Peace deal unlikely to revive tourism

Despite the prospect of a peace deal in the Middle East, Thailand's tourism industry is adopting a wait-and-see approach, concerned that the positive impact may be delayed by a significant slowdown in purchasing power, especially among domestic tourists during the current low season.

Nuntaporn Komonsittivate, head of commercial at Thai Lion Air, noted a year-on-year decrease in average load factors for June and July. Travelers are spending more cautiously in the off-peak season following holiday expenditures in April and May. While a ceasefire between the US and Iran could brighten the outlook, fuel prices are not expected to immediately revert to pre-war levels, unlike crude oil prices. Airlines are waiting for a deal and the full restoration of transport routes before adjusting plans, such as increasing flight capacity or resuming suspended routes. Thai Lion Air has already reduced seat capacity by 15% since the Gulf war began.

La-iad Bungsrithong, a board advisor for the Thai Hotels Association, described the 2026 low season as the weakest in years. Occupancy rates in Chiang Mai are averaging only 40-45%, with some locations as low as 35%. This decline affects all hotel segments, including luxury properties. Three- and four-star hotels are struggling due to weaker domestic purchasing power, as both individuals and companies prioritize essential needs over tourism. Luxury hotels are also impacted by fewer international visitors, particularly from Europe and the US, due to high jet fuel prices.

Even with an expected peace deal, travelers are likely to remain hesitant until the situation is fully settled. Hotel operators are closely monitoring bookings for July and August, typically a busier period due to family holidays and long-stay guests. Mrs. La-iad added that government cost-of-living relief measures, such as the co-payment scheme, primarily help households cover daily expenses and do not leave them with additional budgets for travel, further dampening the tourism sector's recovery prospects.

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The cost-of-living relief measures, such as the co-payment scheme, are unable to extend benefits to the tourism sector. They primarily help households absorb essential daily expenses rather than leaving them with additional budgets for travel.