Tourism slowdown: Visitors in Thai traditional dress pose for photos in Wat Arun, Bangkok. Sagging foreign visitors to Thailand is compounding woes caused by US tariffs and a relatively high baht. — AFP
BANGKOK: The southern Thailand coastal province of Trang boasts lush islands and an emerald cave but has long been overshadowed by neighbouring foreign tourist hotspots Phuket and Krabi.
The government, as part of an effort to stimulate the economy, wants to change that, by providing tax incentives to jumpstart domestic travel, particularly to second-tier provinces.
Sagging foreign visitors to Thailand is compounding woes caused by US tariffs and a relatively high baht.
To offset some of the softness, the government’s local tourism campaign offers as much as 30,000 baht (US$927) in tax deductions for Thais packing their suitcases from Oct 29 to Dec 15.
So far, though, Trang businesses aren’t seeing a surge of local visitors taking advantage of the travel tax perk.
The programme is too short, some observers say, and the nation’s sour economy and large household debt is causing Thais to reduce spending on non-essentials such as travel.
“Things have been pretty quiet recently even though there were inquiries about bookings,” said Chotirot Rodmuang, marketing manager of Jaravee Tour, which provides tours of Trang’s islands such as Ko Kradan.
November and December reservations are down about 50% year-on-year (y-o-y), Chotirot said.
About 1.3 million Thai nationals visited Trang during the first nine months of 2025, up 3.8% y-o-y and generating 6.7 billion baht of tourism revenue, according to the Tourism and Sports Ministry data.
“Some travellers aren’t that interested in the deduction because their annual income may be below the tax brackets so they aren’t liable to pay taxes,” said Kedkanok Tanaengchuan, manager of Ruarasada Hotel in Trang.
It also takes a considerable amount of time for businesses to be integrated into the government’s deduction programme, she said.
The tourism initiative is part of a package of measures the government is undertaking to lift the economy.
Thailand recently finalised a plan to buy about 60 billion baht (US$1.8bil) worth of bad debt that will help about two million individual borrowers and address high household debt.
It is also putting in place policies to lure back more Chinese tourists, down about one-third from last year.
Domestic tourism to second-tier provinces account for about 13% of the nation’s total tourism income, according to Bank of Thailand economists.
But the nation’s dour economic mood may dampen the desire for local travel.
Previous measures to spur tourism spending, such as a co-payment programme that subsidises travel expenses, would be more “targeted and may help boost domestic travel incentives more than tax-related measures”, said Adith Chairattananon, secretary-general of the Association of Thai Travel Agents.
The country’s cool season, which runs from November to February, usually draws thousands of domestic travellers to Ubon Ratchathani, Thailand’s southernmost major province in the northeastern region known for its spicy cuisine and cultural ties with Laos.
But the bad economy, recent flooding and fallout from the Thai-Cambodian military clash have given officials low expectations for the region’s tourism industry this season.
The tax rebate probably won’t make up for losses in the year’s final quarter, said Witsuta Ruangrungsidiskul, president of the tourism council of Ubon Ratchathani.
The average hotel occupancy rate isn’t expected to exceed 40% in the final two months of 2025.
One sector, though, is sure to benefit from the rebate: restaurants.
The tax incentive can also be applied to food purchases without travelling.
“I plan to use the tax incentive mainly for food-related expenses,” said Pamiga Tangthong, a 30-year-old government worker. — Bloomberg
