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1 Jan, 2001

Thai Hotels, Tour Operators Hold First Joint Meeting to Assess State of the Union

Nearly 400 high-level tour operators and hotel managers turned up last week in a major show of strength designed to provide the industry with a state of the union report and bolster cooperation between the two sides.

In a little more than two hours, representatives of both sides provided short but comprehensive briefings of developments in their respective areas of business.

Perhaps the most interesting outcome was that not a single issue could be singled out as a truly major problem for the industry, especially in the context of continuing growth in visitor arrivals which totaled a little over nine million in 2001 and are projected at roughly 10 million in 2001, assuming that there are no domestic disturbances and the international economy remains in generally good shape.

The Association of Thai Travel Agents (ATTA) office at Bangkok International Airport handled about 2.4 million international visitors in 2000, an increase of 5.03% over 1999, mainly due to the large number of Chinese and Japanese visitors and the resumption of growth in Korean visitors.

But the overall picture remained healthy, which is a pretty good result given the fact that travel & tourism does not even enjoy a full-fledged cabinet portfolio and is still treated at government level as a second-class industry.

Though Thai Hotels Association (THA) President Chanin Donavanik said that “there was really nothing significant to discuss” in the meeting,” it was clearly designed to send a strong signal to the Tourism Authority of Thailand and the Thai Tourism Society that these two associations are the real movers and shakers in the industry and that can be done without their co-operation and support.

Said ATTA President Roberto Jotikasathira, “Ministers come and go but it is really the private sector that keeps the industry moving. So perhaps it is time that we should be a monitoring body to see what ought to be done to improve the industry in this area.”

One significant element of the two associations is that their leaders represent the generational transition taking place in the industry.

Mr Roberto, 70, founded Turismo Thai, a company that played a major role in bringing European visitors to Thailand. He will be stepping down as ATTA president this year and is scaling back his involvement with all major international travel industry associations.

Representing the emerging generation is Mr Chanin, 45, former CEO of the Dusit Thani empire, the first Asian hotel group to takeover a major European chain, the Kempinski, in the mid-1990s, an ambitious project which later hit the skids in the aftermath of the 1997 Asian economic crisis. Mr Chanin is serving his second term as THA president, has managed to bat down the hatches of political controversy in the association and give it a new sense of direction.

Both have made a good team in defending the industry in various forums and helped bring together the two sides in the joint meeting last Friday. Some of the major issues that emerged therein:

— Mr Chanin says that while there has been a large growth in visitor arrivals, hotel occupancies have not risen proportionately. This, he said, could be because many guests are staying at the large number of guest-houses, lodges and service apartments emerging nationwide. He also pointed out that amongst the THA members themselves, the growth had been unevenly distributed, with major destinations like the beach resorts benefitting more than less popular areas. Efforts will have to be made to rectify this. A large percentage of the country’s non-performing loans are also credited to hotel-owners.

Concern is rising about the impact of globalisation and the free-trade agreements that will see local tour operators coming under increasing competition from international tour operators, which are themselves consolidating into mega-groups. The THA has been trying to address this issue for some time but tour operators are slowly awakening to the threat, and now seeking help.

The problem of Chinese tourists to Thailand is showing up perhaps the weakest link in Thai tourism industry and indeed the country at large – the lack of proper law enforcement. Since getting Approved Destination Status from the Chinese authorities, Thailand has seen a major growth in visitors from China from where there are now 81 weekly flights to Thailand. Illegal tour operators have proliferated, many of whom are paying 5,000 baht to ‘buy’ one Chinese tourist, and then taking them off to jewellery shops, sex-shows and massage parlours. The Chinese want the TAT to crackdown on this, which the TAT is trying to do, with limited success.

The Korean market is facing the same problem as the Chinese, but the Koreans have managed to beat the system by setting up their own restaurants, souvenir and jewellery shops to which to take their clients. A small number of companies control about 70% of the Korean market. One problem likely to affect growth is a shortage of qualified Korean-speaking guides.

The start-up of operations of an 800 million sewage treatment plant in Pattaya means that over the next few years, there should be a marked improvement in the quality of sea-water. Pattaya epitomises the best and worst of Thai tourism. The packaging of Bangkok-Pattaya tours played a major role in the growth of the industry in the 1960s but dumping of sewage in the sea ruined it. While the new treatment plant may help the resort, it still has a reputation as a haven for sex-tourism and organised crime syndicates, which goes back to the earlier problem of law-enforcement issues.

Currency issues are emerging: While the strong dollar has helped attract many visitors to Thailand, especially from the United States, the dollar is now weakening against major European currencies. Hence, Europeans who may have been inclined to avoid holidaying in the US may choose to go back there if the dollar continues to slide along with what appear to be indications of a slowing US economy.

The Japanese market, as always, is the most sensitive to the issue of safety and security threats. It is now Thailand’s largest market and characterised by a huge proportion of women, especially singles, who are among the biggest spenders on shopping. Tour operators say it is imperative that efforts be made to improve services, especially in Japanese, for these visitors.

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