Tourism Sector Wary Of Impact Of Strengthening Of The Thai Baht

[webfact]

Tourism sector wary of impact
BAMRUNG AMNATCHAROENRIT
THE NATION

BANGKOK: -- The tourism sector is monitoring the strengthening of the baht more closely and has expressed concern that if the current trend continues, the industry may feel a bigger pinch.

On Tuesday, the baht closed slightly below 29 to the US dollar for the first time. Some say the evidence is clear that inbound tourism will start to feel a direct impact from the situation. Foreign visitors will have to pay more for their tour packages. Also, they will be more careful with their spending as their home currencies buy them fewer baht.

The Tourism Authority of Thailand yesterday said there was no sign yet that the burgeoning baht had hit the industry. So far, the number of foreign tourists is still on the rise. "The stronger baht has not yet led foreign tourists to keep away from Thailand. In fact, it is only one part of their decision. Thailand is still a tourism destination in the region, remaining popular as a place with value for money," the TAT said.

Yuthachai Soonthronrattanavate, president of the Association of Domestic Travel, said some local tour operators had been hit slightly because they earn income in US dollars. Coupled with the rise in the minimum wage to Bt300 a day, small or medium-sized enterprises could go out of business if they cannot manage currency fluctuations.

He also worried that the baht's appreciation would lead Thais to travel overseas increasingly to take advantage of cheaper tour packages. If that happens, the domestic tourism industry will suffer. He thinks the exchange rate suitable for business is Bt30 against the dollar.

Piyaman Tejapaibul, president of the Tourism Council of Thailand, said the organisation would take a closer look at the situation. In general, advance hotel bookings are quoted in baht. So far, the industry has not felt any negative impact.

Piyaman, who also runs a hotel at Cha-am Beach in Phetchaburi province, said the tourism outlook had been positive so far. Its good performance is attributed to an influx of Asian tourists from such places as China and South Korea, as well as Russians.

The baht's appreciation has not yet hurt travellers' sentiment, especially Asians. The bigger problem for Thailand is that it has to prepare facilities to serve a rising number of foreign tourists while also looking for ways to reduce congestion in major tourism destinations.

Supawan Tanormkieatipume, chairman for marketing at the Thai Hotels Association, believes that tourism operators can survive the currency movement. The stronger baht will cause Thailand to lose some competitiveness over regional rivals, but "the higher prices fuelled by the baht's appreciation are not a major factor in foreign tourists making the decision whether to come here".

She is most worried about a possible epidemic of bird flu in China. Its impact would be far worse than the baht's appreciation if it spreads outside that nation.

-- The Nation 2013-04-11

[rametindallas]

The rapid strengthening of the Baht for retired expats is like extreme inflation of their home currencies. Terrible and fast cuts in their spending power. For me, as a long stay tourist, the Baht would have to get stronger than 25 to the dollar before I change to Costa Rica. I think a lot of export companies have been doubly impacted by the sudden rise in minimum wages and Baht appreciation. All this cost the Bank of Thailand losses as they have to buy all those Yen, dollars, Pounds, and Euro. Since there is full employment and the economy is somewhat overheated already, they cannot lower the interest rates. Getting rid of short term bonds seems the easiest, least painful way to slow capital inflow from speculators. Thailand could look for lessons/ideas to Brazil and Switzerland; both countries have currency that has appreciated rapidly, recently.

[wotchit]

Despite howls of outrage this comment might create, Thailand has developed economically extremely rapidly over the last few decades, particularly in relation to other countries in the region. A stronger currency is an inevitable part of this and Thailand will continue to get more expensive as it more closely approaches "Developed World" (hate that term) standards.

Can't afford it? There's always Cambodia (or maybe Burma soon).

[noitom]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls. Hats off to the girls!

[siampolee]

truth be known the concern about the strength of baht and its impact upon tourism is not the main factor.

The affect on Thailands export business sector is where the damage will and is slowly being done, tourist will come irespect of the cost, most tourists plana year ahead and of course budget ccordinlg.

Business concerns, well yes they do plan ahead but currency fluctuations play havoc with production and shipping costs,

The powers that be need to focus on the commercial aspect of the situation and tourism is not such a big player, agreed the tourist industry is important , however remember if the costs do go too high those tourists that have here been this year are going to seek cheaper alternatives for next year.

That course of action whilst affecting the economy is not going to have the impact that a decrease in export manufacturing industries output would have.

Look at the big picture the panorama encompasses many different aspects of income generation not just tourism..

[FarangTalk]

Spending power shifting to the East from the Western economies. This is not going to change any time soon.

Welcome to the reality of globalisation, Western economies.

[Thai at Heart]

Despite howls of outrage this comment might create, Thailand has developed economically extremely rapidly over the last few decades, particularly in relation to other countries in the region. A stronger currency is an inevitable part of this and Thailand will continue to get more expensive as it more closely approaches "Developed World" (hate that term) standards.

Can't afford it? There's always Cambodia (or maybe Burma soon).

It happens. Daily minimum in south Korea is 90usd a day I was told last week. Not many people plan to retire there, irrespective of the weather, it's bloody expensive.

[Wat dee]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls. Hats off to the girls!

Don't know where you people are coming from but Thailand's still cheap!!

[belg]

the less you get for you euro, dollar, the less people hopefully will come here ... thailand apparently cannot cope so many visitors anyway (see other story)

let's not forget thanks to inflation, everything is getting 20% more expensive

(macdo menu +- 20% since last time i went there to eat, yes it was some months ago)

[IMA_FARANG]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls. Hats off to the girls!

---------------

That's just not true.

It may SEEM that sex tourists are a mainstay of the Thai economy but in fact the money earned by exports is much more important in earnings for the average Thai.

Only a small percentage of Thais work in the sex industry or even the tourist industry.... outside of a few tourist areas most Thai jobs are in factories ... many with an export orientated product.

Let me use the U.S. dollar as example.

We have a hypothetical Thai exporter selling a product in the U.S. for dollars.

His cost to produce that product in Thailand is 300 baht per unit.

At 30 baht to 1 dollar he needs to sell each unit for a minimum of $10 (300 baht equivalent at that rate) to break even.

Now the U.S. dollar/baht rate goes to 28 baht for one dollar (the baht gets stronger against the dollar).

The producer in Thailand still has to spend 300 Baht to manufacture that product.

He now has to raise his dollar price for his product in the U.S. just to clear his expense.... not even to mention making a profit.

His competiors don't have to raise their price.

That's why exports are being hcreaingly hurt by the strong Baht.

And, believe it or not, exports that are manufactured in Thailand (even if they are so-called Japanese cars for example) are much more of a money maker than tourisim, especially "sex tourisim".

Phuket, Pattaya, and Bangkok sex tourists are NOT the true picture of Thailand especially outside of those cities.

Edited April 11, 2013 by IMA_FARANG

[Ulic]

Please also remember that as the baht appreciates the cost of imported fuel goes down as does the cost

of raw materials imported to manufacture products made in Thailand. The imported machinery or tools to

make the products also cost less. In agriculture the cost of fertilizer goes down as well as the cost to transport

to market. So while I agree with you it is quite a complicated relationship with winners and losers.

[MANFROMBOCA]

you are correct and remember thailand is becoming a much larger consumer economy , less reliant on exports which is also fueling the rise in the baht

[Arkady]

This is a solution, not a problem. Another thread is about Thailand being overwhelmed by foreign tourist tourists. Jack the prices up and get rid some of the lowest quality dross but the sex tourists will keep coming anyway till they are broke anyway because they can't get the same kind of holiday anywhere else.

Edited April 11, 2013 by Arkady

[MrHammer]

The above would all be true if it wasn't for the fact that this is ALSO a bubble fueled by quantitative easing as investors and particularly short term speculators scramble to find ANYTHING that will yield a return. It has gotten so bad that a while ago, investors actually paid to deposit their money in danish account.

There is a massive real estate bubble in Hong Kong and I wouldn't be suprised if what we're seeing is a spillover from that.

Thailand will certainly move on, but lets not kid ourselves, the current infrastructure and political system are decades away from Korea and Japan. Even China doesn't have scooters everywhere anymore. It is my claim that the elite in Thailand does not want rapid modernization as this would threathen their political power and their easy supply of wage-slave labor from Isaan.

A meritocracy and full competition is not something that is beneficial to the cronies in power.

[Thai at Heart]

The above would all be true if it wasn't for the fact that this is ALSO a bubble fueled by quantitative easing as investors and particularly short term speculators scramble to find ANYTHING that will yield a return. It has gotten so bad that a while ago, investors actually paid to deposit their money in danish account.

There is a massive real estate bubble in Hong Kong and I wouldn't be suprised if what we're seeing is a spillover from that.

Thailand will certainly move on, but lets not kid ourselves, the current infrastructure and political system are decades away from Korea and Japan. Even China doesn't have scooters everywhere anymore. It is my claim that the elite in Thailand does not want rapid modernization as this would threathen their political power and their easy supply of wage-slave labor from Isaan.

A meritocracy and full competition is not something that is beneficial to the cronies in power.

Looking at the stats, the easy supply of labour from Isaan has been exhausted. There are few young farmers left in the villages. Modernisation is one thing, economic development, and Toyota, Honda, Amata and Hemeraj wait for no one. Thailand is giong forward economically, whether anyone likes it or not. Floods permitting of course.

[fish fingers]

Thailand will continue to grow until the day comes when a certain monarch passes away. If foreigners are looking to buy property in Thailand and on a tight budget either buy a cheap place or wait.

One benefit of a strong baht is a better class of tourist (not including monied farangs in Phuket)

Edited April 11, 2013 by fish fingers

[hellodolly]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls. Hats off to the girls!

---------------

That's just not true.

It may SEEM that sex tourists are a mainstay of the Thai economy but in fact the money earned by exports is much more important in earnings for the average Thai.

Only a small percentage of Thais work in the sex industry or even the tourist industry.... outside of a few tourist areas most Thai jobs are in factories ... many with an export orientated product.

Let me use the U.S. dollar as example.

We have a hypothetical Thai exporter selling a product in the U.S. for dollars.

His cost to produce that product in Thailand is 300 baht per unit.

At 30 baht to 1 dollar he needs to sell each unit for a minimum of $10 (300 baht equivalent at that rate) to break even.

Now the U.S. dollar/baht rate goes to 28 baht for one dollar (the baht gets stronger against the dollar).

The producer in Thailand still has to spend 300 Baht to manufacture that product.

He now has to raise his dollar price for his product in the U.S. just to clear his expense.... not even to mention making a profit.

His competiors don't have to raise their price.

That's why exports are being hcreaingly hurt by the strong Baht.

And, believe it or not, exports that are manufactured in Thailand (even if they are so-called Japanese cars for example) are much more of a money maker than tourisim, especially "sex tourisim".

Phuket, Pattaya, and Bangkok sex tourists are NOT the true picture of Thailand especially outside of those cities.

They say only 6% of the economy is depended on tourism. But that figure over looks the fact that it is more than 6% of the work force affected by the tourist money. Those people working in the factories making tourist products are also affected.

Plus the fact that on the other hand the influx of tourists are Asians who are not as likely to look on these tourist products as some thing different and even though we see more tourists each year the fact is they are Asians increasing and the baht spent per day is far less than when it was when there was a lot more Western tourists.

[khaowong1]

Just curious how the Chinese and India currencies are doing again'st the Baht? Why the influx of these two countries into Thailand?

[LucidLucifer]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls.

Utter rubbish.

Maybe in your limited, red-light district, bar-dwelling circles that may be true, but the vast majority of workers, business-people, travelers and tourists come here for other reasons.

[zydeco]

Spending power shifting to the East from the Western economies. This is not going to change any time soon.

Welcome to the reality of globalisation, Western economies.

I'm paid in baht. Fine with me. For the present. But eventually a country dependent on exports and tourism will suffer from a strong currency. And, after all the chaos of the last few years, for the life of me I can't figure out why the Tbaht is so strong. Maybe when the rest of the world finds out about the madness of the rice subsidy, things will really crash.

[rotorbreeze]

Spending power shifting to the East from the Western economies. This is not going to change any time soon.

Welcome to the reality of globalisation, Western economies.

I'm paid in baht. Fine with me. For the present. But eventually a country dependent on exports and tourism will suffer from a strong currency. And, after all the chaos of the last few years, for the life of me I can't figure out why the Tbaht is so strong. Maybe when the rest of the world finds out about the madness of the rice subsidy, things will really crash.

European bail outs have increased the interest in Asian currency, the high rate of return of having money in a Thai bank, ... like a Ponzi skeem ... the larger institutions (Thai Families) that regulate in secret the real value of currency.

Like the tides of the ocean vary in the moons position so does the currency with people in power with the most to loose...the Baht will de-value in need to competative with countries using the Ponzi skeem (offering a Higher Rate of return)

The weapons of distruction....another war will break out and the Arms dealers in Europe and America will charge more for the weapons...thus the value of US/Euro will increase. A endless flow of currency with promise of return...it is all just paper...the real value is in a limited supply....gold..silver...minerals... or in my case the quality of living...keep life simple...keep your credit low...pay cash when you can.

The Thai economy works on credit, very little cash...just wait till the Issan Truck dealerships fail in getting their monthy payments will be the first signs of a falling baht!

[hellodolly]

Just curious how the Chinese and India currencies are doing again'st the Baht? Why the influx of these two countries into Thailand?

Good question

[notmyself]

Spending power shifting to the East from the Western economies. This is not going to change any time soon.

Welcome to the reality of globalisation, Western economies.

I'm paid in baht. Fine with me. For the present. But eventually a country dependent on exports and tourism will suffer from a strong currency. And, after all the chaos of the last few years, for the life of me I can't figure out why the Tbaht is so strong. Maybe when the rest of the world finds out about the madness of the rice subsidy, things will really crash.

I think you will find that the rest of the world do know so they are cashing in on it. PM Pu is running around the world trying to get other countries to help stoke the fire and so long as she keeps finding ways to do so there is money to be made.

[carib102]

Just curious how the Chinese and India currencies are doing again'st the Baht? Why the influx of these two countries into Thailand?

Baht strengthening against the CNY since mid-2011. Up from 0.1978 to recent high of 0.2144 (That's CNY per THB)

Also strengthening against the INR since mid-2007 (can't find a chart that goes back any further) Up from 1.2131 to a recent high of 1.8896 (INR per THB)

[MaxLee]

Rice SCAM, First car SCAM, Megaproject SCAM, that has made Thailand the most expensive place in south East ASEAN ....

[Payboy]

Thailand is not cheap anymore. Relatively speaking, sex is still a bargain. Sex is the main draw of Thailand and it would take a 20/dollar to deter sex travelers from Thailand. The real backbone of the Thai economy are the girls. Hats off to the girls!

My hat's always ON for the girls.

Edited April 12, 2013 by Payboy