Thailand's Tourism Sector Faces Challenges Amid Strong Baht and Regional Competition

Thailand's tourism industry, which constitutes approximately 12% of the nation's gross domestic product and supports millions of jobs, is experiencing its first anticipated annual decline in foreign tourist arrivals in a decade, excluding the pandemic years. As of December 28, 2025, the country welcomed 32.6 million international travelers, marking a more than 7% decrease compared to the previous year. Factors contributing to this downturn include safety concerns following the abduction of Chinese actor Wang Xing, a significant earthquake in Myanmar, ongoing border conflicts with Cambodia, severe flooding in southern Thailand, and a political crisis leading to a new government. Additionally, the Thai baht's 8% appreciation has made the country less competitive compared to regional destinations like Indonesia.

The Straits TimesOverstrong baht pressures Thailand tourism competitiveness

The decline in tourist arrivals is projected to result in a revenue drop from 1.67 trillion baht in 2024 to 1.52 trillion baht in 2025. The Tourism Authority of Thailand anticipates that international arrivals will reach 32.8 million in 2025, with a hopeful target of 36.7 million by 2026. Chinese tourists are expected to account for 6.7 million of these arrivals, matching the previous year's figures. However, the recovery of Chinese confidence in Thailand is deemed crucial for the sector's future.

The Straits TimesOverstrong baht pressures Thailand tourism competitiveness

The Association of Thai Travel Agents (ATTA) has raised alarms about the strong baht potentially undermining Thailand's price competitiveness. Adit Chairattananont, the association's Secretary-General, indicated that an exchange rate exceeding 30 baht per US dollar could deter foreign travelers, particularly from price-sensitive markets. He noted that Thailand's already high cost of living within ASEAN, combined with a strong baht, exacerbates the challenge of attracting tourists. Chairattananont emphasized that a more favorable exchange rate, ideally around 35 baht per dollar, would better support tourism and exports, especially given the current economic conditions marked by high household debt and modest export growth.

Overstrong baht pressures Thailand tourism competitivenessThe Straits Times

Critics argue that the Bank of Thailand should intervene to manage the baht's strength, as its current level appears unsustainable amid economic pressures. Chairattananont pointed out that many travelers are opting for more affordable destinations, postponing trips to Thailand due to the increased cost. He attributed the baht's unusual strength to factors such as rising gold prices and unpredictable financial flows, including those related to cryptocurrency.

Overstrong baht pressures Thailand tourism competitivenessThe Straits Times

Despite the challenges, ATTA remains cautiously optimistic about medium-term demand, forecasting up to 39 million foreign tourist arrivals in 2026, contingent upon easing pricing pressures and maintaining regional competitiveness. The coming months will be critical for Thailand's tourism sector as it seeks to balance currency dynamics with efforts to sustain demand and preserve its appeal in an increasingly competitive Asia-Pacific travel market.

Overstrong baht pressures Thailand tourism competitivenessThe Straits Times

• “Safety concerns and the baht’s strength are the key factors impacting tourist arrivals this year,” — Adit Chairattananont, Secretary-General of the Association of Thai Travel Agents.

The Straits Times

• “If the baht strengthens beyond 30 per dollar, it will weigh on tourism for a long period,” — Adit Chairattananont.

Overstrong baht pressures Thailand tourism competitiveness

• “The Bank of Thailand should manage the baht at an appropriate level,” — Adit Chairattananont.

Overstrong baht pressures Thailand tourism competitiveness