Thailand Struggles with Decline in Foreign Tourist Arrivals as Regional Competitors Surge Ahead This Year

Published on August 5, 2025

As a result of fewer foreign tourist arrivals, the kingdom is also said to welcome significantly lesser international visitors this year, giving Thailand’s tourism sector its biggest hump so far of 20-19. According to industry data, that drop is largely due to increased competition in the region from destinations like China, Japan and Vietnam, making a stronger play for visitors. These countries are making available less expensive routes to travel, better infrastructure, and increasing their marketing efforts as appealing options for travelers. Therefore, Thailand has been facing heavier competition as it attempts to uphold a status as the leading tourist hub in SEA.

Southeast Asia’s tourism industry used to count on Thailand as a leader, but the coronavirus-slammed country expected foreign tourists coming in 2025 to be at less than one-third of its peak year. Foreign arrivals reached 19.29mn during the January-July period, a decrease of 6% y-o-y, data from the Ministry of Tourism and Sports reveal. The drop again underscores intensifying challenges for Thailand’s tourism sector in the face of a more crowded regional environment.

Thailand still draws in millions of visitors, however, its year-to-date returns are being shaded by regional rivals, such as China, Japan and Vietnam which continue to ratchet up their attempts to become the paramount tourist magnets in Southeast Asia. Thailand additionally faces an increasingly severe competitive landscape at present with a number of countries strategically and aggressively leveraging tourism as a primary vehicle in their economic recovery process.

Japan’s Surge in Tourist Arrivals

In a notable contrast, Japan has surpassed Thailand in foreign tourist arrivals. During the first half of 2025, Japan attracted 21.5 million visitors from abroad, reflecting an impressive 21% growth compared to the same period last year. This growth underscores the growing dominance of Japan in the tourism sector, with figures significantly surpassing Thailand’s 16.69 million visitors during the same period.

Japan’s ability to attract tourists is aided by its superior tourism infrastructure, efficient transportation systems, and a weak yen, making it an appealing choice for international visitors seeking an affordable yet high-quality experience. The strong growth in tourism is especially noticeable among South Korean and Chinese travelers, who made up the largest share of Japan’s visitors, totaling 4.78 million and 4.72 million, respectively.

Thailand’s performance, in contrast, was notably affected by the mounting competition, with fewer tourists choosing the kingdom as their destination. Despite this, Thailand remains an essential market for Japan, with 680,500 Thai visitors making the trip to Japan in the first half of 2025, marking a 10.1% increase from the previous year.

The Return of China as Thailand’s Largest Source Market

China has reclaimed its spot as the top source market for Thailand, surpassing Malaysia in visitor numbers. During the first seven months of this year, Thailand attracted 2.69 million tourists from China, with Malaysia accounting for 2.66 million visitors. These figures demonstrate the growing importance of the Chinese market for Thailand’s tourism sector, which had been significantly impacted by the pandemic in recent years.

In total, the top 10 source markets for Thailand in 2025 are:

1. China – 2.69 million
2. Malaysia – 2.66 million
3. India – 1.37 million
4. Russia – 1.12 million
5. South Korea – 902,000
6. United Kingdom – 643,000
7. United States – 632,000
8. Taiwan – 585,000
9. Japan – 584,000
10. Laos – 562,000

Tourism Revenue Decline Despite High Arrivals

Although Thailand’s tourism revenue generated from international visitors amounted to 895.16 billion baht in the first seven months of 2025, it still represents a 4.22% decline when compared to the same period in 2024. This drop in revenue, despite steady visitor numbers, suggests that average spending per tourist is decreasing, likely due to regional price competitiveness and shifting traveler preferences.

The data highlights a key challenge for Thailand’s tourism sector, as the rise in regional competition affects both the quantity and quality of tourist spending. With its reliance on tourism revenue for economic stability, Thailand must navigate these pressures carefully to maintain its status as one of Southeast Asia’s leading tourism destinations.

Regional Competition Intensifies: Vietnam and Japan’s Growth

Vietnam is emerging as a formidable competitor, leveraging its newly developed tourism infrastructure and a competitive cost structure to attract international travelers. With a fresh image and a focus on sustainable tourism and affordable travel experiences, Vietnam is positioning itself as a viable alternative to more established regional players like Thailand. The country’s marketing campaigns and investments in infrastructure development have yielded significant results, attracting more tourists to destinations such as Hanoi and Ho Chi Minh City.

Additionally, Japan continues to enhance its tourism infrastructure, offering superior transportation networks, world-class accommodations, and diverse cultural experiences. This has allowed Japan to thrive even as the yen weakens, offering international visitors a compelling reason to choose Japan over its competitors in Southeast Asia.

Domestic Tourism Shows Resilience

While Thailand’s international tourism faces challenges, domestic tourism remains strong. Thai residents took a total of 100.23 million trips within the country during the first half of 2025, reflecting a 2.49% increase despite the prevailing economic headwinds. The country’s domestic tourism market is proving resilient, with many residents choosing to travel within Thailand as part of their post-pandemic recovery.

Tourism and Sports Minister Sorawong Thienthong noted that this surge in domestic travel serves as a positive indicator of recovery, showcasing the kingdom’s ability to retain its position as a local tourism leader. The ministry projects domestic tourism revenue to reach 1.1 trillion baht in 2025, with an estimated 205 million domestic trips for the full year.

Challenges and Opportunities Ahead for Thailand’s Tourism Industry

As Thailand aims to meet its target of 35.5 million foreign visitors for the full year, the tourism sector must overcome several challenges. Modern travelers, especially from younger demographics, increasingly seek unique, personalized experiences that offer more than the traditional tourist attractions. This shift in traveler expectations calls for a reimagining of Thailand’s tourism offerings, with an emphasis on local culture, sustainability, and authenticity.

Additionally, the growing focus on cybersecurity threats presents vulnerabilities for the tourism industry, which relies heavily on digital platforms for bookings and promotions. The Thai government and private sector will need to work together to protect digital infrastructure and safeguard tourists’ personal information.

Lastly, the global push for sustainability requires Thailand to integrate green tourism initiatives into its sector. As environmental regulations become stricter, tourism providers must comply with sustainability practices to meet both international standards and local expectations.

Tourism Authority of Thailand’s Plans to Boost Tourism

To address the current decline and meet its tourism targets, the Tourism Authority of Thailand (TAT) must act quickly. The TAT plans to intensify marketing efforts, especially in markets like India, China, and South Korea, which remain crucial to Thailand’s tourism revenue. With the extended Mother’s Day holiday weekend in August expected to boost domestic tourism sentiment, the TAT is focusing on leveraging seasonal travel periods to stimulate demand.

The final quarter of 2025 will be critical for Thailand, with the country aiming to recoup the tourism deficit created in the first half of the year. If successful, Thailand could see a resurgence in tourism numbers, bringing it closer to its target of 35.5 million visitors by the end of 2025.

A Tough Road Ahead for Thailand’s Tourism Industry

For the year 2025 Thailand faces a competitive rivalry among regional countries as well as shifting demand substitutes which basically places the tourism industry in a difficult environment. But the Kingdom’s domestic sector remains robust and a popular destination in ASEAN, allowing some light to draw on. This will require deliberate action to lift the visitor experience, sustainability and digital security but if Thailand were to pursue these aims it could resolve those barriers allowing it to continue as one of the great tourist destinations.

Thailand is set to see a drop in foreign tourist arrivals this year after wracking up record visitor numbers in 2016 and 2017, with little sign the slide will end soon. — — REUTERS The improved tourism infrastructure, lower costs and better marketing efforts in these countries have attracted more travelers and eating in to Thailand’s share of Southeast Asian market for years.

Realisation of its momentous goal will require all segments within the tourism ecosystem in Thailand to adjust to ever-evolving market conditions and identify similarly adaptable partners across the value chain, especially in light of rising competition that should be anticipated from other destinations in the region.