Pattaya relies heavily on tourists to keep afloat. It is currently the high season, and yet observers feel that things are not going well. Everywhere you go you see ‘for sale signs’ on bars and restaurants. Even Pattaya’s entertainment areas seem relatively quiet. What is the truth of the situation and what is the cause?
According to official figures from the Ministry of Tourism and Sports for international tourist arrivals in May 2015 the trends make alarming reading for those invested in tourism in Thailand.
The figures show a drop in tourists from Europe – a drop of 3.4% in the year. It also shows a drop in Russian tourists for the year – a massive decline of 34.4%. At the same time Chinese tourists have increased their share of the total tourist mix by a massive 120%.
It is very clear what has happened to Walking Street in Pattaya as well as Bangla Street in Patong. ThaiVisa published an article today reporting that businesses on Bangla Road are seeing daily takings down by over 50%.
The Bangkok Post (July 15th, 2015)published an article claiming that hotel room residency in Pattaya was down to 30% and that some hotels were down to single digit occupancy.
All sources are pointing to the rise of Chinese tourism and to a fall in European and Russian tourism.
This clearly points to the fact that Chinese tourists are very different to European and Russian tourists. They predominately come to Thailand in tour groups who pay for inclusive holidays. They pay all their money in China. They are only short stay and clearly have less disposable income. Typically Chinese middle-class families visit Thailand. Also many honeymooners having their once in a life time vacation. These Chinese tourists don’t have much interest in go-go bars, sex shows, beer bars and all the ‘entertainment’ venue styles. These tourists have complained about being led into ‘inappropriate’ places on tours of Pattaya.
Although China is the new economic super-power, its population is not as wealthy as those in Europe and North America. They have less spending money. Moreover, they are comparatively new to foreign travel and for the present generally shy away from independent tourism. None of this is good for small businesses in Pattaya.
In contrast European and Russian tourists are far more diverse in demographics. They tend to be less afraid to travel independently and spend money in small businesses in Thailand.
The reason for the drop in Russian visitors to Thailand is down mostly to the massive fall in the Ruble value since 2015 when gas prices fell and sanctions hit the country’s economy.
The Euro exchange rate with the Thai Baht has been poor for Europeans. The fragile recovery of the European Union’s economy has faltered in 2016 under pressures of immigration, escalating debt and the possible withdrawal of the UK. The news story of the two Brits murdered in Koh Tao in November 2014 has rumbled on in the media. The Erawan Shrine in Bangkok terrorist attack in August 2015 shocked many who thought Thailand was a ‘safe’ destination.
None of this has been helped by doubling visa fees and imposing even more restrictions to prevent long stay budget visitors in Thailand.
When times are hard for Thai businesses the temptation is to raise prices. People claim to have been charged 2000 Thai Baht bar fines in Pattaya. Morality aside, this tells us not that demand is driving prices up, but rather demand is drying up.
The ideological position is clear. The interim government is keen to transition the tourist section of their economy to catering for more family-orientated, short stay guests and to diminish the presence of those drawn by cheap booze and girls. Moreover, this government has strengthened economic and political ties with the PRC.
At present Chinese tour operators are demanding 30% or more room discounts. Only the biggest hotel chains in Thailand have been able to curb the discount trend as people scrabble to re-align themselves in the new tourist market.
Is this the slow death of Walking Street, cheap guest houses and the ex-pat scene in Pattaya? Thailand’s number one beach destination needs to re-invent itself or perhaps offer better value for money.