Q+A: How badly will Bangkok violence hit Thai tourism?

By Ploy Ten Kate

BANGKOK (BestGrowthStock) – An anti-government rally in Bangkok spilled over into violent clashes last Saturday in which 24 people were killed and more than 800 were injured, Thailand’s worst political violence since 1992.

There has been an immediate impact on tourism, and a recovery in the $264 billion economy, Southeast Asia’s second biggest, may be set back. Tourism accounts for 6 percent of GDP and directly employs 1.8 million people out of a population of 67 million.

Comparisons with data last year are tricky.

Tourism was dealt a blow in April 2009 by that year’s “Songkran riots,” involving the same “red shirt” group. The sector was only just recovering from a blockade of Bangkok’s airports by a rival political group in late 2008.

WHAT IS THE IMMEDIATE IMPACT?

Surapol Sritrakul, president of the Association of Thai Travel Agents (ATTA), said the number of tourists coming in for Songkran, the Thai New Year from April 13-15, had slumped.

“Tourist arrivals have been cut in half basically to just 3,000-4,000 per day in April from 6,000-8,000 in the first quarter,” Surapol said.

“It’s been a very, very quiet Songkran. We are worried if this political unrest drags on for too long, it’ll just ruin everything,” he said.

The ATTA expects 14.5 million tourists this year.

The Tourism Authority of Thailand, a state agency, is sticking to its target of 15.5 million, which compares with 14.1 million last year. It said 4.6 million tourists arrived in the January-March quarter, up from 3.6 million last year.

Shares in national carrier Thai Airways lost 5.4 percent on Friday, on top of Monday’s 14 percent plunge. Airports of Thailand, the biggest airport operator, shed 4.9 percent. The main stock market index fell 3.25 percent.

Kasian Watanachaopisut, secretary-general of the Thai-Chinese Tourism Alliance Association, said 100 charter flights from China and 10 from Hong Kong to celebrate Songkran had been canceled.

“Last year there were 1-1.2 million Chinese visiting Thailand, but this year we may hope for only 700,000 — if the situation returns to normal quickly.”

WHAT ABOUT SHOPS AND HOTELS?

Reservations at hotels in Bangkok’s upmarket Rachaprasong shopping district, occupied by the protesters for nearly two weeks, have dropped sharply, operators say.

Hotelier Central Plaza said occupancy at its Centara Grand at Central World — in the middle of the mall district occupied by the red shirts — had dropped 30 percent after Asian visitors canceled and seminars and other events were postponed.

“Customers are either cancelling their bookings or being transferred to our other hotels around town,” said Ronnachit Mahattanapreut, the hotel’s Senior Vice President for Finance.

The “red shirts” have occupied a district full of five-star hotels and plush malls since April 3, forcing several top stores to close, among them Central World, the second-largest shopping complex in Southeast Asia.

Minor International said it had far fewer guests than normal at its Four Seasons Hotel with a “low single digit” occupancy rate. “As regards cancellations, it can’t get much worse,” said Rainer Stampfer, the general manager.

“It’s terrible but there’s nothing we can do about it.”

Streets near Bangkok’s Khao San Road, a magnet for budget tourists, saw some of the worst violence Saturday. Media said many tourists checked out quickly and around 80 shops closed, although the calm that returned to the city over Songkran seems to have persuaded some to return.

HOW HAVE CONFERENCES BEEN AFFECTED?

Central Plaza Hotel says it has lost 4-5 million baht a day since the occupation of the shopping district, the result of canceled bookings for hotel rooms and business events at its hotel at Central World.

Thailand Convention and Exhibition Bureau says the protests had prompted the cancellation of some business events scheduled for April.

HOW MUCH WILL THIS AFFECT THE ECONOMY?

Consumer confidence fell in March, when the “red shirt” rally began.

Investment bank Morgan Stanley calculates economic growth this year could be cut by 0.2 percentage point due to the impact on tourism. A bigger hit of up to 0.6 percentage points of GDP could come from a further loss of consumer confidence.

The government has forecast 4.5 percent growth this year. Finance Minister Korn Chatikavanij told Reuters that, after all that had happened, he would not be disappointed if the economy did manage growth of 4.5 percent.

The Asian Development Bank forecast Tuesday the economy would grow 4 percent this year, although bank officials said that might be revised, depending on the outcome of the crisis.

The central bank says politics is becoming a bigger factor in deciding whether to raise interest rates. Its next policy meeting is on April 21 but, even before the latest events, most economists had not expected an increase until the meeting after that in June, if not later.

The protests, including the occupation of the shopping district, are expected to cost the economy up to 2 billion baht ($62 million) per day, the University of the Thai Chamber of Commerce predicts.

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(Editing by Alan Raybould)

Q+A: How badly will Bangkok violence hit Thai tourism?