Budget tour crackdown hits Lunar New Year bookings

Budget tour crackdown hits Lunar New Year bookings

Chinese tourists take a break at Wat Pho in Bangkok on Oct 3, 2016. (Reuters photo)
Chinese tourists take a break at Wat Pho in Bangkok on Oct 3, 2016. (Reuters photo)

Chinese hotel bookings for the Lunar New Year have tumbled as the crackdown on cheap package tours hits visitor numbers from its biggest source of holidaymakers.

Tourism is increasingly important for Thailand given that its economic growth lags other Southeast Asian economies. Between 2012 and 2016, the number of Chinese visitors trebled to nearly a third of all Thailand's tourists by number and revenue.

But a crackdown on "zero-dollar" package tours in September sent that into reverse with little sign of recovery ahead of the Lunar New Year holiday Jan 28 to Feb. 2

The D Land Holiday Co Ltd caters to Chinese tourists. Bookings are only 300 for the Lunar New Year compared to 800 last year, its owner said.

"It's the crackdown," Ruengdet Amorndetphakdee told Reuters.

Other hotel groups, including Central Plaza Hotel, said Chinese bookings had fallen. Tristar Floating Restaurant Co Ltd has six cruise ships for Chinese visitors -- now it operates only one.

The tourism authority expects a 7.7% drop in Chinese tourists for the Lunar New Year this year, though offset by a 3.9% rise in tourists from elsewhere, and it sees Chinese tourist numbers rising back during 2017.

Zero-dollar tourists pay everything up front.

Operators cut any cost they can while tourists are sometimes cajoled into buying overpriced souvenirs so the company earns a commission. Those are the practices Thailand wants to stop.

But the government's insistence on a minimum 1,000 baht ($28) per night charge for package tourists had made Thailand uncompetitive for many Chinese visitors, tour operators say.

"We weren't prepared for this," Chanapan Kaewklachaiyawuth, secretary-general of the Thai-Chinese Tourism Alliance Association told Reuters.

Chinese tourist numbers fell 30% in November from the year before to the lowest monthly total in more than two years. At least part of that drop-off was due to a one-month mourning period following the Oct 13 passing of King Bhumibol Adulyadej, tour operators say.

Thailand nonetheless forecasts that Chinese tourist numbers will recover to reach nine million by the end of 2017 to just top last year's total.

By targeting wealthier Chinese travellers, revenue from China will increase over 14% this year to around 500 billion baht, according to Tourism Authority of Thailand governor Yuthasak Supasorn.

"It's certainly a change, but Thai operators are able to adapt," he told Reuters.

Overall, Thailand expects growth in tourist revenue of 8.5% to nearly $50 billion -- more than double the overall economic growth rate forecast.

Although Chinese visitor numbers have fallen, the number of travellers from elsewhere has continued to rise. Central Plaza said increased bookings from Russia had helped despite Chinese cancellations.

Tristar Floating Restaurant Co Ltd is looking to new markets in Southeast Asia such as Indonesia, Vietnam, the Philippines and Myanmar, company president Vichai Tanasopananont told Reuters television.

"Cheap packages don't yield high income and businesses will need to adapt," said Thanavath Phonvichai, an economic professor at University of Thai Chamber of Commerce. "It will gradually improve."

For those whose livelihoods have been affected, improvement cannot come soon enough.

"My income has dropped 50%," complained Naruja Nakthong, a 27-year-old souvenir shop owner in the historic Thonburi area of Bangkok. "It might be good if we have tourists who spend more. They might shop and buy more stuff but I haven't seen them here yet."

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