mandatory five-star quarantine stay of 14 days, limited to Phuket. This visa could be extended for a stay of up to 275 days.
The first charter flight of supposedly 120 “tourists” from Guangzhou, China was cancelled only two days before it was due to arrive in Phuket. Media reports claimed the first flight was delayed for administrative reasons, then reported the scheme would be delayed indefinitely. A report in the local news portal Thaivisa reported that no one had actually applied for the visas.
Critics of the STV plan argued that the program would not generate employment within the tourism sector and would only benefit a few wealthy resort owners. There was also some apprehension from the Phuket Administrative Government and public at large about the return of foreign tourists.
Thailand has been hit with a wave of xenophobia against foreigners since the beginning of the pandemic. The minister for community health and a deputy prime minister of the Prayuth Chan-ocha government, Anutin Charnvirakul said foreigners who don’t wear masks should be deported and later warned Thais to be weary of ‘dirty farangs’ (foreigners), who potentially carry the Covid virus. This led to fear and increased xenophobia on the part of much of the Thai population.
Some Thais now purposely keep their distance from expatriates. An attack on foreigners by locals on a beach in Phuket occurred in May, some restaurants and shopping centers banned foreigners, they were banned from entering the iconic Wat Pho temple in Bangkok, and an inter-province bus company refused to carry foreign passengers.
Even though there are more than one million unemployed, polls indicate that the majority of respondents are against reopening to foreign tourists. Last July, a VIP Egyptian military delegation, exempted from quarantine, visited a busy shopping centerin Rayong. With one member of the delegation found to be Covid positive, a mass scare led to the cancellation of accommodation booking for a long weekend, and mass testing across the province. Last month, news about Covid positive people from Myanmar entering Kanchanaburi also led to mass cancellations of hotel bookings on another long weekend holiday.
With the collapse of tourism after the curfews and restrictions, the Tourism Authority of Thailand (TAT) saw that 2 million remaining expatriates in Thailand would be a potential source of tourism revenue, while international borders remained closed. However, just as the Tourism and Sports Ministry was promoting the idea of expatriate tourism, and the abandonment of dual pricing, a long contentious issue with long term foreign stayers in Thailand, news broke out that the Bangkok Midnight Marathon, planned for December has banned foreign entries. This was followed soon after by the Bangsaen Chonburi Marathon. The organizers of the two events only reversed their decisions after strong social media outrage.
The governor of TAT Yathasak Supasorn stated that expatriates will be treated as locals, without discrimination towards foreigners to national parks, and famous tourism sites. However, action has not been taken. Thai blogger Richard Barrow set up a Facebook group 2PriceThailand which has more than 14,000 members who post pictures exposing establishments that practice dual pricing. A website has been created mapping these establishments across the country. Foreigners are charged up to 10 times the price for locals at many establishments. Some of the methods tourist establishments use to display dual pricing according to Barrow can be considered sly and deceitful.
Any revival of foreign tourism within Thailand is going to be a long way off. However, the silver lining is that local tourism has very quickly recovered after most restrictions were lifted. This high end within driving distance from Bangkok in areas like Hua Hin are now frequented by Thais who would normally travel overseas for their holidays. Rayong and Chantaburi are beginning to see the return of tourists from Isan.
Hat Yai, once a haven for Malaysian tourists is seeing visitors from the other southern provinces. Betong, once a red-light district frequented by Malaysians is now a popular destination for big bike groups and small groups coming in vans to enjoy the food and local attractions.
The patterns are different from foreign tourists. While some hotels and tourist agencies which focused on serving foreign tourists have suffered, other businesses which are focusing on serving local wants are flourishing again. Schools and local government groups on subsidized holidays are travelling to these destinations and bringing income into these small local tourism pockets. Hotels, and resorts within these areas are charging pre-Covid prices due to high demand, in stark contrast to hotels in places like Koh Samui. Domestic air traffic is quickly picking up again at discount rates, partly due to the expansion of Vietjet Air to new Thai domestic airports.
Some businesses have taken new paths to adapt to the new normal. Some pubs and bars have redefined themselves as restaurants. Some hotels have become apartments taking on long-term guests. Whole towns have changed. Dannok in the very south, right on the border with Malaysia, once a notorious red-light district for Malaysians has become a quarantine hotel town. Business from repatriations has been so good, some quarantine hotels are offering discounted packages. Dannok is also very quickly becoming the accommodation and service town for a host of quickly growing number of factories being established in the new Sadao Special Economic Zone.
Parts of the Thai administration are taking a realistic attitude to what the new normal may bring. Thai non-formal and vocational education colleges are now beginning to focus on reskilling those who lost their jobs in tourism to other vocations. There is also a major shift going on from patronage of large corporate five-star resorts, towards the smaller family owned boutique resorts around the country. While hotels and resorts in Phuket and Pattaya are seeking a bail out, hotels and resorts in other places are rebuilding their businesses interrupted by the restrictions and curfews.
When foreign tourism does reopen, Thai authorities need to be aware that they now face plenty of competition for the tourist dollar. This reset is a good time to properly replan any reopening of the country to foreign tourism, which the economy needs. Thailand needs to be accessible, competitive, value for money, and be discerning to regain the glitter it has lost.
Originally published in the Asia Sentinel