Travel demand outlook turns brighter

Analysts expect travel demand in Thailand to benefit during the latter half of 2026 through 2027 from a weak baht, the reintroduction of visa-free entry for Indian tourists and an incentive offering free domestic flights to foreign travellers. A weak baht, an incentive offering free domestic flights to foreign travellers, and the reintroduction of visa-free entry for Indian tourists offer upsides for travel demand in Thailand during the second half of the year through to 2027, although conflicts in the Middle East linger, say analysts.Boonyakorn Amornsank, an analyst with Maybank Securities (Thailand), said recent data from Cirium, an aviation data and analytics company, indicates that travel demand in the fourth quarter of 2026 is likely to remain relatively flat, despite a 3% year-on-year increase in airline seat capacity in the third quarter. Chinese airlines are cautiously restoring capacity, while Indian airlines have reduced the number of seats after Thailand waived the 2,000-baht visa-on-arrival (VOA) fee for Indian tourists in June 2026, he said. However, Maybank expects airline seat capacity forecasts to be increased following Thailand's decision to waive the VOA fee for Indian tourists and reinstate a 30-day visa-free entry privilege. In addition, a weak baht should improve the competitiveness of Thai tourism, said Mr Boonyakorn. According to Kasikorn Research Center, the Thai currency has depreciated 5.9% year-to-date against the US dollar, ranking as the third-weakest Asian currency following the Indonesian rupiah (down 7.3%) and the Indian rupee (dipping 6.6%). "We have a positive view of the strategy adopted by the Tourism Authority of Thailand and the Tourism and Sports Ministry, which emphasises quality rather than the quantity of tourists," said Mr Boonyakorn. "This approach should benefit hotel operators listed on the stock exchange, most of which operate in the upscale and luxury segments." KGI Securities (Thailand) said a clear recovery was observed in long-haul markets. European arrivals have grown 5% year-on-year in July, reversing declines of 2% in May and 6% for the second quarter. Middle Eastern arrivals increased 11% year-on-year in July, following growth of 20-28% during the first and second quarters. Other regions also expanded, with arrivals from Northeast Asia up 5% and South Asia rising 3%. "We believe these trends support our view that Thailand's tourism sector has passed its trough and entered a recovery phase, with momentum expected to strengthen from July, supported by summer holidays across China, the Middle East, and other key source markets," said KGI analyst Sirilak Konwai. Moreover, the government's latest tourism stimulus package should provide a tailwind for the hotel sector. The "Fly Thai All the Feeling" scheme, which provides airfare subsidies of 400-600 baht per trip and targets 200,000 travellers or 400,000 seats, should stimulate domestic travel, particularly to major destinations where most listed hotel operators have properties, noted the brokerage. Meanwhile, the "Thailand Air Connect" programme, which targets 600 charter flights (87,000 visitors) and 400,000 additional foreigners via scheduled flights, is expected to support inbound tourism from late 2026 to early 2027, benefiting hotel occupancy and room demand, said Ms Sirilak. Seasonal outbound travel should bolster tourism in the third quarter before the high season ramps up in the fourth quarter, supported by several large events hosted in Thailand expected to attract more than 100,000 participants to each, which should lift international arrivals and hotel demand, noted KGI. The brokerage maintained its foreign arrival estimate of 32.1 million this year, up 2.7% from 2025, she said.