Tourism Success Hinges on Affordability as Middle-Class Travel Expands, Says Agoda CEO

 

Malaysia overtakes China as Thailand's top source market while domestic travel surges, but price remains decisive factor for travellers.

 

The ultimate factor determining tourist destination choices is affordability, with expanding middle-class purchasing power reshaping global travel patterns, according to Omri Morgenshtern, CEO of Agoda, speaking at a media briefing on Wednesday.

 

"In the end, what really makes travellers decide to come is cost," Morgenshtern said. "When middle-class people have more disposable income, they can spend more. In the past they might have travelled domestically, but now they can travel internationally. If it's cheaper than travelling at home, they'll go abroad."

 

His comments came as Agoda revealed that Malaysia has overtaken China to become Thailand's largest source of international visitors for the first time—a dramatic realignment in the kingdom's tourism landscape driven by safety perception issues and successful government visa initiatives.

 

 

 

 

Historic Shift in Tourist Origins

The current top five inbound tourist origins are Malaysia, China, South Korea, India, and Japan, representing a notable departure from historical patterns where China dominated arrivals.

 

 

Morgenshtern attributed the shift partly to widely publicised negative incidents that have impacted Chinese traveller confidence, including a high-profile kidnapping case involving a Chinese actor by scammers, Thai-Cambodia border security issues, natural disasters, and regulatory restrictions such as Thailand's Alcoholic Beverage Control Act.

 

 

 

 

"These kinds of news really do affect tourists' decision-making," he said, whilst acknowledging that tourism is a competitive business with destinations like Vietnam following closely behind Thailand.

 

However, he expressed confidence in Thailand's continued appeal: "I believe Thailand still has advantages because it's a large country and tourists still want to come here. It remains a desired destination."

 

 

Domestic Tourism Surge

Perhaps more striking than the international market shifts is the surge in domestic tourism. According to Akaporn Rodkong, Agoda's Thailand Country Director, two-thirds (66%) of Thai travellers now plan to take more domestic trips in the coming year, up dramatically from 30% last year.

 

Secondary destinations are increasingly attracting Thai travellers' attention. The reasons include affordable prices and attractive promotions (40%), easy access to information and travel support (41%), and proximity to nature and outdoor activities (34%).

 

 

Thai travellers lead Asia in choosing relaxation as their top travel motivation, with 73% citing it as their main reason, followed by wellness (30%) and culinary experiences (20%).

 

The data reveals a preference for short trips of one to three days, facilitated by numerous public holidays, with 50% travelling primarily with family and 30% with a spouse or partner.

 

Crucially, Thai travellers remain price-sensitive: 44% plan to spend 1,600 baht or less per night on accommodation, 40% budget between 1,601–3,200 baht per night, and only 3% plan to spend more than 3,200 baht per night.

 

 

 

 

 

 

Government Recovery Efforts Show Promise

Despite challenges, Morgenshtern praised Thailand's recovery efforts, noting that the government has implemented several effective strategies including visa-free entry for India, attracting major events like the Tomorrowland EDM festival, and launching the "Trusted Thailand" campaign.

 

"These show that the government is investing and learning from past lessons," he said. "We believe Thailand genuinely has potential to attract tourists. But many things can't be done overnight—they take time, especially infrastructure. However, major events, even if they don't directly promote tourism, can still stimulate it."

 

The Indian market has experienced particularly rapid growth, fuelled by increased flight connections and relaxed visa policies, with Morgenshtern noting that visa removals have "stimulated travel big time."

 

Bangkok remains the most popular destination for international visitors, followed by Phuket, Pattaya, Chiang Mai, and Hat Yai. The Netherlands (78%), Israel (76%), and Indonesia (43%) showed the strongest growth rates among origin markets.

 

 

 

Technology Reshaping Travel Planning

Technology is fundamentally changing how Thais plan travel, with 69% likely to use artificial intelligence for their next trip and 57% trusting AI-generated information.

 

Only 12% expressed distrust, whilst 31% remained neutral.

 

Agoda is leveraging this trend through a comprehensive AI strategy. The company has identified more than 200 internal applications of AI across departments and is developing a "Personal Travel Assistant" concept to help users plan, book, and manage trips dynamically.

 

 

 

 

"Silicon Valley of Bangkok" Vision

Morgenshtern revealed that Agoda's recent move to a new office at One Bangkok required significant investment and a trip to the United States to convince shareholders.

 

The new space emphasises collaboration, with interconnected floors accessible by staircases rather than lifts, facilitating spontaneous interaction between teams.

 

"We want to build Bangkok as a tech hub, continuing our 'Silicon Valley of Bangkok' vision," he said. "To reach that point, we must invest continuously in Thailand, attract quality personnel both locally and internationally, and blend them together to strengthen Thai talent. This is the direction Agoda will pursue over the next 3–5 years to drive vertical organisational growth."

 

 

 

Agoda, which was founded in Phuket and employs nearly 4,000 people in Thailand, actively engages with Thai universities and runs tech camps to cultivate local talent.

 

"One thing I've never regretted is investing in Thailand," Morgenshtern emphasised, reaffirming his confidence in the country's potential as a centre for tourism and technology.

 

The data also revealed distinct activity preferences: domestic Thai tourists favour family attractions like Aquaria Phuket and Safari World, international visitors prioritise eSIMs and BTS passes, whilst Thai travellers abroad seek theme park experiences at destinations like Hong Kong Disneyland and Universal Studios Singapore.

 

Survey data indicates that if visa restrictions were removed, 69% of Thai travellers would travel more frequently and 57% would consider new destinations—underscoring Morgenshtern's point that both affordability and accessibility remain crucial drivers in travel decisions.