Economic Mid-Year 2001

Money-spinner
asked to do more

Nondhanada Intarakomolyas

TOURISM

Prime Minister Thaksin has challenged the industry to pull in another 50 billion baht. The misfortunes of some of its neighbours are working in Thailand's favour, as foreign visitors change their travel plans. Now, if only they didn't have to wait so long in the queue at immigration

Since the Thaksin Shinawatra government took office earlier this year, the tourism industry has been given a higher profile as one of the country's best hopes for helping overcome the economic slump.

The premier has rolled out a plan to drive up annual tourism revenue by 50 billion baht or 1% of gross domestic product, over last year's 290 billion baht.

He reasoned that few imports are required for the sector and foreign exchange revenue from tourism is significantly higher than from many export manufacturing industries.

At a high-profile summit in April in Chiang Mai, Mr Thaksin ordered a revamp of the legal infrastructure and stricter enforcement of laws to assist the tourist trade.

A big step was taken with the establishment of a National Tourism Development.

Office to oversee and regulate the industry as well as to handle all policy issues related to tourism at a national level.

Chaired by Deputy Prime Minister Pongpol Adireksarn, the Office will consist of key ministers and permanent secretaries, as well as representatives from the National Police Office, the Port Authority of Thailand the Royal Forestry Department and the Fine Art Department.

The Office will not only be responsible for overhauling various laws related to tourism, but also for dealing with problems that have plagued the industry for years, such as scam artists and illegal tour operators.

The Budget Bureau was also ordered to increase ministerial budgets for tourism purposes. These measures are expected to lead to more foreign tourist arrivals, projected at 10.4 million, an increase from 9.5 million last year.

Although the ambitious plan has been applauded widely by both the public and private sectors, there is still concern whether all the good intentions will lead to concrete action.

For example, Mr Thaksin's plan to designate Phuket and Chiang Mai as the country's first duty-free cities hit a snag when policymakers determined that it would not comply with the constitution.

Many industry veterans said the premier meant well, but some probIems were outpacing the solutions. They said the duty-free idea was not a magic formula for success. On the other hand, the completion of the new Suwannabhumi airport in 2004 and faster immigration processing at the airport were more crucial issues.

Currently, it takes about one hour for arriving tourists to clear the immigration counters at Don Muang International Airport, compared with 10 minutes in Singapore.

To increase tourism revenue by 50 billion baht, the industry should start from upgrading and increasing efficiency of the country's gateway, the existing international airport, executives said.

Another major concern is the national aviation policy. The efficiency of Thai Airways International, which transports 45% of all air tourists to the kingdom, is critical.

Management of the national airline has long been hampered by political interference, red tape and lact of flexibility. Service standards have declined to the point that Mr Thaksin himself made the infamous comment that THAI "sucks".

The steady decline over the past decade has allowed THAl's arch-rival, Singapore Airlines, to emerge as the top Asian carrier.

The entry of Singapore Airlines to the Star Alliance, of which THAI was a founding partner, has also raised hackles. Given the choice, more and more passengers on Star member airlines are moving to SIA when it comes to the Asian leg of their journeys.

THAI president Bhisit Kuslasayanon admits SIA has taken a lot of business from the national carrier since it joined Star.

Prior to SIA's entry to Star last year, THAI earned more than US$93 million in 1999 in direct benefits from the airline alliance, but this was reduced to $90 million dollars after SIA joined, he said.

"We can see there was a drop-off, but at the same time Singapore Airlines gave passengers to THAI," he said.

In the past two years, Singapore Airlines' share value has doubled to $10 billion while THAI's has dropped from US$1.2 billion to US$900 million.

Problems aside, tourism arrivals to Thailand matched projections in the first quarter, increasing by 8% to 2,704,006 thanks to relentless promotion by the Tourism Authority of Thailand.

However, the 8% growth figure was still lower than the 8.95% increase in the same period last year.

Last year, arrivals exceeded projections since the country benefited from instability in neighbouring countries and from tourists who could not reserve accommodation during the Olympic Games in Sydney and came to Thailand instead.

This year, further instability in countries such as Indonesia and the Philippines, and more recently Nepal, is also expected to draw more tourists to Thailand.

However, a significant drop of 23% came from one of the important markets, China. On the plus side, the figures can be interpreted as showing that the two countries' crackdown on illegal tour operators was working, and that business should recover soon.

East Asian tourist numbers increased by just 5.9% overall to 1.5 million baht, while European arrivals rose 8.7% to 756,287 in the first quarter. The average length of stay rose slightly to 8.66 days from 8.52, mainly due to the presence of more Europeans.

Most listed hotel companies reported an increase in net profit in the first quarter, resulting from tourists choosing Thailand over troubled Indonesia and the Philippines.

Central Hotels and Resorts' net profit jumped by 80% while the Dusit Thani Group reported 34% profit increase.

Royal Garden Resorts and ShangriLa also posted higher profits, while The Oriental and the Regent saw profit rise because they had the market clout to increase their room rates.

Pratana Manopaipibul, chief financial officer of Royal Garden Resorts Plc, said the group benefited from the improved performance of its properties in Pattaya and Hua Hin, which it has spent 350-400 million baht to renovate. The properties have been rebranded with the Marriott name, and an Anantra spa brand has been created to offer value-added services.

This year, the TAT hopes to focus more on supplementary destinations besides popular tourist centres such as Pattaya, Phuket and Chiang Mai.

Its major target groups are young people, health buffs, divers, golfers, honeymooners, eco-tourism and agro-tourism enthusiasts. The Mice market meetings, incentives, conventions and exhibitions is also being keenly pursued for its higher spending power.

The TAT has recently outlined a tourism action plan for next year to make Thailand more of a quality destination. There will be an increased focus on sustainable development locally, while new markets and customer market segments will be pursued abroad.

A number of new niche products will be developed and promoted such as agro-tourism, health and spas, auto-adventure, soft adventure, medical checkups as well as Thai food and cooking schools.

Three new TAT overseas office will be opened in Beijing, New Delhi and Stockholm.

Besides the National Tourism Development Board, a Mice Bureau will be set up to work as the country's representative to bid for Mice business. It will introduce more proactive marketing promotions to attract visitors from both primary and supplementary markets.

As well, a new tourism rating system will be implemented to ensure the quality of products and services.