Thursday, July 10, 2008

Oil, politics spoil outlook for Thai tourism

Thu Jul 10, 2008 3:18am EDT

By Orathai Sriring

BANGKOK, July 10 (Reuters) - Thailand will see fewer foreign tourists next year than previously forecast as costly oil pushes up travel costs, while political turmoil clouds the outlook for one of Asia's top destinations, officials said on Thursday.

The Tourism Authority of Thailand now expects tourists to bring in 630 billion baht ($18.8 billion) next year, up 5 percent from 2008 but below an earlier forecast of 10 percent, TAT deputy governor Suraphon Svetasreni told Reuters.

The agency said it expected 16 million people to visit the "Land of Smiles", dowm from a previous forecast of 17 million, but still above the 15.5 million expected this year.

Tourism accounts for 6 percent of Thailand's gross domestic product, making it a key driver of economic growth.

The slower growth underscores the increasingly tough environment facing travel agents and airline operators such as Thai Airways THAI.BK, which has reduced or halted long-haul flights to cope with higher fuel costs.

It could also deal a further blow to an economy struggling with decade-high inflation and stuttering growth.

Home to some of Asia's premier beaches and resorts, Thailand has remained a top tourist draw in the last four years despite SARS epidemic, the Indian Ocean tsunami, bird flu and a military coup.

"The biggest factor is a fuel surcharge which may discourage travel in the long run. There are no signs that oil prices will settle, so we should have more realistic targets," Suraphon said.

"We are worried that arrivals will drop if airlines cut their flights here," he added.

The agency kept its revenue forecast of 600 billion baht from 15.48 million foreign arrivals in 2008, up from 548 billion baht and 14.46 million tourists last year.

STREET PROTESTS

Thailand's volatile politics, which has seen prolonged street protests against the five-month old coalition government, was not scaring away holidaymakers, Suraphon said. [ID:nBKK28385].

"The political impact is not so huge that it deters tourists, especially those from Europe or the United States. Some may have adjusted their travel packages, but they know Thai politics will not hurt tourists," he said.

Travel agents, however, worry that even though the political turmoil should not discourage most holidaymakers, tourists from region may reconsider their plans.

"The protests are not a worry for tourists from Europe and Korea, but those from Singapore and Malaysia may be a bit concerned," Apichart Sankary, president of Association of Thai Travel Agents, told Reuters.

The Tourism Authority plans to offset slower growth in the number of tourists by pushing more expensive packages such as medical tourism, spa and beauty and golfing, Suraphon said.

Foreign arrivals at Bangkok's international airport rose 14 percent to 5.62 million in the first half of 2008 from last year.

But the April-June period showed a drop of more than 18 percent from the previous quarter, and the outlook for the second half is murky.

"We have to wait until late August or early September to see if bookings from Europe are still good," Apichart said

Finance Minister Surapong Suebwonglee said last month prolonged uncertainty would hurt tourism and he warned that the country might miss its economic growth target of 6 percent this year.

However, the baht's slide to a more than a six-month low against the dollar may offer some relief for visitors.

"Thailand is still good value for money," Apichart said. ($1=33.59 Baht) (Additional reporting by Boontiwa Wichakul) (Editing by Nathan Layne and Tomasz Janowski)

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