Tourism Trends in Thailand

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2 Tourism Trends in Thailand January 2014 Prin Boondiskulchok Noppawan Siriphol Thamon Oshige

3 Overview Thailand s tourism industry has long been dominated by international tourists. In 2012, there were million international arrivals, generating receipts of THB 984 billion. International arrivals, tourism revenues, and spending per capita have increased steadily over the past years and are anticipated to continue doing so (Department of Tourism Thailand, 2012). From our research, we have concluded 4 trends and 4 opportunities among international tourists that have strong potential to create positive impact on Thailand tourism industry. Understanding these trends and opportunities will guide both government and private sector to set development strategies towards the right direction. Ultimately, the country will not only be able to successfully boost tourism in the short run, but sustain competitiveness in the long run.

4 4 Global Tourism Trends Chinese Outbound Tourists Russian Outbound Tourists Medical Tourism MICE Tourism

5 Chinese Tourists Chinese GDP per Capita has increased continuously over the past decade, growing at 18% on average. This also boosts Chinese outbound tourism, with Thailand being the highest growing destination. In 2012, the number of Chinese arrivals to Thailand was 2.79 million, representing 7% of total Chinese outbound tourism market worldwide. USD 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Chinese GDP per Capita and Chinese Arrivals to Thailand , , , ,414 2,651 1,135 1,274 1,490 1,731 2,069 3, Chinese GDP per capita (USD) Chinese tourists arrival to Thailand Arrivals (million) Macau Top 10 Worldwide Destination for Chinese Outbound Travel 2012 Taiwan Thailand 7% South 7% Singapore Korea 62% 47% 5% 8% 3 55% 8.4% 11.1 Hong Kong, China 38% Other 15% USA 4% 46% Japan 4% 44.4% Vietnam 4% 0.8% Malaysia 3% 24.6% Thailand ranks 4 th in term of market share and 1 st in term of growth. Source: Department of Tourism Thailand, ; Skift, 2013; The World Bank

6 Chinese Tourists Tourism receipts from Chinese tourists have increased significantly over the past five years. In 2012, the total receipts were THB 106 billion, up 83% from This substantial growth was mainly generated by large increase total arrivals, while spending per capita only yielded small gain. Top three spending categories are accommodation, shopping, and food & beverage. Baht/Person/Day Tourism Receipts from Chinese Tourists and Spending per Capita +83% 4, ,944 4,800 4,700 4, % 4,500 58,002 4, % 4,400 4,520-19% 34,367 4,300 23,148 4,471 +1% 4,200 28,475 4,352-4% 4,425 +2% 4, Chinese tourist spending per capita Tourism receipts from Chinese tourists THB (million) +8% 120, ,000 80,000 60,000 40,000 20,000 0 Share of Expenditure Chinese Tourist Spending by Category % 2% 2% 2% 2% 7% 6% 6% 6% 6% % 11% 12% 11% 12% 19% 18% 19% 19% 19% 25% 24% 25% 24% 25% 25% 26% 27% 28% 27% Miscellaneous Sightseeing Local Transport Entertainment Food & Beverage Shopping Accommodation Source: Department of Tourism Thailand,

7 Chinese Tourists Most of Chinese tourists visit Thailand for holiday purpose. Over the last three years, there has been a sharp rise in the share of holiday travel, from 25% in 2010 to 45% in 2011 and 89% in An increase in arrivals on holiday purpose is also reflected in longer length of stay. Chinese Tourist Arrivals by Purpose of Visit Chinese Tourist Average Length of Stay Share of Purpose Day % 7% 8% 26% 18% 14% 15% 1% 2% 89% % +5% % +4% % 2 25% Holiday Meeting Incentive Convention Exhibition Others Source: Department of Tourism Thailand,

8 Arrivals (million) Arrivals (million) Arrivals (million) Arrivals (million) Chinese Tourists Given an increase in total arrivals, the Chinese tourist profile has shown similar characteristics during the last three years. The ratio between male and female as well as the ratio between group and non-group travelers are nearly equal, while the largest group of tourists is between 25 and 34 years of age. Over years, Thailand has gained both first-time and repeating Chinese visitors. Gender % 47% + 55% 49% + 68% % 53% + 47% 51% + 57% % Male % Female Total Frequency % 42% % + 46% % 58% + 51% 63% + 74% % First visit % Revisit Total Source: Department of Tourism Thailand, Age Group 11% + 98% 10 11% 9% + 33% % 14% + 35% 15% + 69% 28% + 47% % % + 55% % 37% 35% + 62% + 54% % 12% + 62% 13% + 66% % Under 25 % % % % 55 and over Total Travel Arrangement % + 58% % 53% + 46% % 41% + 41% 47% + 86% % Group Tour % Non Group Tour Total

9 Russian Tourists The number of Russian tourist arrivals to Thailand has increased significantly since the Thai-Russian Visa was ratified in 2007, along with a rise in Russian GDP per capita. In 2012, Thailand was the most popular destination in Southeast Asia, with 71% market share. The boom of Russian outbound tourism reveals an opportunity for Thailand to capture this growing target group. USD 20,000 18,000 16,000 14,000 Russian GDP per Capita and Russian Arrivals to Thailand Thai-Russian Visa ratified in March Arrivals (million) Indonesia 5% Southeast Asia Destination for Russian Outbound Travel 2012 Singapore 4% Others 5% 12,000 10,000 8,000 6,000 4,000 2, ,100 15,900 17,000 17,700 11,700 6,947 9, ,337 4, ,375 2, Cambodia 5% Vietnam 1 Thailand 71% Russian GDP per capita Russian tourists arrival to Thailand Source: C9 Hotelworks, 2012; Department of Tourism Thailand, ; The World Bank, 2013

10 Russian Tourists Since 2009, tourism receipts from Russian tourists have risen annually due to the substantial growth in arrivals and the slightly increase in spending per capita. Similar to Chinese tourists, top three spending categories for Russian tourists are accommodation, shopping, and food & beverage. Tourism Receipts from Russian Tourists and Spending per Capita Baht/Person/Day + 41% THB (million) 6,000 84,840 90,000 80,000 5, % 70,000 4,000 60,091 60,000 50,000 3, % 32, % 40, % 4,837 2,000 4,018 4,220 4, % 4, % 30,000 1,000 16,242 16,184 20, % 10, Russian tourist spending per capita Tourism reciept from Russian tourists Share of Expenditure Russian Tourist Spending by Category % 2% 2% 2% 1% 4% 5% 5% 5% 5% 11% % 13% 13% 13% 13% 19% 19% 19% 19% 23% 25% 23% 23% 23% 28% 28% 28% 29% 29% Miscellaneous Sightseeing Local Transport Entertainment Food & Beverage Shopping Accommodation Source: Department of Tourism Thailand,

11 Russian Tourists Holiday travel is the main purpose for Russian tourist visit. Last year, the share of holiday travel increased sharply from 44% to 97% and the length of stay also extended from to days. Although the share of MICE visit has lessened, Thailand could still capture this segment by seeking opportunities to host international events. Russian Tourist Arrivals by Purpose of Visit Russian Tourist Average Length of Stay Share of Purpose 10 9% 9% 11% 11% 8 11% 9% 3% Day % 5% 11% 9% 35% 26% 97% % 44% Others Exhibitions Convention Incentive Meeting Holiday Source: Department of Tourism Thailand,

12 Arrivals (million) Arrivals (million) Arrivals (million) Arrivals (million) Russian Tourists Both the number and the share of revisiting Russian tourists have expanded over the past three years, whereas the components of gender, age group and travel arrangement have almost remained the same. It indicates that Thailand is not only able to gain new Russian tourists but also retain the same group. This can be accomplished by offering different travel experiences for repeating visitors. 10 Gender 8 52% + 66% 51% 52% % 48% + 61% 48% % Male % Female Total Frequency % + 73% 49% % + 57% 51% % First visit % Revisit Total Source: Department of Tourism Thailand, % + 25% + 43% + 11% Age Group 7% 7% + 52% 7% 18% 16% + 47% 16% % 26% + 58% 26% % 36% + 73% 35% 14% 15% + 78% 16% % % Under 25 % % % % 55 and over Total 0.64 Travel Arrangement 55% + 63% % + 29% % + 24% + 19% + 36% % 45% + 64% 47% + 28% % Group Tour % Non Group Tour Total + 22%

13 Medical Tourism Medical tourism has recently played an outstanding role in Thailand s tourism industry. In 2012, Thailand became the top ranking destination for healthcare, surpassing such developed countries as USA and Singapore. Today the medical sector in Thailand is widely accepted for its high quality of services and value-for-money offerings. Country No. of medical tourists in 1. Thailand 1,200, Mexico 1,000, USA 800, Singapore 610, India 400, Brazil 180, Turkey 110, Taiwan 90,000 Source: Bloomberg, 2013 Top Travel Destinations for Medical Tourism Thailand Long known for sex-change procedures, Thailand offers some of the world's best values for a variety of health care.

14 Medical Tourism Total sales from medical tourism have increased at an average growth of 25%, from THB 4.14 billion in 2006 to THB billion in The number is forecast to rise further at an average growth of 15% in the next three to five years, generating THB billion to the country by The majority of medical tourists come from Middle East and ASEAN Medical Tourism Sales : Values and Forecast , , , Medical Tourists in Thailand % , , Forecast 32% , , % , , , % 24% , Statistic , , , , , , THB (million) Source: Euromonitor International, 2012; GfK MarketWise Ltd, 2013 Middle East Asean Europe Oceania Others

15 Medical Tourism Among the global medical tourism hubs, Thailand offers high quality of medical services at relatively low prices, with 50-7 saving compared to prices in USA. Furthermore, the two foremost hospitals in Thailand were recently named the top ten World s Best Hospitals for Medical Tourists. This indicates a strong competitive advantage that the country should maintain in the long run. Procedure Usa Thailand Mexico Singapore India Brazil Turkey Taiwan Costa Rica South Korea Avg. Saving 50 to 7 40 to 65% 30 to 45% 65 to 9-50 to 65% 40 to 5 40 to 65% 30 to 45% Coronary artery bypass garft - CABG $ 88,000 $23,000 $27,500 $32,000 $9,500 - $20,500 $21,000 $31,500 $35,000 Valve replacement with by pass $ 85,000 $22,000 $23,500 $29,500 $8,500 - $20,000 $18,000 $29,000 $33,000 Hip replacement $ 33,000 $13,000 $12,500 $17,000 $8,000 - $11,800 $10,500 $14,000 $15,500 Knee replacement $ 34,000 $11,500 $10,500 $16,500 $7,500 - $12,000 $12,000 $9,500 $18,500 Spinal fusion $ 41,000 $16,000 $16,200 $20,500 $9,500 - $16,500 $18,000 $17,000 $22,000 IVF cycle $ 15,000 $6,500 $4,600 $9,500 $3,300 - $9,500 $4,800 $4,400 $7,500 Gasstric bypass $ 25,000 $12,000 $10,800 $14,000 $6,800 - $13,000 $13,000 $11,200 $12,500 Facelift $ 145 $4,700 $5,400 $6,200 $3,500 - $4,800 $5,600 $4,800 $5,900 Rhinoplasty $ 85 $3,700 $3,500 $4,800 $2,800 - $3,300 $3,500 $3,400 $4,700 Thailand Major procedures can be 50 to 70 percent cheaper there than in the US. (Bloomberg, 2013) World s Best Hospitals for Medical Tourists. MTQUA, Prince Court Medical Center, Kuala Lumpur, Malaysia 2. Asklepios Klinik Barmbek, Hamburg, Germany 3. Clemenceau Medical Center, Beirut, Lebanon 4. Fortis Hospital, Bangalore, India 5. Wooridul Spine Hospital, Seoul, Korea 6. Bumrungrad International, Bangkok, Thailand 7. Anadolu Medical Center, Istanbul, Turkey 8. Bangkok Hospital Medical Center, Bangkok, Thailand 9. Gleneagles Hospital, Singapore 10. Asian Heart Institute, Mumbai, India Source: Consumer media network, 2012 ; MTQUA, 2013

16 Medical Tourism Government support is essential to taking medical tourism to higher level in terms of development and competitiveness. To promote the country as a medical hub, Thai government has initiated various economic incentives and campaigns to boost this strategic sector. Income tax exemption for health care providers including rehabilitation centers, hospitals, producers of health food, and manufacturers of medical tools The Thai government established policies to promote the country as a medical hub Additional benefits for pharmaceutical business Tariff reduction for importers of medicine ingredients and medicine TISO incentive granting additional business benefits for qualified foreign companies operating in Thailand including those that offer consulting services, such as spa and wellness consultants The Tourism Authority of Thailand (TAT) organized the international medical tourism facilitators and tour agencies from all over the world to experience the world-class medical services and spa treatments in Thailand

17 MICE Tourism In 2012, there were nearly one million MICE arrivals to Thailand, generating MICE receipts of THB 80 billion. This represents 4% of total tourist arrivals and 8% of total tourism revenues. MICE sector has expanded in the last two years, revealing opportunities for the country to promote this tourism trend in addition to leisure travel. Arrivals (million) ,735 Number of MICE Travelers and MICE Revenues % 61,570 53, % , ,625 79, No. of MICE Travelers - 13% - 0.4% - 1% MICE Revenues + 32% + 24% + 13% % Meetings Incentives Conventions Exhibitions THB (million) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Why Thailand? Value for money Easy access Excellent airline Great hotel Superb convention and exhibition centers Superb pre- and postconference tours Excellent range of local speakers Great for spouses Professional services and support Shopping Source: lookeastmagazine, 2012; Thailand Convention & Exhibit Bureau,

18 MICE Tourism In general, the average spending per capita by MICE tourists is around 3-4 times higher than leisure tourists. On the other hand, the average length of stay for MICE tourists is shorter than leisure tourists. Therefore, by focusing on MICE sector, Thailand will be able to capture high spenders and earn more receipts. Average Spending per Capita Average Length of Stay Baht/Person/Day 18,000 16,000 14,000 Day , ,000 8,000 6,000 4,000 2,000 12,343 12, % 13, % 13,080-3% + + 3% 15,653 16,084 4,121 4,142 4,011 4,079 4,187 4, Average spending/person /day (MICE tourists) Average spending/person /day (All tourists) Source: Thailand Convention & Exhibit Bureau, Meetings Incentives Conventions Exhibitions Average length of stay (All Tourists)

19 MICE Tourism Top spenders within MICE sector are meeting, followed by exhibition, convention and incentive attendants. These groups are likely to travel on a pre-determined schedule with corporate/ organizational budgets on accommodation, transportation and daily allowances. Some of them may also extend their schedule for leisure purpose. Baht/Person/Day (thousand) 25 MICE Average Spending Per Capita M Avg. Growth = 6.2% I Avg. Growth = 6.4% C Avg. Growth = 3.2% E Avg. Growth = 5.2% Meetings Incentives Conventions Exhibitions Source: Thailand Convention & Exhibit Bureau,

20 MICE Tourism More than 8 of MICE tourists in Thailand travel from East Asia and Europe. Within East Asia, the countries that bring about most MICE tourists are Malaysia, China, Japan, Laos, Korea, Singapore and Hong Kong. The largest growing MICE markets are China and Laos. MICE Tourists in Thailand by Region 2011 Asian MICE Tourists in Thailand % - 5% 3% 1% - 1% + 4% 5% 3% - 6% 6% + 5% 26% 55% - 2% + 0.2% + 3% 18.3% 4.8% 7.9% - 9% - 2% 8.8% 9.5% - 9% 21.4% 17.7% 11.7% + 8% MICE East Asia Tourists in Thailand Growth Country Growth Malaysia 1,087, ,032-9% China 757, ,495 8% Japan 605, ,983-11% Laos 400, ,681 1 Korea 447, ,102-9% Singapore 353, ,056 3% Hong Kong 220, , % Other 858, ,834-2% % East Asia Europe South Asia Oceania The Americas Middle East Africa Source: Department of Tourism, Thailand, Malaysia China Japan Laos Korea Singapore Hong Kong Other

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