PATA Hub City Forum - Bangkok
Thai Tourism Lesson Learnt : Challenges Ahead
By Mr Suraphon Svetasreni
Governor of the Tourism Authority of Thailand
30 January 2012
PATA Chief Executive Officer,
Thai Airways International President,
Invited speakers and panelists,
Ladies and gentlemen.
I would like to thank Mr Piyasvasti Amranand, President of Thai Airways International, for sharing his insights. The TAT also appreciates the key role Thai Airways plays in bringing so many visitors from all over the world to Thailand.
It is an honour for me to join you today at the PATA Hub City Forum – Bangkok, following the first forum in Hong Kong. These forums will also be held in Abu Dhabi, London, New York, Singapore, Sydney, and Tokyo.
Before I continue, I would like to address why PATA is holding today’s session. The aim is to create awareness of the challenges faced by each country’s tourism industry, to exchange ideas and stimulate collaboration to overcome these challenges, and work together towards a common goal. These are basic elements for the tourism industry, especially during these times when changes happen much faster and things are much more complex than before.
We at the TAT are certainly familiar with a changing world. While the TAT has been successful in our mission to make Thailand the destination of choice for travellers from all over the world, we have faced three key challenges along the way.
Challenge 1: Market structure.
Changing socio-economic factors have made today’s market structure quite different from before. Thailand welcomed about 19.09 million international arrivals in 2011. This is 3.16 million arrivals higher than 2010 and represents a growth of 19.84 per cent. Thailand is far ahead of the UNWTO’s estimate of 4.4 per cent growth in international tourism.
On the other hand, a detailed look at the market structure shows challenges in the landscape, or geography. The East Asia region has grown beyond estimates over the past two years.
In 2011, the number of visitors from East Asian countries, including ASEAN, increased an impressive 26.56 per cent, accounting for 54 per cent of all international arrivals to Thailand.
International arrivals for Europe remained positive. However, European countries — excluding Russia — were ranked the bottom three in terms of growth rates, along with Africa and the Middle East. For the two latter markets, this low ranking was due to limited market penetration and political upheavals that started with the Arab Spring.
Going forward, we need to stay on top of how long the Asian growth trend will last. We must also determine whether the European market growth — with the exception of Russia — has reached a plateau.
The challenge is how to handle this changing market structure. As we have realised the market shift for some time, the TAT has been deploying a “Look East Strategy.” It includes concrete initiatives; such as, opening more TAT offices in Asia, in Mumbai, Jakarta, Kunming, Chengdu, and Guangzhou.
Challenge 2: Paradigm shifts in the way global population think and act, and the way each country strengthens its competitiveness. We are seeing factors; such as, global warming coming into effect, heightened due to some countries refusing to accept the Kyoto Protocol and its aim to reduce greenhouse gases.
Global warming is affecting lifestyles, tourism, and even the quality of natural tourism sites. Thailand – like some other countries around the world – has experienced coral bleaching due to the rising temperature of seawater. Many regions of the world have also seen extended summers or winters due to seasonal fluctuations.
Awareness of changes in the environment is leading to greener lifestyles and more eco-friendly consumption values. People now realise that how they live their lives will affect the lives of the following generations. For example, many products today offer customers information about their carbon footprints. A growing number of tourism products now employ a “no-frills” concept, removing non-essential features to keep the price low. Others offer “add-on services” on request to minimise the use of resources while also offering savings to customers.
This change in thinking can be seen in the European Union Emission Trading Scheme (EU ETS) for trading carbon credits among its members. A result of the Kyoto Protocol to minimise activities that cause greenhouse gases, the EU ETS came into effect in 2005. Its goal is to reduce greenhouse gases by 21 per cent by 2020.
Starting this year, the EU ETS has been extended to the airline industry. It assigns carbon caps to all airlines including those from outside of the EU. An airline that reaches its carbon cap must pay for an emission allowance. This will encourage airlines to use more environmentally-friendly aircraft or deploy carbon-reduction technology. There is speculation that most airlines, especially outside of the EU, will raise ticket prices to the EU by 2 to 5 per cent to cover the cost of this compliance.
Even though some nations do not support this move, the EU ETS is firmly in place. When we combine it with Europe’s economic situation, we need to keep a close watch on how the airfare hikes affect Thai tourism so we can address it in the future.
Another aspect of the paradigm shift involves how countries develop a competitive edge. There is more competitiveness gained through alliances in which countries take a “win-win approach” to economic policies. This concept has led to “Economic Blocs” in many regions, including ASEAN.
These alliances can impact the tourism sector in many different ways. For example, the ASEAN Economic Community (AEC) in 2015 should stimulate intra-region tourism between member countries. This will be positive for achieving arrival and revenue targets. The challenge here is how to get ready to welcome arrivals from our neighbouring countries. How we must be prepared in terms of language, food, services and facilities. Thailand must be fully ready so we do not lose marketing opportunities.
The AEC 2015 can also impact the tourism through the ASEAN Framework Agreement on Service (AFAS). The ASEAN leaders agreed in Bali in 2003 that the ASEAN Economic Community will be fully set up by 2020. The member countries must prepare Mutual Recognition Arrangements (MRAs) as a tool to certify standard qualifications for people who want to work in another ASEAN country.
Thailand’s Ministry of Tourism and Sports proposed a MRA for Tourism Professionals to the Cabinet, which was approved on 11 January, 2011. The MRA will soon be considered by Parliament.
Under the MRA, 32 types of tourism jobs will no longer be bound to their nations’ borders. All ASEAN countries need to consider the impact on their international competitiveness. Those which gain an advantage from professionals coming in from other countries could become too reliant on migrant workers, while making it difficult for domestic workers to compete for tourism jobs.
People in Thailand have less ability to speak a second language than in other ASEAN nations. It is important for both the public and private sectors to identify such key areas for training and development so business gains are in line with national gains.
Challenge 3: The importance of crisis management and communications.
The TAT’s experience shows that no matter what type of crisis occurs – economic, political, health issues, natural disasters, or terrorism – there is always some impact on the tourism sector. International travellers are very sensitive to situations and incidents, particularly in today’s world where news travels very fast through many channels, especially those online.
Due to the proliferation of social media and the moment-to-moment reporting by citizen journalists and I-Reporters, this makes crisis management and communications more difficult for the tourism industry. As the parties often involved in a crisis are not tourism-related, the TAT has to wait for accurate information from others, which further delays communications.
Realising the importance of responding rapidly to a crisis situation, the TAT established the Tourism Intelligence Unit and Crisis Management Centre, or TIC. It is a centralised co-ordination centre that collects information and implements communications response plans when a crisis situation arises. The TAT gathers information from our TAT offices, domestic and overseas, and from other related organisations. We also work on an ad-hoc basis with others; such as, the Tourist Police, Ministry of Tourism and Sports, Tourism Council of Thailand, and tourism associations.
The TAT uses traditional and online media channels to communicate in a timely manner with the most up-to-date, correct, and relevant information. We have invested in information technology for crisis communications; such as, distributing situation updates, and live broadcasts from webcams at popular tourist attractions. We also do online crisis and reputation management, monitoring 32,000 Web sites and being involved in more than 20 social media channels worldwide.
These are three major challenges that we must respond to carefully. There will also be many more minor challenges ahead; such as, the changing socio-economy that drives changes in market segmentation; and issues like energy and currency fluctuations.
No individuals or a single organisation can effectively handle these challenges alone. There should be collaboration across the board. I believe all of us in the tourism industry should exchange ideas, discuss solutions, and ultimately act in unison towards a common goal. The TAT appreciates PATA’s initiative in holding this event as a forum to generate ideas and begin developing solutions for the challenges that we face.
Before I end my session, I would like to reinforce that as we work to overcome challenges, we should also strive for balance, the ultimate challenge for sustainability. To ensure sustainable tourism, we have to think about balance in terms of market structure, the value gained and value delivered for any particular tourism areas, and balancing the economic, social and environmental impact.
In closing, I would like to again express my gratitude to PATA for organising this event. I hope that all participants benefit from these sessions and enjoy the opportunities to exchange ideas. This is an important step in gaining a common understanding to create solutions for the Thai tourism industry.
Thank you very much.