Malaysia and China are the largest source countries for Thai tourism, accounting for more than 25%, each more than double of the third place country, India.
Western expats may not care about a border skirmish, but Asian tourists do.
Thailand has been getting a lot of bad press lately between the fighting, and political instability.
The earthquake earlier this year didn't help either.
Chinese and Asean tour companies have been stating that the demand for Thailand travel packages has declined significantly.
There's a lot of competition for tourist dollars, people choose to go where they feel safe, whether that's based on fact or not, perception is everything.