Occupancy rates in hotels in Bangkok, the Thai capital that has been the scene of violent clashes between anti-government protesters and security forces, are at about one-thirds of expectations, a spokesman for Federation of Thai Tourism Associations said on Thursday. We were expecting 80-90 percent room occupancy rate in Bangkok, but I don't think we can make it to 30 percent, Charoen Wangananont, a spokesman for the Federation of Thai Tourism Associations, told local cable news network TNN.
Tourism accounts for six percent of Thailand's gross domestic product and employs 1.8 million people directly.
Although Bangkok was calm on Thursday, red shirt anti-government protesters were readying for renewed clashes at a base in the heart of Bangkok's most affluent shopping district, that abuts the central business district.
Rachadumri Road, home to Central World
More than 100 charter flights had been booked to bring in Chinese tourists for Songkran, the Thai New Year holiday which runs from April 13 to 15. Around 70 had been canceled before the weekend and all have now been scrapped.
Investment bank Morgan Stanley calculates economic growth this year could be cut by 0.2 percentage point due to the impact on tourism.
A bigger hit of up to 0.6 percentage points of GDP could come from the hit to consumer confidence in the capital which has borne the brunt of the fighting.
Thailand has ridden the revival in worldwide economic growth since the global credit crunch and the government is expecting the economy to expand by 4.5 percent this year.
But credit rating agencies and economists say the escalation of violence will hit tourism revenue, foreign direct investment, economic growth and the country's ability to repay its debts.
Thailand is a key investment hub for industry as well as tourism and some foreign investors are getting worried that the conflict here could hit their businesses.
Fujio Mitarai, head of the Japan Business Federation (Japan's top business lobby), told a regular news conference on Monday that he was very worried about the potential impact of the unrest in Thailand on Asia, and the roughly 7,000 Japanese firms in Thailand.
I am hoping for the speedy return of peaceful daily life and normal business conditions, Mitarai said, according to a spokesman of the business lobby.
Japan's largest department store operator, Isetan Mitsukoshi <3099.T> closed its store in Bangkok on April 3.
But Thailand has had 18 coups since 1932 and protests by pro-administration yellow shirts, red shirts, and others are a way of life, even if Bangkok has not seen such violence since 1992.
Tourism usually takes a hit at times of tensions, but it always bounces back in what many people believe to be one of the most beautiful countries in the world.
(Reporting by Nopporn Wong-Anan; Editing by David Chance; Editing by David Chance)