Thailand’s Tourism Industry Spared From Floods, May Help Battered Economy

Thailand’s tourism industry has so far been spared from the nation’s worst floods in more than half a century, and may help support the economy after the disaster devastated manufacturing hubs and agricultural land.

Phuket, Krabi, Pattaya and Koh Samui, Thailand’s biggest tourist draw cards, escaped the deluge that swamped central and northern provinces including the ancient city of Ayutthaya. Efforts to bolster flood defenses around Bangkok will help the capital avoid widespread damage, Prime Minister Yingluck Shinawatra said today.

“Most of the areas affected are not tourism areas, so while it’s affecting our farmers and many of our industrial estates, the effect on tourism is minimal,” said William Heinecke, chief executive officer of Minor International Pcl (MINT), the nation’s biggest hotel operator, in an interview yesterday.

Thailand’s tourism industry has recovered from multiple blows in recent years. In 2004, more than 8,000 people died when the Indian Ocean tsunami devastated Thai beach resorts including Phuket and Kao Lak. In 2008, Bangkok’s international airport was shut down for two weeks by anti-government demonstrations, and protests erupted in the capital again last year, culminating in an army crackdown that killed more than 90 people in the city’s most popular shopping district.

“You mustn’t underestimate the ability of Thailand to respond very quickly to these types of events as they’ve shown in the past,” said Heinecke, whose Bangkok-based company owns the Four Seasons, St. Regis, Marriott and Ananatra hotel chains in Thailand. Minor hasn’t received any cancellations because of the flooding, Heinecke said.

Chatuchak, Khao San

Many of Bangkok’s top attractions, including the Chatuchak weekend market and tourist areas around Sukhumvit Road, Silom and Khao San Road are unaffected by flooding, and ferries are still operating on the Chao Phraya River, according to the government’s website. Luxury hotels along the river, including the Shangri-la, are preparing sandbags and water pumps to protect against any inundation.

Hotel occupancy rates in Bangkok and Phuket are “at a normal rate of 60 percent to 70 percent,” Thai Hotels Association President Prakit Chinamornpong said yesterday. Those rates may fall if monsoon rains don’t end soon, Prakit said.

“If Bangkok is flooded or the flooding drags on until next month, which will be the start of peak season for tourism, that will have a great impact,” Prakit said by phone.

Tourism Minister Chumpol Silpa-Archa earlier this week reaffirmed a target to attract 19 million tourists this year, and said the floods haven’t had an effect on tourism.

Revenue Earner

“Tourism can still support Thailand’s economy,” Sisdivachr Chevaratanaporn, president of the Association of Thai Travel Agents, said today by phone. “The industry generates hundreds of billion baht in revenue. There may be some damage, in the tens of billion baht, but that’s still not much compared to the total.”

The country attracted 15.8 million tourists last year, generating 585 billion baht ($19 billion) of revenue, according to government data. Revenue from tourism accounts for about 7 percent of the nation’s gross domestic product, former Prime Minister Abhisit Vejjajiva said in March.

“The target of 19 million tourist arrivals this year will be hard to meet, though we should attract more than 18 million,” Sisdivachr said, adding that arrivals in the fourth- quarter may fall by as much as 20 percent if the floods persist into November, when Thailand’s peak tourist season begins.

Much will depend on the success of efforts to protect Bangkok from the deluge.

“I’m pretty confident they are going to protect the city at all costs,” Minor’s Heinecke said. “This is still the center of the tourism industry.”

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editor responsible for this story: Tony Jordan at tjordan3@bloomberg.net

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