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Thai tourism industry counting cost of political chaos
Publication Date : 04-12-2013
The local travel industry, including airlines, hotels and convention centres, have started to feel some impact from the current political chaos, which could hurt their financial performance in the final quarter of the year.
Thai Airways International said its cabin factor last month was 74 per cent, down from 76 per cent in November last year. The airline expects its cabin factor to be 75 per cent this month, down from 78 per cent in December 2012.
Chokchai Panyayong, THAI's senior executive vice president for commercial, said the largest decline in passengers was from the China market, at 18 per cent. The airline also expects the number of passengers from Australia to be reduced.
The load factor of the European market was 77 per cent last month, below target. Only the Japanese market is still showing good growth, as Japan is now the favourite destination for Thai travellers. THAI has also increased the number of Japan routes and the number of seats to cater to this growth.
"The drop in number of passengers has been caused by many factors, including more competitors, as well as the slow recovery of the world economy, particularly Europe, and the slower economies in Australia and India. The Chinese government is also quite strict in monitoring 'zero dollar' tours. Meanwhile, the political conflict in Thailand is getting more intense," Chokchai said.
He said that normally, the end of the year would be the peak tourism period and the airline expected to see more arrivals to Thailand. However, the political climate would negatively affect the airline's revenues in the current quarter. If the problem is prolonged, the impact will be more serious. "My concern is that individual tourists in the short-haul markets will cancel their trips to Thailand and go somewhere else," he said.
Thai AirAsia chief executive Tassapol Bijleveld said the political demonstrations had resulted in 34 governments issuing travel warnings, and that had affected the number of passengers using his airline as well. Its cabin factor in November dropped by 5 percentage points to 82 per cent compared with a year earlier. The market with the biggest drop was China.
"Foreign tourists, especially Chinese, are quite concerned about the political demonstrations. If the situation remains intense, the tourism sector should be more sluggish. However, tourists might decide to go directly to local tourism destinations, such as Phuket, Krabi or Chiang Mai [and avoid Bangkok], or change to other countries instead," he said.
Ronnachit Mahattanapreut, senior vice president for finance and administration at Central Plaza Hotel, said the Centara Grand at CentralWorld had started to see an impact from postponements and cancellations of meetings scheduled by state agencies and local and foreign companies for November and December. This had resulted in opportunity losses of about 50 million baht (US$1.16 million. Meanwhile, the occupancy rate of its hotels in Bangkok was just 70 per cent last month, compared with the 80 per cent it normally sees in November. He expects average occupancy rate this month to be 60-70 per cent.
Catherine McNabb, vice president for sales and marketing at Dusit International, agreed that hotels in Thailand had started to feel the impact. Most of the Dusit customers who had cancelled their bookings were those who had organised the meeting and incentive trips for their employees and clients.
Paul Stevens, operations director of Accor Thailand, said about 24 hotels in Bangkok under the Accor Group still enjoyed average occupancy of 80 per cent as they were located far from the demonstration areas. However, advance bookings have slowed slightly, especially by Hong Kong customers. "We hope that the political problem in Thailand will be settled in a short period of time and the country will be able to progress normally. However, Thailand has strong a foundation as a tourism destination. Despite frequent political difficulties, the number of foreign tourists rebounds very quickly after the situations are settled," he said.
Sakchai Pattarapreechakul, president of NCC Management and Development, the operator of Queen Sirikit National Convention Centre in Bangkok, said his venue expected to see a small impact on conferences and exhibitions for the rest of the year although the anti-government protesters appeared to have wound down their activities earlier than expected.
This year's financial results are already reserved in the company's account. NCC expects to see growth of 12-15 per cent growth in terms of event numbers and a 20-per-cent surge in revenue by end of this fiscal year from the year earlier.
However, Sakchai said he was concerned that if there is further political uncertainty affecting the confidence of international leisure and business tourists this year, particularly after Christmas Day, MICE (meetings, incentives, conventions and exhibitions) business next year might suffer.