Thailand’s tourism and aviation sectors are anticipating a significant upswing, driven by declining energy costs and the gradual restoration of flight operations. Analysts suggest that a market normalization, coupled with supportive government initiatives and a weakening Baht, will bolster performance in the latter half of the year.
Tourism Recovery on the Horizon
Aviation and hospitality stocks in Thailand are positioned to be key beneficiaries as the market returns to a more stable state. Pasakorn Wangvivatchareon, an analyst at Asia Plus Securities, forecasts a notable travel recovery beginning in the late third quarter. This projection is underpinned by the upcoming peak travel season and a renewed sense of confidence in Middle Eastern aviation hubs, with countries like Australia and the UK already easing their travel advisories for the region.
Recent data from Krungsri Securities (KSS) indicated that tourist arrivals to Thailand in the third week of June stood at 510,000, a slight decrease of 3% year-on-year, consistent with the previous week’s 4% contraction. The mix of nationalities remained largely unchanged, with notable increases from China (up 11%), Malaysia (up 9%), and Russia (up 7%). Conversely, arrivals from South Korea and India saw year-on-year declines of 42% and 10%, respectively.
To further stimulate the industry, the Ministry of Tourism and Sports is developing promotional measures. These include domestic co-payment schemes, with bookings anticipated in the fourth quarter, and initiatives like “Buy International, Free Thailand Domestic Flights.” Additionally, the Thai Baht has depreciated by over 5% year-to-date, trading around 33.30 against the US dollar. While not the primary factor for travel decisions, this weaker currency significantly enhances the value proposition for international visitors to Thailand.
Hospitality Sector Shows Promising Fundamentals
Sirilak Konwai, an analyst at KGI Securities (Thailand), observed that the fundamental operating performance within the hospitality sector has continued to improve following a temporary disruption in April. Indicators such as forward flight bookings, expanding air connectivity, and positive hotel booking trends all point towards a recovery in inbound tourism during the second half of the year. KGI maintains its forecast for foreign arrivals at 32.1 million, a slight year-on-year decrease of 2.7%.
Hotel operating trends demonstrated a marked improvement in May, with revenue per available room (RevPAR) returning to positive year-on-year growth across all listed operators. This uplift contributed to a low-to-mid single-digit RevPAR growth for the sector. S Hotels and Resorts and Central Plaza Hotel experienced the strongest recovery, moving from contractions in April to single-digit growth in May. Asset World Corporation, The Erawan Group, and Minor International also sustained single-digit RevPAR growth.
KGI anticipates that sector RevPAR will achieve low single-digit growth in the second quarter, with further improvements expected in the third quarter, bolstered by forward bookings. The brokerage also foresees additional gains from upcoming government-led domestic tourism stimulus measures, which are expected to support demand towards the end of 2026. Current RevPAR trends suggest that the sector’s earnings forecast for 2026, previously projected at 16.1 billion baht (a 7% year-on-year increase), might see an upward revision. Earnings momentum is expected to strengthen from the third quarter onwards as travel demand normalizes.
KGI maintains an overweight rating on the hotel sector, citing the passing of the peak impact from Middle East conflicts. The recovery in foreign arrivals expected in the latter half of the year will support earnings. Valuations are considered attractive, with share prices still trading 5-12% below pre-conflict levels following a significant sector correction.
Aviation Sector Benefits from Easing Tensions and Lower Fuel Costs
Major Middle Eastern carriers, including Emirates and Qatar Airways, along with key transit airports in Dubai and Doha, are witnessing a resurgence in flight volumes. As regional conflicts subside, airlines are able to avoid costly route diversions and reinstate suspended flight paths through reopened airspaces. Destinations that previously experienced increased diverted traffic, such as Mediterranean resorts and Southeast Asia, have returned to normal operational levels, and global tour operators have noted a reduction in volatile, last-minute trip cancellations.
Jet fuel prices have seen a significant decoupling from previous highs. Dithanop Vattanawakin, an analyst at KSS, noted that the year-to-date average jet fuel price is $143.41 per barrel, suggesting a strong likelihood that full-year fuel prices will remain below KSS’s assumption of $160 per barrel. This price level presents a considerable upside for airline stocks, as fuel constitutes the primary operating cost.
Preliminary estimates suggest a positive impact on airline stocks directly from fuel price changes, separate from any potential downward pressure on airfares that could drive passenger volumes higher than anticipated. Data from Cirium, a global aviation analytics provider, indicates that international airline seat capacity to Thailand is projected to grow by 3.5% in the third quarter, marking the strongest growth since the first quarter. While this increase is largely attributed to Chinese carriers reallocating capacity, the trend of flight cancellations to and from Thailand, previously driven by fuel shortages and weak demand, is expected to decelerate after nearly 4,000 cancellations in the second quarter.
Healthcare Sector Anticipates Turnaround
Kasem Prunratanamala, head of research at CGS International Securities, noted that despite the generally defensive nature of the healthcare business, many Thai hospitals have underperformed the broader Stock Exchange of Thailand index. Investor concerns were linked to weakened foreign patient demand due to Middle East tensions and softer local healthcare spending amidst a sluggish domestic economy.
However, a turnaround is anticipated. With potential de-escalation of Middle East conflicts and projected improvements in economic growth in 2027, hospital earnings are expected to bottom out and begin recovering in the second half of the current year. CGS maintains an overweight rating on the sector, identifying de-escalation of geopolitical conflicts and pent-up foreign demand as key catalysts for a re-rating.
The brokerage projects a 4% year-on-year increase in aggregate revenue for six hospitals under its coverage in the second quarter. Bumrungrad Hospital (BH) and Praram 9 (PR9) are specifically expected to post revenue growth during this period, supported by an increase in medical tourists from Myanmar and the Middle East. Mintra Rattayapas, a hospital analyst at KSS, confirmed that PR9’s international patient revenue maintained strong momentum in April, partly due to the return of Middle Eastern patients for treatment following Ramadan. The brokerage anticipates continued positive revenue growth for PR9 in the second quarter, extending from the first quarter, despite seasonal factors and Middle Eastern uncertainties.
Conclusion: The outlook for Thailand’s tourism-related stocks appears increasingly positive. A confluence of factors including easing geopolitical tensions, stabilizing energy prices, government stimulus measures, and a favorable currency exchange rate is creating a robust environment for recovery in the hospitality, aviation, and healthcare sectors. While challenges remain, the underlying trends suggest a promising period ahead for these industries.
