Thailand Tourism Faces Challenges Amid Border Conflicts, Rising Malaysian Competitors, and Travel Disruptions in 2025

Published on December 21, 2025

In 2025, Thailand finds itself at a crossroads, as rising tensions along its border with Cambodia, combined with economic struggles and increased competition from neighboring countries like Malaysia, threaten to derail its tourism industry. With tourism making up a significant portion of the country’s GDP, the challenges faced by the industry are echoing through local communities and the broader economy. Despite being one of the most iconic travel destinations in Southeast Asia, Thailand’s tourism numbers have declined by 7% in 2025, with a noticeable drop in travelers from traditional markets such as China and the U.S..

The impact of the conflict with Cambodia, along with political instability, rising costs, and issues such as overtourism, have created a perfect storm for Thailand’s tourism sector. As border skirmishes intensify, with cross-border fire reported just before Christmas, both local residents and international visitors are re-evaluating their travel plans to Thailand.

Border Clashes and Their Impact on Thailand’s Holiday Tourism

Thailand’s tourism industry is in turmoil due to the ongoing border conflict with Cambodia. While the Tourism Authority of Thailand (TAT) has attempted to maintain a positive image, the reality on the ground paints a different picture. In early December 2025, violent skirmishes broke out along the Cambodia-Thailand border, affecting the tourist experience in key areas such as Trat and Sisaket provinces. The violence has led to increased travel warnings from global governments, including the U.S., U.K., and Germany, urging visitors to avoid the border area and nearby tourist hotspots like Koh Kood.

The ongoing border tensions have also led to a drop in bookings for key destinations along the border. Travel advisories have warned tourists to stay cautious and avoid areas near the conflict zone. As a result, many international travelers are reconsidering their trips to Thailand, fearing for their safety.

The local economy, heavily reliant on tourism, faces the brunt of this disruption. Hotels, transport services, and local shops in border towns have seen reduced revenue. The government has ramped up security measures and reassured the public that the main tourist destinations, including Bangkok, Phuket, and Chiang Mai, remain unaffected. However, the stigma of the border violence still lingers, causing visitors to hesitate in booking flights and tours to Thailand.

Thailand Faces Competition from Neighboring Malaysia and Vietnam

While Thailand struggles with the fallout from border disputes, its neighbors, particularly Malaysia and Vietnam, are outpacing it in attracting visitors. Malaysia reported a 14.5% increase in foreign tourist arrivals in 2025, outshining Thailand’s sluggish growth. Meanwhile, Vietnam has broken records with 20 million visitors this year, attracting tourists with affordable prices, improved infrastructure, and an emerging culinary scene.

Thailand’s tourism dominance in Southeast Asia is being challenged, particularly by Malaysia, which has been positioning itself as a leading alternative for holidaymakers seeking sunny beaches, cultural experiences, and city escapes. This growing competition is putting more pressure on Thailand to adjust its tourism strategy and attract new visitors while trying to maintain its position as the #1 tourist destination in Southeast Asia.

Challenges Faced by Thailand’s Tourism Industry in 2025

The most significant hurdle for Thailand’s tourism industry this year has been political instability and the ongoing border conflict with Cambodia, which has tainted the country’s image as a peaceful and welcoming destination. However, over-tourism has also played a significant role in the challenges facing Thailand’s tourism sector. Despite being one of the most visited countries in the world, Thailand is struggling to manage the influx of tourists that overwhelms its major cities like Bangkok and Phuket during peak seasons. The strain on infrastructure and public services has led to a decline in the quality of the visitor experience in some areas.

On top of this, the appreciation of the Thai baht has further complicated matters, making the country more expensive for foreign visitors. For many tourists, the value of their currency against the baht has declined significantly, making it harder for them to enjoy the same experiences they did in previous years without increased costs.

The rise of foreign-run tourism businesses in Thailand has also raised concerns. Many of these businesses, often backed by foreign investors, have been accused of siphoning off profits from local communities, leaving the Thai economy and local businesses at a disadvantage. The growing number of “zero-dollar tours” (where tourists are funneled into specific businesses owned by foreign operators) is increasingly seen as a threat to local enterprises.

Thailand’s Strategic Response to Tourism Challenges

Despite the current challenges, the Tourism Authority of Thailand (TAT) has shown optimism for the future. One of the positive signs of resilience is Thailand’s continued popularity in long-haul markets, with British tourists topping the list of visitors, followed by Americans. TAT officials are keen to emphasize the long-term recovery by promoting cultural tourism and ecotourism to attract higher-value visitors. The recent announcement of milestone visitor figures – including 1 million visitors from the U.K. – highlights that the country remains a key player in global tourism.

Thailand’s shift to sustainable tourism is part of its broader efforts to diversify its tourism offerings, with more focus on regions outside of the traditional tourist hotspots like Bangkok and Phuket. The government is also targeting the Southeast Asian market, particularly Malaysia, Vietnam, and China, to drive tourism numbers in the coming years.

Conclusion: Is Thailand’s Tourism Industry in Crisis or Just Evolving?

While Thailand’s tourism sector has faced significant setbacks in 2025, the country’s reputation as a top global travel destination remains intact. Despite border tensions, overtourism, and the rising competition from Malaysia and Vietnam, Thailand is adapting and evolving. The growing demand for sustainable and culturally rich experiences in Thailand, along with improvements in tourism management, may help the country bounce back from this year’s challenges.

As Thailand’s tourism landscape shifts, travelers will continue to flock to the nation’s stunning beaches, historic landmarks, and vibrant cities. With new initiatives underway, Thailand’s tourism industry is working hard to meet the expectations of future generations of visitors while maintaining a balance between preserving cultural heritage and promoting sustainable growth.