HARD TRUTHS
PHUKET TOURISM SUFFERING UNDER SLEW OF CRISES
Phuket’s tourism industry is unlikely to achieve the Tourism Authority of Thailand (TAT) target of 10 million visitors by year’s end as it struggles to move forward while coping with delays in reopening the country to tourism under COVID,
fallout from the Russia-Ukraine conflict and long-term problems that were “inevitable”.
Bill Barnett, Managing Director of hospitality consultancy C9 Hotelworks, delivered the news via an interview broadcast by state news agency NBT World last week, following the Thailand Tourism Forum 2022, held earlier this month.
“We have learned from the past two years. We have learned from the Phuket Sandbox. We have learned from how the public and private sectors can work together. I have been in Thailand for 20 years and it’s the first time I have seen that level of cooperation,” Mr Barnett noted.
“What we have also seen is that we need to see the communities engage. That’s really important because
going through this pandemic there has been no roadmap, and having the community feel safe to have tourists come back and also be able to work. They are the ones providing the workforce in the hotels, so you are going to have partnerships everywhere, and you have to work with your own neighbours. That’s very important,” he added.
Mr Barnett gave a double-edged appraisal of the island’s tourism sector, which has been battered by meagre tourism figures during the past two years.
“Thailand has great infrastructure
for the service economy. They are skilled, they have experience, they have capacity ‒ but something they don’t have, especially in terms of the past few years, is that they lack leadership and innovation,” he said.
“That is something Bill Heinecke [CEO of Minor Group] mentioned at the conference [TTF 2022] as well. There has to be that edge with innovation. Business is changing.”
“What happened during the pandemic was a trend that was going to happen anyway. The rising cost of labour, the lack of skilled labour for hospitality and [the lack of] innovative style of operating hotels as you would see in the West,” Mr Barnett noted. “We have to be leaner and meaner with the approach to hospitality. We can no longer just throw endless people at it anymore. We have to make careers in hospitality and train people better and innovate our systems as well.
“Sustainable growth, not just double-digit growth every year and posting new numbers every year ‒ and that comes down to planning,” Mr Barnett explained.
“That comes down to having a master plan. Too often when we are looking at the P’s we are talking about promotion, not master planning, and that’s something still lacking in the government very much.
“I come from Phuket and Phuket doesn’t really have a tourism master...
...plan. We know how to promote, but we don’t know what is going to happen in the next five to 10 years,” he pointed out.
“I think more important is the government’s ability to mobilise infrastructure projects for tourism going forward and to invest in these projects. You can’t just take from tourism and say we want more tourists, we want to have more, more, more… without re-investing.
“There has to be investment, not only on the eastern seaboard, but other sectors as well. The government has to invest back into its tourism industry to regain and stabilise it,” he said.
Phuket Sandbox is no longer a model to recapture tourists, Mr Barnett said.
“Right now we are losing ground to other places. Over the past month we have incredibly lost ground to places like Bali. Today Bali is opening up without quarantine. We see the Maldives, we see other countries around the world embrace and get over the pandemic and try to keep moving on with their tourism profiles.
“Test & Go has to be Test & Gone. That’s number 1. To be able to
be competitive we have to raise the bar and do what other countries in similar positions are doing,” he said.
Tourism recovery will now likely take years, Mr Barnett noted.
“We are at the beginning of a new cycle. and I think we are in uncharted territory. People keep asking what is the new norm? There is no new norm because the world is upside down right now. This is like a tourism cold war right now in terms of what we’re having. In terms of fuel prices, in terms of the war in Ukraine, the political instability we’re seeing certainly is causing a lot of issues “Practically speaking, our projections for the longer term really go back to 2024. It is going to take time. When you’re in a new cycle you start from the bottom up,” he said.
CCSA RULES
TAT Governor Yuthasak Supasorn has announced that the agency is preparing a plan to relax travel rules in line with the timeline to declare COVID-19 an endemic disease on July 1.
The tourism goals for revenue and arrivals this year might be downgraded because of surging oil prices and inflation caused by Russia’s invasion of Ukraine, he said.
The plan to label COVID-19 endemic from the second half of the year will lead to further relaxations, including the termination of Thailand Pass, marking a milestone for the industry.
The agency has to start working on new protocols over the next four months, he added.
However, an RT-PCR COVID test result from tourists remains essential for the time being as the country is struggling with an overwhelming daily caseload, Mr Yuthasak said.
The TAT plans to propose further easing of travel regulations at the next Centre for COVID-19 Situation Administration (CCSA) meeting today (Mar 18).
The agency wants to closely monitor the Russia-Ukraine conflict as it has triggered soaring oil prices, which directly affect airline costs. The TAT will wait until the end of this month before providing a new tourism forecast for this year, he said.
“Tourism is still a key engine to revive our economy, even though revenue was stymied by negative factors,” he said.
The tourism revenue goal is B1.28 trillion this year, of which B626 billion is to come from 10 million international tourists. Another B656bn is to come from 160mn domestic trips.
CASUALTY OF WAR
The latest study by the University of the Thai Chamber of Commerce (UTCC) has indicated that the Russia-Ukraine conflict is estimated to inflict B244.7 billion worth of damage to the Thai economy, dragging GDP growth to only 2-3% this year, if it is extended for the entire year.
“The Thai economy is highly likely to grow at a rate of 2-3%, with inflation staying at 5% this year if the Russia-Ukraine conflict is prolonged throughout this year,” said Thanavath Phonvichai, president of the UTCC. “This scenario will lead Thailand to enter technical stagflation in 2022.”
Stagflation is a combination of stagnation and inflation, reports the Bangkok Post. It describes an economic condition characterised by slow growth and high unemployment (economic stagnation) mixed with rising prices (inflation).
Stagflation in the 1970s saw many developed economies suffer rapid inflation and high unemployment as a result of the oil crisis.
However, Mr Thanavath insisted, “Nevertheless, it’s too early to make such a dreadful scenario, as the situation is still full of high uncertainties… The university is still maintaining the Thai economic growth forecast at the rate it made in November last year, but will wait some time before making a new revision, possibly in April.”