Thailand Loses Ground to Malaysia in Race for Chinese Tourists

Thailand, long a titan of Southeast Asian tourism, is grappling with a seismic shift in its visitor demographics as Malaysia surges ahead to claim the top spot for Chinese tourists. A dramatic 34% drop in Chinese arrivals compared to pre-pandemic levels in 2019 has rattled Thailand’s tourism sector, with recent data showing a 5% decline in total international visitors for the first half of 2025. Meanwhile, Malaysia’s proactive policies, including visa exemptions and enhanced flight connectivity, have propelled it to the forefront of the region’s tourism race.

A Steep Decline in Chinese Visitors

Thailand’s tourism industry, a critical engine of its economy, welcomed 16.8 million international tourists between January 1 and July 5, 2025, a notable decrease from the previous year. The most striking loss comes from the Chinese market, traditionally the largest source of visitors. In 2019, Chinese tourists accounted for 11.1 million arrivals, nearly 28% of Thailand’s total. This year, projections suggest that number will plummet to under 5 million, with just 2.32 million recorded in the first five months of 2025. This represents a sharp 32.71% year-on-year decline for the first quarter alone.

The financial impact is undeniable. Chinese tourists historically contributed significantly to Thailand’s tourism revenue, spending an average of 42,428 Thai Baht (~US$1,190) per trip and staying for over seven days. In contrast, while long-haul markets from countries like India, Japan, and the United States are showing growth—with visitors spending an average of 81,482 Thai Baht (~US$2,285) per trip—their numbers remain too small to offset the loss of Chinese arrivals, which previously formed the backbone of the industry.

Malaysia’s Strategic Ascendancy

While Thailand struggles, Malaysia has seized the opportunity to become the leading destination for Chinese tourists in Southeast Asia. In the first quarter of 2025, Malaysia welcomed 1.12 million Chinese visitors, a 22% increase compared to the same period last year. This achievement is largely attributed to forward-thinking measures, such as visa exemptions for Chinese citizens extended until the end of 2026, and a significant expansion of direct flight routes from major Chinese cities.

Beyond logistics, Malaysia has cultivated an environment of confidence and accessibility. Mandarin-speaking staff at hotels, Chinese-language signage, and tourist information tailored to Chinese visitors have fostered a welcoming atmosphere. Additionally, Malaysia’s cities are increasingly perceived as safer and more tourist-friendly, a stark contrast to Thailand, where high-profile incidents have tarnished its reputation among Chinese travelers.

Safety Concerns Undermine Thailand’s Appeal

A key factor in Thailand’s declining numbers is a growing sense of insecurity among Chinese tourists. Reports of high-profile criminal incidents, including a mall shooting in central Bangkok and cases of kidnapping involving Chinese nationals, have sparked widespread concern on Chinese social media platforms. These events have amplified perceptions of risk, deterring potential visitors who once flocked to Thailand’s beaches, temples, and bustling markets.

In contrast, Malaysia has actively worked to project an image of safety and convenience, addressing cultural and linguistic barriers to make Chinese tourists feel at home. This strategic focus has paid dividends, positioning Malaysia as a more appealing destination in the eyes of a market that values security and ease of travel.

Long-Haul Growth Falls Short

Thailand has seen some growth in long-haul markets, with visitors from the United Kingdom, United States, and Australia increasing their presence. These tourists, who make up about 28% of total arrivals, tend to spend more per trip than their regional counterparts. However, their numbers are insufficient to compensate for the dramatic contraction in Chinese visitors. For comparison, Malaysian tourists, another significant group for Thailand, spend an average of 21,450 Thai Baht (~US$601) per trip and stay for just over four days, far less than the contributions from Chinese visitors in both expenditure and duration.

This imbalance highlights a structural challenge for Thailand’s tourism sector: while diversifying markets is essential, the sheer volume and economic impact of the Chinese demographic remain unmatched. Without a recovery in this segment, Thailand’s ambitious targets for tourist numbers and revenue are at risk of falling short.

Regional Rivals Gain Ground

Malaysia is not the only competitor reshaping Southeast Asia’s tourism landscape. Vietnam is emerging as a formidable rival, benefiting from a weaker currency compared to the strong Thai Baht. The Vietnamese Dong’s relative affordability makes Vietnam an attractive alternative for cost-conscious Chinese travelers seeking value for money. This dynamic underscores the intensifying regional competition, where economic factors and strategic policies play pivotal roles in attracting international visitors.

The Tourism Authority of Thailand (TAT) has acknowledged the urgency of addressing these challenges. While welcoming growth in new markets, officials emphasize the critical need to restore confidence among Chinese tourists. Without swift action, Thailand risks missing its projected targets and ceding further ground to neighbors who are adapting more rapidly to changing traveler preferences.

Can Thailand Reclaim Its Position?

The shift in Chinese tourist flows represents more than just a statistical anomaly; it signals a broader transformation in ASEAN’s tourism dynamics. Malaysia’s rise and Vietnam’s growing appeal illustrate the importance of adaptability in a fiercely competitive global market. Nations that can quickly align their policies and public image with the expectations of key demographics stand to gain a significant edge.

For Thailand, the path forward requires a multifaceted approach. Enhancing safety measures and addressing negative perceptions are immediate priorities, as is improving cultural accessibility for Chinese visitors through language support and targeted marketing. Additionally, exploring incentives similar to Malaysia’s visa exemptions could help rebuild Thailand’s allure as a top destination.

The decline in Chinese tourist arrivals has ripple effects beyond the hospitality sector. Retail, transportation, and entertainment industries, which rely heavily on tourist spending, are also feeling the strain. In 2019, tourism accounted for a substantial portion of Thailand’s GDP, with Chinese visitors playing a central role in driving that economic activity. The current downturn threatens not only immediate revenue but also long-term growth prospects if investor confidence in the sector wanes. Moreover, the loss of market share to Malaysia and Vietnam could have geopolitical undertones. Tourism often serves as a soft power tool, fostering cultural exchange and strengthening bilateral ties. As Malaysia deepens its connection with China through increased visitor numbers, Thailand risks losing influence in a region where economic and cultural diplomacy are increasingly intertwined.

Thailand stands at a crossroads in its tourism journey. Once the undisputed leader in Southeast Asian travel, it now faces the dual challenge of restoring trust among Chinese visitors and adapting to a rapidly evolving regional landscape. The TAT’s recognition of the need for a swift recovery in the Chinese market is a starting point, but concrete actions—ranging from enhanced safety protocols to innovative policy measures—will be crucial in reversing the current trend.

As Malaysia and Vietnam continue to refine their strategies, the pressure on Thailand to innovate intensifies. The coming months will test the nation’s ability to reclaim its position as a tourism powerhouse, with the stakes extending far beyond visitor numbers to the broader economic and cultural fabric of the country. For now, the question looms: can Thailand adapt quickly enough to turn the tide?