Political tensions hurt May tourism

Political unrest hit the tourism industry hard in May, causing arrivals and hotel occupancy to plummet in the central and northern provinces, says the Bank of Thailand.

Arrivals declined by 12% year-on-year in May after a recovering world economy saw a record number of foreigners come to the country in first quarter. But international trade and investment, driven by strong external demand, helped shore up the economy.

The economy in May expanded moderately from the previous month, said Mathee Supapongse, director of the central bank's Domestic Economy Department.

Tourism was hardest hit with hotel occupancies falling to 35% in May compared with an average of 50% for the past five years. Bangkok and the North were hit hardest, but southern destinations enjoyed a slight increase from the same period last year.

Arrivals from Asean and East Asia declined the most. But increased political stability could improve prospects in time to attract tourists from Europe and North America for the peak season that starts in October, said Mr Mathee.

The hotel occupancy rate in the central region was 30%, with Bangkok at 25%, compared with a seasonal norm of 60%. Bookings in the South stood at 45%, slightly higher than the average for the past five years. The three-month advanced hotel booking slightly increased in May comparing with April, Mr Mathee said.

Exports of farm goods, which rose in volume by 42% year-on-year in May, continue to drive international shipments from Thailand. But gains were seen across the board for all goods and markets, despite global concerns about contagion from the Eurozone's sovereign debt crisis.

Increased growth in global manufacturing and investment supported Thai exports, even though revived booking in May slowed slightly from April due to the impact of the curfew on production and transportation.

Investment continued to improve with a slight increase from April. Gains in the investment were mostly from machinery and equipment to support future export orders. Construction recorded a small increase in Bangkok and northeastern provinces.

Private consumption softened slightly, however, reflecting a decline in VAT, fuel consumption and automobile sales, due in part to deteriorating political situation, said Mr Mathee.