Economic outlook for Thai spas — 2011 onward

By Dr. Kriengsak Chareonwongsak

The spa industry is enormously important to Thailand’s economy with its capacity for huge nationwide revenue generation and its association with a variety of industries and numerous workers in the business.

Thailand’s spas potentially attract foreign tourist revenue by more than 24,000 million baht per year, according to Naew Na Newspaper; with the local Thai market garnering approximately 2,000 million baht per year, according to the Weekly Manager 360 in 2009.

The spa business provides health services with high potential growth because Thailand combines a positive blend of hospitable, smiling and service-minded spa workers with favorable natural resources.

Teamed together, the spa industry has now become one of Thailand’s government-supported industries. Moreover, it is a health care service that the government has targeted to make Thailand a “Center of Excellent Health Care in Asia, 2003-2011,” being expected to generate revenue for the country by at least 100,000 million baht, according to Naew Na.

Thailand’s past Spa business proved to be a steady growth industry, with its average growth potential at 10-20% per year due to health concerns in society.

While the trend of Thailand’s spa business from 2011 onward will depend on many involved factors, if we will consider just two main factors – economic outlook and the implementation of government policy – we will find the following projections:

Economic trends

In the second half of 2011 into 2012, Thailand’s economy will likely grow as a result of many industries, previously affected by a raw materials shortage after Japan’s horrific earthquake and tsunami in March 2011, having stronger exports in the second half of the year following Japan’s recovery, which has been faster than expected,.

Clear and consistent policy implementation by Thailand’s new government will from now on encourage higher private sector confidence than in the past, both in consumption and investment. This will be beneficial to all business in Thailand, including the spa business.

While in the past, the major group of spa customers was foreign tourists, with Thai customers representing only about 20% of Thailand’s total spa industry income, in relation to all industry groups, according to Naew Na, it is likely at present, with the country’s situation beginning to return to normal conditions, that Thai consumers may be drawn back to Thailand’s tourist sector and spend more in spa services.

State policy

During Thailand’s recent election campaign, the PueaThai Party announced policies that would have both positive and negative impacts on spa business. Short-term positive policies included a visa waiver for countries in the Middle East and Japan, plus a revival of relations with Saudi Arabia that could increase the number of tourists and visitors to enjoy Thailand’s spas in the future.

In addition, some policies were also mentioned that could result in long-term benefits for spas, including the building of infrastructure, double-track rail lines to connect ten metro suburbs of Bangkok, high-speed trains to Korat, Rayong, and Chanthaburi, an airport link to Pattaya, and plans to improve Suvarnabhumi Airport to be the Aviation Hub of Asia, etc. These developments will facilitate tourists with quick and easy access to spa services and indirectly promote tourism and the spa industry long-term.

Meanwhile, the policy of reducing corporate tax from 30% to 23% will allow entrepreneurs to profit from operations or to expand and develop their businesses. However, it is still unknown when the government will implement this policy and how it will actually happen.

For some policy that might adversely affect the spa industry, such as a minimum workers’ wage at 300 baht a day, increased base salaries for Bachelor’s graduates working with a starting salary of 15,000 baht, and increased base salaries for civil servants and state enterprise employees.

These policies, in some aspect, may increase people’s purchasing power; however, higher wage costs, especially for labor and other spa business operating costs may lead to higher inflation. Thus, higher wages and salaries may not increase consumption in spa services, but increased operating costs will decrease competitiveness, making it difficult for spa business owners to compete both domestically and internationally.

The Spa business in Thailand has good prospects consistent with a world that is interested in health. If the spa industry receives appropriate support and strategic development from the government, it will surely generate large income for the country in the future.

 

About jimcarr

Freelance writer and blogger, associate editor of Spa Canada Magazine,
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