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Is Thailand really losing Russian arrivals?

The news about the decrease in Russian arrivals to Thailand prompted an active discussion in social media last week with Thai nationals and foreign residents alike sharing their views of Russians as a tourists.
The war of words turned out to be fierce enough for all sides to forget about the main topic: the decrease in Russian arrivals and thus in the revenue of the Thai tourism industry.

Russian tourists on the beachAccording to Kasikorn Research Center in 2014 Thailand will see 1.65 million visitors from Russia – 5.5 per cent down from 1.75 million last year. Is this a scary figure for the industry?

The answer is yes and no. The drop alone is not dramatic. But things are not looking bright if what we see is just a beginning of a long-term negative trend. So let us have a closer look at the figures and the factors behind them.

Both Russian and Thai state agencies have already admitted that 2014 is a tough year for Thai tourism. Political disturbances followed by martial law, the coup and curfew hit the arrivals greatly.

Most significantly, all those events took place during the high season from November to May. And the 5.5 per cent drop in Russian arrivals can be explained by the consequences of the negative factors listed above.

Russian tour companies were strongly advised by the Russian authorities to cancel or limit trips to Bangkok and that affected the figures. At the same time Phuket benefited from all the disturbance simply because companies and their clients switched to this destination instead of places perceived as risky.

So 5.5 per cent is a reasonable drop nationwide. In Phuket the drop was less than the national one so now it is time to regain the losses with the new high season coming and the National Council for Peace and Order (NCPO) guaranteeing safety.

Taking all these observations into account the future of Phuket tourism looks bright.

There remains, however, a list of Russian “domestic” factors that Thai authorities have no way of influencing.

This year Russian authorities started promoting domestic tourism, notably at Sochi (with its Olympic facilities) and Crimea (desperately needing to replace lost Ukrainian tourist arrivals). Both resorts can hardly be listed among Thailand’s competitors in the November-to-May season (most of it winter in these places), but have been able to replace it in case of urgent need.

Russia’s economy has been badly hit by the consequences of the Ukrainian conflict and the sanctions imposed by the USA and EU. The Russian currency has dropped significantly against both the USD and the Euro — and the Thai baht. It is widely recognised that leisure and travel expenses are among the first to be cut when people need to save money.

The wave of bankruptcies among Russian tour companies has made people less confident about their safety wile travelling abroad (let alone the negative effect for the industry proper).

A new tax on international flights is being currently discussed in Russia. If accepted it will significantly increase the cost of a vacation in Thailand, thus making domestic destinations more attractive.

Another proposal being discussed presupposes compensation of up to 50 per cent of travel expenses for those choosing domestic resorts. And if these two drafts are accepted as law it will definitely effect international tourism.

None of the five factors alone can threaten Thailand. Separately they are harmless and could not even result in another 5.5 per cent drop. But if combined, they could cause real problems for Thailand.

Just a simple example: Nowadays it is cheaper for a person from Siberia to fly to Thailand than to Sochi. But if overall incomes go down, international flight costs climb and government compensation become real, the possibility of taking advantage of government support and spending Christmas in Russia becomes a definite threat to Thailand. Though not this season, one hopes.

Phuket News

 

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