The Tourism Confidence Index for the first quarter remained below the pre-pandemic level because of concerns over high energy costs and Chinese businesses using nominees.
Chamnan Srisawat, president of the Tourism Council of Thailand (TCT), said the index was 74 in the first quarter, an increase of two points from fourth quarter of 2022.
The index lags the 98 posted in the first quarter of 2019, with a reading below 100 reflecting weak confidence.
The uptick in confidence was attributed to a high season packed with several festivals, such as New Year and Chinese New Year holidays.
China's reopening in January also contributed to the growth as the number of arrivals from this market in January increased by 68% from December.
The index, which polled 740 tourism operators in Thailand between Feb 22 and March 12, also found the private sector was most concerned about electricity bills, based on a score of 4.5 out of 5, followed by fuel prices (3.9) and higher travel costs such as expensive airfares and fuel prices (3.89).
Lower purchasing power and the Russian invasion of Ukraine registered 3.67 and 3.39, respectively, as key concerns.
Mr Chamnan said other negative factors remain, notably PM2.5 air pollution that choked tourism in Bangkok and Chiang Mai, with the northern province especially suffering from the smog.
However, concerns about a labour shortage subsided, posting the lowest score in the index at 2.81 as industry hired more staff and it only lacks around 600,000 workers to meet the pre-pandemic employment rate, said TCT.
By region, the North and the East reported the highest confidence at 78, while Bangkok tallied 75 and the central region was 69.
Spa and massage, inbound operators and souvenir businesses recorded the highest confidence at 80, while entertainment venues remained the least confident.
Most tourism operators expect their revenue to reach 64% of the pre-pandemic level this quarter, before increasing to 68% in the second quarter.
He said tourism operators have started to mention worries about Chinese businesses flooding Thailand, competing with local entrepreneurs. They are worried that tourism revenue could eventually be drained out of the country, said Mr Chamnan.
A TCT study found 33% of Thai operators were affected by Chinese businesses as the newcomers can lure guests from the mainland via cheaper products and services, while mostly hiring foreign workers, depriving locals of opportunities to get tourism jobs.
Most cases were reported in major tourism provinces, notably Phuket, Krabi, Phangnga, Prachuap Khiri Khan, Bangkok, Ayutthaya, Chiang Mai, Chon Buri and Trat, as international guests accounted for more than 60% of the tourism market in those provinces, according to the study.
Spa and massage businesses were affected the most at 40%, followed by inbound operators and transport operators, both at 35%.
He urged tourism operators directly affected by illegal Chinese operators to report the proof to TCT.
The council will help report the problem to the government and attempt to set up a discussion, said Mr Chamnan.
