Thailand Halts Domestic Travel Subsidy Amid Corruption Probe

Thailand suspended its domestic travel subsidy program ahead of the peak holiday season to investigate allegations of irregularities in the government-funded program meant to help the pandemic-hit tourism industry.

Authorities are looking into complaints of corruption and bribery in the “We Travel Together” program, which offers up to 40% subsidies for hotel room rentals and air tickets, according to Tourism Authority of Thailand Governor Yuthasak Supasorn. The online platform, which allows people to register for the program, may be back next week at the earliest, or after the new year, he said.

The travel subsidy program has been successful in boosting occupancy rates at local hotels hit by the global halt to travel due to the coronavirus pandemic. The program helped boost average occupancy rates to 34% in October, up from a single digit in April, according to Yuthasak.

The plan to offer an additional 1 million rooms at subsidized rates to travelers has been delayed, Yuthasak said. Local holidaymakers were earlier offered 5 million rooms under the program that started on July 18.

Without the subsidy program, Thai hotels may have to offer heavy discounts to lure holidaymakers, which may worsen their financial conditions, according to Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, who appealed to the government to reinstate the program.

Heavy Dependence

“Since the government launched the campaign in July, hotels have come to depend heavily on it,” Marisa said Wednesday. “Almost all our customers have made their bookings through ‘We Travel Together’ campaign. We’re afraid that without this campaign, the bookings will disappear.”

Thailand is betting on a revival in its tourism industry to exit a recession, with the central bank forecasting it may take at least two years for Southeast Asia’s second-largest economy to return to the pre-pandemic growth levels. Foreign tourist arrivals generated more than $60 billion in revenue from about 40 million visitors in 2019.

While Thailand has eased some restrictions on entry of foreign tourists, the industry has struggled to draw visitors as authorities have retained a mandatory 14-day quarantine on arrival amid a surge in confirmed infections worldwide. While Thailand has relaxed most of its coronavirus measures to allow businesses to fully reopen, it has retained a nationwide state of emergency to prevent a resurgence in the outbreak.

“Domestic tourism looks very strong, but there’s no way that it could make up for the shortfall in international travel,” said John Brown, chief executive officer of Agoda. “For the time being, through the winter and through the first to second quarter, international travel will remain at a much lower level.”

©2020 Bloomberg L.P.

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