Protests wipe away Thailand's Land of Smiles image

BANGKOK (Reuters) - Stranded holidaymakers sleeping on luggage trolleys. Masked militants shooting at each other. Club-wielding protesters roaming through an airport terminal.

The chaotic scenes shown around the world from Thailand in the past week have shattered its carefully managed "Land of Smiles" image, badly damaging a key sector of the economy that could take years to recover.

"I have never faced this in my life," Apichart Sankary, president of the Association of Thai Travel Agents, told Reuters as anti-government protesters ended their crippling 8-day siege of Bangkok's main airports.

He predicted a fall of one million tourists in the November-March high season due to the rush of cancellations, costing the industry more than 100 billion baht in revenue.

One minister said 2009 arrivals could drop to 6 million from an initial target this year of more than 14 million. Another said last week's anarchy was like shooting yourself "in the head."

Luxury hotels in Bangkok, normally packed with foreigners ahead of the busy Christmas and New Year holiday period, were counting up their losses.

Erawan Group, which has several hotels including the Grand Hyatt Erawan, said its occupancy rates had plunged by 50 percent since the airport blockades began on November 25.

William Heinecke, chief executive of Minor International PCL, said their rates had dropped to 30 percent.

"The occupancy rate is very low right now because everybody is leaving Thailand and nobody is coming back," he said, although they planned no layoffs at the moment.

Other hotel chains are cutting back the hours of their staff. Some have stopped expansion projects due to the gloomy outlook for tourism, and the broader economy amid a global slowdown.

"People are going to be avoid this place like the plague," said one Bangkok-based organiser of international exhibitions and trade fairs, which draw thousands of delegates to Thailand.

"It's terrible. We're not launching any new shows in Thailand," said the businessman who did want to be named for fear of losing government contracts.

SECURITY BREACH

Home to some of Asia's premier beaches and resorts, Thai tourism had been remarkably resilient despite SARS, the Asian tsunami, bird flu, a Muslim insurgency in the deep south plus a military coup in the past five years.

It all changed last week when hundreds of yellow-shirted members of the People's Alliance for Democracy (PAD) invaded Suvarnabhumi international airport, severing Bangkok's main air link to the outside world.

Airport employees fled and all flights into and out of the country were stopped, leaving up to 300,000 tourists stranded inside Thailand and forcing thousands outside to cancel holidays.

The seizures raised serious questions about security at one of Asia's biggest air hubs handling 125,000 passengers a day.

"The airport's security was blatantly breached and the chaotic scenes beamed into homes around the globe have informed the world that our airports are unsafe," wrote Bangkok Post columnist Boonsong Kositchotethana.

"Those images will certainly take a very long time to go away."

Flights slowly resumed at Suvarnabhumi on Wednesday as the PAD withdrew, but the damage to an industry that employs 1.8 million people and brings in the equivalent of 6 percent of GDP will take years to repair.

The Bank of Thailand said the tourist sector could lose 140 billion baht ($4 billion) in revenue next year -- 1.5 percent of GDP -- if political turmoil continues to the end of the year, which analysts say it most certainly will.

The risk of clashes between red-shirted government supporters and the yellow-clad PAD worried Jenny Cooper as she and her husband prepared to fly home to Australia on Thursday.

"My big fear is that the reds will start fighting the yellows and we'll never get out," said the Melbourne resident. (Additional reporting by Ed Cropley and Khettiya Jittapong; Editing by Sanjeev Miglani)