Tisco Securities Expects Gradual Recovery in Thai Tourism with Overweight Rating on Hotel Stocks

Tisco Securities wrote in its research on December 21, 2023, expecting tourist arrivals to Thailand to be on an uptrend, but momentum still slow.

According to the research, Tisco Securities expected the Ministry of Tourism and Sports (MoTS) to report their official information on the topic of tourist arrivals in November 2023, expecting a total amount of 2.6 million or 77% of tourists in 2019. The estimation of tourist arrivals in December 2023 is 3 million or 76% of tourists in 2019. Both numbers indicated the breakthrough of the bottleneck, as tourist numbers had not broken the 72-75% level of 2019 since May 2023, giving positive signs to the strong outlook.

The estimation of tourist arrivals in 2023 was 27.8 million, which matched the mid-November prediction of Tisco’s research and was equivalent to 70% of 2019, which is a gauging benchmark before the Covid pandemic. Countries around the border of Thailand, especially Malaysia, showed outstanding tourist market recoveries in arrivals to the kingdom of Thailand, as it is cheaper and easier to travel to one another regardless of the struggle in the economy. The Middle East and Russia also showed positive trends, as the level of tourist arrivals in both countries was expected to hit 116% and 103% of the 2019 levels, respectively. Other countries in Asia were also recovering in terms of tourist arrivals to Thailand as well, reaching or even exceeding the 2019 levels.

Tisco Securities expected tourist arrivals in 2024-2026 to gradually increase to 84%, 103%, and 106% of 2019, while foreseeing Chinese tourist arrivals to be normalized by 2026.

In addition, another monitored matter is the spending per head of tourists, as the aim of the Thai government was for tourists to spend more money. The aim, though, had not yet been accomplished, as the spending per head in 2023 was 10% lower than the 2019 level. Thus, from Tisco’s point of view, global economic improvement and the promotion of Thailand as a quality destination could be essential factors in boosting tourist spending.

As the tourism industry is forecast to recover gradually moving forward, Tisco Securities raised The Erawan Group Public Company Limited (SET: ERW) as its top pick among the tourism sector due to the majority of hotels being in Thailand and should benefit from its local expansion of Hop Inn. ERW also invested in Japan as well, and Tisco Securities expected a quick return for the upcoming opening. The brokerage company recommended “BUY” ERW at a target price of THB5.90 per share.

Other than ERW, Tisco Securities also gave “BUY” recommendations on other hotel operators as well, namely; AWC (TP5.50), CENTEL (TP59.00) and MINT (TP38.00).