PATTAYA, Thailand – For years, Thailand’s tourism sector has thrived on its reputation as an affordable paradise. But the tide may be turning. With the Thai baht strengthening sharply in 2025, Thailand risks losing its competitive edge against regional rivals like Vietnam, Japan, and even long-struggling China. What once was a land where dollars, euros, and yen stretched far is now, in the eyes of many foreign visitors, a more expensive destination—sometimes prohibitively so.
According to Thapanee Kiatphaibool, Governor of the Tourism Authority of Thailand (TAT), the continued appreciation of the baht is becoming a serious obstacle. Rising accommodation, food, transportation, and service costs in baht terms are pushing Thailand up the “expensive” rankings. Tourists now compare the cost of a trip here against cheaper competitors and, increasingly, they are choosing to spend their holidays elsewhere.
Americans and Japanese Cut Back
The data speaks volumes. Between January and September 28, 2025, Thailand welcomed 23.96 million international visitors—down 7.52% from the same period last year. The decline is especially visible in long-haul markets. U.S. arrivals, once showing double-digit growth, have begun to shrink since May, with September figures down 6% year-on-year.
Americans face a double burden: the dollar has weakened about 7% against the baht this year, and long-haul flights already eat a large share of their travel budget. A Pattaya bar owner summed it up recently: “It’s not the women or their smiles anymore—it’s the exchange rate that decides whether I stay or go.” That sentiment is now being echoed by mid-range U.S. and Japanese travelers who find Southeast Asia’s “budget allure” slipping away.
Japan tells a similar story. While the yen remains weak, Thai safety concerns—from earthquakes to border tensions—have compounded the sense that better value lies in destinations like Korea or Taiwan. TAT data shows Japanese arrivals fell 6% in September compared to last year.
China’s Woes Go Beyond the Baht
China, the single largest source market, continues to shrink—down 33% in September year-on-year. But here, the baht is only part of the problem. Concerns over safety, poor infrastructure, and a wave of negative news have left Chinese travelers with less appetite for Thailand, while Japan, South Korea, and Vietnam eagerly court them with softer currencies and improved marketing campaigns.
Europe Emerges as the Winner
Ironically, where others retreat, Europeans advance. With the euro and pound stronger against the baht, Europeans now find Thailand relatively more affordable. German, French, and British arrivals have all risen steadily throughout the year. In September, French visitors rose 3% year-on-year, and Easter in April drove a 38% spike in German arrivals.
This resilience is also buoyed by Europe’s modest but steady economic recovery. EU GDP is expected to grow by 1.1% in 2025 and 1.5% in 2026, with stronger gains in countries like Poland (3.3%), Spain (2.7%), and Ireland (3.3%). More direct flights into Thailand, thanks to the “Airline Focus” strategy, further fuel European momentum.
The Warning Signs
Thailand’s tourism earnings are at risk of falling by 15–17% this year, according to TAT estimates. While European growth softens the blow, the shrinking of long-haul markets like the U.S. and Japan, and the collapse of China, could drag overall revenues down. Worse, the baht’s strength may deter precisely the kind of high-spending tourists Thailand is trying to attract under its “premium” travel branding.
What’s more troubling is that Thailand seems stuck between two forces: a strong baht, partly driven by global investors betting on Thai assets, and domestic vulnerabilities—from safety perceptions to weak infrastructure—that no currency shift can paper over. While the government eyes policy tweaks and Fitch’s downgrade hints at cracks, the tourism sector already sees the real-world cost.
At the same time, some see opportunity in the baht’s strength. Market watchers note that if the Thai baht pushes toward 40 to the dollar, new investment flows are likely to return, with some investors even hoping for a move to 45 against the euro. In their view, a stronger currency signals stability and enhances the appeal of Thai assets—though it is precisely this dynamic that deepens the squeeze on the tourism industry.
A Critical Juncture
For decades, Thailand’s selling point has been clear: affordable luxury. But in 2025, the strong baht is rewriting that story. Without intervention—be it currency management, safety reforms, or genuine competitiveness upgrades—Thailand risks pricing itself out of its own success.
The question now is not whether Thailand can attract tourists, but whether they will still see Thailand as worth the money when cheaper, safer, and equally exotic alternatives stand ready across Asia.
