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17 Sep, 2001

Industry Ponders Life after 9/11

IN the mad scramble that will start for what little life there will be left in the travel industry following the US retaliation to come, Thailand ‘s ability to maintain its share could hinge to a large degree on two conditions: safety & security, and total neutrality.

The many analyses about how the crisis will affect tourism are focussing mainly on economic impacts and shifts in travel patterns. While these are generally well-known – higher oil prices, currency fluctuations, rejuggled destination preferences, etc – it is the political, social, psychological and cultural factors that will have a greater short- and long-term impact.

For now, the global travel industry is trying to maintain some semblance of normalcy. No major travel shows have been cancelled. The annual general assembly of the World Tourism Organisation is to be held next week in Seoul and Osaka. The regional incentive and convention travel show (IT&CMA) is on track in Malaysia as is the Thailand Travel Mart in Pattaya this week.

However, cancellations are already coming in for Thailand and more could come in later, depending on the scale and location of the US retaliation. Then, the speed at which the market recovers will depend entirely on how much of a mess the global economy is in.

All source-markets of Thai visitors will be affected, some like the American, Middle East, Israeli markets more than others. All these markets had been growing steadily for Thailand – the US market was up 13% in 2000 and again by another 13% in the first half of 2001, the overall Middle East market was up 14.5% and 22.5% in the same periods thanks to good growth from both Israel and the Gulf countries.

The European market should continue to do okay and bolster the numbers in the traditional October-March high season for Thai tourism, but that depends again on the scale and ramifications of the US response.

Airlines, the lifeblood of the tourism industry, were undergoing a severe crimp even before September 11 and will move to further cut unprofitable routes, replacing it with more consolidation, code-sharing and joint flights, etc. In Australia, the long-bleeding airline Ansett has already gone bankrupt.

Security and immigration checks will become a major problem, especially for frequent business travellers. At a meeting of a group of global travel agents in Bangkok last weekend, one European agent called the entire security concern an over-reaction. Noting that in the last many years, Europe had seen virtually no terrorism involving airlines, he said, “Who in his right mind is going to take a 40-minute flight if he has to check in two hours before and then answer all these silly questions about who and when they packed their bags?”

The overall flattening of travel & tourism is likely to be about one year, depending on whether the American retaliation meets further resistance. During that period, a mad competitive scramble will ensue for the less-affected markets.

India and China are expected to be two such markets. Thailand is lucky in that its contacts with both are strong, and growing. An Indian travel agent said that the peak period for holiday outbound from India in March–April was over, but that there would be a shift away from Indians travelling to Europe and North America, and more towards East Asia and Australia.

As the global scenario changes, Thailand will have to adjust accordingly, though price-cutting will invariably follow in a depressed market. If past experience is any indication – and there have been at least three in the last 10 years alone – marketing budgets and jobs will be cut and some money (for those who still have it) could be redirected into renovations

However, two things can be done domestically, and will be critical to the long-term future of Thai tourism.

The first is ensuring the safety and security of both visitors and expatriates living in Thailand. This is a tall order by any account but it is likely to come under increasing scrutiny in the years ahead, and increasing media coverage.

Thailand has a generally good reputation and safety record but it is also home to many organised crime gangs. The nature of the threat has also changed. While in the past crime was the main issue, now the threat could also be political. The political neutrality that Prime Minister Thaksin has pledged to maintain will be very significant in this context.

This neutrality will become equally significant in the area of second potential impact: The way guests are treated and business is done.

The reaction to the September 11 attack has been very emotional in the US. Inspite of the universal condemnation, there has been an hardening of anti-Islamic sentiments among many. In the travel industry, which involves millions of contact-points between people of all castes and creeds every day, how will this transpire and spill over into the work place, especially in a country with a significant Islamic minority?

Among questions and issues bound to emerge in some shape or form: How will the industry react at large to the new and unique problem of people’s political views being possibly reflected in their attitude and approach towards guests, co-workers and suppliers?

Will US hospitality companies hire Islamic workers or buy products from Islamic-owned suppliers? Will Islamic guests continue to patronise US hotel chains? Will Thai and expatriate front-line staff deal respectfully with Islamic guests? Will Muslim front-line staff deal respectfully with American guests?

So far, this has never been an issue. If it becomes one, any resulting publicity could affect the critical Malaysian market, Thailand’s second largest source market overall but by far the largest market in places like Haad Yai and border provinces.

Thailand’s long-vaunted independence and neutrality have long been its strongest point. That will now face one of its most powerful tests in ensuring minimal impact on travel & tourism, an industry that helped Thailand remain afloat in the wake of the 1997 economic crisis and could play a major role in the recovery to come after this latest crisis, provided we play our cards right.

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