Nearly 40% of Thai hotels suffered a sharper-than-expected guest slump as the Middle East conflict hit tourism, forcing deep discounts and cost cuts, while Phangnga warns occupancy could sink to 20% and billions in revenue may be lost.
Thailand’s hotel industry is coming under mounting pressure as the Middle East conflict drives a sharper-than-expected collapse in guest numbers, forcing widespread room discounts, cost-cutting and emergency marketing campaigns while fresh industry data points to another weak quarter ahead. With Phangnga forecasting occupancy of just 20%, billions of baht in tourism revenue at risk, and business leaders warning the low season could spill into the peak travel period, operators are urging faster government action on tourism promotion, infrastructure and new overseas markets before the slowdown deepens.
Nearly 40% of Thai hotels reported a steeper-than-expected collapse in guest numbers last month as the conflict in the Middle East intensified pressure on an already weak low season.
Hotels have responded by cutting room rates, reducing labour costs and launching heavier promotions to protect cash flow, while operators in Phangnga warn the downturn could extend into the high season and erase billions of baht in tourism revenue.
The warning emerged from a joint survey by the Thai Hotels Association and the Bank of Thailand. The survey covered 148 hotels nationwide. It found average occupancy reached 52% in June. Hotels expect that figure to edge up to only 53% in July. Even then, occupancy would remain below last year’s level.
At the same time, operators forecast year-on-year declines in both domestic and foreign guests throughout the third quarter.
Survey shows hotel occupancy falling as the Middle East conflict deepens low-season downturn
Although the third quarter is traditionally the low season, hotel operators said the prolonged Middle East conflict has compounded the downturn. As a result, 88% of surveyed hotels expect fewer guests.
Notably, 38% reported the decline was worse than they had anticipated. In response, many hotels have introduced deeper room discounts. Others have expanded marketing campaigns to generate bookings. At the same time, many businesses have reduced labour costs to preserve liquidity and maintain cash flow. Those measures reflect mounting pressure across the hospitality sector.
Even so, some operators still see limited opportunities. They believe Chinese travellers may increasingly favour regional destinations over long-haul holidays. High international airfares remain a decisive factor. However, expectations for a broader recovery remain subdued.
Phangnga is among the provinces under the greatest pressure because of its dependence on European visitors. Hotels there expect average occupancy of only 20% during the third quarter.
Phangnga hotels face severe low season as European visitors disappear. Occupancy drops to just 20%
According to Lertsak Ponklin, president of the Phangnga Tourism Association, that compares with the 50% to 60% normally achieved during the low season. Instead, fresh bookings are arriving slowly. Furthermore, he said the renewed escalation in the Middle East has further weakened demand.
Mr Lertsak said expensive long-haul airfares continue to discourage European travellers. Europe remains Phangnga’s most important overseas market. In parallel, disrupted aviation routes through Middle Eastern hubs have further reduced visitor numbers.
Even when flights gradually resume, many tourists stay only in Phuket. They then bypass Phangnga to reduce travel costs. Consequently, the province has lost business that previously extended beyond Phuket.
Local operators have adjusted accordingly. Hotels are offering discounts to Thai travellers while pursuing Chinese, Indian and Russian markets more aggressively. Nevertheless, Mr Lertsak said those markets cannot compensate for the sharp loss of European arrivals. The combined visitor numbers remain insufficient to fill hotel rooms. Occupancy therefore continues to lag well below seasonal norms.
Tourism leaders warn Phangnga’s weak low season could spill into peak months without an upturn
Mr Lertsak warned the consequences could stretch well beyond the current quarter. If weak demand continues, the low season could merge into the high season.
Under that scenario, Phangnga’s tourism revenue would suffer another severe setback. He estimated the province could generate only 30 billion to 40 billion baht this year. That compares with 56 billion baht recorded last year.
Accordingly, Mr Lertsak urged the Tourism Authority of Thailand to work more closely with private operators. He called for coordinated marketing campaigns and targeted promotional strategies. He said stronger cooperation is needed to stimulate demand before the traditional high season begins.
On another front, Mr Lertsak welcomed the government’s 30-day visa exemption for Indian visitors. He said the policy should benefit Phangnga and other Andaman provinces by encouraging additional arrivals. Even so, he stressed that stronger infrastructure remains essential for long-term growth.
Tourism infrastructure projects remain vital as businesses await bridge and Andaman airport progress
As part of this, tourism businesses continue monitoring several major development projects. One priority is the proposed bridge linking the mainland with Koh Kho Khao. An environmental impact assessment is expected to begin next year. The island is planned as a new low-carbon tourism destination capable of attracting fresh investment and visitors.
Hoteliers and leading foreign tourism entrepreneurs ask government to help as industry crisis worsens
Tourism boss pleads with PM to bring back more Chinese tourists as Thailand’s arrivals this year slide further
Separately, uncertainty continues to surround the proposed Andaman airport. Mr Lertsak said many residents remain concerned about the land expropriation process. Numerous affected plots still lack clarity.
That uncertainty could delay construction despite Airports of Thailand completing its feasibility study. Meanwhile, tourism operators continue watching both projects closely as they prepare for another difficult trading period.
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