Diethelm Travel Asia invited eight guests, each a key stakeholder in our industry, to join John Watson, the company's CEO, and Richard Brouwer, its Chief Operating Officer, at a lunch in Bangkok to talk frankly about tourism in the kingdom – its strengths, its weaknesses, its future. The discussion was a lively one.

When 10 tourism heavyweights gather to
discuss the industry in Thailand, you can be sure there will be no shortage of opinions on the key issues we face.

Our guests were drawn from across the industry – a tourism analyst, hoteliers, an events manager, an airline general manager and, of course, Diethelm Travel itself – and each had their own perspective on the challenges for the future.

But there was also striking unanimity in the basic task we all face – as an industry, we must be more co-operative and work together on the next phase of development to benefit our customers, our companies and the people of Thailand.

The entire panel agreed that much work needed to be done to manage pricing better – perhaps the main concern of all in the group. Seasonality, as it is currently viewed, in simple terms of high and low season, is missing opportunities that are emerging through greater intra-regional travel and niche markets such as medical tourism.

There was also agreement that success should not be measured, as now, simply on volume terms, but on a revenue and profit basis.

While agreeing that one of the greatest strengths of the Thai industry is the welcoming, good nature of the Thai people themselves, there was a general call for greater education across the industry. We need better English language skills, a better supply of qualified hospitality and tourism workers, and smaller hotels in particular need help to understand yield management.

There was some criticism of the public sector, particularly in the division of responsibility among different departments, the panel agreed that more could, and should, be done by the industry itself through greater participation in industry bodies.

Finally, the panel looked ahead at the challenges we face and some of the opportunities we can tap into. Among those challenges were rising costs – particularly of labour – environmental protection and maintaining the image of Thailand as a welcoming and hospitable destination.

The panel agreed that one of the most under-catered-for sectors was the domestic market itself, and one on which more time should be spent building a strategy.

John Watson, CEO of Diethelm Travel Asia, opened the meeting with a welcome to his distinguished guests. He noted the strength and resilience of the Thai travel industry and praised the work and dedication of the thousands of people who have made Thailand such a popular and successful global travel destination.

He invited his guests to speak frankly about their hopes and concerns for the industry as we face the future to make the best use of the collected wisdom and experience around the table.

We can not decide how we face the future unless
we know where we are today, and John Koldowski, Director of the Strategic Intelligence Centre of the Pacific Asia Travel Association, kicked off the discussion with an overview of the industry against a background of significant global problems.

"Thailand is doing relatively well in terms of top line numbers," he said. "But that in some ways is a distorted view.

"In Thailand in particular, we must sound a cautionary note, given that the base in 2005, due to the tsunami, shows a significant dip. That said, we can be confident that we are getting back to normal."

Richard Brouwer (left) and John Koldowski from PATA	From left, Prachoom Chayabongse, of the InterContinental Hotels Group, with Robert Eschmann of Hotelplan and Benjawan Wisootsat
From left, Benjawan Wisootsat of the Trade Exhibition Association, The Marriott's Jonathan Wigley and Richard Brouwer

Koldowski noted the changing mix of tourist arrivals due to low-cost carriers means more people are now able to afford to visit the kingdom. He also stressed the growing intra-regional flows, often overlooked by some observers.

Many of the challenges confronting Thai tourism are beyond the control of the industry – rising fuel costs, political problems in the south of the country and the background of international terrorism.

However, Koldowski said that many of the issues are not as big a problem as the negative headlines they generate, particularly in the international press.

Richard Brouwer, speaking from the unique perspective of Diethelm Travel, the region's largest inbound tourism operator, agreed that base figures need to be read in the light of sectoral trends.

"Leisure travel has shown a marked upswing from October 2005," he said. "But the trends are not so positive for commercial travel." He noted that, after the catastrophic year of 2005, events in particular had not come back in the way that he had hoped.

Benjawan Wisootsat, President of the Trade Exhibition Association, shed some light on why this may be. She stressed that in the MICE niche, it was essential to look at the "E" – events – separately.

Khun Benjawan suggested that costs were a major factor in decision-making. "Business still wants to do business," she said, but rising fuel costs were a significant challenge to the sector. That, of course, leads to rising costs, many of which the industry is absorbing." But the issue of rising fuel costs, could be over emphasised, she said.

Thailand does not face the problem alone. It is a global problem and as long as Thailand maintains its position compared with other destinations, the kingdom should not be too adversely affected.

Prachoom Chayabongse, Director of Sales at the InterContinental Hotels Group, saw Thailand's key strength in its position as a multipurpose destination.

"People may come here for business but then extend their stay," she said. "And it is still good value for money."

She gave credit to the Thai people themselves for past successes that have led to the strong global position of the country. "Our welcoming people are undoubtedly one of our greatest assets," she said. Khun Prachoom made a plea to government and the industry to do more to develop that vital human resource.

Better English language skills were vital, she said, as was a programme to improve skill levels. "While many universities can produce quality graduates for the travel industry, it is essential that universities and the government concentrate on tourism-oriented programmes and training to meet the increasing demands of the industry."

While Khun Prachoom's comments drew general
agreement, it was the issue of pricing that gained the most support from around the table and proved to be the issue to which, time and again, our panellists returned.

"There is no control of the pricing mechanism," Khun Prachoom said. "That is alright for us [InterContinental] but not for the country. "Pricing is not a localised issue and it requires the private sector and government working closer together. "We need strategies to increase market share."

It was a theme picked up enthusiastically by Marriott Hotels and Resorts Group General Manager Jonathan Wigley. "The essence of the problem is that we continue to count success on arrivals and not revenue," he said. "The leisure sector is handling demand terribly.

"Most growth is fuelled by regional markets but we are stuck with the simple formula that November to April is high season. We are not managing the rise of intra-regional flows well at all. Our mishandling of 'seasonality' is leaving a lot of money on the table," he said.

He cited regional school holidays as an example. Although demand may be high, because it may fall outside ‘high season’, pricing is low.

He believes that as an industry, Thai tourism must look at seasonality on a geographical basis. Clearly Wigley was preaching to the converted.

"We have been saying this for years, but why is it not happening?" asked Richard Brouwer. "In the Middle East, tourism operators are not getting the rate for next year, they are managing it on a daily basis, but in Thailand it seems we cannot agree on effectively managing rates."

"Clearly there needs to be a brave first company to do it," Wigley said. "Ideally we need price banding under which everyone would win. But what body is going to handle that?"

Wigley said that the tourism industry should look to the airlines for inspiration. "The plan is there."

It was an issue Kirk Albrow, who established United Arab Emirates' airline Etihad in Thailand, confirmed and he identified the Arab market as a growing resource.

"In the two-and-half years Etihad has been operating in Thailand we have seen huge growth in volume terms," he said, with Middle Eastern visitors arriving at different times of the year from, say, Europeans. So great is growth that the airline is looking at a third daily flight to Bangkok from its home base in Abu Dhabi.

While the airline sees some of its potential European business frustrated by planes inbound to Bangkok filled with Middle Eastern passengers, there are seasonal advantages with European travel picking up as the Middle Eastern season ends with the cooler months.

Wayne Buckingham, Vice President and Area Managing Director (Thailand) of Starwood Hotels Group, brought a new perspective to the debate, through the eyes of a relatively new arrival in the kingdom. He agreed with Wigley that volume alone was not a good indicator but said profit, not revenue, should be the marker.

"We need to be more confident with pricing," he said. "It's all about yield management." He advocated a system of education particularly for smaller hotel operators which, as Khun Prachoom noted, are less aware of the need for yield management.

Buckingham identified the corporate market as one of the biggest challenges. "This has been a problem with quotes in US dollars but performance measured in Thai baht. That has meant swings of up to 9% in revenue from foreign currency exchange."

Turning to what can be done to improve management of the industry, the panel had some tough words for both government agencies and themselves.

Wigley compared the Thai situation with that in Dubai. "In Dubai," he said "government agencies buy in the best talent and the people in charge listen to the experts." But that was not a call for an influx of foreigners, as he and Brouwer agreed.

"There are plenty of Thai experts, so many that could be put together with the Tourism Authority of Thailand," Brouwer said.

Khun Prachoom acknowledged this but pointed out that the ‘experts’ would be drawn from the ranks of the very people around the table. "It is essential that we, from the industry, work hand-in-hand with TAT."

She praised the work of government agencies, including TAT and the Ministry of Tourism, but called for greater co-operation between the two.

Khun Benjawan looked for greater consistency with changes at the top of the ministry. "There is a problem in that the focus changes," she said.

The panel also had some words of advice for
themselves.

The Thai Hoteliers Association (THA) lacked effectiveness, Wigley said. "This is the body we should use for education," he said.

Buckingham agreed and suggested that there was not enough involvement by industry participants. "The best thing the government could do would be to force us to take part in bodies such as the THA. Make people play a role on one industry body of their choosing," he said.

Koldowski said that we should also focus on the things that can be fixed – most notably the flow of information. "We should be able, for example, to have figures within two weeks, as they do in Vietnam."

He said that PATA was moving away from an annual conference model towards gatherings such as the roundtable discussion, only slightly larger, as a way to better communicate and address problems within the industry.

Looking ahead, the panel foresaw several main opportunities and challenges to the industry.

Positive, but under-exploited trends included,
increased intra-regional travel and the largely untapped but extremely loyal domestic market.

Among the risks to our industry are environmental degradation, that requires greater effort to ensure that all operators play by the rules, and rising labour costs.

The panel agreed that more could be done to focus on growing intra-regional arrivals. There is room for improvement, especially with destinations such as Hua Hin – the only destination in Thailand still dominated by European travellers.

There was a general feeling that a scheduled flight aimed at the regional market was necessary to address this, particularly given longer transfer times from the new airport.

As important, however, were domestic tourists, described by Wigley as "the biggest neglected market in Thailand".

The market is extremely strong thanks to the Thai love of their own country and travelling within it. What is more, domestic tourists are often good spenders, but the tourism industry has failed to develop a strategy for developing the market.

"And that strategy is crucial if there is an international crunch," Koldowski said. "What happens if the unthinkable happens and there is an outbreak of SARS or bird flu and the borders are closed. It means we will have to fall back on domestic travellers," he said.

Khun Prachoom felt the industry had failed to see the full potential of the sector. "This country has so many attractions but we see the same ones being promoted over and over again," she said.

One of the greatest threats to the industry is the condition of the environment, with more arrivals meaning more pressure on sensitive local systems. The panel identified Ko Samui as a problem area, given the runaway development on the island, and was concerned that Hua Hin development may be getting out of control.

Richard Brouwer identified many of the environmental problems as local issues. "If the local systems go wrong, then problems become more difficult to handle."

Once again, the issue called for greater education and more consistent enforcement of existing legislation.

"It is frustrating for those of us who follow the rules to have to compete with those who flaunt them," Brouwer said.

Pressure grows with arrivals and some of the panel wondered if we should not address more fundamental issues, such as whether we really want 20 million arrivals as targeted, rather than focus on greater yield from fewer tourists.

Another looming, but so far little-recognised,
threat to the industry comes from higher labour costs. Buckingham compared the market with his home country, Australia, where labour accounts for some 40% of costs compared with 18% in Thailand.

"Our position here will erode unless we start looking at the problem and become more efficient," he said. He and other panellists believe the answer lies in more multiskilling among staff, and a shift away from rewards based on length of service to productivity is essential.

"Salaries will go up – as they should – but they need to be offset by greater efficiencies. "We can't change this overnight, nor do we want to see people laid off, but we can start thinking about new systems and introducing them, as Starwood is, with our new hotels."

While the wide-ranging discussion touched on many specific issues and challenges facing tourism in the country, there was an underlying belief in the strength of the industry here that relies heavily on the Thai people themselves.

In drawing to a close, the panel once again turned to these issues with a hope that, as the pace of life in the kingdom grows faster and commercial pressures more onerous, the essence that is Thailand would not be lost.

Khun Prachoom summed up the mood by saying that Thai hospitality was the key selling point. "It is the Land of Smiles after all, but we show signs of losing that. We forget to smile at each other. We must look back to our Thai culture and those three questions Thais always ask when meeting: ‘How are you?’, ‘Where have you been?’, ‘Have you eaten yet?’.

"We can learn a lot from foreigners and this is good but we must also remember these Thai virtues."