The tourism sector could lose 15-17% of revenue if the baht strengthens beyond 30 per US dollar, according to a former governor of the Tourism Authority of Thailand (TAT).
Meanwhile, the Thai Hotels Association (THA) forecast that bookings for the Songkran holiday this year could drop by 5-10% year-on-year.
Speaking at the THA's annual general meeting on Tuesday, Yuthasak Supasorn, chairman of the Industrial Estate Authority of Thailand and the former TAT governor, said three scenarios were prepared for the baht and the potential impact on Thai tourism should the Middle East crisis persist.
In the worst-case scenario, if the baht strengthens beyond 30 per US dollar, Thailand would struggle to compete, potentially losing 15-17% in tourism revenue.
Long-haul travel would slow due to higher costs, while short-haul tourists may switch to nearby destinations such as Vietnam, the Philippines and Indonesia.
He said the baht is trading between 30 and 32 per dollar, which hasn't yet dented its appeal to foreign tourists.
This exchange rate is still considered an appropriate level for tourists with flexible spending, who opt for destinations that can offer attractive experiences, gastronomy and safety more than low prices, said Mr Yuthasak.
However, Thai tourism operators need to upgrade their products to meet this new standard, he noted.
Tourism spending per trip in Thailand averages US$1,300 and has room to grow compared with $1,600 and $1,700 per trip in countries such as Japan and Singapore, respectively, said Mr Yuthasak.
The country should put more effort into promoting its unique selling points, particularly as a medical and wellness hub, a premium meetings, incentives, conventions and exhibitions destination, and a digital nomad enclave, he said.
Thailand should position itself as a destination for travellers seeking respite from stress and conflict, while capitalising on its neutral geopolitical position as a hub for meetings and business negotiations, said Mr Yuthasak.
If the baht weakens to 32-34 per dollar, this would be the sweet spot, encouraging more arrivals and making Thailand's pricing as competitive as Japan and Vietnam, he noted.
THA president Thienprasit Chaiyapatranun said the association expects bookings to slow by 5-10% during the Songkran holiday due to concerns over rising travel costs and petrol shortages.
He said some provinces are expected to be more severely affected than others, such as Chiang Mai, which recently recorded the world's highest air pollution level.
Some domestic travellers may postpone long-distance road trips, including Bangkok-Chiang Mai, while Krabi has been hit by multiple flight cancellations.
During this weaker period, Mr Thienprasit said hotels might refrain from raising room rates and even offer additional services to attract guests.
Surasak Phancharoenworakul was appointed the new tourism and sports minister yesterday, and Mr Thienprasit said the THA is gathering proposals from its members to submit to the new minister.
