Posted by: Bruce Einhorn on April 22, 2010
Even as Bangkok has been hit by political unrest, Thailand’s medical-tourism industry has been surprisingly resilient. Overnight, one person died and 78 were injured when at least five grenades exploded in Bangkok’s financial and tourist district. (Note that this is the updated figure, based on a statement to Bloomberg News by the Health Ministry; earlier, Deputy Prime Minister Suthep Thaugsuban had said three people died.) This was the latest fatal incident in the capital, where 25 people were killed and more than 800 injured earlier this month when the military tried to force the Red Shirts - anti-government protesters who support deposed Prime Minister Thaksin – to end their demonstrations in the city. According to Bloomberg News, about 14,000 Red Shirts have rallied in the center of Bangkok, “where they set up showers next to the Four Seasons Hotel and slept under advertisements for Prada and Louis Vuitton.”
You might think this would be huge turnoff for investors in Thailand’s hospitals, which count on patients coming from overseas - people who might stay at the Four Seasons, wear Prada clothes and carry Louis Vuitton bags - for an important part of their revenue. So far, though, investors are surprisingly sanguine about the impact of the unrest. Since the Red Shirt demonstrations started last month, the stock price of Bumrungrad Hospital, probably the premier destination in Thailand for international patients, is only down about 8 percent; meanwhile, Bangkok Chain Hospital is down just 1 percent and Bangkok Dusit Medical is actually up by 0.8 percent. (The benchmark Thai index is down 1.7 percent.)
What explains such confidence? In part, the timing of the Red Shirt revolt. As analyst Raweenuch Piyakriengkai of KGI Securities wrote in a report on April 1, the second quarter of the year is low season for the health-care sector, regardless of what’s happening in the streets. “It is the off-peak tourism season which means less international patient traffic,” Raweenuch wrote.
Since that KGI report came out, though, the once-peaceful protests have turned deadly. The situation could get much worse soon, given the huge political and economic divide between Bangkok’s upper and middle class Yellow Shirts and the northeast’s poor Red Shirts. If and when it does, I would expect the Thai hospitals to take a big hit. Medical tourists from Southeast Asia, the Middle East, Europe and America have plenty of other options for their hip replacements or tummy tucks without having to brave turmoil in Thailand.