The bombshell announcement this week is bound to generate antipathy and concern among foreigners both inside and without Thailand. It goes against all principles of modern customer service as well as international business practices and will ultimately undermine the goal of the government which is to assist the full recovery of Thailand’s foreign tourism sector which the World Bank predicts will not fully recover until 2026 but which has been improving in recent months with an easing of regulations imposed on it by the government, moves which had generated renewed optimism and confidence.
The announcement by the Thai government this week that it was moving to introduce a two-tier pricing structure for foreigners and locals at hotels across the kingdom has been received negatively by key players in the foreign tourism industry with real fears that the initiative may cause damage to efforts to maximise incoming visitors this year because of the negative message being sent to foreign travellers, many of whom are regular holiday makers to the kingdom and have shown loyalty towards it over the decades. The move will equally put off potential new travellers to the country as it undermines internationally recognised standards of customer service and equal treatment expected by tourists the world over.
There has been a less than enthusiastic response from the Thai hotel industry to the proposal floated on Wednesday by the government to charge foreigners a higher tariff than locals in a measure designed to boost foreign tourism income for the troubled industry despite the optimism in recent weeks that a recovery was playing out with a jump in the number of arrivals.
However, the reaction of senior hoteliers has not been positive with the idea of discriminating at hotels between foreign and local guests being repugnant and offensive to many western visitors to Thailand while also going against accepted international standards.
Spokesperson for a US-based luxury resort group described the shocking plans as unfair and unhelpful
Local media on Thursday, the day after the bombshell announcement, reported Ms Anchalee Sriwongsa, a spokesperson for Outrigger Resorts, a luxury hotel chain based in Honolulu which operates luxury beachside resorts on Ko Samui, Phang-nga and Phuket describing the government proposal as unhelpful.
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‘Personally, I don’t see how this would help,’ Anchalee Sriwongsa, a PR expert and the spokesperson for the international resort chain said.
She was speaking with Coconuts, a popular news website in Thailand.
‘The tourism sector should be a globalised thing. I don’t see how it’s fair that Thais should have to pay lower rates as opposed to foreigners. Foreigners have a lot to pay already in terms of travel expenses.’
In central Bangkok, at the 5-star Bangkok Marriott Marquis Queen’s Park in the Sukhumvit area, extremely popular with both foreign residents and visitors alike, a spokesperson for the hotel was also not in favour of what is being advocated by the government.
‘I don’t think it’s fair,’ explained Nutnicha Limpanasumarn. ‘Whether we are Thai or foreigner, we should all pay the same rates.’
Two-tiered pricing plan may impact foreign residents who predominantly hold international passports, the principle is anathema to modern-day business
There is concern about the PR damage to Thailand such a proposal could bring about as it contravenes established international norms on what is acceptable and not acceptable.
There is also a lack of clarity on whether the proposal will extend to foreign residents living in Thailand who are a key source of revenue to hotels as they travel throughout the country availing of what has been, up to now, quite a competitive industry and one of the key reasons for the success of Thailand’s foreign tourism sector since the 1960s.
The initial understanding is that it would apply to foreigners in Thailand who predominantly hold international passports with annual visas although the principle of discriminating against customers based on their nationality is both anathema and repugnant to most responsible business concerns and something very different to publicly funded Thai institutions and services.
Goes against Sheraton Hotel group’s international policies where charges are universal for all customers
This was raised by spokesperson Guntapitch Rodpun for the Sheraton Hotel Group which operates chain hotels around the country including establishments in Bangkok, Hua Hin, Cha-am, Prachin Buri and Ban Chaweng Yai who said that any formal policy or proposal like this to discriminate against hotel guests based on their citizenship would contravene the international hotel chain’s policies regarding the treatment of customers while emphasising the group’s commitment to one set of charges for all customers.
‘While several hotels may have implemented a separate pricing structure for Thai nationals and foreigners in the past, we have never had that kind of pricing structure,’ Mr Guntapitch outlined. ‘Although we have not received any direct proposal, our hotels have always featured universal rates for Thai nationals and foreigners alike.’
News of floated government plan to protect Thailand’s ‘tourism brand’ spreads worldwide
On Wednesday, the highly controversial proposal which is bound to cause concern and shock among many potential foreign tourists and which is already generating highly damaging coverage for Thailand internationally, as a favourite tourist destination, was put forward by government spokesperson Trisulee Traisanakul.
Ms Trusulee explained to reporters that the initiative being proposed was designed to protect the kingdom’s ‘tourism brand’ and assist in maintaining a high standard of services going forward.
She explained that there is concern within the industry that even with improving foreign tourist numbers, Thai hotels are still experiencing low occupancy rates with one industry source this week suggesting that the occupancy rate for hotels in the kingdom was between 30% and 34%.
This is true even among high-value and premium hotspot destinations such as Bangkok, Phuket, Krabi and Ko Samui in Surat Thani province.
Tourism Council of Thailand says that 80% of Thai hotels enjoy less than 50% of pre-pandemic income levels, higher prices required to sustain ‘momentum’
The Tourism Council of Thailand, this week, told the media that a full 80% of hotel properties in Thailand are currently operating at only 50% of the revenue seen before the pandemic emergency which saw swingeing lockdown measures that have severely damaged the industry and its ability to return to normal.
The nature of the emergency and Thailand’s unique dependency on foreign tourism meant that the kingdom was among the countries hardest hit economically and it has struggled to recover since the 6.1% contraction of the economy in 2020 with only a 1 .6% growth rate last year and a currently projected 2.7% for this year.
The World Bank has estimated that it will be 2026 before the country’s foreign tourism fully recovers from the disaster.
‘This is to maintain our standards of rates and services for foreign tourists, which affects the perception of the country’s tourism brand,’ Ms Trisulee Traisanakul said at Government House on Wednesday when the announcement was made and linked with the Ministry of Tourism and Sports. ‘Rates that have been reduced during Covid-19 will be maintained for Thais to sustain the momentum of domestic tourism.’
No detailed proposals on the plan available except for proposed consultations with the hotel industry
No detailed proposals were released concerning the initiative which came out of the blue but just days after an eye-raising statement by Minister of Public Health and Deputy Prime Minister Anutin Charnvirakul calling for the Thai tourism industry to rebrand and reposition itself as a quality, high-value proposition in which the colourful and outspoken minister compared the Thai travel industry to Louis Vuitton handbags.
Those comments drew an extremely hostile reaction from foreigners living in Thailand and regular visitors to the kingdom over the past 72 hours.
Mr Anutin is the leader of the Bhumjaithai Party in Thailand which also controls the Tourism and Sports Ministry where fellow Bhumjaithai Party member Phiphat Ratchakitprakarn is the minister.
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On Wednesday, the government announcement suggested that the proposal to charge foreigners pre-pandemic tariffs were to be formulated by the Ministry Of Tourism and Sports and it was suggested that talks between the ministry, the Tourism Authority of Thailand (TAT) and the Thai Hotels Association would take place in preparation.
One theory is that the proposal could be introduced using the government’s Emergency Decree as a temporary proposal to facilitate the recovery of the foreign tourism industry which is how it was presented to the media on Wednesday.
Long-standing opposition by foreigners to dual pricing at public parks and within the health system
Following the announcement which has left many foreigners both in Thailand and outside, understandably reeling given the visceral reaction there has been over the past few decades to dual pricing in the kingdom in respect of government-sponsored services such as public health care and the cost of entry to public parks, the Minister of Tourism and Sports Phiphat Ratchakitprakarn appeared to confirm the initiative telling the media that he was arranging a meeting with the Thai Hotels Association to discuss the proposal further.
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Tiered pricing in Thailand for health services discriminating between foreigners and locals was upheld by an Administrative Court in Thailand at the end of September last year in a case taken by cancer patient Erwin Robert Buse who has campaigned tenaciously on the issue for seven years.
Foreign residents to Thailand are more concerned about this proposal as it concerns day-to-day private commerce without a link to public funds.
They fear the principle may be extended to other foreign tourism services such as taxi fares where it may influence rogue drivers and that it simply sends the wrong message.
Kingdom’s foreign tourism recovery has already run into a bottleneck with a lack of flight connectivity
The controversial plan is coming with bottlenecks developing in the foreign tourism recovery as the kingdom is pushing for ramped-up inward numbers and foreign tourism income given the increasingly darkened economic landscape with rising inflation and ballooning current account deficits from April to May 2022 driven by missing foreign tourism receipts and high energy costs for oil.
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In the last week, the Director-general of the Tourism Authority of Thailand (TAT), Yuthasak Supasorn revealed that Thailand still has only 30% of international flight connectivity compared to that available before the pandemic.
Mr Yuthasak revealed that Air Canada was set to reopen its Vancouver Bangkok route in December while Korean Air is expected to resume flights from South Korea to Thailand in the fourth quarter.
Airfares for incoming tourists to Thailand are already higher by between 20% to 40%, this plan would make Thailand even less competitive in its market
However, the current turmoil in the airline industry is impeding efforts to revive Thailand’s foreign tourism juggernaut with 55% of the pre-pandemic level of flights required at a minimum, according to Mr Yuthasak, to allow the industry to return to 2019 levels of foreign tourism activity.
Even for those who can get flights to Bangkok, Phuket and other international airports in Thailand at this time, the fares are higher according to the tourism chief by anywhere from 20% to 40%.
‘Tourists face higher travel costs, particularly from inflation and airfares, which have increased by 20% to 40%. The Tourism Authority of Thailand (TAT) is working with airlines, both scheduled and chartered services, to roll out joint promotions to help offset those costs. However, for Europe’s summer season in August, it might be too late to prepare any stimulus packages,’ he explained.
Top airline boss cautious about government’s plan to end emergency measures for foreign tourism sector
However, another reason why airlines may not be prioritising Thailand and Bangkok may be the unpredictable nature of Thai government policy as illustrated by this week’s proposal.
Government’s unpredictability and uncertainty are a significant challenge to the industry’s recovery
In March this year, Mr Tariq Al Mutawa, the Head of Emirates in Thailand, perhaps the most important foreign airline flying into the country at both Suvarnabhumi Airport in Bangkok and Phuket International Airport, said that his airline was adopting a cautious approach to Thailand because of the variable nature of official policy in the kingdom.
The surprise announcement on Wednesday regarding a dual pricing system for foreigners is coming when there is a clear jump in numbers with unofficial figures suggesting that Thailand will see 822,000 arrivals from June 1st to July 3rd and with tourist chiefs in holiday hotspots such as Pattaya reporting an improvement in trade after the nightlife industry was allowed to return to a 2 am closing time in addition to the full removal of all pre-arrival requirements for incoming tourists with the abolition of Thailand Pass on July 1st.
Thailand is facing stiff competition from Cambodia and Vietnam according to foreign tourism boss
However, the current worldwide surge in international travel due to pent-up demand has also prompted Thailand’s competitors such as Cambodia and Vietnam to also up their game and in many ways, these countries are offering a lower cost and more convenient offering to foreign tourists who are regular visitors to Thailand.
Dual pricing was a concept widely used in communist countries but has been eliminated over the years even in Vietnam which is still a communist one-party state.
It announced an end to the system in January 2020.
The battle that Thailand is engaged in to win foreign travellers was confirmed by Chamnan Srisawat, the President of the Tourism Council of Thailand this week.
Mr Chamnan reduced his estimate of the number of arrivals the kingdom can achieve this year from 15 million to 12 million which is still ahead of the government’s official prediction of 9.3 million foreign tourists with many analysts suggesting an upwards figure of 10 million of 25% of that seen in 2019.
Perception of this proposal is damaging
They say in marketing, customer perception is everything.
This week’s announcement by the Thai government has certainly not improved the kingdom’s brand, particularly amongst its extremely valuable base of loyal and regular visitors to the country who have been coming for decades.
The initiative sends the wrong message, certainly not a welcoming one, to prospective travellers, many of whom may also opt, in the future, to become residents of Thailand and investors in the country.
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