Tourism sector

Tourism sector

 

What’s new? The authorities have announced that they see no further need for the country to be under martial law, which has been in place since May last year. Instead, the government will use the powers given the National Council for Peace & Order (NCPO) under Article 44 of the interim constitution to guard against threats to order, peace and stability in the country. 

 

Comment:  

This news is positive for Thai tourism. Lifting martial law will remove the travel warnings levied by embassies when a country is placed under martial law. This will help boost confidence in travel to Thailand particularly for those from long-haul destinations (42% of total international tourist arrivals in 2014), most particularly from Europe and the US, countries that are sensitive to political uncertainty and travel warnings. Since May last year when martial law was put in place, tourists from long-haul destinations have fallen steadily YoY - nine months of contractions - in stark contrast to the recovery of tourists from short-haul destinations, chiefly China, since 4Q14. With a more favorable industry backdrop, we expect a stronger influx of long-haul tourists in 4Q15, their travelling season. 

 

Thai tourism-related stocks will be positively affected by this action. Of our coverage, we believe listed hoteliers will benefit the most given their high exposure to long-haul tourist markets. By our estimate, more than half the guests lodging in CENTEL, ERW and MINT hotels are long-haul travelers. 

 

While stocks in the tourism sector continue to be pressured by the cloud created by the possible downgrade of country’s safety standards, positive developments as the government gets into high gear to resolve the concerns will help dilute the negative pressure. Our top picks of Thai tourism sector are AAV, NOK and ERW.