PATTAYA – Looking for a US$50 a night five-star hotel on an empty beach? You might consider a trip to Thailand’s notorious Pattaya beach resort, the “old lady” of the nation’s sometimes seamy tourism industry.
Pattaya, the once gyrating, all-night entertainment hedonistic hotspot just 100 kilometers southeast of Bangkok, has mellowed over the past eight months of a Covid-19 ban on international travel.
“For sale” signs dot the main beachfront road on deserted bars, shops, restaurants and the hotels and restaurants that have managed to stay afloat are offering huge discounts.
An estimated 100,000 Thais previously working at the beachside resort, where tourism normally accounts for 80% of the local economy, have gone home. Walking Street, which pre-Covid offered tourists a trot on the wild side at night, is now a spooky stroll through shuttered bars and restaurants.
The once-bustling Pattaya beach, crowded in the pre-Covid era with hundreds of Chinese tourists boarding speed boats to nearby Koh Lan island, and Western tourists sipping beers in the sun, is mostly empty, especially on the weekdays. Weekend business has picked up somewhat thanks to Thai traffic from nearby Bangkok.
Of course, unless you live in Thailand, getting to Pattaya as a tourist is problematic. Thailand has banned nearly all international flights since April 4, when the government enforced a nationwide lockdown for two months (April-May) that shuttered most restaurants, cinemas, massage parlors, bars and other entertainment venues.
Exceptions were made after July to allow flights bringing back Thai nationals who had been stranded overseas by the Covid-19 pandemic.
Last year, some 39.8 million tourists visited Thailand. This year the projected number is less than 7 million. Tourism accounted for an estimated 18% of Thailand’s gross domestic product (Fitch Ratings has estimated that it is closer to 22%) with 12% earned from international tourists’ revenues, or about 2 trillion baht ($65.3 billion).
Thailand’s economy is projected to contract at least 7.8% this year, according to the Bank of Thailand (BOT), largely because of the evaporation of international tourist arrivals. Economists don’t see the economy recovering until the government turns on the tourism faucet again.
“For Thailand, it is hard to see a recovery gaining traction without some kind of recovery of the tourism sector,” said James McCormack, global head of sovereign and supranationals at Fitch Ratings HK, speaking at a recent event.
Tourism has been one of Thailand’s few growth industries over the past five years, led by a huge surge in annual arrivals from China, which peaked at nearly 11 million in 2019.
But despite the sector’s obvious importance to GDP and employment with an estimated 4 million Thais are employed in tourism-related activities, the government has been reluctant to reopen up over fears of a Covid-19 resurgence.
In October, Thai authorities took the baby step of allowing 159 Chinese tourists in to the country on Special Tourist Visas (STVs), a tentative first “baby step” to allowing international tourists back.
The STVs requirements are onerous. First, the visitor must come from a “low-risk country”, so citizens from Covid hotspots such as the US, UK and most of Europe are excluded.
Once allowed in Thailand, they must agree to quarantine for 14 days in accredited hotels or hospitals and pay for the stay, provide proof of medical and travel insurance coverage amounting to more than $100,000 and once freed from quarantine must provide authorities with evidence of accommodation at a condominium or hotel during a long stay.
The STV costs 2,000 baht ($64) and allows visitors up to 270 days in the country. So far, there have been few takers for the STVs in November.
After weeks of debates, the Pubic Health Emergency Operation Center – the doctors-led team set up in April to handle the government’s response to the pandemic that now arguably dictates economic policy – this month approved in principle a proposal to reduce the mandatory quarantine requirement to 10 days.
Even if this is implemented, the four-day difference is unlikely to spark a stampede of international tourists. Meanwhile, Tourism Authority of Thailand governor Yuthasak Supasorn recently said the government has limited arrivals to 1,200 per month until the end of this year.
Another option on the table is travel bubbles that allow tourists to travel to Thailand without quarantining if they come from low-Covid-risk countries.
The bubble plan was discussed at a recent meeting between Thailand’s Tourism and Sports Ministry and the Chinese embassy in Bangkok. Media reports said the bubble might cover 22 low-risk provinces in China that have reported no new local Covid cases in the past 150 days. Recent cases in Beijing and Shanghai would eliminate potentially big, high-spending markets.
The bubble proposal, with an eye on implementation in time for the traditional Chinese Year tourism influx in February, would need to be finalized by a bilateral agreement signed by Thai Prime Minister Prayut Chan-ocha and Chinese President Xi Jinping, which could take a while and may not prove a priority for either leader.
Covid has had a big impact on Thailand’s new foreign direct investment (FDI) projects, with new applications at the Board of Investment (BOI) falling 29% in value to 118.5 billion baht ($3.9 billion) year-on-year.
While the BOI has tried to continue promoting the country online and via webinars, it has thus far failed to persuade the government to devise a special quarantine-free visa for visiting businessmen, although some scheme is reportedly in the works for target countries such as China, Japan and Hong Kong.
“The political pressure from the Thai private sector to open up the country is not as strong as it is elsewhere, except in the tourism sector,” said a BOI source, citing discussions with Thai business associations.
For well-to-do Thais, the ban on international tourists has had little impact on their daily lives, unless they happen to own a hotel.
“When you look at Thailand, it is like we are separating into two different societies – the one that doesn’t care much about the economic slowdown because they are okay, and the other that depend a lot on industries like tourism, and are having a hard time surviving,” said Pakorn Peetathawatchai, president of the Stock Exchange of Thailand (SET). “It’s tough for the government to decide which way to go, so they have been slow and prudent.”
Unlike China, Thailand cannot rely upon a massive population to fill the huge vacancy left by the absent foreign tourists at Thailand’s 60,000-plus registered and unregistered hotels. A government-sponsored program – dubbed ‘Rao Teow Duay Kan’ (We Travel Together) – designed to promote local tourism by subsidizing hotel bills has fallen far short of its target.
“In these unprecedented, uncertain times, domestic travelers are extremely cautious about their spending,” said Suphajee Suthumpun, chief executive officer (CEO) of the Dusit Group, a Thai hotel chain with properties in most top Thai tourist destinations and several more abroad.
“This has been reflected in the government’s campaign to stimulate domestic tourism, which initially targeted to generate five million nights of subsidized accommodation from July through October but generated less than one-fifth of this amount,” she noted.
Suphajee added that while the program had helped the Dusit Group fill its properties over weekends and holidays in Pattaya and Hua Hin beach resorts, which are within driving distance from Bangkok, but it had less effect on hotels in Phuket and Chiang Mai, an airplane ride away.
Thailand’s other top hotel chains – Centara Group, Asset World Group, Minor Group, Erawan Group – are all similarly well-prepared to provide a combination of safety measures and professional service to international tourists once the ban is lifted on international flights.
The first thing the government needs to do to prepare for that eventuality would be to launch a public relations campaign to prepare the population for the inevitable uptick in Covid cases, observers have argued.
Thailand’s medical community has performed admirably over the past nine months in preventing a resurgence in the Covid pandemic after the first cases were reported in March, stemming the tide of cases to about 3,900 with only 60 deaths.
But they set high expectations during the lockdown period (April-May) of trying to keep newly reported cases at zero. “This indoctrination program was switched on over a two-month-period and the problem the government faces now, is how do you switch to a different channel,” said Michael Messner, curator of the Patpong Museum, which opened three months before the Covid pandemic struck.
It doesn’t help that there doesn’t appear to be a popular uprising against the ban on international tourism, despite the widespread economic pain, especially among Thailand’s poorest whose numbers are swelling in the Covid era. Perhaps their discontent has not been heard because they are now back in their rural homes.
In fact, that are indications that public sentiment seems to favor the government’s thus far ultra-cautious approach to reopening, which has indeed prevented Covid resurgences as witnessed in continental Europe and which never receded in the US and UK.
A survey conducted by the Tourism Council of Thailand (TCT) in August on the public’s attitude towards plans to reopen the country to specific groups of tourists found that 46% of the respondents disagreed with reopening even for bubbles, 83% disagreed with reopening on a broader scale, while 58% opposed the scheme of allowing long-stay tourists.
With little political pressure from the public to reopen, and clear widespread dread about a Covid comeback, Thailand seems destined for a very slow recovery that may need to await the availability of a vaccine, or a change in government.
Private companies engaged in tourism have either shuttered their doors or greatly reduced their overhead by cutting unnecessary staff and expenses. The question is how many can survive a year or so of hibernation.
Well-known establishments, with strong brand names, are more likely to survive than their weaker competitors, analysts and observers say.
“We have some savings because we were planning for this beforehand,” said Alisa Phanthusak, managing director of Tiffany’s Show Pattaya Co. Ltd, a popular transvestite cabaret show in Pattaya. “We knew that something could happen but we didn’t know it would be this bad, but we’ve been around for 46 years so we have learned a lot,” she said.
The Tiffany Show, started by Alisa’s father in 1974 to provide a new tourist attraction for Pattaya and legitimate work for Thai transgenders, has kept on its “dancers” at half pay, and the other “artisans” – stage managers, technicians and directors – at full pay.
“I just try to keep my staff stable and looking forward to next year,” Alisa said. “If they give up I will lose my talented people forever, and that would cost me a lot in the future. Much more than what they are costing me now.”
There are several big players in Thailand’s entertainment scene, such as the Panthera Group, that owns a score of upscale establishments in Bangkok and Pattaya, and will be well-positioned to buy out competitors in a post-Covid environment at bargain rate prices, industry sources say.
“This is the perfect time to buy,” said Messner, founder of the Patpong Museum and an investor in several bars in the Patpong entertainment and shopping district.
Messner, whose enthusiasm for Patpong’s history enticed him to open a museum capturing the rise of one of the world’s most notorious red-light districts, is looking into opening a new wine bar and restaurant on the street, and maybe even an “adult puppet show.”
“I am looking for locations and it’s amazing,” Messner said. “You can rent anywhere, and rents are heading south. Some places are down 50%. When you buy you are taking over the lease and the brand name. Maybe the brand is still there but definitely not the price of the business.”