Always a haven in a storm

Nondhanada Intarakomalyasut

When everything else turns sour, there's always tourism to fall back on.

With abundant natural resources, cultural sites and a touch of the exotic for Westerners in particular, Thailand has always been able to rely on tourism as a cash generator, particularly after the economic bubble burst in 1997.

TOURISM Lucrative sector has weathered the past five years reasonably well, achieving higher annual growth is getting harder

After all, tourism provides about 6% of the country's gross domestic product.

Unlike other industries, tourism requires little in the way of imports _ other than tourists _ and generates more foreign-exchange earnings than many exported industrial products.

Initially, the sharp depreciation of the baht was expected to be a big plus for tourism.

However, as currencies fell throughout the region, other popular destinations such as Indonesia and Malaysia began to offer similar holiday bargains.

Worse still, the number of tourists from other Southeast Asian countries declined as their spending power diminished.

The baht's fluctuation _ it fell from 25 baht to 58 baht to the US dollar before recovering steadily to trade in the lower 40s _ was a headache for local tour operators and foreign travel agents alike, who were worried they would have to absorb higher costs if the baht's value changed sharply after contracts were signed.

Most tour operators were reluctant to introduce new packages and the country missed opportunities to attract foreigners during the high season.

ROOM RATES

The baht's depreciation caused a significant change in the hotel industry which started quoting room rates in dollars.

Then came the Amazing Thailand campaign launched by the Tourism Authority of Thailand (TAT) in 1998-99.

The campaign is widely credited with saving the industry by boosting arrivals from Western countries, especially Europe, offsetting the decline in Oriental visitors.

Thailand became a value-for-money destination as tourists benefited from the foreign exchange rates.

Moreover, political and social instability in other countries in the region helped Thailand.

While Bali, an arch-rival of Phuket and Samui island, were affected by political turmoil in Indonesia, Malaysia lost its charm because of strict currency controls.

Only Thailand, the Philippines and South Korea recorded more foreign tourist arrivals in 1998 than in 1997.

Abundant natural resources provide the backdrop for tours to Thailand.

Although Thailand saw a drop in arrivals from Indonesia, Malaysia, Hong Kong, Singapore and Taiwan, there was a strong increase in those from China and Japan, thanks to aggressive marketing by the TAT and Thai Airways International Plc.

Additional direct flights between China and Thailand and increased co-operation between the two governments paid off with a jump in Chinese tourist arrivals.

At the same time, Japanese visitors who became more budget conscious preferred Thailand to other long-haul destinations.

However, there was an obstacle to the campaign.

The TAT could not fully promote Amazing Thailand because the campaign promotional budget was slashed to 1.5 billion baht from 2.5 billion because of the ailing economy.

OLD DESTINATIONS

Moreover, the campaign's highlighted destinations, many old and deteriorating, were not new to foreigners.

Instead, Thailand had to highlight its ideal location as a hub for visits to Indochina and the Greater Mekong region.

Elephant riding in Umphang Wildlife Sanctuary is a major attraction for many tourists while, below, far from the crowd, a solo trip through the hills allows trekkers to be at one with nature in Chiang Mai by enjoying rafting.

But the major issue related to being the hub was Suvarnabhumi, the new Bangkok international airport which is not likely to be opened on schedule in 2005.

The country's largest infrastructure project has been delayed by political interference and the government's limited budget.

Further delays in building Suvarnabhumi may jeopardise Bangkok's role as a major global hub for travel.

The delay is also likely to force airlines, particularly those making long-haul trans-continental flights, to switch their bases to Singapore from Bangkok.

HIGHER PROFILE

However, Thaksin Shinawatra's government, which took office in early 2001, has raised the profile of tourism by taking a more hands-on approach.

The prime minister rolled out plan to boost tourism revenue by 50 billion baht.

Several big steps were taken fueled by increased funding, a national tourism development body, plans for a tourism ministry and a bureau to encourage meetings, incentive and convention travel to Thailand.

Mr Thaksin volunteered to be the country's presenter in the "Be My Guest" campaign intended to lure foreign tourists.

The came the Sept 11 events with talk of a slump in global travel, currency fluctuations and shifts in investment and oil prices.

With millions of tourists worldwide putting their plans on hold, the Tourism Authority of Thailand (TAT) lowered its projection of growth in visitor arrivals to 2%, from 8.4%, based on on 10.3 million visitors in 2000.

Looking further ahead, the government sought to capitalise on an eventual recovery in the industry by aiming to make Thailand one of the five most popular destinations in the world.

Compared with other countries in the region, Thailand was less affected by the aftermath of Sept 11 as it was seen as a safe haven for tourists.

This gave Thailand an advantage over countries such as Indonesia and the Philippines where there was domestic conflict and a religious backlash against the American military response to Sept 11.

Although the government's tourism policy won praise, the industry has many problems demanding urgent solutions.

One major concern is the national aviation policy as Thai Airways International carries 45% of all tourists to the country.

The airline's service standards have declined in recent years, critics say, and its management has been subjected to political meddling for influential positions.

Thai Airways' major rival, Singapore Airlines, has emerged as the top Asian carrier.

MONOPOLY IMPACT

The airline's monopoly, enshrined in law, shut out small carriers hoping to compete in the aviation industry.

Even so, the national carrier's financial status worsened in a complacent, protected environment where critics said overmanning and nepotism in hiring staff was rife.

THAI presidents and chairmen were restricted by government policy and needed political backing to avoid being ousted.

The story is much the same at the TAT as Pradech Phayakvichien was ousted as a result of a campaign alleging breaches of work ethics.

Mr Pradech was cleared of the allegations but, even so, was not reinstated.

Another major problem is an oversupply of hotel rooms that built up steadily during the economic boom years, which is likely to result in more mergers and acquisitions among existing operators.

This trend will see the expansion of large chains as they absorb smaller players, but little new construction.

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