29 Sep, 2007

2008 A Year Of Reckoning For PATA

Imtiaz Muqbil

The year 2008 will be a year of reckoning for the Pacific Asia Travel Association. Two of its biggest sources of program revenues — the new CEO Challenge and the annual PATA mart — are going to be under pressure to perform.

1. 2008 A YEAR OF RECKONING FOR PATA

The year 2008 will be a year of reckoning for the Pacific Asia Travel Association (PATA). Two of its biggest program revenue sources — the annual conference, now restructured into a high-level summit of CEOs and devoted solely to the subject of climate change, and the annual PATA mart — are going to be under pressure to perform. The association is making yet another attempt to convert its chapter members into full dues-paying members, and has made membership retention its top business priority. But at a time when all industry sectors are seriously examining returns on investment and seeking more cost-effective means of doing business, the new era of change is fraught with uncertainty.

This report, the result of numerous interviews conducted with PATA members and board members, raises a number of concerns about the directions of PATA, which is funded to a considerable extent by taxpayers money routed through member national tourism organisations. Many of the interviewees are long-standing members through two generations who insist they have the best interests of PATA at heart.

“If PATA were to be dissolved tomorrow, I don’t think the flow of travel & tourism in the region would miss a beat,” said one board member. “On the other hand, if such an organisation did not exist, it would have to be invented. So the key question is: What does it need to do that others cannot, that really makes a difference? Is it truly providing leadership in line with the claim of being the “Voice of Pacific-Asia tourism”?

Many members agreed to the interview in order to deliberately defy a request for confidentiality made at recent PATA board meetings. The last PATA meeting opened with such a request. One board member called this a “gag order”. He said, “This is not the Ministry of Defence or an Intelligence agency. There is nothing so sensitive here that cannot be discussed with whomsoever we feel fit. It has long been part of PATA’s vibrant democratic tradition to talk to the media. Western governments preach to us in Asia about transparency and accountability. Why shouldn’t this apply to PATA?”

He added, “Every member is technically a shareholder and has every right to know how the organization is being managed and how their money is being spent. If the board has nothing to hide, and is acting correctly and professionally, why should they have anything worry about? The same would apply to the management.” Here are some of the results of the interviews, but first some historical background and context, for those who are not entirely familiar with PATA.

BACKGROUND

PATA was founded in 1951 in Honolulu, initially known as the Pacific Area Travel Association largely in order to promote travel into Asia from North America and Europe, the two key source markets of visitors at that time. With the boom in travel that followed the advent of the commercial jetliners, it quickly grew into a major networking opportunity which eventually became the PATA Travel Mart. Located for many years in San Francisco, it spawned a generation of chapters worldwide. Together, the annual conference, travel mart and chapter network created a formidable collection of dedicated industry professionals, and gave PATA its prominent brand and influence. Destinations once competed vigorously, even viciously, to host the conference and mart.

The industry, too, was different. The simple link between buyer and seller with travel agent and tour operator as a middle-man was still active. There were no GDSs or travel advisories. Terrorism was mostly an Irish phenomenon. The hotel industry had no terminology like “EBITDAR”. When Asia boomed after the end of the Indochina wars, the name was changed to Pacific Asia Travel Association, to reflect the new realities, and the home base was moved to Bangkok, pretty much in the heart of Asia.

The end of the Cold War and the single-minded positioning of the travel & tourism industry as a job-creator and economic-force by new organisations such as the World Travel & Tourism Council all through the 1990s triggered a new wave of growth. All that changed, first after the Asian economic crisis of 1997 and then in the aftermath of 9/11. Then came other crises like the haze, SARS, the US-led attacks on Afghanistan and Iraq and the tsunami, plus internal upheavals in once high flying destinations like Indonesia. As the industry suffered, so did PATA membership as members cut costs.

Dutchman Peter de Jong took over as President and CEO in November 2001, just two months after 9/11. His forte was running associations. Today, he is widely credited with keeping the association afloat through the troubled waters but the future may require a different set of skills. Said one board member, “We hear a lot of slogans and talk of “visionary leadership” and “strategic thinking”, but there are some serious challenges ahead that need to be addressed.” Here are some of the issues that have been raised:

MEMBERSHIP AND CHAPTERS REVAMP

Once considered the ‘strength’ of PATA, the worldwide chapters played a critical role in PATA’s communications and networking efforts (very much like the Skal club). At their peak, the PATA chapter handbook says, “PATA’s network of 82 Chapters and Satellites and their more than 16,000 members forms a vital grass roots volunteer network unmatched in the industry. Chapters are located on five continents in 38 countries and territories. Each Chapter conducts programmes that respond to the needs and interests of its local travel community. Chapter promotional activities throughout Asia Pacific, North America, Europe and South America reach a combined attendance of nearly 500,000 travel industry professionals annually.”

However, because they did not pay the full membership dues but a far lower set of chapter dues, and were also an administrative chore to manage, it was decided to “integrate” the chapter members and make them full members through a phased three year programme 2005-2007 (details listed on the PATA website). This meant that the force of 16,000 members would have to all pay much higher dues or drop out. As many had been with PATA for years and had contributed significantly with time and effort, many felt hugely affronted at being treated thus.

In reviewing the results at the first meeting of the newly formed membership advisory committee in April 2007, Mr de Jong said that the integration plan “had the desired effect of sanitising the chapter network,” reducing the total number of chapters to 39. Among the prime casualties was the Hong Kong chapter. But he also admitted that “perhaps we misjudged the criteria when it came to membership development” because of the differences in activities amongst chapters.

Now, Mr de Jong has changed his tune. He is talking of recognising the “fraternal nature” of the chapters and coming up with a new proposal that moves away from “policing compliance with the terms of integration” towards playing a more supportive role. In other words, using a carrot rather than a stick. He is backed by PATA stalwart Mr Alwin Zecha of Pacific Leisure who told the meeting that quality should be considered more important than quantity.

Whether that works either is yet to be seen. But members say there has been significant damage to PATA’s global reach. Many ex-members reported that they dropped out simply because the price difference between being a chapter member and a full member was so huge that it simply was not worth it, especially when considering the services they would get for their money. Most importantly, one board member said, “there is no way of putting a dollar figure on the value of that huge force of volunteers in terms of the help they could have delivered by spreading positive messages during the numerous recent crises.”

CEO CHALLENGE

If aspects of the chapters integration are now said to have been “misjudged”, another potential case of misjudgment is looming. This involves disbanding yet another long-standing PATA pillar, the annual conference, and replacing it with a “CEO Challenge” to be held in Bangkok in April 2008 to focus solely on the subject of climate change and its impact on travel & tourism. Already, there is a lot of head-shaking about this in the aftermath of what one board member called rather “heated discussions”.

Firstly, the broad diversity of subject matter at the former annual conferences allowed delegates to come up to speed with several different issues at the same time. Although the mono-theme of climate change is hugely important for travel & tourism, it will have featured intensively in dozens of global conferences between now and April 2008, including an Asia-Pacific summit of environmentalists in Bali in December 2007, the UNWTO conference this October, a UN summit this September, and many more. A number of members have asked what “new” value will the PATA event bring to it.

Secondly, the asking price per delegate is US$ 1,200+ upwards which several members say is beyond the ability of most members to justify. Thirdly, PATA has partnered with two aviation and hotel consultancies which run their own conferences, raising further questions about who will gain more benefit, PATA or the consultancies? Questions have also been raised about the choice of these consultancies, neither of which have any expertise on environmental issues. “You would have thought they would link up with the UN Environment Program or the Asian Institute of Technology,” said one PATA member. “That would have made more sense.”

PATA is projecting an attendance of about 500-700. The consultancies are expected to bring in a number of non-members whom PATA hopes to convert into members. This in itself is a curious turn of events. In the old days, many chapter members couldn’t afford to attend the annual conference. Today, many full members say they probably can’t afford to attend the revamped conference. Nevertheless, PATA is projecting that the CEO Challenge will yield a surplus in 2008, based on budgeted revenues of US$ 704,000 and expenses of US$ 673,560. As the scrapped annual conference in 2007 meant zero revenues from this normally strong source of income, earnings from the CEO Challenge are projected to be critical in helping PATA generate a net budgeted revenue surplus of US$ 188,255 in 2008 – if it can meet the forecast attendance targets.

The Thai taxpayer will be a major contributor — to the tune of five million baht, courtesy of the Tourism Authority of Thailand. A TAT spokesman said the TAT is extremely pleased to have the conference in Thailand because of the publicity value and the promised presence of a number of important speakers. “They’ve told us of great plans,” he said. “It all looks good on paper. We think the money will be well spent, if it delivers what they say it will.” Asked if he thought it would be a good idea to check how that money is spent, the spokesman said, “I suppose so, but I’m not sure how.”

PATA TRAVEL MART OR ITB ASIA?

Next to membership dues, the annual travel mart is PATA’s second biggest money-spinner. This year’s hugely successful mart in Bali earlier this week has projected budget revenues of US$1.13 million in 2007, or about one-third of the total revenues of US$3.69 million projected this year. Without any hesitation, virtually every member this editor spoke to credited its success to what one called “the superb administrative and management work” of Ms Sheila Leong, Director-Events, who joined PATA long before Mr de Jong and has developed management of the mart into an art form.

The PATA Mart has enjoyed a unique historical position as the undisputed king of pan-regional travel shows. Next year, things may not look so rosy. The next PATA Mart is set for Sept 16-19, 2008 in Hyderabad, India’s IT City. Exactly a month later, between October 22-24, 2008, the inaugural ITB Asia is due to launch in Singapore. This will merge the huge marketing power of ITB Berlin and Singapore Inc. Already, a huge toss-up is under way as the industry evaluates which one to attend.

Organising company Messe Berlin clearly read Asia’s winds of change and quickly found its niche. Seeing that Asia has thousands of small and medium-sized travel companies looking for cost-effective exposure, it has offered them special inaugural rates. It noted the need for a one-stop-shop for buyers and sellers of all kinds, just like ITB Berlin, and is pursuing buyers from the MICE sector and business travel in addition to international exhibitors “from all parts of the value-added chain”. Having “the entire spectrum of the global travel industry at ITB Asia will enable buyers from Asia to search for new products in order to market them throughout Asia and the world, as well as assisting international sellers to expand into new markets,” the media release said.

To bring in more numbers, a conference will run alongside, based on the ITB Berlin Convention “Market, Trends & Innovations”, now claimed to be the largest event of its kind in Europe. This will be “tailored to meet the needs of the new generation of Asian travel entrepreneurs.”

In other words, the ITB Asia will merge the networking opportunities of the former PATA conference and business platform of the present Travel Mart. Its major advantage over the PATA mart will be its universality, unhindered by the constraints of providing a platform only for members. At a time of proliferating trade shows, with many countries and companies evaluating which ones they attend, this is already figuring high on the must-attend list of shows. So far, there is no indication how PATA plans to retain its competitive edge. “I hope there will be no more misjudgments,” said one PATA board member.

CRISIS MANAGEMENT

“PATA’s crisis centre PATA’s advocacy and crisis communications function is vital to the Asia Pacific travel and tourism industry. All industry stakeholders derive significant indirect benefit from it.” Thus boasts PATA’s website. As examples of how it has “protected the reputations of destinations affected by crisis,” it cites “its response to the October 12, 2002 Kuta nightclub bombings in Bali, the region-wide SARS-related tourism crisis in 2003 and its quick response to the December 26, 2004 Indian Ocean tsunami.” It adds, “PATA continues to respond thoughtfully and proactively to events throughout the region that have a potential negative impact on tourism flows.”

Nevertheless, when the bombs went off in Bangkok, its HQ city, on New Year’s eve 2006-2007, the lights were out at the association offices. The first statement on the matter did not appear on the PATA website until offices reopened for work on January 4, saying there had been no significant impact on travel & tourism to the city. When the European Union imposed a ban on the Indonesian airlines over safety concerns in July 2007, the Indonesian travel industry cried foul, questioning the justification of a blanket ban, the jurisdiction of the EU over Indonesian aviation and noting the impact on rural tourism. PATA’s response: A statement several days after the fact “expressing concern” and lauding the efforts of other travel organisations such as IATA in addressing the issue. Commented one member, “I’m not sure if either of those qualify as ‘thoughtful and proactive’ responses, not to mention that they were way too late.”

DOT TRAVEL

Some years ago, PATA was encouraging its members to sign up with the “dot-travel” enterprise. That cause is no longer being pushed to the same extent. Mr de Jong has been quoted as saying that PATA was earning a small fee from authentication but PATA is now taking “a less active role” in promoting it. He opined that “dot-travel” domain “might not be as successful as was originally expected.” However, many PATA members signed up as a result of the PATA pitch.

CONCLUSION

The interviews as well as intensive research of PATA’s website, documentation and speeches raised many more concerns, from the involvement of Premier Partners to more troubling allegations about internal management issues to the seriousness of the advocacy agenda to the gargantuan size of the roughly 80-member board of directors to the lack of a more global perspective in relation to issues such as the UN Millennium Development Goals.

All the interviewees noted that it is not easy managing an unwieldy, multi-headed association like PATA with its plethora of egos, committees and task forces. But, they said, that is true of any public or private sector enterprise, and it is in the best interests of the organisation to see them brought out into the public domain. “There is a generation change taking place,” said one board member. “Members have a right to know. The old ways are simply unsustainable. Gag orders won’t work.”

[EDITOR’S NOTE: A series of questions about these issues were emailed to PATA President and CEO Peter de Jong on 24 September 2007, with copies to incoming chairman Brian Deeson, Assistant director of Communications Min Min Wong, Mr de Jong’s secretary Miss Ratana P., other PATA staffers, and two other industry journalists, both PATA journalism award winners. He was asked to provide replies by a deadline of Sept 28 morning. On 26 Sept, a reply came from Ms Wong acknowledging receipt. It said: “We will be in touch in due course.” No reply was received.]