As geopolitical conflicts in the Middle East have begun to soften, the global investor spotlight is shifting back to fundamental economic drivers. The de-escalation of the US-Iran war caused oil prices to dip, allowing tourism-related industries to recover from steep declines during the peak of the tensions.
With energy costs retreating and airlines gradually resuming flight operations, Thailand’s hospitality and aviation sectors are poised to emerge as the major beneficiaries of this market normalisation, said analysts.
TOURISM
Pasakorn Wangvivatchareon, an analyst with Asia Plus Securities, projects a travel recovery from the late third quarter, supported by the peak season and a revival of confidence in Middle East aviation hubs. Australia and the UK have already downgraded their travel advisories for the Middle East.
According to Krungsri Securities (KSS), tourist arrivals to Thailand in the third week of June tallied 510,000, down 3% year-on-year, broadly in line with the prior week, which contracted 4%.
The composition of tourist arrivals was relatively similar to the previous week, with Chinese up 11%, Malaysians gaining 9% and Russians expanding 7%. Arrivals from South Korea and India contracted year-on-year by 42% and 10%, respectively.
Mr Pasakorn noted the Tourism and Sports Ministry is preparing tourism stimulus measures, including domestic co-payment schemes with bookings expected in the fourth quarter of this year, along with other initiatives such as “Buy International, Free Thailand Domestic Flights”.
In addition, the baht has weakened more than 5% year-to-date to around 33.30 to the dollar.
“While not the primary travel driver, a weaker baht significantly increases value for money for visitors to Thailand,” he said.
Sirilak Konwai, an analyst from KGI Securities (Thailand), said operating fundamentals continued to improve following the temporary disruption in April.
Forward flight bookings, expanding air connectivity and improving hotel booking trends point to a recovery in inbound tourism in the second half of the year, she said, adding KGI maintains its foreign arrival forecast of 32.1 million, down 2.7% year-on-year.
HOSPITALITY
According to Ms Sirilak, hotel operating trends improved in May, with revenue per available room (RevPAR) returning to positive growth across all listed operators, lifting sector RevPAR growth to low to middle single digits.
The strongest recovery came from S Hotels and Resorts (down 5% year-on-year in May from a contraction of 7% in April) and Central Plaza Hotel (single-digit growth compared with a dip of 4% in April).
Asset World Corporation, The Erawan Group and Minor International maintained single-digit RevPAR growth. KGI expects sector RevPAR to post low single-digit growth in the second quarter.
“Forward bookings indicate further improvement in the third quarter. In addition, we expect incremental upside from upcoming government domestic tourism stimulus measures, which should support demand in late 2026,” she noted.
“Operating trends have recovered faster than expected. Sector RevPAR has recovered to flat or single-digit growth year-to-date, exceeding our full-year assumptions of a 4% contraction to 2% growth across our coverage.
“If sustained, current RevPAR trends could mean an upgrade to our 2026 sector earnings forecast of 16.1 billion baht, up 7% year-on-year. We expect earnings momentum to strengthen from the third quarter as travel demand normalises.”
The brokerage maintained its overweight rating on the hotel sector because the peak impact from the Middle East conflict appears to have passed.
Foreign arrivals are expected to recover in the latter half of 2026, supporting an earnings recovery. Valuations remain attractive following the sector’s sharp correction during the conflict, with share prices still trading 5-12% below pre-conflict levels, noted KGI.
AVIATION
Major Gulf carriers such as Emirates and Qatar Airways as well as key transit airports in Dubai and Doha are recording a resurgence in flight volumes. As the conflict softens, it allows airlines to avoid expensive route diversions and resume suspended flight paths across reopened regional airspaces.
Destinations that saw a surge in diverted traffic, such as Mediterranean resorts and Southeast Asia, have returned to normal baseline operations, while global tour operators have recorded a reduction in volatile, last-minute trip cancellations.
Jet fuel prices have delinked drastically. KSS analyst Dithanop Vattanawakin said the year-to-date average jet fuel price is US$143.41 per barrel, suggesting a high probability that full-year fuel prices will come in below the brokerage’s assumption of $160 per barrel. This price offers an upside for airline stocks, as fuel is the primary cost, he said.
“We preliminarily estimated the upside to airline stocks based on the direct impact of fuel price changes on costs, excluding the potential downward pressure on airfares that could drive passenger volumes above expectations,” said Mr Dithanop.
Boonyakorn Amornsank, an analyst at Maybank Securities (Thailand), said data from Cirium, a global aviation analytics provider, indicates international airline seat capacity for Thailand is expected to grow 3.5% in the third quarter, the strongest growth since the first quarter. While the increase is mainly driven by Chinese carriers relocating some capacity from Japan, the trend of flight cancellations to and from Thailand caused by fuel shortages and weak demand is expected to start slowing after nearly 4,000 cancellations in the second quarter, he noted.
HOSPITALS
Kasem Prunratanamala, head of research at CGS International Securities, said despite the defensive nature of the healthcare business, most hospitals in Thailand have relatively underperformed the Stock Exchange of Thailand “as investors worry about weak foreign patient demand due to Middle East tensions” and softer local healthcare spending amid a sluggish domestic economy.
“However, we see a turnaround ahead. With potential de-escalation of Middle East conflicts and improving economic growth in 2027, we believe hospital earnings will bottom out and recover in the second half of this year,” he said.
CGS retained its overweight rating on the sector. Re-rating catalysts include de-escalation of geopolitical conflicts and pent-up foreign demand, said Mr Kasem.
The brokerage projects the aggregate revenue of six hospitals under its coverage to increase 4% year-on-year in the second quarter. Among them, Bumrungrad Hospital (BH) and Praram 9 (PR9) are expected to post revenue growth for the period, supported by a bump in medical tourists from Myanmar and the Middle East.
KSS hospital analyst Mintra Rattayapas said PR9 international patient revenue maintained solid momentum in April, supported by Middle Eastern patients returning for treatment following Ramadan.
The brokerage expects the hospital’s revenue growth will remain positive in the second quarter, continuing from the first quarter, despite seasonal pressures and uncertainty in the Middle East, she said.