As the Winds of Change Blow, Whither Tourism in Thailand?

Dali

by Marque A Rome

Domestic political unrest, economic slowdown in major markets, and consumer quality protection measures in China have hammered Thailand’s tourism industry over the last six months, and indicators remain bleak. Large chunks of Thailand’s formerly expansive tourism economy are sliding into nothingness: 40 percent of the Chinese market, for example, has disappeared, along with some 900,000 tourists and over 90 billion baht in income, according to a vernacular report published over the weekend.

The slowdown comes at precisely the wrong time for government planners, who hoped tourism profits would see the nation through hard times. The economy was already slowing when unrest hit Bangkok and elsewhere at the end of October, splitting the country politically, and leading during the last week to talk of civil war and secession in the north and northeastern provinces.

Such discussion excites near universal horror: “Thailand,” said Labour Minister and Peace-Keeping Centre chairman Chalerm Yubamrung last week, “is the one country that is indivisible,” a sentiment echoed by caretaker Prime Minister Yingluck Shinawatra Monday after a group calling itself Chiang Mai 51 posted a sign urging secession and establishment of a republic. The army filed treason charges against the group’s leader, Petchawat Watanapongsirikul.

Though only a few Red Shirts seem seriously to consider such eventualities, the deteriorating economy, especially the tourism economy, is not helping matters.

According to the report by Awikant Buakong published Sunday in mass circulation daily Daily News, the government is in a quandary: tourism is Thailand’s premier cash cow, amounting to ten percent of total income. “It requires no up-front investment yet can produce amazing profits,” he wrote. “The government pins their hopes on tourism to drive the country’s economy.”

Yet this amazing engine of growth now sputters along with the rest of the economy. Sputtering economies in some of Thailand’s major tourism markets have resulted in “the disappearance of tourists from countries further than six hours’ flight time away. They want to save money so they opt for holidaying close to home.”

The Chinese market — hitherto Thailand’s star, ever growing stronger — has plunged off a cliff: “It has contracted not less than 40 percent, owing to a new law in China regulating the quality of package tours.” Chinese and other east Asian tourists were also scared off when PM Yingluck declared a state of emergency in Bangkok and environs — a move much criticised by her opponents owing to its effect on tourism.

In the event, the civil court forbid the prime minister to enforce the decree’s provisions, effectively making it a dead letter, yet its adverse effects on tourism continue as it remains officially in force. Some 48 countries have warned their nationals away from holidaying in Thailand with special emphasis on Bangkok.

Even travellers already in-country are changing plans owing to the propensity protesters have for focusing direct action on tourism: A Dutch tourist told this reporter last week she was returning home via Kuala Lumpur “because who knows what will happen in Bangkok. I must get home on schedule and last time they closed the airport — I don’t want to be stuck in a mess and miss work.” Thus does money ordinarily spent locally go abroad.

The government target this year for tourism spending in Thailand is 2.2 trillion baht. Many doubt the final tally will be close. The Tourism Authority of Thailand expects the total to be about the same as last year’s: 2.0265 trillion baht in income from 28.01 million foreign tourists.

Though the government hopes the TAT can jump start tourism by amending marketing strategies, Awikant says the TAT “thinks it a difficult thing to do, because if they put a lot into promotion, and events in Bangkok continue their violent course, tourists will lose confidence and no amount of public relations will restore it.”

As a practical matter, the Emergency Decree keeps tourists with vacation insurance from travelling here: “Wherever a state of emergency is declared, insurers immediately refuse to guarantee policies there, so that stream of tourists dries up and the image of Thailand suffers.” Association of Thailand Tourism Agents chief Sitiwach Chiewratanaporn noted that: “It is popular among Russians to visit Vietnam and Malaysia, but the feeling was they must visit Thailand first. Now, owing to events, Thailand’s being cut out of the picture.”

With foreign tourism down, the TAT is trying to compensate by promoting “dream destinations” within the country to Thai tourists. Some 70 percent of the Thai middle class “enjoy vacationing”, and the TAT’s campaign is aimed at spreading their numbers among the provinces, especially to new destinations.

Concomitant to that is a shifting of air routes. The drop in foreign tourists to popular destinations affords air carriers opportunity to assign aircraft new routes: “Traffic on routes with their base in outlying provinces has not been affected by the violence,” said Thai Air Asia Managing Director Tasapol Balaweld. “In fact it is increasing apace and passenger numbers stand at 80 – 90 percent” of capacity.

He expects to increase the number of routes and planes flying direct to outlying provinces from China, Hong Kong, Macao, and Singapore to 30 percent of the company’s total in “two or three years.” It presently stands at 10 percent, with just four planes from the airline’s fleet of 38 based in outlying airports.

The political crisis that began nine years ago with “yellow shirt” demonstrations against former Prime Minister Thaksin Shinawatra, led by former Thaksin business partner Sonthi Limtongkul, has reached a point of absurdity, yet few think it will go away any time soon. Many doubt Thailand will have a fully functioning government and Parliament before the end of this year.

“The tourism industry cannot adapt itself to the political crisis at all,” said Thailand Hotels Association president Surapongs Decharuwichit. “Safety is a most important issue — one hotels cannot control. Until circumstances correct themselves, we simply have to wait. Then we’ll embark on an aggressive marketing campaign again.”

Surapongs said that, though the downturn is not so severe as to require lay-offs, hotels are putting staff on furlough or trying to upgrade their skills. “We still anticipate a quick recovery,” he said optimistically. “Hotels can recover faster than other kinds of tourism business. Within one or two months I expect tourists will return in the same numbers as before.”

That remains to be seen; and, though safety concerns have not yet arisen in outlying provinces, it remains unclear how badly and in what numbers tourists — Thai or domestic — want to visit such places as Sri Saket, Chaiyapum, Nakorn Sawan or Patalung. My guess is that, lacking the sort of tourism infrastructure that makes Phuket and Bangkok so popular, such places will never attract the big numbers — and big money — the government is hoping for.

Tourism long has provided an important stimulus to upward mobility for great masses of Thailand’s under-educated and under-skilled. If the industry fails to recover quickly from the current slump, they will feel the weight more heavily than the middle classes. Budget constraints entailed by the government’s caretaker status also affect the lives of poorer classes more than those of the rich. Economic malaise easily metamorphoses into political unrest — which drives away tourists and gives investors pause.

The experience of giant property developer Property Perfect Plc. Ltd. puts current tensions into better perspective. The company announced Friday that budgets for advertising and new investment will be reduced this year as a result of the unsettled political state. “We will open only four new projects the first half of this year,” explained chairman and managing director Chainid Atyansakul, “two in Chiang Mai and two in Hua Hin, valued at 6.1 billion baht. We must wait till the political situation clarifies to know what direction events are taking.

“It is the principal factor in depressing growth and consumer confidence.” He expects matters should improve during the second half of this year. In 2013, the company had sales of 10.6 billion baht, off 22 percent from the previous year’s 13.573 billion.

“Last year was an important test for the property sector,” Chainid said. “The slowing economy reduced buying power across the board, while household debt increased. Consumer confidence fell, banks tightened up on loans — then the heated political milieu made it all worse.”

It’s a vicious circle, one that will stop only when people come to their senses — and who can say when that will be?

“Anyone who thinks this is going to end quickly,” said Education minister Jaturon Chaiseng, one of the ruling Pheu Thai party’s chief men, “should understand that’s not going to happen — sure.”

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