Tourism officials in Thailand have forecast that the recent political unrest will cost the industry over US$2.5 billion in losses, and could cut tourist arrivals by as much as 2 million this year.

Thailand relies heavily on its toursim industry and the recent unrest has only served to worsen the already battered local hospitality industry. Layoffs, particularly by hotels, will increase significantly to an estimated 50,000 by the second half of the year, according to the Association of Thai Travel Agents.

Foreign tourist arrivals, which were initially forecast at 14 million, the same as last year's total, will shrink to 12 million, industry sources said. "Foreign tourists from Japan and China are very sensitive to political unrest and they won't come back to Thailand until they are confident, around the middle of next year," said Thai-Chinese Tourism Alliance Association president Sidivachr Cheewarattananaporn.

Currently, Bangkok hotel occupancy is around 30% and is as low as 5-10% at some properties and the Federation of Thai Tourism Associations has suggested that the government issue bonds to raise funds to help bolster the local hospitality industry.

Tourism and Sports Minister Chumpol Silpa-archa said the government must come up with measures to stimulate the tourism industry in the short term. They should include greater tax incentives to operators and more financial assistance.

According to Mr Chumpol, planned roadshows, which includes the Arabian Travel Mart from May 5-6 in Dubai, would remain unchanged. Prime Minister Abhisit Vejjajiva will join the trip in order to build confidence in the Middle East market.