Sept. 4 (Bloomberg) -- Thailand may struggle to meet its target of attracting 15.7 million tourists this year amid political turmoil that has already eroded confidence and threatened economic growth.

Airlines and hotels reported cancellations after Thai Prime Minister Samak Sundaravej imposed a state of emergency this week as 5,000 demonstrators occupied Government House. Clashes between pro- and anti-government rivals left one dead and dozens injured, and prompted countries including Singapore and South Korea to warn against non-essential travel to the kingdom.

Thailand's economic growth slowed for the first time in more than a year last quarter and the central bank expects the expansion to ease further in the second half as protests against Samak's seven-month-old government hurt sentiment and keep investors away.

``We have done ourselves in by worsening the situation with protests and the state of emergency,'' said Apichart Sankary, President of the Association of Thai Travel Agents. ``The global economy has already delayed travel decisions. If the situation can't be resolved by the middle of this month, we will lose a lot of tourists.''

Airport Closures

The country's second-busiest airport in Phuket was forced to close for 43 hours from Aug. 29 to Aug. 31 because of anti- government protests. The closure cost Airports of Thailand Pcl, operator of the nation's main airfields, about 5.7 million baht ($172 million), said acting President Serirat Prasutanond.

Demonstrations have also occurred at other airports across southern Thailand, including in Krabi and Songkhla provinces, and rail services in the region continue to be suspended. Foreigners arriving at Bangkok's international Suvarnabhumi Airport have dropped by a third from 80,000 a day, Serirat said.

About 9.3 million tourists visited the country in the first seven months of the year, and hotels had an occupancy rate of about 56.4 percent in July, according to the Bank of Thailand. Thailand aims to raise 600 billion baht from tourism this year.

The Tourism Authority of Thailand is keeping to its targets for now and may revise them later after it assesses the impact on the industry, said spokeswoman Kaneungnit Chotikakul.

`Crisis'

``The emergency decree will make it difficult for conferences and meetings to take place,'' said Andrew J. Wood, general manager at Chaophya Park Hotel & Resorts, which has seen a decline in its occupancy rate to 55 percent from an annual average 85 percent. ``It could reach 40 percent. Frankly, this is a crisis.''

Thai Airways International Pcl, the nation's largest carrier, said it had received cancellations from travelers in Asia, which make up about 10 percent to 15 percent of its sales.

``Most came from passengers in Asia such as China, South Korea and Singapore,'' said Apinan Sumanaseni, President of Thai Airways. ``Passengers from Europe, who are our biggest customers, haven't made many cancellations of bookings yet.''

The government is attempting to reassure its people as well as visitors that demonstrations in the capital of 8.1 million people are not affecting businesses and other operations. Thailand is ``normal'' outside the protest areas, Samak said in a national address today.

`Minimal Threat'

``Many of Thailand's prospective visitors are understandably reluctant to travel when they hear about a state of emergency being declared and see images of violent clashes in media reports,'' said Peter de Jong, president of Pacific Asia Travel Association, in a statement. ``The reality, however, is that life is continuing as normal in Bangkok and Thailand and there is minimal threat to the safety of visitors.''

Singapore this week advised its citizens to postpone travel to Bangkok if there is no ``pressing need'' and said they should ``avoid areas where there is a risk of disturbance'' such as Government House.

South Korea also warned travelers against making trips to Thailand as ``the situation is exacerbating,'' and Australia said visitors to the Southeast Asian nation should ``exercise a high degree of vigilance,'' adding that further violence could not be ruled out.

``Even demonstrations intended to be peaceful can turn confrontational and possibly escalate into violence,'' the U.S. embassy in Thailand said in a statement to its citizens.

To contact the reporters on this story: Shamim Adam in Singapore at sadam2@bloomberg.net; Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net.

Last Updated: September 4, 2008 00:30 EDT