Thailand Issues Stimulus Packages to Boost Domestic Tourism
- The Thai government has issued stimulus packages worth 22.4 billion baht (US$718 million) to revitalize its tourism industry.
- The packages are aimed at boosting domestic travel by subsidizing hotel accommodation, airline tickets, and facilities in tourist destinations around the country.
- International visitors contribute some US$64 billion to the economy annualy but foreign arrivals could tumble by 65 percent in 2020 because of the pandemic.
In late June 2020, Thailand’s government approved two stimulus packages worth 22.4 billion baht (US$718 million), aimed at revitalizing the country’s tourism industry.
The packages, named ‘We Travel Together’ and ‘Moral Support’, are designed to boost domestic travel by providing an array of travel perks such as subsidized flights, car rental fees, and bus fares. There are also subsidies available for hotel accommodations, food, and facilities provided at tourist destinations.
The subsidies will be available from July to October 2020 and will also include funding to support domestic trips for more than 1 million healthcare workers and volunteers from sub-district hospitals, as a sign of gratitude for their service in helping to combat the virus pandemic.Thailand’s economy is expected to perform the worst in Southeast Asia, given its dependence on tourism and exports. The tourism industry accounts for some 20 percent of the country’s GDP, and according to a UN report titled ‘COVID-19 and Tourism’, Thailand could stand to lose US$47 billion in GDP due to the contraction of this sector.
In June 2020, the country’s central bank, Bank of Thailand, reduced the 2020 GDP outlook to negative 8.1 percent, a downgrade from the 5.3 percent decline that was projected in March 2020.
As such, the government hopes the domestic tourism industry can support the economy and help boost domestic spending by as much as 30-50 billion baht (US$962 million – US$1.6 billion) this year.
We Travel Together
The government allocated 20 billion baht (US$641 million) under the ‘We Travel Together’ stimulus package.
Some 18 billion baht (US$577 million) will go towards subsidizing 40 percent of normal room rates at hotels, capped at 3,000 baht (US$96) per night for up to five nights. The eligible traveler will have to pay the remaining 60 percent of the room rate.
The government will provide subsidies for other services and facilities provided at tourist destinations, such as food. This is capped at 600 baht (US$19) per room per night. The subsidies are also limited to 40 percent of actual expenses.
Lastly, the remaining 2 billion baht (US$64 million) will be used to subsidize 2 million airline tickets, which will be priced at 2,000 baht (US$64) per person. The eligible applicant must pay for the ticket first, and the government will repay 40 percent of the ticket price. For round-trip tickets, the subsidy is capped at 1,000 baht (US$32) per ticket.
Operators of hotels and eateries were allowed to register from July 1, 2020, although only businesses that held a hotel license were eligible to join the program. The public can apply through the We Travel Together website from July 15, 2020. Tourists must apply to destinations that are not located in their home province to qualify.
Under this stimulus package, the government allocated 2.4 billion baht (US$77 million) to fund the holiday travel expenses of approximately 1.2 million health workers and volunteers from sub-district hospitals.
This subsidy is capped at 2,000 baht (US$64) per person for a two-day and one-night trip. The package is expected to utilize 13,000 travel agencies in the country.
Domestic tourism will struggle to fill the void
Despite these latest incentives, Thailand’s domestic tourism industry will not fill the void of the foreign market.
In the first five months of 2020, revenue from the tourism industry reached 520 billion baht (US$16 billion) – a 57 percent drop from 2019. The government is looking to capture at least 75 percent of the 400 billion baht (US$12 billion) Thai nationals spent abroad in 2019, targeting 100 million domestic trips worth US$28 billion in revenue for 2020.
This would still be a far cry from the US$64 billion that 39 million international visitors bring to the economy annually.
To revive this vital sector, and thus quicken economic recovery, the country has begun to gradually ease restrictions on foreign visitors as of July 1. Those permitted to enter are mostly foreigners who are spouses of Thai citizens, have a valid work permit, are international students, or are foreigners in need of specific non-COVID-19 medical treatment.
The government is also exploring the idea of ‘travel bubbles’ similar to the one implemented between Singapore and China, whereby visitors from selected countries would not require to abide by the 14-day quarantine measure.