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Political unknowns cast shadow over Thailand's tourism prospects for 2014

Publication Date : 25-12-2013


The year 2014 will be a challenging period for the tourism industry. Government officials and private-sector executives agree that the top concern is political instability.

The political landscape is different from the old days, they caution. This time no clear way out of the conflict is visible, which means it could drag on well into the first quarter of the new year.

This lack of clarity has already started to cast a cloud over the tourism industry, as it is feared that foreigners will choose to take their vacations elsewhere, especially those who have never been here before.

"If this situation carries on into 2014, of course the hotel industry will get hit in the first quarter. Travellers will start changing their plans to come here," said Dr Ronnachit Mahattanaphreut, senior vice president for finance and management of Central Plaza Hotel, operator of the Centara Grand hotel chain.

The question right now is: "Is the tourism industry still a hero that can save the country at a time when the national economy is facing a slowdown?"

Caretaker Finance Minister Kittiratt Na-Ranong has acknowledged that tourism is an important industry and a key driver of the national economy. Currently, tourism revenue makes up more than 10 per cent of the country's gross domestic product. However, prolonged political demonstrations risk damaging the country's image as a tourist destination.

Charoen Wangananont, honorary secretary general of the Association of Thai Travel Agents (ATTA), argued that tourism could only play the role of hero in the short term. In the long term, all parties must work more cohesively to stabilise the industry, especially with consistent government policy.

Charoen has proposed setting up a programme to reform the industry. Tourism associations would be the hosts for this task and would work with the government to promote the industry's sustainability. Important factors would be concerns for the environment and tourists' safety.

One of the highlights would be to crack down on rampant corruption. The industry has long lost billions of baht to state employees and politicians. The system should be made more transparent with creation of checks and balances. Clearly, a lot of tourism revenue has gone into different hands without anything to show for it.

"What we will do is boost the country's tourism revenue. Reform is a serious issue, and we have to make a bold move to make it so. This will be the first priority for us in 2014," Charoen said.

All in all, however, the long-term tourism outlook is good. By 2015, tourism revenue is projected at 2.2 trillion baht (US$67 billion), up from 1.2 trillion baht ($36.60 billion) this year, thanks largely to the country's wealth of natural and cultural beauty and friendly people.

2014 target

Despite the political tension, the Tourism Authority of Thailand has kept its previous projections for the new year unchanged. It forecasts 28 million foreign tourists coming to Thailand, an increase of 7.28 per cent from 2013. Tourism revenue will grow by 12.9 per cent to about 1.32 trillion baht. As for domestic tourism, it projects 136.8 million trips through 2014, an increase of 6 per cent from this year. Revenue from domestic travellers will also grow by 9 per cent to 700 billion baht.

Operators believe that tourism will flourish here for a long time, thanks to strong fundamentals. For more than a decade, it has prevailed through a changing political climate, with foreign visitors continuing to pour in. And 2014 will be no exception.

Charoen said the current crisis had affected tourism only marginally. As long as there is no violence or another closure of the airports as happened several years ago, the industry would keep growing.

This year, ATTA expects to report more than 4 million people using the services of its member travel agents. In 2014, that is projected to grow by 10-15 per cent. Major markets behind this boost include China, Russia, Japan, South Korea and India. Europe is on the recovery path, and that too could help drive tourism.

Piyaman Tejapaibul, president of the Tourism Council of Thailand, said the industry should be optimistic and that it would be a key driver of the economy. He agreed that the current turmoil had only a slight impact on the industry so far. What the country should do now and in 2014 is restore tourists' confidence and its image before moving ahead with other activities. However, Yutthachai Soonthronrattanavate, president of the Association of Domestic Travel, said politics was starting to hurt tourist sentiment, especially locally.

He urged the government to pay more attention to domestic travel agencies, mainly small and medium-sized enterprises. The government should launch a tax-refund programme. Travellers could claim up to 30,000 baht from their tourism bills. In addition, tourism programmes should be subsidised.

If there had been no political tension in the final quarter of 2013, this would have been one of the best years for Thai tourism. Somsak Pureesrisak, in his now-caretaker role as tourism minister, revised his 2015 projection for tourism revenue to 2.2 trillion baht, up from 2 trillion baht previously. The industry appeared to be on a recovery path this year after suffering from flood disasters and political crises in past years.

But unfortunately, the turmoil has put a cloud over such hopes, with 39 nations warning their people on travel to Thailand.

And these are not the only barriers tourism operators face.

Troubles persist

This year, the industry has made a continuous attempt to tackle troubles ranging from tourists' safety to service standards, in cooperation with the Tourism and Sports Ministry. However, it has not seen much improvement. Such troubles still haunt the industry.

A recent Chinese law to curb so-called zero-dollar outbound tours is one of the issues the industry has had to grapple with. After it took effect on October 1, more than 400,000 Chinese tourists had disappeared from the scene in Thailand by early December. However, about a quarter of those cancellations were attributed to the political turmoil.

There was good news too, though - some of it mixed. From July 1, Thais tourists were allowed to go to Japan for 15 days without a visa. However, that was bad news for domestic tourism because more Thais were heading to Japan instead of travelling locally.

Overall, the curtain is coming down on 2013 satisfyingly. The problems that have occurred were well understood and accepted as part of the business. Now, operators have no time to rethink the rough patches of 2013, as they already face another big challenge, caused by politics, that waits for them after New Year's Day.


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