Pattaya Daily News

05 August 2010 :: 12:08:48 pm 34347

European Tour operators Take Advantage of Thailand’s Crisis

Debate on tourism in Thailand, hotel rates and airline prices and the European travel operators was held in order to raise issues in the price wars.
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BANGKOK, 5 August 2010.  In a bid to fight the ailing economy, the lowering of hotel rates to boost occupancy and airline load factors has not been successful, but Thailand it seems is doomed to repeat its mistakes.

These are just some of the issues revealed by the leaders of the travel industry along with their bitter experience in the price wars as they addressed a debate entitled “Rates Versus Value: Are We Going Off the Deep End?” organized by the PATA Thailand Chapter on the 28th July in Bangkok.

The Bangkok based Asian Trails Group CEO, Luzi Matzig, told the audience of 70 travel industry professionals, “As soon as crisis hits, some overseas tour operators behave like vultures trying to make money out of it.”

Matzig told the audience that it was common practice for some overseas operators to use strong arm tactics to negotiate a 50% decrease in rates so they can pocket 20% and only pass on a reduction of 30% to paying customers.

CEO of Destinations’ Asia Jim Reed told the audience that such overseas operators did not deserve the so called name, “Friends of Thailand.”

Chanin Donavanik, CEO of Dusit International,  said that there are too many business families in Thailand who see hotel developments as a prestigious business, building properties which then incur huge losses as over supply cripples yield.  He stated, “We have investors that do not know what they are doing”.

Chinin who is the former president of the Thai Hotel Association added that 7,000 hotel rooms would be added to Bangkok in 2011 which does not include serviced apartments.  “Lower rates are here to stay for a while, and there are hotel owners who do not have a long term life left,” he continued.

Wayne Buckingham, VP and Area Managing Director for Starwood, Thailand, told members that his company would be opening six more hotels in Thailand in the next six months. Business plans for today’s hotels are less profitable than plans made 10-20 years ago when supply was in more demand, so investors should view thing long term and increase rates more abruptly during the good times in order to cushion the blow during the bad times.

Buckingham went on to say that Thailand’s hotels were under severe pressure if they wanted brochure space. He went on to say, he did not mind being flexible on rates, “But not without commitment from you, the overseas tour operators, to do something in return, such as the allocation of rooms, for example in Singapore.”

The gathering of travel experts said the situation was particularly bad in Chiang Mai, North Thailand where hotels have seen occupancies of less that 10%.   “Five or so years ago, Chiang Mai hotels made profits for three months of the year,” said Buckingham, he then implied that it was now under threat.

During the conference, the speakers criticized the state of emergency decrees that are still in place in Bangkok and parts of Thailand following the political unrest in May, pleading with the Government to realize how bad it is hurting the industry.

Chaladol Ussaman, CEO of CBS Travel Asia, said that some of Thailand’s competitors had internal security acts in place which is the same as a state of emergency, but nobody knows about it.

“Too many hotels in Thailand are dropping their rates just because other hotels are doing it”, said Jim Reed.  He stated that it was a knee jerk reaction and a mistake that costs millions of dollars.

Buckingham responded with, “One of our secret of negotiation is to find what the customer really wants. Often it is not the price. He just wants to be listened too.”

Buckingham went on to say that there was often intense pressure from hotel owners to generate cash flow, but, he concluded, “If your rate strategy is not delivering volume, drop the strategy.”

Mr. Bert Van Walbeek, the PATA Thailand Chapter Chairman, told the audience that the Chapter would organize all other issues and events that concern them on tourism in Thailand during the oncoming months.

Reporter : PDN staff   Photo : Internet   Category : Tourism News

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