Thailand plans tourism boost with annual visitors poised to drop

BANGKOK – Thailand’s government announced plans to boost domestic tourism, as the nation’s struggling hospitality industry faces the first decline in annual foreign visitors since the Covid-19 pandemic.

The stimulus will be proposed in a Cabinet meeting next week, and will let domestic tourists use travel expenses to reduce taxable income, Finance Minister Ekniti Nitithanprapas told reporters on Oct 15.

There will also be initiatives to increase spending on conferences and events and to encourage hotel renovations, he said.

Once an economic bright spot, Thailand’s tourism sector has lost much of its post-pandemic shine.

Even with an expected bump in foreign arrivals during the peak travel season, the Tourism Authority of Thailand said on Oct 15 that it expects just 33.4 million visitors in 2025 – down almost 6 per cent from 2024, the first annual drop in a decade outside the pandemic.

The slide reflects lingering weakness in key markets such as China, where concerns over safety and a stronger baht have curbed travel.

Mr Ekniti also said he will hold talks with Bank of Thailand Governor Vitai Ratanakorn on the inflation target in 2026, declining to comment on whether the 1 per cent to 3 per cent range remains appropriate.

The Ministry of Finance, central bank and other agencies will also discuss irregular flows, he said, expecting the findings from those talks at the end of 2025.

The stimulus efforts by Prime Minister Anutin Charnvirakul’s government are a direct response to a sputtering economy that has all but lost its key economic engines – exports and tourism, with the latter contributing about one-eighth of the country’s gross domestic product.

Similarly, the discussions with the central bank come amid a push for greater fiscal and monetary cooperation under Mr Vitai, who became governor on Oct 1. Thai inflation has lagged the government’s target for months.

Mr Ekniti also said the government on Oct 15 asked all state agencies to front-load their spending by March and to ensure the total budget disbursement for the current fiscal year reaches no less than 93 per cent and at least 75 per cent for the investment budget alone.

The domestic tourism stimulus means Thai people can use their local travel expenses during the Oct 29 to Dec 15 period to deduct as much as 20,000 baht (S$796) from their taxable income and comes as international arrivals crater.

Just 2.3 million Chinese tourists visited Thailand in the first half of 2025, down by almost a third from the same period in 2024.

The kidnapping of a Chinese actor in neighbouring Myanmar earlier in 2025 further dented sentiment, prompting mass trip cancellations around Chinese New Year.

To repair confidence, the government has made tourist safety a top priority and instructed agencies to respond swiftly to incidents that could harm Thailand’s image.

“The measure can help mitigate some of the shortfall from the drop in international tourists but will unlikely compensate for the entire drop, which has been significant,” said Ms Lavanya Venkateswaran, an economist at OCBC Bank in Singapore.

“Domestic guests are larger in number, but past data shows they tend to spend less than tourists.”

Officials are also trying to diversify the country’s tourism mix, ramping up chartered flights from India, the Middle East and secondary Chinese cities.

The Tourism Authority of Thailand said 731 chartered flights are scheduled from China alone between the final quarter of 2025 and early 2026, reflecting hopes of a rebound before the 2026 elections.

Thailand’s stimulus package is the second economic fillip in October. Last week, the government approved a US$1.4 billion (S$1.8 billion) plan to spur consumption and boost its popularity ahead of a general election early in 2026.

The twin stimulus on consumption and tourism may help boost the economy by 0.4 percentage points in 2025, government spokesman Siripong Angkasakulkiat said. Next week, the authorities are expected to consider steps to reduce energy costs to ease the burden on consumers.

Previous years’ domestic travel stimulus injected some US$1.8 billion into the economy, and the new package may help with confidence. Data released on Oct 15 showed the Thai industries sentiment index rose for the first time in seven months in September, from a three-year low.

“In the long run, the government seems to be using these measures not just to spur spending, but also to widen the taxpayer base,” Kasikorn Research Centre economist Nattaporn Triratanasirikul said. “That’s a more structural goal beyond this year’s growth cycle.” BLOOMBERG