COVID wave crushes Thailand’s already hobbled tourism sector

BANGKOK – Thailand’s acclaimed tourism industry is rocked by an unprecedented number of business closures and job losses as it suffers from the second wave of COVID-19 infections in the country and seeks help from the government.

At least 1 million hospitality workers have been laid off in the country as accommodation and other service companies suffer from the disappearance of tens of millions of foreign tourists, according to the Thai Hotel Association.

Tourism contributed around 20% to Thailand’s gross domestic product in 2019. The sector is so large that it creates a multiplier effect across the economy. At least earlier. Now, all of the industry’s job losses and closings could prevent a recovery in Southeast Asia’s second largest economy.

When the first wave of infections hit the country hard in March last year, the Thai government responded by restricting people’s movements and closing its borders to foreign arrivals. The constraints on residents were gradually eased from May, and in the months that followed, the government encouraged Thais to indulge in their country’s world-famous tourist paradises.

However, these efforts failed to get the industry out of the dire financial plight it faced as foreign tourists and purchasing power faded. The number of foreigners visiting Thailand in 2020 fell to 6.7 million, according to the Thai Ministry of Tourism and Sports, down 83% from the previous year.

Thai hotels, which served nearly 40 million overseas tourists in 2019, are now staring at a possible second straight year with just a trickle of these big donors.

Krungthai Compass, a think tank at Krung Thai Bank, says the second wave will have an impact longer than expected. It is expected that it will take the government a few months to get the spread of the virus under control. This will inflict an additional 100 billion baht ($ 3.3 billion) in damage to the already limping tourism sector, the think tank said.

Several hundred hotels in major tourist destinations have already closed, and many are for sale. Other businesses that rely on the tourist hordes have been forced into bankruptcy as the second wave further decimated their finances.

Thailand had been viewed as a COVID success story as it stopped the virus from spreading completely. In December, a cluster exploded at a fishing center in central Samut Sakhon province. The broadcasts then raced across the country, forcing the government to declare 28 provinces “red zones”, where crossing provincial lines is prohibited.

The consequences were devastating.

In Krabi, a southern beach resort with around 900 hotels, “450 have been temporarily closed,” Ekkawit Pinyothammanothai, president of the Krabi Tourism Council, told Nikkei Asia. Dozens of the dormant hotels have been put up for sale as their owners can’t stand a second liquidity crunch in less than a year, Ekkawit said.

Hoteliers on Koh Samui, a vacation island on the Gulf of Thailand known for its palm-fringed beaches and mountainous rainforest, are being squeezed by the same truck. Up to 100 have been on sale, according to Vorasit Pongkumpunt, president of the Koh Samui Tourism Association.

“There are typically thousands of tourists walking the streets and beaches of Koh Samui,” Vorasit said. “But they have disappeared and 70% to 80% of the shops and bars are closed because there are no tourists.”

The decline in guests has forced many hotels in Thailand to temporarily close or cease business. (Photo by Lauren DeCicca)

In the west coast beach town of Hua Hin, where the Thai royal family has a summer residence, “hotel occupancy has dropped by single digits and all shops, bars and spas are closed,” said Wassana Srikanchana, president of the Hua Hin Tourism Business Association. “Even supermarkets are empty.”

The Central Group’s retail conglomerate will temporarily close its department store in Patong, a bustling beach town on the Andaman Sea island of Phuket, on Monday due to a lack of tourists. Prior to COVID, foreign tourists made up 85% of the commercial hub’s customers.

Thailand achieved tourism income of around 3 trillion baht in 2019. Two thirds of them came from foreign tourists. The industry’s strong dependence on foreigners who want a winter escape has made the industry all the more painful.

Around 400 to 500 outbound travel agencies have closed as there are virtually no commercial flights. About 50 have gone bankrupt, Sutthipong Puenpipob, president of the Thai Travel Agents Association, told Nikkei.

There used to be 850 of these travel agencies. Those that remain open now are arranging domestic vacations and often offering premium tours for wealthy Thais that feature high-end transportation, leading restaurants, luxury hotels, and more. “However, offering premium domestic tours is not easy as purchasing power is not very high and COVID is still undermining the country’s economy,” Sutthipong said.

The Thai Hotels Association recently made a proposal to the government asking for survival assistance, including a debt moratorium and soft loans. The association also called on the government to subsidize 50% of workers’ wages to prevent further layoffs.

“At this stage,” said THA President Marisa Sukosol Nunbhakdi on the association’s website, “we urgently need government help in order to survive as the situation is going on longer than expected.”