Chinese visitors are vital to Thailand's tourism sector

China is essential to the tourism sector in Thailand, as the country provides the most visitors and the highest growth rates in terms of tourist numbers.

At a time of concerns over arrivals from other countries and regions due to political and economic issues, China looks set to remain a solid contributor, despite drops in some months in 2016. Its sheer size, proximity to Thailand and the rising incomes of its people make the country of vital importance to tourism and overall economic growth. The Thai authorities are carefully working to reduce any tensions and potential for misunderstanding that has arisen as the numbers of Chinese tourists has increased in such a short period of time. This approach seems to be working.

Growth Market

The numbers alone are impressive. In 2016 a total of 8.8m Chinese visitors came to Thailand, nearly 27% of all arrivals, according to figures from the Department of Tourism (DoT). No other single country came close to this. Indeed, entire regions came in below China, with ASEAN visitors totalling 8.7m visitors and Europeans 6.2m. For a few years growth was exceptionally fast. Total visitor numbers from China grew from 750,000 in 2000 to the current level of just under 9m. The growth rate has slowed but remains strong, with visitor numbers up 10.3% in 2016.

However, visitor figures from other countries have also been growing rapidly, with some particularly sharp increases reported. Travellers from Myanmar were up 32% in 2016, followed by Cambodia (28%) and Russia (23%), according to the DoT. However, in these cases the high growth rates are the result of a low starting base or a recovery in traffic following a significant decline. No other country is near to China in terms of exponential growth. With more than 100m Chinese travelling overseas per year, and the total growing more than 16% a year since 2009, China is the world’s largest source of tourists. It is more than simply a matter of people arriving and leaving. The traffic is economically significant. In total, Chinese travellers spent an estimated $261bn in 2016, up 12% on the previous year. Importantly, Chinese visitors are starting to increase their spending when overseas, with total outlay per tourist more than doubling since 2004.

By Air

Thailand is very popular with Chinese travellers. After Hong Kong and Macau, it is the top destination for outbound tourists from China. It is also the country in which Chinese tourists spent the most money overall, although more was spent on a per capita basis in other places, including Argentina, Chile, Madagascar, Ethiopia, French Polynesia, Tahiti, Mexico, Brazil, Kenya and Réunion Island.

A number of factors explain the Chinese affinity for Thailand. Chinese nationals can obtain a 15-day visa upon arrival, making it one of the few countries that allows Chinese citizens to visit so easily. The 2012 Chinese comedy Lost in Thailand has also had an important impact. It was the highest grossing domestic Chinese film ever and had a positive effect on Thailand’s image in China.

Accessibility is another factor working in Thailand’s favour, being only a short flight away. The journey has been greatly simplified by the establishment of an increasing number of connections, many linking secondary or even tertiary cities. Some of the routes are surprising. Thai AirAsia started flying to Nanning and Nanjing from U-Tapao International Airport, in the Ray-ong-Pattaya region, in 2015. In late 2015 and 2016 Air China initiated a Lanzhou-Bangkok and Hangzhou-Surat Thani routes. In December 2016 Chinese low-cost carrier Spring Airlines added a Zunyi-Bangkok route. Thai Airways opened a direct connection between Beijing and Phuket in March 2017. Thai Smile Airways has started flying between Bangkok and Zhengzhou, China Eastern Airlines has established a Wenzhou-Bangkok service, and Thai AirAsia has started flying Phuket-Wuhan and Bangkok-Shantou routes.

Mixed Feelings

However, Chinese tourists have sometimes been met with mixed reviews in Thailand. Selected and much-reported episodes of bad behaviour by visitors from China and historical suspicion regarding Chinese economic interests has resulted in somewhat of a backlash. The sheer numbers of visitors and their tendency, historically, to travel in tour groups serves to concentrate their impact.

The governments of both countries are concerned about the impact of these tensions and are working to improve the interaction between cultures. To help change these dynamics, Thailand has implemented a ban on so-called “zero-dollar tours”, in which visitors on cut-rate packages are ferried from one substandard kickback-paying venue to the next.

For a time, unease about Chinese visitors and their tour policies did have a negative impact and caused major concerns. The rapid increase in tourists from China slowed noticeably, with totals dropping in some months in 2016 on a year-on-year basis, including by 16% in October and 30% in November.

At one point it had been estimated that some 10m Chinese would visit Thailand in 2016, but that figure was not reached, in part because of the country’s response to Chinese tourists.

Competing For Visitors

The Chinese market is dynamic and cannot be taken for granted. While Thailand is still high on the list of favourites, it is competing with many other countries. As Chinese travellers become more sophisticated and wealthier, and as visa restrictions ease, they are opting for destinations off the beaten track. Already, travellers are going farther afield. In 2015 and 2016 high growth rates for Chinese visitors were seen in countries including Japan, Sri Lanka, Germany, Egypt, Turkey, Norway, Croatia and Finland. Emerging destinations include Nepal, Vietnam, Iceland, Poland, Serbia and Mexico.

Thailand has quickly realised that it needs to plan carefully when it comes to Chinese visitors, as they are so important to the economy. Rather than speaking in terms of a crackdown or a ban, the Thai authorities appear to be emphasising the marketing of higher-quality, value-added experiences.

While the goal is still to reduce the number of zero-dollar tour travellers, the message seems to have been presented more positively as it became apparent that a protracted drop in the number of Chinese visitors could have a significant impact on the already weak economy.

Indeed, it appears as though the inbound market is recovering from the rough patch in late 2016. Bangkok-based Kasikorn Research is estimating a 5-7.5% rise in Chinese tourist numbers in 2017, and early signs of recovery are already apparent. Airports of Thailand reported in May 2017 that its performance has improved following a rebound in the number of Chinese visitors. While the rebound could be due in part to increased regional tensions between South Korea and China, it is also seen as a function of the targeting of Thailand’s message to Chinese tourists.