Thailand eyes $765 million tourism boost with domestic travel subsidies

BANGKOK – Thailand is targeting more than 20 billion baht (S$765 million) in additional tourism spending with a domestic travel stimulus aimed at shoring up a key economic engine hit by weaker foreign arrivals and higher energy costs.The government plans to spend around four billion baht to subsidise hotel stays and other tourism expenses, according to Tourism and Sports Minister Surasak Phancharoenworakul.The package, covering one million entitlements, is expected to go before the Cabinet on Sept 22.The measure reflects Thailand’s growing reliance on domestic travellers to cushion the sector as it struggles with the slow return of international visitors and rising costs tied to higher oil prices.Tourism is a major source of jobs and foreign exchange for Thailand, making the slowdown a broader concern for an economy already grappling with sluggish growth.Thailand welcomed 21.7 million foreign tourists through Sept 12, down 3.4 per cent from a year earlier, while their spending fell 1.9 per cent to 1.06 trillion baht. Domestic travel has held up better, with trips by Thais rising 2 per cent to 142 million and spending up 1.9 per cent to 824.6 billion baht.Under the plan, the government will subsidise accommodation by up to 2,000 baht per entitlement.Travellers will also receive co-payment vouchers worth up to 2,000 baht for restaurants, spas, shops and tourism activities, with larger benefits available in secondary destinations. Each person can use up to five entitlements.Subsidies are scheduled to run from Nov 1 to Dec 15, pause during the peak New Year period and resume from Jan 16, 2027, through the end of February.Hotel operators welcomed the support but questioned the timing. November marks the beginning of Thailand’s traditional high season, when many people would travel even without government incentives.“The package should help encourage people who may not travel to come out during the implementation period,” said Thienprasit Chaiyapatranun, president of the Thai Hotels Association.The government should instead have saved the package for the 2027 low season, he added.The industry is heading into the high season after a difficult year.Prakit Chinamourphong, a long-time hotel industry executive and former president of the Thai Hotels Association, expects about 30 million to 31 million foreign arrivals in 2026, below what he described as a more normal level of around 35 million.The industry is also contending with excess capacity after developers added hotels in anticipation of a stronger post-pandemic recovery, he added.Economists, meanwhile, question whether a programme of this size can materially lift growth.“We don’t expect the programme to boost the economy, as the amount of money is not much, but it should help boost sentiment,” said Nattaporn Triratanasirikul, an economist at Kasikorn Research Centre.Even the government’s much larger 200 billion baht consumption stimulus, which will end in September, is expected to add only about 0.3 percentage point to economic growth, according to Nattaporn, suggesting the tourism package will have little measurable impact on gross domestic product.The government plans to extend that broader cash handout programme into the final quarter of 2026 to help ease living costs for millions of citizens, Thai Prime Minister Anutin Charnvirakul said over the weekend.For Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Financial Group, the key question is how much new travel the subsidy will generate rather than simply subsidising trips that would have happened anyway.“Having this package is definitely better than not having it,” Pipat said. “But the question is whether the benefits justify the cost.” BLOOMBERG