Political tension in Thailand, with a state of emergency declared to quell anti-government protests, has hurt tourism but may not have a big impact on the export-driven economy unless it drags on or leads to violence. Tourism in Thailand directly employs 1.8 million people out of a population of about 67 million and it accounts for 6 percent of the $264 billion economy, Southeast Asia's second largest. Comparisons with tourist data last year are tricky. Tourism was dealt a blow in April 2009 by Thailand's worst street violence in 17 years, involving the same “red shirt” group. And the sector was only just recovering from a blockade of Bangkok's airports by a rival group of protesters in late 2008. Are the protests scaring away tourists? The occupation since Saturday of a district full of five-star hotels and plush malls has hurt the retail, restaurant and tourist sectors, although several stores reopened on Friday. Some operators said tourists from China, Hong Kong and Taiwan had pulled out. Over 100 charter flights had been booked to bring Chinese tourists in for the Songkran festival from April 13-15, but that has dropped to 30, the Tourism Authority of Thailand says. The Federation of Thai Tourism Associations says the industry has already lost more than 10 billion baht ($309 million). Thailand Tourism Council says foreign arrivals have dropped about 10 percent from normal levels since the protest started. The Thai Hotels Association says bookings at hotels around the occupied area stand at just 20-30 percent of capacity. Normally bookings at Songkran are about 60 percent. More than 40 countries have issued travel advisories warning about the problems in Thailand. One operator, AllTheBestTravel, said Japanese clients, often nervous about political unrest, were still coming but headed straight to places such as Phuket and Chiang Mai. Bangkok's Khao San Road, a magnet for budget tourists just a 10-minute walk from one main protest site, seems unaffected, with plenty of Westerners in the bars and Internet cafes. How much will it affect the economy? Erawan Group said its Grand Hyatt Erawan hotel and Courtyard by Marriott could lose a combined 90 million baht per month if the protests continued for over a month. Central World, the second-largest shopping complex in Southeast Asia, has been closed for seven days. The protests, including the occupation of the shopping district, are expected to cost the economy up to two billion baht per day, the University of the Thai Chamber of Commerce predicts. Kasikorn Research says the unrest could cost the economy 23-150 billion baht, or 0.2-1.5 points of GDP growth, depending on the severity of the situation. Consumer confidence fell in March, depressed by the unrest. The central bank says politics is becoming a bigger factor in deciding whether to raise interest rates. Finance Minister Korn Chatikavanij said the protests could delay a rate rise and might cause growth to be significantly worse than the ministry's 4.5 percent forecast. The World Bank forecast on Wednesday that Thailand's economy would grow 6.2 percent this year. Private economists expect growth of 4-5 percent. They say that, despite the problems, the export-driven economy should perform well due to the global recovery, with momentum carrying over from the final quarter of 2009, when the economy grew 3.6 percent, its fastest quarterly pace in 10 years. What effect did the airport siege and 2009 riots have? The eight-day closure of Bangkok's two main airports by the rival “yellow shirts” in December 2008 cut GDP growth by 0.6 percentage point, Kasikorn Research said. It stranded 230,000 tourists and disrupted trade flows. Foreign arrivals fell 18 percent in the final quarter of 2008 from a year before and the hotel occupancy rate slumped to 51 percent. Arrivals rose just 0.8 percent in 2008 as a whole, when the economy grew 2.5 percent, also hit by the global downturn. Tourism remained weak in 2009, when April's riots and the global economic downturn helped push arrivals down 3 percent. The Tourism Authority of Thailand still expects 15.5 million arrivals this year, up from 14.1 million last year. It expects tourist revenue to rise 10 percent to 580 billion baht. It said about 4.6 million tourists arrived in the first quarter of 2010, up from 3.6 million in the same period last year. How have conferences been affected? Central Plaza Hotel says it has lost 4-5 million baht a day since Saturday, the result of cancelled bookings for hotel rooms and business events at its hotel at Central World. Thailand Convention and Exhibition Bureau says the protests have prompted several business events to be cancelled, with the damage estimated at about 800 million baht so far. But operators of the Queen Sirikit National Convention Centre, which hosts many major events and seminars, says it has had no cancellations so far.
