CGS-CIMB turns positive on Thai hospitality as tourism recovers
Elysia Tan
THE Thai hospitality sector is gearing up for a strong recovery as tourism returns, both within and beyond the nation’s borders, CGS-CIMB analysts said on Tuesday (Jul 6).
They upgraded hospitality companies Erawan Group and Minor International to “add” in separate reports, raising their target prices from 3.4 baht to 4.7 baht and 35 to 44 baht, respectively. This was on expectations of eased entry restrictions bringing an influx of tourists into Thailand, as well as tourism recoveries in regions where Thai tourism-related companies operate.
Last month, a Thai deputy government spokesperson said foreign tourist arrivals totalled 2.03 million between Jan 1 and Jun 26. Thailand is forecasting 10 million foreign arrivals in 2022.
CGS-CIMB analyst Thanapol Jiratanakij noted that from Jul 1, foreign visitors to Thailand will only be required to show either a certificate of vaccination or a negative Covid-19 test upon arrival to enter the country, making way for the acceleration of foreign tourist arrivals.
He predicts that luxury hotels, particularly those in Bangkok, will lead the recovery in the initial period of reopening.
Outside of Thailand, Thai companies such as Minor International, which draws much of its revenue from its European hotel operations, will also benefit from stronger tourism recovery.
Minor International derived 64 per cent of its hotel revenues from Europe this year, with a strong showing from Spain in particular, one of Minor International’s key markets, CGS-CIMB analyst Kasem Prunratanamala said in his report. The rebound in European tourism markets will likely improve its hotels’ performances.
Jiratanakij said easing restrictions in China will be a boon to Thai tourism: “We also expect Thailand to be among the top beneficiaries of China’s eventual border reopening, which we expect in 2023.”
Pre-pandemic, Thailand was among Asia’s most popular travel destinations, attracting a record of nearly 40 million visitors in 2019. These tourists spent 1.91 trillion baht (S$74.6 billion), equivalent to 11 per cent of gross domestic product.
As the pandemic set in in the following year, arrivals slumped to 6.7 million, and dropped to 428,000 in 2021, despite calibrated moves to end quarantine requirements.
“We are now more positive on the pace of tourism recovery,” Jiratanakij said.
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