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Home » News from Thailand » Fear of decline in tourism due to strong Thai Baht
Fear of decline in tourism due to strong Thai Baht
The strong baht is expected to negatively impact the tourism industry, with travelers potentially opting for other destinations in the region where the local currency is more favourable.
Vichit Prakobkosol, president of the Association of Thai Travel Agents (Atta), expressed concern about the strong baht, which has risen 4% against the US dollar since the start of this year and has outperformed other regional currencies. This will hurt tourism to Thailand, as foreign travelers will find Thailand too expensive, Vichit said.
At the beginning of this week, the Malaysian ringgit appreciated 1,5% against the dollar, while the Indonesian rupee appreciated 2,2%. The Singapore dollar rose 0,9% against the US dollar, the Philippine peso rose 0,7% and the baht appreciated 3,8%.
Statistics show that in January this year, tourist arrivals in Thailand are declining: the Middle East by 47%, Africa by 28%, the US by 20%, Europe by 12% and China showing a decrease of 11%. %.
Source: Bangkok Post
Tourism is increasing year by year in Thailand. For a tourist, that small difference in currency value makes little difference.
The Airport is bursting at the seams and will soon be expanded. One cannot currently follow in Thailand with new condominiums to be built. Houses are also being built at an astonishing rate. Land is becoming more and more expensive and industry is booming.
Only for exports, the strong baht may be somewhat disadvantageous. Importing, on the other hand, will become much cheaper again.
On the other hand, a strong currency is always the partner of a strong economy. I don't know of any strong economy with a shitty currency. All currencies weaken against the Baht just so that all those economies weaken against Thailand
The future is here. The past in the west. We just have to learn to live with it. Whoever invests here invests in the future.
Incidentally, it is true that about 20% of the new condos are not sold and that many of the older condos are also empty.
The housing sector is not much better.
The fact that the building land is becoming more and more expensive is mainly due to speculation, more and more is being borrowed to pay for it.
Thailand's debt burden is huge and growing.
Indeed, the strong baht is not favorable for exports, so the latest figures indicate a contraction.
The tourist flow, also that, is shrinking, the TAT figures are completely incomprehensible.
The future is here, in Asia?
That was also thought in 1997, the evidence that it is not quite right can still be seen everywhere in Thailand.
For the time being, Asian countries are getting their growth from tourism and exports to …….western countries.
Let me put it this way, whoever invests in Asia is betting on the short term, not the long term in Asia.
There is reasonable doubt that the strong baht is partly due to gambling with the value against other currencies.
I see more and more Thai companies investing in Cambodia –
Sat to I
Probably because wages are even lower there.
Or do you mean western companies or what kind of companies do you mean?
Don't think planes full of Chinese, Russian and Indian tourists land there.
Then the number of tuk-tuks will have to be expanded, the dirt roads will have to be asphalted.
Because outside the center of the big places it is a sadness
Airplanes do indeed land in Sihanoukville, bursting with Chinese people. The dirt roads are or will be asphalted, the Chinese hotels and shopping malls are flying out of the ground.
Making deals with surrounding countries like Cambodia, leave that to the Chinese. And work they can!!
Theo, the number of Chinese tourists has risen sharply in recent years. Sihanoukville has almost become a complete Chinese city and here in Siem Reap you also stumble across the Chinese.
Compared to 2017, the number of Chinese tourists has increased by +/- 46%, in 2017 the number of Chinese tourists has also increased by 40%.
See:
https://www.phnompenhpost.com/business/spike-chinese-visitors-drives-tourism-boom
http://www.chinadaily.com.cn/business/2017-09/26/content_32497079.htm
I just looked at the economic reports and forecasts in Thailand in 1996-1997. They were also very optimistic and everyone invested like crazy. And then …..
Fred, what country are you talking about?!
Construction is still going on in Thailand, but sales are still very selective. One cause is indeed the artificial “strong(!)” Baht or the weak Euro. Thailand has to be careful. After pride comes the fall!
The reason why we are leaving for Europe is because the future is NOT here in my eyes. Aside from the fact that Thailand is hard-boiled by its neighbours, the baht is kept so hard only because it benefits a speculative elite, and it is one of the most navel-gazing countries in the world, there remains the small point about the imminent climate catastrophe. Not only will large parts of Thailand be flooded, including Bangkok, the temperature will also continue to rise towards unlivability. It was already hard to do outside during the day in February.
Therefore, we are going to cool Europe, where our family still has a bright future.
In Pattaya, about 12500 apartments are empty and they cannot accommodate them and many large buildings are also almost half empty because the many investors have left with the northern sun due to the strong Thai baht
According to the TAT, the number of tourists is only increasing.
They are nicely displayed here.
@fred: Building condominiums is one thing, but then they also have to be sold, and there seems to be a huge amount of condominiums for sale that cannot be lost on the paving stones.
Furthermore, Thailand has always had a low to no national debt.
But that is changing at a rapid pace.
You forget to mention the vacancy of countless real estate projects and
the projects that are half-finished and simply left to their own devices.
In Pattaya, 90% of all new construction has been sold within the year. It is still being built as much as possible. There is a lot of demand so supply must follow.
Dear Fred, nonsense, that 90%. All new condos from the last 3-4 years have sold for an average of only 45-50%. The developers only need 40% to break even; some with (too) high prices only 30%. The rest is on their balance sheet as an asset, but you don't see it in the P&L account. Sellers do show lists that would show that almost everything has been sold, but that is to lure buyers (after all, 80-90% sold id a well-known sales pitch). A used condo can hardly be sold anymore, unless prices go down, sometimes well below the original purchase price. The strong THB is partly to blame for this. It is also more economical to buy an existing condo or house.
I'm sorry to say, fred, that I rarely believe or trust your posts, nor this one. I refer to below link about condo construction in Pattaya:
In short: between 2011 and 2014, between 16 and 20.000 new condo units were built per year in Pattaya. That slumped after 2014 (why?) and has only been between 2 and 4.000 units per year for the last three years, less than a quarter of Pattaya's peak.
https://www.colliers.com/-/media/files/apac/thailand/market-reports/1h%202018/pattaya-condominium-1h-2018_eng.pdf
Pattaya is doing great, isn't it?
…currently there are 15.000 unsold condos in Pattaya…
Therefore, according to the latest figures, there are 87000 !!!! condos for sale in pattaya
Vacancy of condos has absolutely nothing to do with an increase or decrease in tourism.
Thailand indeed more expensive than 2018
Exports down 18%.
That alone makes it more expensive.
Nathalie up 3.8%.
That makes it more expensive sorry but answer with we have to live with it I don't find an answer sorry
I take the numbers with a grain of salt.
But the fact that the baht is high can be seen daily.
and that it affects what the people who visit Thailand,
or as Falang who live there.
Influence on the total spending these people make in Thailand.
And will become more and more a trade-off,
where people go or want to stay for a longer period of time.
If you walk along the streets of a touristic place.
You see many shops and restaurant and bar,s
With very few customers.
And the falang who lives in Thailand for a longer period of time, also look out where they can save.
Maybe in a while no one will talk about it anymore, when you get 40 baht for the euro again.
Dear Fred, Been coming to Thailand for twelve years. I think
that you are one of the few who think that tourism in Thailand is increasing. I can assure you that it is actually deteriorating exuberantly. As for building condominiums yes a lot is being built BUT there are more that are vacant. I don't know if I'm completely blind, but what I've seen the last four years is the opposite of what you write on this forum. Only the strong Bath I can agree with you.
indeed I went to Thailand once for a month and once for 3 months last year and this January too, but everyone complains that tourists spend little and everything has become much more expensive, but everything remains the same 30% to 50% more expensive. old and little or no maintenance people prey on the money of the tourist because there is little to earn, and there are also fewer tourists sometimes I also think what am I doing there and go back to Spain now costs the same as Thailand.
I only go for the weather.
5 years ago they asked the same prices but then the bath was 48
Jan I think you are mistaken with 38/39 bath 5 years ago instead of the 48 bath you mentioned.
Furthermore, I sometimes wonder who everyone is who complains. Are those the bars and restaurants in the Khao San Road area, which are packed every day? The big shows like Colosseum, Siam Niraret and the parks where bus loads arrive every day? The parks where the buses with Russian, Chinese and Indian tourists drive to and from? The large hotels in Pattaya and Jomtiem, among others, where bus loads are unloaded every day? The full bath vans in Pattaya and Hua Hin? The boats on the river in Bangkok, packed with dining and partying tourists, sailing in a parade along the banks? The longtail boats that parade through the Klongs?
Or is it the beer bars, the girls/boys and small hotels that notice that sex tourism is lagging behind.
Think that there will be a different kind of tourists more, which may be of more use to Thailand itself. Because a lot of this bar, gogo clubs, restaurants where you come to eat are partly in western hands.
I find that everyone always complains so broad understanding.
But luckily the weather is still there, although I also have to warn you because the Smog is getting worse.
In 2008 the baht stood at 53! In June 1997, you received 100 baht for 2,5 Belgian francs (67 €), equivalent to 27 baht for a €. In winter you also got above 50 baht. Let us hope…
I don't think many people planning a trip will look at the exchange rates first. Airfares will not be affected by the baht I think, hotels will become more expensive but I don't think this will really deter many people because the hotel prices are lower anyway than elsewhere, perhaps some will book a lower class of hotel. For the pensioners, however, a disaster. I have an average pension, but with only 35 baht per € I don't think I can reach the required 65.000 baht. But for what my last stay of four weeks has cost me there is nowhere else to go or I would have to sacrifice a lot of comfort.
According to my accounts, the baht stood at 2013 in 38, in 2014 at 43.80, in 2015 even at 34 (!), in 2016 at just under 37, in 2017 and early 2018 at over 38 baht for one euro. The rest is known and of course it is not wrong. And I still enjoy my state pension here for 6 months a year!
Figures can be manipulated. How many tourists only use Bangkok as a hub to other surrounding countries? When they arrive in Bangkok, they are counted as arriving tourists.
Using the airport in Bangkok as a hub is decreasing, because if you are a smoker and want to smoke after an 11-hour flight, you can only do this behind a kind of outside terrace and when you leave you can no longer smoke anywhere after immigration.
Alternative airports are singapore, kuala lumphur etc and from there beautiful holiday destinations.
Thailand remains beautiful, but on certain days no beach chairs or no beer, let alone a cigarette on the beach in the open air, while in Bangkok and Changmai the particulate matter is screeching around your ears ... If you have a smoke-free airport policy, then stop smoking too the sale of tobacco.
Well Fred I don't know what you think is a small depreciation but I think 10% and I think many others with me are quite substantial, then I'm talking about a few years ago when we got 40 Bath and now 35. Go back even further you around 45 Baht and the more elderly have even experienced 50/52, then you soon speak of more than 15%. So far it hasn't stopped me either, but still. Incidentally, I cannot understand those people who say that everything is becoming more expensive, because the groceries, beer in the bars and hotel prices have not or hardly increased in the 20 years that I have been coming here, as have the petrol, bath buses, clothing etc. ov in Bangkok, for example, so this is indeed only more expensive because we get less Bath for our euro.
Well, around 2000, a kilo of pork cost around 50 THB. Then often went to the market with my mother-in-law and always complained that it was expensive. Meat was then meat, but now the pork tenderloins are also sold much more expensive than the meat.
A plate of fried rice then cost around 25 Thb and was much larger.
You can go on like this, but it doesn't make sense, it won't change anyway.
I think prices in the Netherlands have also increased since the year 2000.
And not just a little bit.
The year 2000 is now 19 years ago.
With an inflation rate of 3% per year, the price of 50 Baht in the year 2000 would now be 87,50 Baht per kilo and with an annual inflation rate of 5% 126,35 Baht per kilo.
The Thai baht is indeed becoming more expensive compared to the euro and the US dollar. And some people complain that the current government is so bad for the Thai economy; that view is incompatible with an ever-increasing baht. The average tourist will not care that more expensive baht nmm. Perhaps as a result there will be fewer Chinese, but who is raw about that?
The Thai baht stood at 2013 in 38, in 2014 at almost 44, in 2015 occasionally at 34 (!), In 2016 at just under 37 per euro. You know the rest. And yet I have been enjoying a 6 month stay pe here for many years
You can also see many new-build apartments in Changmai. But both the space for a shop or the living space has been standing for years. If you think why on earth are they building. We also go to Thailand for a month every year, but are now waiting to see whether the bath creeps up.
There is a connection between the number of flying holidays and a strong or weak currency, but in a different way than many people think. In the 90s, I and a colleague tried to make an econometric model to predict the number of flying holidays with some accuracy (on behalf of an airline). I will spare you the exact details, but we worked with time series (15 years) for about 120 variables, varying from the price index in the holiday country to the number of hours of sunshine and the number of airlines flying into the country. And 117 other variables.
In any formula that fairly accurately predicted the number of flying holidays to European and non-European countries, the value of the currency appeared, BUT not the value of the year of the actual holiday, but of the year BEFORE. In short: the number of flying holidays to Thailand in 2000 was not related to the value of the Baht in 2000, but to the value of the Baht in 1999. How is that possible? Does the tourist of 2000 remember the exchange rate of the currency in 1999 of the country where he/she is going on holiday? No, absolutely not, because the majority of tourists do not go to the same country every year. And even if you go to Thailand every year, you don't first look at the value of the Baht in the past year. How does it work then?
The tourism industry makes its money not only from selling trips or parts thereof, but also from (speculating on) currency trading. The tour operators 'steer', 'guide' tourists towards countries with depreciated and/or declining currencies. With the money from the down payment (10%) you can buy the foreign currency of the purchased holiday country on the futures market (100%, because the other 90% of the customer is deposited into the customer's bank account no later than 4 weeks before departure) and pay for the hotels, bus companies, restaurants, tour guides in the currency of that country. In a holiday country with a falling currency, one can earn quite a bit of money this way. This is not the case in a country with a strong currency. I am not familiar with the payment transactions of Chinese tour operators, but it would not surprise me that the bills of Thai companies (sometimes proxies of Chinese) that live off Chinese tourists are paid in Chinese RMB and not in Thai Baht. This avoids losses based on valuation rates.