TOURISM & AVIATION

The Thai tourism and hospitality industry has experienced extraordinary success for years, with record tourist arrivals in 2012, but keeping the country's position amid a fiercer battlefield will require bold moves to generate demand.

Barnett: Tempering growth may be cure

Casinos are suggested by some of the industry's movers and shakers, as gaming could be a key magnet to attract "quality" travellers and strengthen Thailand's long-term competitiveness in the region.

"It is certain that more tourists will come, but the problem is how do we handle so many customers," Chanin Donavanik, the chief executive of Dusit International, told a recent forum held by the American Chamber of Commerce (AmCham).

"When we have more than 2 million people arrive per month, can our airports and transport deal with that big number?" he said.

Bill Barnett, co-organiser of the forum and managing director of C9 Hotelworks, said Thailand must "study very carefully" the issue of gaming. "There is a very real risk of us slipping behind places like Singapore and Macau in terms of visibility, branding and revenues," he said.

The chatter about legal casinos began in earnest last year, when CP Group boss Dhanin Chearavanont called for casino licences to be issued for Chiang Mai, Phuket and Pattaya. He warned at the time that Thailand was slipping behind regional rivals and allowing "underground businesses and dark powers" to flourish by not taking control of the lucrative gaming sector.

Another challenge relates to the quality aspect. While the numbers in terms of visits and hotel occupancy are growing fast, Thailand's revenue per available room (RevPAR) at luxury hotels _ a key measure of profitability _ still lags far behind that of Singapore and Hong Kong.

"While we did quite well last year and look stronger this year, we have to think about the future," said Peter Henley, president and chief executive of the Onyx Hospitality Group. He stressed the need to improve local industry productivity and income sustainability.

Mr Barnett dubbed mass tourism "the elephant in the room". "As Wall Street learned, nothing grows forever," he said. "Thailand needs to learn the lessons of a volatile trading environment and focus on developing stronger infrastructure and perhaps temper growth targets and create a more healthy segmentation than simply more, more, more."

With mass transit improvements and the upcoming Asean Economic Community in 2016, the industry has sensed some big shifts in the Thailand tourism landscape. For example, the activation of second-tier markets and border cities, the emerging potential of corporate tourism as it is becomes pricier in Singapore, and the increasing affordability for tourists from China.

Still, the challenges lie in how to leverage those opportunities and prosper as competition intensifies. A 2012 poll by the Tourism Authority of Thailand (TAT) found that just 27.5% of industry leaders felt their business was ready for regional integration.

It seems that Thailand needs to look beyond the numbers and come up with concrete ideas for keeping its edge in tourism, a mainstay of the economy for decades.

Thailand drew 22.4 million global arrivals last year, bringing in more than 965 billion baht. The TAT is aiming for 24.5 million visitors in 2013.

According to STR Global, the leading provider of hotel market data, Thailand had Asia-Pacific's highest rise in terms of occupancy in 2012, with handsome RevPAR growth of 15.4%.

At the AmCham forum, more than 80% of participants _ representatives from leading hospitality brands and analysts _ anticipated the positive momentum carrying over into 2013.

"More people are coming for different reasons," said Clarence Tan, chief operating officer for Asia and Australasia at InterContinental Hotels Group. "In the next few years, what we see is many more opportunities."

The participants attributed the success of Thai tourism to changes in the global market.

Dillip Rajakarier, chief executive of the Minor Hotel Group, said: "Asian countries are our new strong demand markets. We are shifting away from traditional European and US markets."

Even so, more than 80% of attendees agreed that Thailand was staring at a glut of rooms.

Mike Batchelor, the managing director for Asian investment sales at Jones Lang LaSalle Hotels, said Thailand's hotel transaction volume in 2012 totalled 7.9 billion baht, down by 6% from 2011.

Transactions should rise this year, as new real estate investment trusts (REITs) come into play and the domestic economy performs well while the recovering world economy may bring more investment to Thailand.

For the year 2013, Mr Batchelor expects Bangkok to replace Phuket as an investment hot spot.

Despite the positive trend, Dusit International's Mr Chanin urged investors to scrutinise the details.

"The number of rooms is increasing far beyond our realisation," he said, questioning the state's official numbers. "In certain destinations, 30-40% of the hotels do not have property licences."

STR Global predicts room supply growth of 8.75% in Thailand over four years, with 6,172 rooms in construction and nearly 5,000 in final planning.