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10 Nov 2020

Econ Digest

The domestic tourism market: Thais favour mountainous natural attractions

                 Thailand's domestic tourism market has been continuing to grow after the COVID-19 situation in the country eased and the government launched measures to stimulate domestic tourism. Based on data provided by the Ministry of Tourism and Sports, the number of domestic tourists in the third quarter of 2020 reached approximately 24.3 million person-trips, contracted by around 38.9% year-on-year yet still a significant improvement from 3.9 million person-trips in the second quarter. The tourism expenditure of domestic tourists in the third quarter was approximately 116 billion baht.
                 KResearch has analyzed the tourism activities of Thai tourists in various provinces in the third quarter, including day trips, side trips and overnight trips. The survey results show that although the number of tourists has not returned to pre-COVID-19 levels, the contraction has narrowed. The number of domestic tourists in some provinces was close to the level of the same period of last year, such as Chiang Mai (contracted by 2.7 percent YoY), Mae Hong Son (contracted by 8.8 % YoY), Chon Buri (contracted by 10.1 % YoY), Phetchaburi (contracted by 11.5 %YoY) and Prachuap Khiri Khan (contracted by 12.2 %YoY), which is a good sign for the tourism industry. However, the recovery of tourism in other provinces such as Phuket, Ranong, Surat Thani and Chaiyaphum was still below the potential level.
                KResearch believes that Thailand's domestic travel market will continue to grow in the fourth quarter, which is the high season for Thai tourists. Mountainous natural attractions are particularly popular during this period of each year, with the most popular tourist destinations for domestic tourists still being Chiang Mai, Chiang Rai, Phetchabun, Kanchanaburi, Ratchaburi, Nakhon Ratchasima, Loei and other major provinces, due to their diverse tourist attractions, continuous promotion and convenient transportation.  However, other potential provinces with mountainous natural attractions still need local governments and related parties to strengthen tourism promotion.
              KResearch projects that the impact of COVID-19 will cause the number of domestic tourists in 2020 to reach the lower limit of the forecasted range, which is approximately 89.5 million person-trips, contracted by 46.4%YoY; the total value of domestic tourist expenditures in 2020 will be at around THB 506 billion, or contracted by 53.3%YoY. However, in the absence of negative factors such as a second wave of COVID-19 and political problems in the country, it is expected that the domestic tourism industry will resume positive growth in the second quarter of 2021. Many provinces, especially major domestic tourism provinces such as Chiang Mai, Chonburi, Phetchaburi and Prachuap Khiri Khan will resume positive growth in tourism, but the tourism industry in southern tourism provinces such as Phuket may recover slowly because opening up to foreign tourists will cause some domestic tourists to worry about COVID-19 and to shift to other tourism destinations.
                Although the domestic tourism market has improved and benefited the tourism industry, since the inbound tourism market has not yet returned to normal, the business sector will still face fierce competition, which is bound to trigger a price war. However, tourism operators should consider using other strategies such as creating awareness and new travel trends through social media channels, because nowadays travel reviews, photos and activities shared on social media will influence the decision of tourists to choose tourism destination, accommodations, and other travel services. Therefore, making good use of social media will boost local travel and tourism.

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