LEADING INDUSTRY FIGURES AGREE: THAILAND'S TOURISM FUTURE AT A CRITICAL JUNCTURE
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
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
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
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
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
"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
Four Seasons Hotel Bangkok regional vice
president and general manager Patrick Ghielmetti
added: "I definitely agree with Richard.
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
"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
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
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
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
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
"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
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
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
"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
"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
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.
|Some issues are country-wide and not specific to travel
The 2007 Diethelm Travel's Thailand Tourism Review
Roundtable produced a wide range of excellent
discussion points relating to the day-to-day operations
of Thailand's travel and tourism industry, the
challenges it faces and some grounded solutions for
the sector to move forward.
However two international issues which will
remain long-term challenges for the industry and
Thailand were raised that do not necessarily affect
just tourism, but could have wide-ranging affects in
many other sectors of the country.
The travel industry leaders at the roundtable
have flagged them early and believe they are already
relevant and are issues that the country must
Population and Community Development
Association chairman Mechai Viravaidya said
there had been some very interesting comments
about airports and hotels and what the industry
would call hardware.
"But what about one of Thailand's best assets,
its software and the service culture we have here, can
this be a bright spot in the doom and gloom?" he asked.
Mr Mechai had raised a paradox some see has
a vital question for Thailand. It has a magnificent
service culture, but with an industry not prospering,
how are travel industry organisations going to retain
Pacific Asia Travel Association chief executive
officer Peter de Jong said: "This is very much an
issue with PATA, we see in the next five to ten years
there being a huge human resource crunch
throughout the Asia Pacific travel and tourism
"It is a massive issue in other countries, and
the only reason it has not come to Thailand yet, is the countries crying out for staff first go to English-speaking
markets such as the Philippines.
"But it will come because we are so good at
service and I predict Singapore will attract huge amounts
of staff from Thailand, as will Macau, and it has already
begun in new markets such as Dubai.
"Thailand is a potential future victim of the human
Four Seasons Hotel Bangkok regional vice
president and general manager Patrick Ghielmetti said
he believed it had already started,.
"Specifically in the spa industry," he added.
Mr de Jong added the industry needed to ramp up
the appeal of a tourism career among young people
because in many of the other Asian countries, and
perhaps Thailand too, tourism is not really seen as a
very "exciting" career choice.
However Minor Hotels, Resorts and Spas chief
operating officer Michael Sagild said the issue has been
flagged early in the cycle and there may be a chance to
stem the flow of Thai talent out of the country.
"A lot of Thais are studying in international
hospitality schools overseas and their first choice is not
to come back to Thailand straight away when they
graduate because they want to build a CV with
international experience," he said.
"But if there is a drive and a way to get these
students back to Thailand then I think we can go a long
way to meeting this challenge."
Another issue raised by the industry leaders was
that of the international investment environment in
Thailand and how the current climate in the country was
not conducive to attracting valuable investment dollars.
"One concern is that international investment is
drying up and companies are sitting on the fence
regarding major capital investments in this country when other markets are beckoning," Mr de Jong said.
Diethelm Travel chief operating officer Richard
Brouwer agreed and added: "From a macro point of
view international investment is drying up but if you look
at it from a return on investment point of view, then I
think many tourism owners are still doing quite well."
Diethelm Travel chief executive officer John
Watson gave an example of why Thailand might not
be receiving the billions of potential investment dollars
that are out there.
"Sometimes it is not as easy to do business in
Thailand any more," he explained.
"For example, we are considering opening a
new division within Diethlem Travel and we are
probably not going to base that business in Thailand;
we are looking at either Singapore – who are
desperate for us to go there – or Hong Kong.
"As a company, we don't want too many of our
tourism eggs placed in Thailand and a place like
Singapore provides a number of incentives and they
roll out the red carpet for new investment."
Mr Sagild warned that if the business and
profitability landscape did not improve, then
investment "vultures" may come in when the market
is at a low ebb and cheaply buy businesses that have
taken years and decades to build.
"There is liquidity in the market… they sense
Thailand is at a weak point and they are hovering
around expecting something to fall off at some point as
we can't sustain business in the current climate… we
just have to try and fight that through better (hotel
room) rates and better expectations."
All delegates at the table agreed these two
issues were not just confined to the travel and tourism
sector and they have many implications across other
industries in Thailand.