Uncertainty over the Chinese market and the effect of US President Donald Trump's policies are the most critical factors for the tourism industry in the first half, as airlines and hoteliers consider market trends after the high season.
Fuel prices, which typically make up a large portion of travel costs, have been monitored this year as new trade tariffs from Trump are expected to impact global oil prices.
Tassapon Bijleveld, executive chairman of Asia Aviation, the majority shareholder of Thai AirAsia, said fuel prices would be the most crucial factor for the aviation industry to watch in the new round of trade wars.
Currently low fuel prices benefit airlines as the oil supply in the global market is expected to be overwhelmed due to Trump's energy policy, which favours fossil fuels over green and sustainable energy.
He said that if Russia ends the war with Ukraine as the president has pledged, more energy supplies from Russia will be added to the market. This would not only benefit airlines but also other industries still reliant on fossil fuels.
According to the International Air Transport Association, global air traffic rose by 10.4% in 2024, while total capacity grew by 8.7% year-on-year.
However, in terms of the domestic market's purchasing power, Mr Tassapon said there would be an impact if confidence in the economy declined due to rising costs from higher tariffs.
He said the near-term situation remained concerning because, aside from the thriving tourism sector, other key economic drivers in Thailand are not in good shape.
The gloomy atmosphere is clearly seen in the Thai stock market, which lacks the ability to attract foreign investment due to its low profitability, while some listed companies are facing serious governance issues, which further erodes overall confidence.
MORE UNPREDICTABLE
Thienprasit Chaiyapatranun, president of the Thai Hotels Association, said internet bookings and the visa-free programme have made the situation more unpredictable, particularly for the Chinese market, which has enjoyed visa exemptions since last year.
Hotel operators, once able to forecast average occupancy months in advance, must now monitor the situation on a weekly basis due to the shortened booking lead times as travellers do not have to plan around the period when visas are allowed.
Although the outlook for tourism during the high season is promising, the real test will come in the low season when there are no festivals like Chinese New Year to stimulate the market.
Mr Thienprasit said that the Chinese market alone could determine whether Thailand meets its revenue target of at least 3 trillion baht, or even reaches 3.5 trillion baht, as the government wants.
"Given the large volume of the Chinese market, its fluctuations have a significant impact on Thailand's tourism industry. While other markets may experience growth, their smaller scale cannot create the same substantial difference as the Chinese market," he said.
Mr Thienprasit said the outlook for the Chinese market this year is likely to become more apparent during April's Songkran holiday. This follows tepid growth in January, as tourism confidence was hit when a Chinese actor was conned into joining a scammer network via Thailand.
LOSS OF APPEAL
"Initially we were concerned about the impact of the Chinese economy, especially with Trump's re-election, on Chinese outbound trips. But the growth of the inbound Chinese market to Japan has already proved that the Chinese still have purchasing power. They just switched to another country instead of Thailand," Mr Thienprasit said.
According to the Japan National Tourism Organization, the Chinese market in 2024 saw a surge of 187.9%, increasing from 2.4 million to 6.9 million people, slightly surpassing Thailand, which welcomed 6.7 million Chinese visitors.
Japanese travel agency JTB expects 9.3 million Chinese visitors to Japan this year, a 33% increase, driven by the close proximity between the two countries and the weak yen.
An influx of Chinese tourists to Japan is expected to continue this year as Osaka will host the three-month-long World Expo 2025, starting from April, which will attract many markets, said Mr Thienprasit.
The weak yen is regarded as one of the most attractive factors that lured foreigners to Japan last year, and the trend should continue in 2025, he said.
"Chinese travellers have several options for destinations, from Tokyo and Osaka to Sapporo and other cities in Japan. Data from online travel agencies also reveal that they are increasingly opting for fresh destinations in Southeast Asia. This trend has presented a challenge for the Thai government to stimulate the growth of this market," said Mr Thienprasit.
According to Chinese travel agency Tongcheng Travel, the outbound Chinese market during Chinese New Year surged by 30%, with tourists choosing Japan, Malaysia, Singapore, South Korea and Thailand.
During this period, overseas room bookings surged 300% year-on-year, with many emerging destinations seeing a 2-4 times increase in flight bookings, including Sapporo and Chiba in Japan, Johor state in Malaysia, Da Nang in Vietnam, and Cebu in the Philippines.
