Tensions have flared in recent months following the comment on Taiwan by Japanese Prime Minister Sanae Takaichi, prompting China to retaliate via various measures, including the restriction of flights between the two countries.
Morgan Stanley recently noted that scheduled flights from China to Japan have decreased by nearly 50% in December alone, and the average reduction is expected to remain at 38% until the end of March. Meanwhile, bookings to Thailand have increased by nearly 40% since mid-January, compensating for the lost Japanese routes.
Ms. Natthriya Thaweevong, Permanent Secretary of the Ministry of Tourism and Sports, stated about tourism figures for the week of December 15–21, noting that there has been a significant increase in incoming tourists, especially from the long-haul market. Cumulative arrivals for December have already surpassed 900,000, reflecting growing confidence and a substantial recovery, with over 353,000 arrivals last week—a more than 20% rise from the previous week.
Mr. Koraphat Vorachet, Assistant Director and Division Head of Research at Krungsri Securities (KSS), stated the Chinese tourism trend is “shifting” significantly. Chinese airlines have cut Japan-bound flights for early 2026 to 45% below the winter schedule, compared to only a 15% decline earlier in December. Flights from China to Thailand, by contrast, have risen by about 30–35%, clearly reflecting revived demand for Thai tourism in China.
This overall situation is a positive factor for service-sector stocks in 2026, supported by two key drivers: significant profit growth from rising tourist numbers and spending, and the potential for valuations to recover or re-rate to normal levels after previous suppression. Service-sector is set to shine both fundamentally and in valuation next year.
Moveover, sentiment and operational support from the Countdown and New Year festivals will further boost tourism, aviation, retail, and hospital sectors this week in the short term. Notable beneficiaries include Central Plaza Hotel PCL (SET: CENTEL), The Erawan Group PCL (SET: ERW), Airports of Thailand PCL (SET: AOT), CP All PCL (SET: CPALL), and Bangkok Dusit Medical Services PCL (SET: BDMS).
Bualuang Securities (BLS) maintains its 2026 foreign tourist estimate at 34 million, a 3.7% YoY increase—a conservative assumption. However, signs of recovery in the Chinese tourist market are emerging and could provide significant upside, potentially leading to actual tourist numbers exceeding the estimate.
Key supporting factors include the resilient passenger growth benefiting AOT, a projected 15% increase YoY in tourism sector profits for 2026, and higher spending by affluent travelers boosting hotel margins.
The recommended investment strategy is “Selective Buy,” focusing on fundamentally strong stocks with unique drivers. The securities company also recommended CENTEL, AOT, ERW, as well as Asset World Corp PCL (SET: AWC) and Minor International PCL (SET: MINT).
