Thailand’s tourism sector—once a powerhouse contributing nearly 20% to the nation’s GDP—is facing a major disruption in 2025. This collapse is driven by a dual crisis: a sharp decline in Chinese tourist arrivals and a sudden eruption of border conflict with Cambodia. While the immediate impact is felt in hotel bookings and travel receipts, the longer-term consequences extend deep into Thailand’s downstream industries, particularly in the polyurethane sector where TDI (Toluene Diisocyanate) plays a critical role in furniture, mattresses, and soft foam applications.
Chinese Arrivals Plummet Amid Diplomatic and Economic Pressures
Chinese tourists have traditionally been the backbone of Thailand’s inbound travel market, often accounting for more than a quarter of total international arrivals. However, in the first half of 2025, Chinese visitor numbers have dropped by approximately 25% year-on-year, according to data from the Tourism Authority of Thailand (TAT). This has pushed their overall share of arrivals down to just 13.6%. For the first time since the pandemic years, Chinese arrivals are projected to fall below 5 million annually—well below pre-COVID levels of 10–11 million visitors per year.
Multiple factors contribute to this downturn. Heightened economic uncertainty in China, tighter discretionary spending, and political tensions over trade and regional security have led to a slowdown in outbound tourism. Despite efforts from the Thai government—including postponing the implementation of a planned THB 300 tourism entry fee until mid-2026, launching charter flight subsidies, and rolling out a digital visa-on-arrival system—recovery has been slow. While markets like India and the United States have shown moderate growth in arrivals, their volumes remain far too small to offset the East Asian shortfall.
Border Conflict with Cambodia Deepens the Crisis
Adding to the turbulence is a border conflict with Cambodia that erupted on July 24, 2025, following a landmine explosion that injured Thai soldiers. The skirmish quickly escalated into broader violence, including rocket fire, artillery exchanges, and limited airstrikes across the border provinces of Sa Kaeo, Chanthaburi, Trat, Surin, and Buriram. The conflict has displaced over 130,000 people and resulted in dozens of casualties.
The impact on tourism has been immediate and severe. Within a week of the conflict’s onset, the Thai Hotels Association reported that over 4,000 room nights were canceled across 24 hotels in affected regions. Popular domestic and cross-border festivals were called off, and hotel occupancy in eastern Thailand dropped to near zero. Travel advisories from neighboring countries and ASEAN partners further worsened the situation, as travelers opted to reroute or cancel trips entirely.
Ripple Effects in Industrial Demand: Spotlight on TDI and Furniture Sector
Tourism is not just a contributor to GDP—it sustains a broad range of secondary industries. One such industry is the accommodation and furnishings sector, which relies heavily on soft furniture and bedding materials made from flexible polyurethane foam, a derivative of TDI (Toluene Diisocyanate). Hotels, resorts, and serviced apartments routinely upgrade or refurbish mattresses, sofas, and cushions, all of which use TDI-based foam.
With new bookings plunging and renovation plans paused, the downstream demand for TDI in Thailand has begun to show signs of contraction. Several construction and renovation projects scheduled for Q3 2025 in hospitality zones have reportedly been delayed or canceled altogether. This is particularly concerning because TDI consumption in Thailand is heavily tied to the cyclical demands of tourism and real estate.
Thailand’s TDI Import Trends: A Supply-Demand Mismatch
Despite these demand-side weaknesses, Thailand’s TDI imports have risen significantly in the first half of 2025, due primarily to a global oversupply and plummeting prices. In the first half of 2025, Thailand imported a total of 5,867 tonnes of TDI from China—a sharp 46.6% y-o-y increase compared to 4,002 tonnes during the same period in 2024.
For example, while Thailand imported 932 tonnes of TDI from China in May 2024, it imported slightly less—884 tonnes—in May 2025. Although the May 2025 figure is lower year-on-year, it still reflects strong volume given the softening domestic consumption. This highlights a potential inventory buildup or speculative buying by distributors expecting prices to rebound later in the year.
These figures indicate a supply-driven import surge, even as end-user demand from furniture makers and hotels remains under pressure. If this trend continues, it may lead to a correction in H2 2025, where imports slow to align with actual consumption. Export-oriented producers in China, South Korea, and Japan will be watching closely, as Thailand remains a key destination for excess TDI volumes in Asia.
Conclusion: Stabilizing Tourism Is an Industrial Priority
Thailand’s 2025 tourism downturn is more than a temporary setback—it is a reflection of how geopolitics and shifting regional dynamics can reverberate through industrial supply chains. The decline in Chinese visitors and the escalation of regional conflict have dealt a significant blow to tourism-related sectors, with ripple effects seen in furniture manufacturing and the polyurethane value chain.
Though TDI imports have remained strong due to low prices, the underlying industrial consumption is weakening. The growing gap between supply and actual demand poses risks for chemical distributors, foam producers, and exporters in Northeast Asia. To restore market balance, stabilizing Thailand’s tourism sector is essential—not only for economic recovery but also for maintaining healthy trade flows and industrial momentum across the Asia-Pacific region.
