Tourism & hotel

Tourism & hotel

 

- First MERS case confirmed in Thailand 

 

The Ministry of Public Health yesterday confirmed a first case of MERS infection in Thailand. The patient, who had arrived from a Middle Eastern country, is now treated in a hospital and 59 others who had been in contact with the patient are also being monitored. The Ministry affirmed that it was able to prevent the virus from spreading. 

 

- Negative sentiment hits Thai tourism in low season 

 

The news posed negative sentiment on Thailand’s tourism and hotel industry. If an outbreak spreads and cannot be controlled, it will destroy tourist confidence toward travelling to Thailand, especially Chinese tourists which are highly sensitive to an unusual situation and comprise the biggest part of the tourist volume (over 26% of total tourist volume in 1Q15); investors should monitor the situation closely. However, we believe the government and concerned parties will be able to keep this situation under control for they had experience from dealing with SARS and H5N1 outbreaks before. In the worst case scenario that the situation turns out like SARS in 2003, it will affect Thailand’s tourism industry for four to five months before the situation returns to normal in the fourth quarter (based on SARS case), which is a high season. 

 

Yet, we will be keeping an eye on the situation to assess its impact further. 

 

- Avoid tourism stocks. ERW at risk the most, MINT the least 

 

We recommend staying away from tourism stocks in the short term. MINT ([email protected]) would get the least negative effect from this situation since it has diversified businesses and the hotel business in Thailand makes up only 20% of its total revenue in 1Q15. For CENTEL([email protected]), 48% of its revenue comes from a restaurant business, while 42% comes from a hotel business in Thailand and the rest 10% from Maldives. ERW will be affected the most among peers for 90% of its revenue comes from a hotel business in Thailand.