Thai tourism faces an uphill battle as Vietnam grabs bigger market share

THAI tourism is facing a major challenge with the total number of international visitors likely to reach 34 million in 2027 while hopes of reaching the 40-million mark remains a distant prospect as Vietnam has started capturing a larger share of the market, PPTVHD36 said today (Nov. 3).

The Thai Chamber of Commerce estimates that international tourist arrivals could recover to 34 million by 2027; however, returning to the 40-million milestone may not happen until 2031, as Vietnam increasingly competes for Thailand’s market share by offering better value, competitive pricing, more direct flights, and favourable visa policies.

Thailand’s tourism industry is currently grappling with significant challenges, marked by a persistent decline in international visitor numbers. Although the average revenue per trip has increased, it has not been enough to offset the loss in total visitor volume. Meanwhile, Vietnam is gaining ground, leveraging its strengths in affordability, value for money, direct flight connectivity, and travel-friendly visa regulations.

Mr. Thanavath Phonvichai, president of the University of the Thai Chamber of Commerce and chairman of the Advisory Board for the Centre for Economic and Business Forecasting, revealed survey results from tourism operators indicating that the sector is falling short of its 2026 targets.

Tourism revenue is projected at approximately 1.24 trillion baht, a 2.8% decrease from the 1.27 trillion baht recorded the previous year. While the average revenue per trip rose by 1.82%, from 47,800 baht to 48,700 baht, this growth has been insufficient to compensate for the drop in the number of tourists.

Factors hindering tourism

According to the survey, 48.1% of tourism operators attribute the decline in visitor numbers to external factors, such as wars and international geopolitical tensions, while 25.3% point to domestic constraints, including flight availability, visa processes, border crossings, and safety. Meanwhile, 21.7% of respondents believe that tourists have shifted their preferences toward competing destinations.

Although 52.2% of operators perceive Thailand’s competitiveness to have improved compared to three years ago, 59.1% still believe Thailand remains at a disadvantage relative to its Asian competitors. While Thailand holds an edge over Vietnam, it continues to lag behind Japan, China, South Korea, and Singapore.

Thailand’s core strengths lie in its service and hospitality—an advantage recognised by 65.2% of operators—whereas key weaknesses include flight availability, value for money, safety, and the enforcement of laws.

A closer look at five major markets

The number of international tourists in the first nine months of 2026 fell by 3.8%, with a 10-month decline reaching 4.6%. The contraction has intensified: from a 2.4% drop in the first quarter to a 5% decline in the third quarter, and a sharp 12% decrease in October.

The Asean market has been a significant drag, contributing to a 4.62-percentage-point decline in overall tourist numbers. Conversely, the Chinese market has helped stabilise the situation, with an increase of approximately 500,000 visitors—a figure that roughly offsets the loss of tourists from Malaysia. Notably, tourism revenue for the first nine months fell by only 2.3%, suggesting that average spending per trip has increased.

The situation across the five major markets varies as follows:

1/ Malaysia: A loss of 530,000 tourists

The number of Malaysian tourists declined by 15.2% compared to the previous year, largely due to the impact of flooding in Hat Yai. Issues such as fuel shortages, delays at the Sadao border checkpoint, and unrest along the border, which led Malaysian authorities to advise their citizens against travelling, resulted in a nearly 40% decline in arrivals during September. Meanwhile, tourists have increasingly shifted their interest toward Vietnam and Japan.

2/ India: Visa confusion, reduced flight capacity, and a weakening rupee

The number of Indian tourists began to shrink in May, following a change in Thailand’s visa policy, shifting from a 60-day stay to a 15-day Visa on Arrival (VOA) with a 2,000-baht fee (later adjusted to 30 days). This created uncertainty and caused travellers to delay or hold off on bookings. Compounding this were a reduction in available flights, high fuel costs, and a weakening rupee. Consequently, the number of Indian tourists visiting Thailand dropped by approximately 100,000, while Vietnam saw an increase in arrivals from this market.

3/ Russia: Thailand remains stagnant, while Vietnam surges ahead

The number of Russian tourists visiting Thailand has declined by only 0.1%. In contrast, Vietnam has seen an increase in Russian visitors, from 440,000 to 1.13 million, bringing their figures close to Thailand’s 1.27 million. Vietnam’s advantage stems from the availability of direct flights and a 45-day visa-free stay, whereas Thailand has reduced its visa-exempt stay duration from 90 days to 30 days.

4/ South Korea: 25% decline in tourists

Rising jet fuel costs have driven up airfares and fuel surcharges. In November, these costs for flights to Thailand were nearly four times higher than those for travel to Japan. Consequently, the number of South Korean tourists visiting Thailand dropped by 25%, while travel to Japan and China increased by 20% and 14%, respectively.

5/ China: 15.2% increase, yet confidence remains fragile

Chinese tourist arrivals grew by 15.2% during the first nine months of the year, partly due to a low base from the previous year. Although concerns regarding safety have eased, dropping to 18%, a warning issued by the Chinese Embassy in mid-October led to a contraction in Chinese tourist numbers that same month. Nevertheless, China remains a high-potential market, with projections suggesting that the number of Chinese visitors to Thailand could exceed 6 million by 2027.

Vietnam emerges as a key competitor

An overview of these five markets indicates that Vietnam is becoming a significant competitor, attracting tourists from markets traditionally served by Thailand, such as Malaysia, India, and Russia, by leveraging advantages in direct flight connectivity, visa policies, pricing, and overall travel value.

Meanwhile, border-related issues remain a risk factor for the fourth quarter, particularly affecting the Malaysian market. Airfare costs for the South Korean market, changes to visa requirements for Russia, and safety concerns among Chinese tourists are key factors.

Tourist arrivals are projected to reach 31.5 million in 2026

It is estimated that in 2026, Thailand will welcome approximately 31.5 million international tourists, a decline of 4.5%, or roughly 1.47 million, compared to the previous year. This downturn is primarily driven by the Malaysian and South Korean markets, while China remains the only major market still showing growth. Tourism revenue for this year is expected to reach 1.5–1.52 trillion baht.

By 2027, tourist numbers are projected to recover to approximately 34 million, an increase of 7.9%, fueled by China and long-haul markets. Meanwhile, the Malaysian market could see a recovery, provided that border-related issues are resolved. Tourism revenue is expected to reach 1.632 trillion baht, an increase of over 100 billion baht from the previous year.

Thanavath believes that Thailand’s tourism sector may hit its lowest point in 2026 before beginning a recovery.

Growth could reach 7.5% or higher by 2027, provided that the conflict in the Middle East de-escalates, oil prices decline, and the global economy does not deteriorate beyond the scenarios projected by the IMF. Furthermore, hosting the IMF and World Bank meetings bolsters the nation’s image; nearly 80% of business operators believe this would positively impact tourism. Additionally, AI serves as another tool to enhance competitiveness.

However, returning to the 40 million annual tourist arrivals, a record set in 2019, will take time. Survey results indicate that only 10.6% of respondents believe this milestone could be reached by 2029, while over 80% anticipate it will not happen until 2031 or later. Another 9.1% suggest that Thailand might never return to that level.

Key challenges for Thailand

Business operators surveyed have urged the government to prioritise increasing seat capacity and flight frequencies during peak tourism seasons, addressing bottlenecks at border checkpoints—particularly the Sadao checkpoint—and establishing a clear, stable visa policy. They also call for a crackdown on illicit capital and “nominee” tour operators, alongside targeted communication regarding safety, tailored to the specific concerns of tourists from different markets.

Thanavath suggests that Thailand must urgently engage with airlines to increase direct and chartered flights. It is essential to distinguish whether the lack of growth stems from a lack of interest in visiting Thailand or from a shortage of available flights to meet existing demand.

Furthermore, the issues of costs and overall value for money must also be addressed. In the short term, Thailand must urgently restore confidence within the Malaysian, Chinese, and Indian markets. In the long term, the country needs to enhance its competitiveness—covering flight connectivity, pricing, and the development of new tourist attractions.

While the tourism sector is projected to recover by 2027, reaching the 40-million-visitor mark will remain a challenging goal unless structural issues are promptly addressed.

CAPTIONS:

Top: Representative image of Thai tourism. Photo – PPTVHD36

First insert: Pattaya Bay on a sunny day. Photo – Tourism Authority of Thailand

Second insert: A tourist having fun in Thailand. Photo – Amarin TV

Third insert: Chiang Mai night market. Photo by Chris Slupski on Unsplash

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