Thailand Too Reliant on Mass Tourism

Dateline: Bangkok, 9 March 2011

Thailand Too Reliant on Mass Tourism

Thailand needs to move beyond its 'Amazing' brand, embrace quality tourism and build iconic mega-attractions instead of more hotel rooms that only end up being discounted, says David Keen, CEO of Keen, a global brand strategy and communications agency with its headquarters in Bangkok.

On March 2, the Thai Prime Minister Abhisit Vejjajiva told his country's travel industry leaders at the 'Thai Tourism in the Next Decade' forum that the country needs to focus more on quality tourism.

To me that means we need to attract higher yield, higher disposable income, higher spending leisure and business visitors.

Prime Minister Abhisit is to be saluted for his opinion. Thailand needs to move away from its dependence on increasingly irrelevant, low yield mass tourism.

Official government statistics show that international arrivals in 2011 will reach about 16.6 million, an increase of 4.4%. To put that in context, Thailand's Ministry of Tourism and Sport reports that the country recorded annual tourism growth of 7.5% between 2005 and 2010, with visitor arrivals growing from 11.5 million in 2005 to around 15.8 million last year.

However, macro statistics like this are increasingly misleading. Look closer and you'll discover that long-haul, long stay, higher spending visitors are being replaced by shorter stay mid-market visitors who spend less per capita per visit.

A new and unsustainable trend has emerged. The country has to run faster to stay still. Because more tourists stay shorter and spend less, Thailand needs to maintain double digit growth in arrivals just to match the preceding year's tourism earnings.

More hotel beds and airplane seats creates over capacity. Empty hotel rooms and low load factors are causing price dumping and desperate short-term marketing pitches to mass market suppliers.

I am increasingly concerned. The over supply of rooms and seats are among key factors pushing Thailand's brand reputation into a downward spiral. Huge volume, cost-conscious tourists bring the country's brand down, which in turn attracts lower yield tourists.

Political instability, long queues at Suvarnabhumi airport, over-crowding and environmental degradation are also damaging the brand. Such all-too-visible problems are 'amazing' in the eyes of tourists who are used to high quality travel experiences in Europe, Japan, Australia and the United States. Thailand's brand is becoming more 'amazing' for all the wrong reasons.

Because of a toxic tom yam mix of political, capacity and branding issues, Thailand is witnessing the flight of quality to alternative destinations such as Malaysia, Vietnam, Sri Lanka and the Maldives.

Old lessons have still not been learned. More hotels are being built. In February the Thai Hotel Association reported that 2,282 new hotel rooms would be added in Bangkok this year. No wonder a similar standard property in Singapore or Hong Kong charges US$350 a night compared to US$150 in Bangkok. The Phuket Insider this week reported an increase of 27% in arrivals year on year to Phuket in the first two months of this year.

These numbers give serious pause to international luxury hotel brands. Luxury accommodation brands will only continue to invest in your country if they believe they can attract high yield returns.

If you're going to build, stop building so many hotels and start building iconic mega projects.

Singapore bravely built the Marina Bay Sands, Universal Studios and added F1 night races. Hong Kong opened Disneyland and Ngong Ping 360. Malaysia has announced Legoland. Thailand has very little 'new' to offer except more amazing sales and discount prices. It's not a sustainable proposition.

Bangkok has added a skytrain, an underground train network and a new airport, all in the last 11 years. The country can deliver on ambitious goals when it acts as one.

My hope is that Thailand will unite to build brand equity. We should move on from the worn out 'Amazing Thailand' mantra to a new era based on higher yield, higher value leisure and business visitors.

ENDS

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