|Siam Paragon, Bangkok|
Thailand in transitionKorea overtaking Thailand is not because tourists previously going to Thailand are now going to Korea as each country attracts a distinct group of Chinese tourists. The “Traditionalists”, favoring Thailand, were the only group affected by the ban on zero-cost tours as they are the economic group with the lowest disposable income. They are the largest group of tourists and almost exclusively purchase the lowest cost group tours.
While they are also less experienced in travel and consequently more sensitive with uncertain environment such as that of Thailand in 2014, the decline has been somewhat buffered by the unusually low hotel occupancy in Bangkok resulting in the most depressed hotel prices in Asia. This unfortunate situation did help mitigate the loss of the zero-cost tours with lower price budget tours than previously available.
However in the long term, Thailand may ultimately benefit as higher group tours prices does bring tourists with greater spending capacity. And, with the exception of gambling and competitive luxury shopping, Thailand also has many of the destination features favored by the leisure oriented “Wenyi” and could potentially become attractive for that tourist group as well, at least as an alternate destination to Singapore and Korea which will retain the top ranking with their excellent casino attractions.
Korea is riding highKorea is the ideal, and closest, destination for the “Wenyi” with fashionable trends, attractive modern shopping, clubbing and … gambling! Gambling is the elephant in the room of the tourism industry; it is very big but no one likes to talk about it. And when it comes to Chinese tourists, no destination can attract the middle and upper range in any significant numbers without casinos. Korea already has a number of casinos for foreign tourists with more and bigger ones in the pipeline specifically designed to appeal to Chinese tourists. They are not targeting the high-rollers and “hedonists” tourists who favor Macau, but the middle range most strongly represented among the “Wenyi” making it a perfect complement to their other strengths in the market. Korea is in the best position to see the highest growth in Chinese tourism income which, ultimately, is more important to the economy than the visitor count.
Singapore will do just fine!Retailers may be fretting about declining Chinese tourists purchases, but that is likely more of a change in purchase pattern than a long-term decline. While the average spend declines, the frequency of visits is likely to increase as it does in Europe (See my January 16 article: “Chinese tourists: The second wave”). The following quote from Stefan Ellrot, Country Manager of Global Blue Singapore  underlines that while their purchasing pattern has changed, their purchasing capacity remains:
"The money is still there. We just need to bring the people to Singapore and spend in Singapore. The first wave is definitely over. The first need to buy the Rolex watch, to buy the Cartier jewellery is over. Now they are not coming to buy two or three pieces, they are buying one piece and with the anti-bribery and corruption law taking place now in China, it does not allow tourists to bring back a lot of presents for officials or friends."The frequency of visits will also get a boost from the explosive growth of LCC (Low Cost Carriers) in Asia, especially the mid to long range carriers like AirAsia X, which will lessen the proximity advantage of Korea and shift the interest back to South-East Asia.
 Lower-spending Chinese tourists could hurt Singapore retailers. Channel NewsAsia, 8 August 2014
 South Korea becoming top tourist destination. China Daily, 8 July 2014
 South Korea Replacing Thailand as Top Tourist Destination for Chinese Travelers, Skiff, 4 August 2014