BANGKOK, THAILAND – The conflict in the Middle East sharply cut into Thailand’s tourism outlook and pressured its wider economy.
War forces drastic forecast downgrade
The Thai government significantly lowered its expectations for tourism in 2026. Instead of previously planned record arrivals, officials now anticipated only 32.14 million foreign visitors.
Projected revenues also declined. Tourists were expected to spend just 1.52 trillion baht (about 38 billion euros), which marked a severe setback for the sector.
The reason for the revision was clear. The closure of the Strait of Hormuz following US strikes on Iran on 28 February 2026 had disrupted the global economy.
Oil prices surge and air travel costs soar
The impact of the conflict was felt by travellers worldwide. Around 20 percent of global oil supply was taken offline, pushing prices sharply higher.
Benchmark Brent crude broke through the 100‑dollar‑per‑barrel mark. In Thailand, the diesel price alone increased by six baht per litre in March, reaching nearly 40 baht (about 1 euro) at the pump.
Experts warned of further increases. In extreme scenarios, the price could climb to 50 to 60 baht per litre, a level that would bring the entire tourism industry to its knees.
European airlines under pressure
The fallout hit European holidaymakers particularly hard. Airlines had to reroute flights around the wider Middle East, adding hours of flight time and driving up fuel surcharges.
These surcharges pushed ticket prices to unprecedented levels. Many potential visitors from Europe, the Americas and the Middle East reconsidered travel plans to Thailand.
Tour operators were hit especially badly. Their confidence index fell to just 72 points, the lowest of all sectors, as group bookings from Western markets collapsed.
Chinese tourists help, but not the bottom line
There was one unexpected positive development. A diplomatic dispute between China and Japan shifted travel flows in Thailand’s favour.
After sharp remarks from Japan on the Taiwan issue, Beijing responded with a travel ban. As a result, Japan saw 60 percent fewer Chinese tourists, while an estimated 500,000 travellers cancelled trips there and chose Thailand instead.
However, these visitors spent less money. Average spending per trip fell to 45,417 baht (about 1,135 euros), down from 50,000 baht the previous year.
“Volume is rising, returns are falling.”
said the report’s analysis.
K‑shaped recovery divides the industry
The tourism industry experienced a two‑track recovery. Large, well‑capitalised hotels with more than 100 rooms coped relatively well, reaching 73 percent occupancy in the first quarter.
Smaller establishments with fewer than 30 rooms struggled to survive. Their occupancy rate was a modest 55 percent, matching levels in the structurally weak northeast.
Nationwide, occupancy stood at 62 percent in the first quarter. Bangkok led with 66 percent, but revenues there reached only 68 percent of pre‑crisis levels.
Songkran offers brief relief as calls for action grow
Authorities looked to the April Songkran New Year period with mixed feelings. The festival was expected to provide short‑term liquidity for businesses.
Beyond that, the outlook remained bleak. The confidence index was projected to edge down further to 75 points, and operators demanded targeted state intervention.
Experts called for tax relief, energy subsidies and better access to credit for small enterprises. Without such support, the sector risked slipping below the already weak performance of the previous year.
Thai tourism at a crossroads
Thailand faced a severe test. On one hand, it benefited from the tourism spat between China and Japan; on the other, domestic cost and energy pressures eroded profits.
The industry watched oil markets and diplomatic cables with equal concern, as both could shape the future of Thailand’s most important economic sector.
“Thailand is caught in a pincer movement,”
said the latest report, summarising the situation.
It noted that the war was far from over and that its consequences were being felt even on the dream beaches of Southeast Asia.
Tourism in crisis – dip or lasting trend?
Rising oil prices, geopolitical tensions and weaker purchasing power put tourism under intense pressure. The question remained whether this was merely a temporary downturn or a lasting change in the market.
The report left the answer open and underscored the uncertainty hanging over the sector’s future trajectory.