3 Jan, 2015

What made Thailand a unique travel & tourism country in 2014

Exclusive analysis by Imtiaz Muqbil

Bangkok – Thailand has become arguably the first in the world to statistically prove how political and geopolitical events at the local, regional and global levels can be both good and bad for the travel & tourism industry. From time to time, all countries are affected by negative man-made crises, and all benefit from positive man-made policies. But it is rare for any one country to provide incontrovertible proof of both in the span of one calendar year. Thailand has just done that.

Local politics

After four years of remarkable growth, Thailand is projected to end 2014 with a decline in total visitor arrivals to a little more than 25 million, down about 3% from 26.7 million in 2013. This is primarily the result of the domestic political crisis, which has been bubbling on slow-fire for several years. It first had a serious impact in November 2008 when the country was hit by the shutdown of Suvarnabhumi airport, Thailand’s main aviation gateway, and again in April-May 2010 when the takeover of the Central Business District in Bangkok led to a seven-week stand-off between the so-called yellow shirts and red-shirts antagonists. After a three-year hiatus, more downtown protests struck in late 2013 and early 2014.

In May 2014, the military finally carried out the coup that was not a coup. The resulting imposition of martial law led to a steep downturn in visitor arrivals in third-quarter 2014. Arrivals had already started slowing down in 2013 but a nascent turnaround taking shape in first-half 2014 hit the skids after the coup. All the major markets slumped, especially China, Russia, Malaysia, Japan, India, Korea and Europe. After TAT, Thai Airways and the private sector again gunned the marketing engines, arrivals picked up in the last quarter but were not strong enough to allow the entire year to end at a breakeven level.

This is entirely a man-made downturn, and Thailand can only blame itself. Conflicts caused by domestic politics and other factors too complex to be discussed here are indeed a major determinant of travel & tourism fortunes.

International Visitor Arrivals to Thailand 2007-2014
Year	Number	+/-(%)
2007	14,464,228	+4.65
2008	14,584,220	+0.83
2009	14,149,841	-2.98
2010	15,936,400	+12.63
2011	19,230,470	+20.67
2012	22,353,903	+16.24
2013	26,735,583	+19.60
2014*	25,500,000	-3.94
Remark: *Projected figures
Source: Tourism Authority of Thailand

 

Global geopolitics

The arrivals downturn has been aggravated by the impact of international geopolitics. Arrivals from Russia, one of the most rapidly growing markets between 2009-13, slowed significantly in 2014, thanks entirely to the economic and financial difficulties triggered by the United States and European-imposed sanctions over the conflict in Ukraine.

Many destinations worldwide have seen major growth in Russian arrivals in recent years. Thailand is the largest recipient of Russian visitors in the ASEAN region. Russia is also one of Thailand’s few source-markets which generates more female arrivals than men. The average length of stay has jumped from 12 days in 2010 to 15.2 days in 2013. Total foreign exchange earnings from Russian arrivals nearly trebled from just over US$1 billion in 2010 to US$3.9 billion in 2013. That is a significant contribution to jobs and income, well ahead of U.S. visitors.

Thailand is not party to the geopolitical row between Russia and the West but has become an indirect victim of this purely man-made crisis. Popular Russian tourist spots such as Pattaya have been affected. If Russian visitor arrivals had maintained normal levels, the overall decline in arrivals caused by the local political crisis would have been lessened. Although Chinese visitor arrivals also were hit by imposition of martial law, they bounced back in the last quarter 2014. Russian arrivals did not, mainly due to the sanctions and the impact on the ruble.

Russian Visitor Arrivals to Thailand 2007-2013
Year	Arrivals	% Change
	(by Nationality)
2007	277,503	47.88
2008	324,120	16.8
2009	336,965	3.96
2010	644,678	91.32
2011	1,054,187	63.52
2012	1,316,564	24.89
2013	1,746,565	32.66
2014 (Jan-Nov)	1,419,561
Source: Ministry of Tourism and Sports

 

Regional politics

Now for the positive news. Thailand is benefiting from peace and progress in its neighbouring countries of the Greater Mekong subregion – Cambodia, Laos and Myanmar.

The vision of the Thai government, dating back to former Prime Minister Chatichai Choonhavan in the late 1980s, to convert war zones into trading zones is coming to fruition. The extensive work done by the UN Economic and Social Commission for Asia-Pacific to develop the Asian Highway is producing huge results.

On its northern border, four bridges now connect Thailand and Laos across the Mekong River, some of them funded by the Asian Development Bank. Cross-border transport, trade and tourism is booming. Visitor arrivals from outside the region are gaining access to unexplored destinations opened up by the increased connectivity. Laos, categorised by the U.N. as one of the least developed countries in the world, is next in line to become the seventh country to generate more than one million annual visitor arrivals for Thailand.

The same is happening on the Thai-Cambodian border to the east. Improved highways have made it possible to drive from Bangkok to Siem Reap, gateway to the famed temples of Angkor Wat. Another highway is emerging at the southern tip of the Thai-Cambodian border, which will make it possible to drive from Bangkok to the southern Cambodian resort island of Koh Kong and the port of Sihanoukville.

The latest beneficiary of peace is Myanmar. The sanctions have been removed. Visa and aviation policies have been liberalized. The tourism gold rush has begun. Thailand is benefiting across the board. Not only are direct visitor arrivals from Myanmar up strongly, Thailand is also the primary transit point for visitors heading for Myanmar from outside the ASEAN region. In 2014, Burma hosted the ASEAN leaders summit, and will host its first ASEAN Tourism Forum in January 2015. Increased road connectivity between Thailand and Burma is also in the offing, making a bridgehead between ASEAN and Northeast India. That will lead to more bilateral and intraregional travel.

Laos, Cambodia and Myanmar have become a saving grace for Thailand. Arrivals from each have risen steadily over the past three years. If the three countries once needed Thailand to help put their tourism sectors on the map, Thailand now needs them to prop up its visitor arrivals. The score is even. How times change.

Arrivals to Thailand from Laos, Cambodia, Myanmar 2010-2014
	2010	2011	2012	2013	Jan-Nov 2014
Laos	715,345	891,950	975,999	976,639	893,775
Cambodia	146,274	265,903	423,642	481,595	498,854
Myanmar	90,179	110,671	172,383	129,385	185,882
Source: Ministry of Tourism & Sports

 

Conclusion

Global travel and tourism can now cite one country to prove beyond doubt that politics and geopolitics, both for better and for worse, are equally as important as economic ups-and-downs in determining industry fortunes. When countries are at peace within and with each other, travel and tourism booms, and vice versa.

As such, the people of this industry, especially at the grassroots rank-and-file level, have got every right to make their leaders accountable for building peace first and developing economies later. Countries such as Thailand which are affected by disputes to which they are not parties also have got every right to demand that the major global powers stop fomenting geopolitical trouble that exact a heavy ripple-effect toll on jobs and income in distant lands.

The Thai tourism industry worked hard throughout 2014 to convert crises into opportunities. By becoming the first to prove the impact of domestic, regional and international politics on travel and tourism, Thailand and its tourism sector are well placed to take the lead in demanding that the linkage between peace and tourism be put at the forefront of the global agenda.

Tourism by itself does not build peace, but it is both its primary victim in bad times and primary beneficiary in good times. That much is now clear.