Thailand's tourism industry has experienced a tumultuous 2007 with a wide range of issues affecting its medium- to long-term prosperity coming to the fore.
Searching for major issue solutions to drive the industry back to a more stable position for 2008, ten of the most influential voices in the travel sector gathered for a forthright discussion during the annual Diethelm Travel's Thailand Tourism Review Roundtable at the Four Seasons Hotel, Bangkok.


Thailand has long prided itself on being South-East Asia's tourism powerhouse in terms of its diverse range of destinations, luxury hotels, the warmest welcome and service in the world, and an inviting landscape for foreign infrastructure investment to drive the industry for the economic betterment of all in the country.

While very little of that has altered, there has been a sea change in international perception of the country since the bloodless 2006 coup and the installation of a militarily-appointed government.

Yet the travel industry remains resilient.

The fundamentals of one of the world's most respected and oft visited travel destinations remain intact, yet wide-ranging external forces have left the travel industry grasping for solutions to return the Kingdom to its rightful place as one of the world's premier destinations.

With the tourism sector churning an estimated 900 billion baht into the Thai economy, delegates attending the second Diethelm Travel's Thailand Tourism Review Roundtable were keen to highlight all of the issues currently preventing the progress and growth rates of years gone by.

The lively discussion was positioned as a platform for the next elected government to utilise as a blueprint and learning tool to nurture one of Thailand's biggest industries back to health and prosperity.

Members on the panel were not asked to highlight the perceived shortcomings of the current government.

The group as a whole agreed Thailand's international image had suffered in the wake of the coup; the resultant uncertainty in many aspects of the country's business landscape, and poor publicity surrounding the opening of its new Bangkok airport, have been hurdles to overcome.

For the past 12 months many issues had been discussed feverishly both in the public domain and within the travel and tourism industry, many times to the detriment of Thailand.

It would be hard to pin down one single fallout from this, but what did became very clear was Thailand's so-called "regional rivals" in the tourism industry had been the beneficiaries of the recent turmoil and built their market share from the booming intra-regional tourism pool.

Former prominent politician and Population and Community Development Association chairman Mechai Viravaidya opened his comments by saying blaming the current government was an easy option.

He said the industry "must" continuously approach politicians to "get them to take a policy stand and have a clear policy on tourism.

" "We have to do a lot more ourselves and not worry about the government," he said.

This point was supported by the fact that in the last 20 years, only three ministers of tourism had stayed in office for more than 1,000 days.

DIETHELM TRAVEL'S THAILAND TOURISM REVIEW 2007 PAGE 17 Regional business going to Thailand's neighbours Pacific Asia Travel Association (PATA) chief executive officer Peter de Jong said not being proactive was facilitating the ease with which Thailand's neighbours were "stealing" business.

"If there is complacency then Thailand gives other regional destinations, who are competitors, a real advantage and an opportunity to capture markets," he said.

"I would be very concerned because there is tough competition out there for Thailand and competition that was not there ten years ago.

"These destinations are aggressive, they are very hungry and have healthy budgets and strong government support.

My concern is that the Asian competition gets 'help' from Thailand when these types of negative issues occur.

" Minor Hotels, Resorts and Spas chief operating officer Michael Sagild said: "Other countries definitely use the situation in Thailand, with the coup and martial law, against Thailand.

" Tourism Authority of Thailand (TAT) governor Phornsiri Manoharn agreed regional arrivals are a staple for the Thailand industry, and the fall in business must be alleviated.

"Unfortunately though, this year many Asian countries have dropped off because of various issues.

But the TAT has been trying to turn this around… we are not standing still," she said.

Diethelm Travel chief operating officer Richard Brouwer said, from a tour operator's perspective, the Asian leisure market has definitely dropped off but added business from long-haul markets seems to have been oblivious to the market factors affecting Asian leisure traveller decisions.

"Recently in Conde Nast Traveler, the US publication, around 30,000 readers of that magazine were voting on their favourite destinations around the world and Thailand came in third, and this vote was done recently and definitely after the coup, so I don't think the affect has been felt as bad in long-haul markets," he said.

Thailand was also voted as the world's third best destination recently by readers of Conde Nast Traveller, UK.

Four Seasons Hotel Bangkok regional vice president and general manager Patrick Ghielmetti added: "I definitely agree with Richard.

We saw Asian group and wholesale markets fall away and we were tremendously impacted."

INITIATIVES TO DRIVE RECOVERY IN THAILAND'S TRAVEL INDUSTRY


Diethelm Travel chief executive officer John Watson said it was clear some sectors had been affected. He also pointed out the much soughtafter MICE (meetings, incentives, conferences and exhibitions) business and the corporate dollars it brings with it, had yet to show signs of a full recovery.

"We are one of the largest MICE organisers in Thailand and immediately after the coup we had some cancellations and we are still occasionally being asked by potential MICE customers, 'is this the right time to come to Thailand?'," he said.

"The countries that have benefited from this issue are places like Hong Kong, Malaysia and Singapore." So while Thailand's attractiveness in the region for tourism arrivals has clearly suffered – and PATA figures clearly indicate intra-regional travel remains at an all-time high – this was also having an affect on the viability of a number of tourism-related businesses.

Dusit Group chief executive and chairman of the Thai Hotels Association Chanin Donavanik said the hotel industry had been particularly hard hit with the fall in arrivals, resulting in a fall in hotel room rates to attract business.

"If you look at Vietnam and Cambodia, they are booming and I hope we do not get left behind.

Bangkok room rates are lower now than they are in Laos, and that can't be good for industry," he said.

But Thai Airways International director, Thailand, Indo-China and Myanmar Pichai Chunganuwad said the flag carrier was trying to bolster frequencies to its country-wide network in an attempt to spur domestic travel, highlighting the benefits a rise in this sector would bring.

"If we can work together to expand the domestic market, this will provide more support to the tourism industry and create new tourist destinations," he said.

"At the same time this strategy will help to create an alliance with the hotel industry to further develop the tourism market.

"I have discussed this strategy with Khun Phornsiri. If Thai Airways takes the opportunity to grow new destinations, these new destinations will provide us with returns to expand new tourism markets." Swiss International Air Lines general manager for Thailand, Laos, Myanmar, Cambodia, Vietnam and president of the Thailand Board of Airline Representatives Brian Sinclair-Thompson said Thailand once again found itself in a position where it had to have a strategy to "bounce back" from another check to its progress.

"I think the coup has left Thailand in a vacuum of uncertainty and caution," he said.

"Hotel rates in India, Malaysia and Vietnam have not gone down, they have increased and I think we once again find ourselves in 'recovery' mode like we were post-SARS and post-tsunami. Other Asian nations have not had to recover from these issues."

So while the industry has clearly been hurting with falling arrivals of quality tourists who have larger than average disposable incomes, Thailand faced the issue of "filling seats and rooms" with lower-spending tourists who have clearly done little by way of increasing turnover in the industry.

Arrival numbers versus yield

Mr Sagild, said: "Immediately after the coup, we saw the higher yielding business fall away and we back-filled with anything we could call on, which was cheap wholesale business."

Mr Chanin agreed and added that offering discounted tourism products was not a solution to rebuilding the tourism industry.

"The Thai government's marketing policy seems to be that by offering something cheap is a good thing and getting the numbers up is a good goal, despite what this does for the country's image," he said.

While calling for industry solidarity on the issue of yield, Mr Watson gave a perfect illustration of why the industry maybe hurting itself and setting poor foundations for long-term gains.

"Last year, we walked away from 30,000 passengers from one country who wanted us as their destination management company (DMC) because the rate they wanted to pay us was so low we wouldn't touch it," he explained.

"The year before we resigned from major accounts in Australia and Europe because they were not prepared to pay us what we thought was a fair return for our services.

"Our competitors then went into a feeding frenzy for this business and the customer then got what they wanted, which was a very cheap rate and now, what I think, a low quality DMC.

"So I don't know what the solution is. We walked away and toed the line on rates and our turnover decreased substantially, but we now make higher profits."

Mr Sinclair-Thompson added: "It doesn't matter if there are fewer arrivals, if they spend more, then that is still okay for the industry."

Ms Phornsiri said the TAT was aware of this issue and was working harder to bring more dollars, and not necessarily numbers of arrivals into Thailand.

"We are looking at ways to bring affluent Chinese travellers to Thailand, so we can move away from the zero-based tour industry," she said.

"We have tried to promote Thailand as upmarket. It is not something we can achieve overnight, but we are aware of the need for it and it is something we have taken on board."

Mr de Jong said one of his concerns was that he did not want Thailand "to be left with the bottom feeders of the tourism market such as the first time, low spending package tour travellers."

So while delegates were aware of the issues hurting the hundreds of thousands of employees in the tourism and travel industry, they were quick to provide a wide range of what could be effective solutions.

When the discussion moved to what more had to be done to arrest the decline in Thailand, delegates were full of enthusiasm for the task ahead and produced a solid road map that, if followed, would go a long way to achieving positive results – with a unified industry.

Industry needs say in communications role

Mr Mechai offered a suggestion that was unanimously accepted among the group and that was to launch a strategic global media campaign and for the industry to take ownership of the project.

Mr Watson agreed and added: "We do need a proper communications campaign to the media for Thailand, this is a way I think we can go forward and communicate the right messages."

Thailand was already trying to achieve this goal, Ms Phornsiri said, but she also agreed that with industry leaders behind the programme, it would be a worthwhile campaign.

"We are still trying to communicate the real and positive messages to the public, media and tour operators that we are still a country that is safe and would welcome them," she said.

"We must have the media play a role for us.

If it is just the TAT talking to the public and industry, they have no reason to believe us, but if their own home media is communicating with them, then people have more reasons to believe what is written."

Mr Ghielmetti said he thought there was one important point that needed to be communicated globally.

"I think the election is an important part of what we are talking about, but I think that needs to come hand in hand with the lifting of martial law.

When it is removed, Thailand needs to tell everyone," he said.

Mr Sinclair-Thompson also added that immediately expanding the new Bangkok airport and opening a third runway and a midfield terminal would also allow Thailand to remain competitive in a region where the fight for tourism dollars was becoming ferocious.

"From an aviation point of view, the decision had to be made 'yesterday' on a midfield terminal and a third runway. Thailand is at the threshold of 45 million passengers already and needs to go to 60 million otherwise a country like Vietnam and the rest of Asia will go right past Thailand," he claimed.

Mr Pichai said this would help in the fulfilment of a goal handed down from senior Thai Airways management.

"From this October, we have been told by our new executive vice-president (Pandit Chanapai) that we have to pay more attention to Thailand and get more passengers and arrivals through
Bangkok, not just transit passengers feeding our network," he said.

Mr Sagild offered one solution for Thailand, and that was to take a step back and perhaps use the model of another Asian country who had experienced some similar issues to Thailand.

"We should ask 'are there any countries that have been in the same situation as Thailand at some point?'" he said.

"What did they do? I was in Hong Kong for 10 years and immediately after the market crash in 1997, Hong Kong had a huge identity crisis, they did not know who they were.

"It was being handed back to China and they brought in specialists who had repositioned other destinations through communications plans and other unilateral targets. Hong Kong is now very successful again."

But perhaps one of the better solutions for the entire country, and those who wield enormous amounts of power, came from Mr Mechai.

"We should ask the TAT, with some private funding, to commission a study and find out what a coup actually costs Thailand financially," he said.

"So before it happens the next time, the people involved would be able to realise how much you can lose and what is at stake… and we should let the public know also what this stake means."

There is no doubt the current political situation in Thailand is hurting the Kingdom and the tourism industry financially, maybe, if we all knew how much exactly, more could be done by those in power to prevent another one.