Tourists in Chiang Mai. Photo / Valeria Mongelli, Bloomberg via The Washington Post
Thailand’s Government has announced plans to boost domestic tourism, as the nation’s struggling hospitality industry faces the first decline in annual foreign visitors since the pandemic.
The stimulus will be proposed in a Cabinet meeting next week and will let domestic tourists use travel expenses to reduce taxable income, Finance Minister Ekniti Nitithanprapas told reporters.
There will also be initiatives to increase spending on conferences and events and to encourage hotel renovations, he said.
Once an economic bright spot, Thailand’s tourism sector has lost much of its post-pandemic shine.
Even with an expected bump in foreign arrivals during the peak travel season, the Tourism Authority of Thailand said on Wednesday that it expects just 33.4 million visitors in 2025 – down almost 6% from last year, the first annual drop in a decade outside of the pandemic.
The slide reflects lingering weakness in key markets such as China, where concerns over safety and a stronger baht have curbed travel.
Ekniti also said he will hold talks with Bank of Thailand Governor Vitai Ratanakorn on the inflation target next year, declining to comment on whether the 1%-3% range remains appropriate.
The stimulus efforts by Prime Minister Anutin Charnvirakul’s Government are a direct response to a sputtering economy that’s all but lost its key economic engines – exports and tourism, with the latter contributing about one-eighth of the country’s gross domestic product.
Similarly, the discussions with the central bank come amid a push for greater fiscal and monetary co-operation under Vitai, who became governor on October 1. Thai inflation has lagged behind the Government’s target for months.
Ekniti also said the Government had asked all state agencies to front-load their spending by March and to ensure the total budget disbursement for the current fiscal year reaches no less than 93% and at least 75% for the investment budget alone.
The domestic tourism stimulus means Thai people can use their local travel expenses during the October 29 to December 15 period to deduct as much as 20,000 baht ($615) from their taxable income and comes as international arrivals crater.
Just 2.3 million Chinese tourists visited Thailand in the first half of 2025, down by almost a third from the same period last year.
The kidnapping of a Chinese actor in neighbouring Myanmar earlier this year further dented sentiment, prompting mass trip cancellations around the Lunar New Year.
To repair confidence, the Government has made tourist safety a top priority and instructed agencies to respond swiftly to incidents that could harm Thailand’s image.
“The measure can help mitigate some of the shortfall from the drop in international tourists but will unlikely compensate for the entire drop, which has been significant,” Lavanya Venkateswaran, an economist at Oversea-Chinese Banking Corp in Singapore, said.
“Domestic guests are larger in number but past data show they tend to spend less than tourists.”
Officials are also trying to diversify the country’s tourism mix, ramping up chartered flights from India, the Middle East and secondary Chinese cities.
The Tourism Authority of Thailand says 731 chartered flights are scheduled from China alone between this year’s final quarter and early 2026, reflecting hopes of a rebound before next year’s elections.
Thailand’s stimulus package is the second economic fillip this month. Last week, the Government approved a US$1.4 billion plan to spur consumption and boost its popularity before a general election early next year.
The twin stimulus on consumption and tourism may help boost the economy by 0.4% this year, government spokesman Siripong Angkasakulkiat said.
Next week, authorities are expected to consider steps to reduce energy costs to ease the burden on consumers.
Previous years’ domestic travel stimulus injected some US$1.8b into the economy, and the new package may help with confidence. Data this week showed the Thai industries sentiment index rose for the first time in seven months in September, from a three-year low.
“In the long run, the Government seems to be using these measures not just to spur spending, but also to widen the taxpayer base,” Nattaporn Triratanasirikul, an economist at Kasikorn Research Centre, said.
“That’s a more structural goal beyond this year’s growth cycle.”
Sign up to Herald Premium Editor’s Picks, delivered straight to your inbox every Friday. Editor-in-Chief Murray Kirkness picks the week’s best features, interviews and investigations. Sign up for Herald Premium here.