The Impact of 9-11 on Thailand's Tourism Industry by Focusing on the First-Class Hotel Market in Bangkok

Westbeld, Christian

The Impact of 9-11 on Thailand's Tourism Industry by Focusing on the First-Class Hotel Market in Bangkok

Zusammenfassung

Inhaltsangabe:Abstract:
Sawasdee Khrap welcome to the kingdom of Thailand. A number of valid characterizations such as The Land of Smiles, The Land of Temples and Pagodas and Tropical Vacation Paradise describe Thailand at its best. In addition to these picturesque synonyms, the kingdom gained international recognition through its growing travel and hospitality industry. In 2001 Thailand once again booked the top spot as most preferred tourist destination in South East Asia as well as runner-up position in all of Asia, second only to China.
When Muslim extremists hijacked four domestic U.S. flights and cowardly carried out the terrorist attack of 9-11 on the U.S.A., the global travel sector felt the direct impact of the terrorist attacks like no other industry. From one day to the other tourists decided to stay at or close to home and hotel rooms were left vacant. As major employer and source for foreign exchange earnings, Thailands tourism industry was no exception to the threat.
As the brutality and human tragedy of this incident will always be remembered, the following report will focus solely on the implications for the tourism and hospitality industry. In specific, the text will take an in-depth look at the development of the first class hotel market in Bangkok following the September attacks. The report looks at 14 top hotels of Bangkok and their performance from January 2000 to March 2002. Special attention lies on the seven months following the U.S.A. attacks in September 2001, whereas a full year comparison of 2000 and 2001 will also provide valid information.
The tourism and hospitality industry is a major economic driving factor not only for Thailand, but also for many other Asian nations. Therefore, the beginning of this report deals with the regional development after the terrorist attacks. This way the reader will get an understanding of the current situation in Asia and the general impact of 9-11. After a general overview of Thailand, the first class hotel market of Bangkok will be analyzed by its occupancy, ADR and RevPar development. These performance related information create the backbone of this report and support further assumptions and findings. For validity reasons, the results are then compared to two independent surveys. The fourth section is made up of the changes in travel patterns, tourism demand and strategies, followed by a comparison of the two best performing individual hotels and their advantages over […]

Leseprobe

Inhaltsverzeichnis

ID 5907

Westbeld, Christian: The Impact of 9 - 11 on Thailand's Tourism Industry by Focusing on the

First - Class Hotel Market in Bangkok

Hamburg: Diplomica GmbH, 2002

Zugl.: Wernigerode, Fachhochschule, Diplomarbeit, 2002

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Table of Content

Table of Content

List of Abbreviations

List of Tables

1. Introduction

2. The International Tourism Industry and Thailand under

the Impact of 9-11

3. Bangkok and its First-Class Hotel Market

4. The Resulting Change in Travel Demand and Patterns

5. The Two Top Performing Hotels of the First-Class Hotel Market

in Bangkok

6. Outlook for Thailand and the First-Class Hotel Market in Bangkok

7. Limitations

8. Conclusion

Appendix

References

Solemn

Declaration

Introduction

2. The International Tourism Industry and Thailand under the Impact of 9-11

2.1 The International Tourism Industry and Armed Conflicts

2.2.The Impact of 9-11 on the International Tourism Industry

2.2.1 The International Tourism Industry Six Months after 9-11

2.2.2 The Impact of 9-11 on the Asian Tourism Industry

2.2.3 The Impact of 9-11 on the Hospitality Markets in Asia

2.3.

Thailand

2.3.1 Thailand and its Economic Performance

2.3.2

Thailand's

Tourism

Sector

3. Bangkok and its First-Class Hotel Market

3.1 The Bangkok Hotel Market in the Years after the Economic Crisis

3.1.1 The High-End Hotel Market in Bangkok

3.2. High-End Hotels in Bangkok Performing under the Influence of 9-11

3.2.1 Occupancy Development for the First-Class Hotel Market

3.2.2 ADR Development for the First-Class Hotel Market

3.2.3 RevPar Development for the First-Class Hotel Market

3.3

The

Major

Findings 34

3.4 The Author's Findings Compared to Other Surveys

3.4.1 The Horwath Asia Pacific Summary Market Report Bangkok

3.4.2 The Andersen Hotel Industry Benchmark Survey 2002, Asia Pacific

3.5 A Brief Comparison with Hong Kong

4. The Resulting Change in Travel Demand and Patterns

4.1 Safety and Security - Newly Perceived Influences of the Tourism Industry

4.1.1

The

Aviation

Industry

4.1.2

The

Hospitality

Industry 43

4.2 The Thai Government and the Tourism Authority of Thailand (TAT)

4.2.1

The

Thai

Government

4.2.2 The Tourism Authority of Thailand

4.3 Growing Cost Awareness in Corporate Headquarters

4.3.1 Effects of the Growing Cost Awareness

4.4

Changes

Travel

Patterns 54

4.4.1 Short-Haul and Domestic Travel Influence Business and Nationality Mix

4.4.2 Changed Travel Patterns and the Effects on the First Class Hotels

4.5 Lead-Time of Booking A Technical Approach

4.6 Strategic Adjustments and Reactions by Individual First-Class Hotels

4.6.1

Leisure

vs.

Corporate

Travel

4.6.2 Discounts, Promotions and Relationships

4.6.3

Loyalty

Programs 65

4.6.4 Cost Saving Strategies in the Hospitality Industry

4.7

Integrated

Approach

5. The Two Top Performing Hotels of the First-Class Hotel Market in Bangkok

6. Outlook for Thailand and the First-Class Hotel Market in Bangkok

6.1 Safety and Security Influence Future Growth

6.2 Economic Uncertainty and Confidence

6.3

The

Competitive

Situation 73

6.4

The

Comparative

Advantage

6.5

Change

Brings

Opportunity

7. Limitations

7.1

Time

Constraints

7.1.1

First

Quarter

2002

7.2

Different

Measures

Occupancy 78

7.3 An Overemphasis of the September Attacks

Conclusion

List of Abbreviations

ADR

Average Daily Room Rate

ASEAN

The Association of Southeast Asian Nations

BITEC

Bangkok International Trade and Exhibition Center

BMW

Bayrische Motorenwerke

BTS

Bangkok Transit Skytrain

CEO

Chief Executive Officer

CFO

Chief Financial Officer

COO

Chief Operating Officer

E.g.

For

example

European

Union

Etc.

Et cetera, and so forth

FDI

Foreign Direct Investment

FIT

Foreign Individual Traveler

GDP

Gross Domestic Product

GDS

Global Distribution System

General

Manager

IATA

International Air Transport Association

ITB

Internationale Tourismus Boerse

JTB

Japan Travel Bureau

MICE

Meetings, Incentives, Conventions and Exhibitions

NIC

Newly Industrialized Countries

PATA

Pacific Asia Travel Association

Ph.D.

Doctor, Dr.

PWC

PriceWaterhouse

Cooper

RevPar

Revenue per available room

SAS

Scandinavian Airline Systems

SPG

Starwood Preferred Guest Program

TAT

Tourism Authority of Thailand

THA

Thai Hotel Association

U.K.

United

Kingdom

U.S.A.

United States of America

U.S.

United

States

WTO

World Tourism Organization

WTTC

World Travel and Tourism Council

List of Tables

Table A

Decrease in Int. Tourist Arrivals per Region Sep. 2001 Dec. 2001

Page 4

Table B

Change in RevPar 2000 vs. 2001

Page 10

Table C

Monthly Arrivals to Thailand 2000 vs. 2001

Page 14

Table D

Tourist Markets for Thailand Share in 2001

Page 15

Table E

Average Occupancy Development Aug. 2001 Mar. 2002

Page 22

Table F

Riverside vs. Downtown Hotels in Occupancy after 9-11

Page 23

Table G

Top Performers During the Sep. 2001 Mar. 2002 Period

Page 25

Table H

ADR Development Aug. 2001 Mar. 2002

Page 27

Table I

Riverside vs. Downtown Hotels in ADR after 9-11

Page 28

Table J

Sharpest Increase in ADR for Sep. 2001 Mar. 2002

Page 29

Compared to Previous Period

Table K

RevPar Development Aug. 2001 Mar. 2002

Page 31

Table L

Riverside vs. Downtown Hotels in RevPar after 9-11

Page 32

Table M

Sharpest Increase in RevPar for Sep. 2001 Mar. 2002

Page 33

Compared to Previous Period

Table

N The

Three

Major

Findings

Page 35

Table O

First 8 vs. Last 4 Months in 2001

Page 36

Table

P The

Surveys

Comparison

Page 39

Table Q

Adjusted Influence of Cost Awareness on Bangkok Hotel Market

Page 53

Table R

Le Royal Meridien vs. the JW Marriott

Page 69

1. Introduction

"Sawasdee Khrap" welcome to the kingdom of Thailand. A number of valid

characterizations such as "The Land of Smiles", "The Land of Temples and Pagodas" and

"Tropical Vacation Paradise" describe Thailand at its best. In addition to these picturesque

synonyms, the kingdom gained international recognition through its growing travel and

hospitality industry. In 2001 Thailand once again booked the top spot as most preferred tourist

destination in South East Asia as well as runner-up position in all of Asia, second only to China.

When Muslim extremists hijacked four domestic U.S. flights and cowardly carried out the

terrorist attack of 9-11 on the U.S.A., the global travel sector felt the direct impact of the terrorist

attacks like no other industry. From one day to the other tourists decided to stay at or close to

home and hotel rooms were left vacant. As major employer and source for foreign exchange

earnings, Thailand's tourism industry was no exception to the threat.

As the brutality and human tragedy of this incident will always be remembered, the following

report will focus solely on the implications for the tourism and hospitality industry. In specific,

the text will take an in-depth look at the development of the first class hotel market in Bangkok

following the September attacks. The report looks at 14 top hotels of Bangkok and their

performance from January 2000 to March 2002. Special attention lies on the seven months

following the U.S.A. attacks in September 2001, whereas a full year comparison of 2000 and

2001 will also provide valid information.

The tourism and hospitality industry is a major economic driving factor not only for Thailand,

but also for many other Asian nations. Therefore, the beginning of this report deals with the

regional development after the terrorist attacks. This way the reader will get an understanding of

the current situation in Asia and the general impact of 9-11. After a general overview of

Thailand, the first class hotel market of Bangkok will be analyzed by its occupancy, ADR

and

RevPar

development. These performance related information create the backbone of this report

and support further assumptions and findings. For validity reasons, the results are then compared

to two independent surveys. The fourth section is made up of the changes in travel patterns,

tourism demand and strategies, followed by a comparison of the two best performing individual

Average Daily Rate

Revenue per available room

hotels and their advantages over competitors. A short outlook for the first-class hotel market and

the survey's limitations and a conclusion complete this report.

The key aspects of this paper are backed up by extensive research on the topic by the author

and a number of interviews with various hotel professionals from first-class Bangkok hotels and

professors of local universities. All performance related information is obtained from the

"Bangkok Hotel Performance Variance" Report, a document that looks at the monthly

performance of the upper 39 hotels in Bangkok. Each participating hotel provides the relevant

information for the internally used report.

2. The International Tourism Industry and Thailand under the Impact of 9-11

Before looking in detail at the performance of Bangkok's first-class hotels under the influence

of the terrorist attacks it is useful to briefly describe the impact of 9-11 on the international as

well as Asian tourism markets. International oriented future trends and scenarios may as well

determine the future performance of Thailand's tourism and hospitality industry.

2.1 The International Tourism Industry and Armed Conflicts

During extreme situations such as the attacks on 9-11, analysts tend to take past incidents as

valid indicators for possible future scenarios. Looking at the period from 1950 to 2000, world

travel witnessed only a single year with a decrease in international tourism arrivals. In 1982, the

tourism environment was influenced by an adverse economic climate and imposed travel

restrictions on Eastern European countries as a result of the state of siege in Poland. This negative

environment lead to a 0.4 % decline in international tourism.

Two of the major armed conflicts of the 1990's, the Gulf War in 1991 and the Kosovo

conflict in 1999 led to a slowdown in tourism growth but did not lead to a decrease in total

arrivals. Notably the following year of each conflict was marked by major growth. During the

year of the Gulf War the industry grew by 1.2 %, followed by a jump in arrivals of 8.3 %. While

1999 saw international tourism rise by 3.8 %, 2000 witnessed an increase by 7.4%. However,

these conflicts can only partially be compared to the current situation but their impact on the

industry can be used as a trend-setting landmark for eventual future scenarios.

2.2 The Impact of 9-11 on the International Tourism Industry

The travel year 2000 was a year of major travel growth, influenced by booming economies in

a large number of countries, a stable situation in regards to armed conflicts with the exception of

the Middle East conflict, the recovery of the Asian markets after the 1997 economic crisis and

various millennium celebrations and special events, such as the World Exhibition at Hannover

and the Summer Olympics in Sydney. In figures international tourist arrivals reached 699 million,

representing an increase of 7.4 % or almost 50 million compared to 1999.

Following this outstanding performance in 2000, 2001 was expected to add only a modest

rate of growth to the previous number, mainly influenced by the steady deceleration of the

international economy. But then 9-11 happened and predictions were lowered significantly. WTO

Secretary General Francesco Frangialli said that the tragic events of 9-11 affected the tourism in

every region of the world, but even before that we could see a cooling in growth of outbound

travel from countries like Germany, Japan and the U.S.A. during the first eight months of the

year.

In November 2001 the WTO reported that the travel reservations worldwide stood at 12-15%

below the levels of the previous year. WTO named the terrorist attacks, the war in Afghanistan

and a weak global economy as the main reasons for the downturn in reservations.

At this point it

became even more obvious that the hardest hit destinations were the ones dependent on long-haul

air travel, destinations with a heavy reluctance on U.S. tourists and countries in the Muslim

world. However, some destinations were more effected than others and therefore a valid and

unique crisis management for everybody does not exist. The Egyptian Tourism Minister

Mamdouh El Beltagui who also chairs the Crisis Committee of the WTO said that this global

crisis must be managed on a local basis. He pointed out that specific action plans need to be

tailored in order to respond to each challenge in each destination separately.

Surpassing earlier mentioned expectations, the trend for 2001 did not look too bad. During

the first eight months of 2001 the WTO estimates that worldwide arrivals grew by 3%, which is

more than one point lower than the average annual gain of 4.3 % over the past ten years but

higher than expected after the record year of 2000.

However, the last four months of 2001 were

disastrous to arrivals worldwide, the global travel industry saw a decline of 11%. The hardest hit

N.A.: World tourism stalls in 2001, WTO, Madrid, Spain, January 29, 2002, in:

www.world-tourism.org/newsroom/Releases/more_releases/january2002/ numbers_2001.htm (3-20-2002)

www.traveldailynews.com (4-15-2002)

regions include the Americas, the Middle East and South Asia. Overall during the crisis year of

2001, international tourist arrivals fell 1.3% to 688 million, which represents the only significant

decrease since World War II and only the second decrease at all.

-30,00%

-25,00%

-10,00%

-6,00%

-3,50%

-30,00%

-25,00%

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

Middle East South Asia

The

Americas

East Asia

and Pacific

Europe

Africa

Decrease in Int. Tourist Arrivals per Region Sep.01-Dec.01

Table A (www.traveldailynews.com)

Besides these devastating figures, there seems to be hope for the near future. Mr. Francesco

Frangialli said: "We have indications that December was not as bad and that these statistics do

not reflect the dramatic changes in travel habits in the fourth quarter of 2001, as many tourists

substituted international travel for domestic trips".

For example, in France passenger numbers on

domestic flights dropped by 15% in November, whereas the numbers for rail passengers

increased by 9% during the same period. These shifts in travel habits put a new light on domestic

travel, seeing rural tourism accommodations, ski resorts, campground and bed & breakfast inns

benefiting by this development.

www.world-tourism.org/newsroom/pressreleases/wtocrisis.htm (5-27-2002)

2.2.1 The International Tourism Industry Six Months after 9-11

At the ITB tourism fair in Berlin in March 2002 participants continued to look for positive

aspects of the crisis. Tourism professionals and WTO representatives agreed that the worst crisis

in the international tourism history had reached a turning point. According to the latest WTO

forecast at that point, the industry is expected to regain pre-crisis levels by the third or fourth

quarter of this year. Secretary General Mr. Francesco Frangialli said in Berlin: "Our industry has

weathered the most serious crisis in its history and already we see light at the end of the tunnel".

Tour operators also shared the optimism, because of the earlier described phenomena of a

mini travel boom following a crisis. Participants said that travelers usually postpone trips rather

than cancel them altogether, which will eventually lead to increased travel.

The first two months of 2002 proved to be much stronger than the months of November and

December. Regions such as Europe, Africa, the Western Mediterranean and the Caribbean are

expected to bounce back in the third quarter of 2002. East Asia and the Pacific Region are

already feeling positive impulses. On the other side South Asia, the Middle East and the

Americas still feel the impact of 9-11 and will continue to be negatively effected as long as

regional conflicts do not get solved.

Now that the crisis is older than six months, it shows that governments and national travel

bureaus have responded to the crisis in a variety of ways, including subsidies, tax breaks, shifts in

marketing and promotional strategies and increased advertising. But the deep impact on the job

market is still unanswered. The World Travel & Tourism Council expects the industry to

experience a loss of 10.5 million jobs by the end of 2002.

Similar to the travel agents in Berlin,

the WTTC refers to the resilient nature of the industry and expects a positive development and

results for the long term. For the following year of 2003, an increase in all tourism branches is

expected to bring the level of employment back to pre-September numbers. The WTTC expects

the creation of 6.8 million jobs, replacing most of the businesses and lost jobs in the extended

wake of 9-11.

N.A.: Tourism recovery already underway, WTO, Berlin, Germany, March 16, 2002, in:

www.world-tourism.org/newsroom/Releases/more_releases/march2002/berlin.htm (3-20-2002)

N.A., Asia Rising, in: Rolling Pin Asia, NexC, Bangkok, Thailand, May 2002, page 31

2.2.2 The Impact of 9-11 on the Asian Tourism Industry

With the Asian economic crisis in 1997/98, the accelerating and steadily growing tourism

sector had reached a turning point. The industry managed to come back strong when the region

went through a massive economic recovery in 1999. Growth in Asia almost doubled to 5.3% in

1999, influenced partially by the return of economic growth in all ASEAN countries.

A record

GDP growth of 3.4% made up the decline of 6.2% in 1998. And with the rising economy, tourist

arrivals picked up pace again.

After two years of decreasing tourist arrivals in Asia Pacific, the tide turned and according to

the World Tourism Organization (WTO) an estimated 96.6 million people visited the region in

1999, an increase of 10.5% to 1998. As tourism plays a major role in key markets across Asia,

this was a very encouraging sign for the near future. The leading nations in international tourist

arrivals in Asia for the year of 1999 were China, Hong Kong and Thailand. However, early 2000

showed slightly increasing numbers for the first three quarters, while the shadows of recession

settled in during the last quarter of the year. Growth slowed down significantly, but managed to

remain positive. And then the September attacks happened.

The immediate impact of 9-11 on Asia was not as severe as on the North Atlantic Region or

other regions. But as the war against terror in Afghanistan is still ongoing and tensions between

India and Pakistan are still alive, South Asia is going to be the most affected region besides the

Middle East.

Nations in East Asia and the Pacific region are suffering to a much lesser extend than their

neighbors in South Asia, which is mainly because of the unstable situation covering the area from

Iraq to India. In East Asia, Indonesia and the Philippines may be the only exceptions to a fast

recovery as both have large Islamic populations and suffer under Muslim extremist groups. And

after the U.S.A. sent military consultants and supervisors to the region, the aftermath of 9-11 may

be more severe than elsewhere in the area. But, it is too early to make clear assumptions on the

development of these two nations and neighboring countries at this point.

As the long haul travel from the U.S. and Europe to Asia declined in the first months after the

terror attacks, East Asian local governments had to focus on, follow up on and promote their

security standards and safety measures in order to stay competitive within the Intra Asian travel

ASEAN The Association of Southeast Asian Nations

market. This is important for countries in order to mitigate the loss in business and face the

growing competition within the region.

The real bad news for Asia is the situation on the job market. The Asia Pacific region is

expected to experience a loss of 4.4 million jobs through 2002. Taking the WTO figures into

account, this represents 41.9% of the global job loss share. Dramatic cost and labor cuts as well

as a regulation of the market are the main reasons for this development. China was hardest hit,

with the expanding tourism sector eliminating almost 1.8 million jobs, India was second with

886,000 jobs, while Thailand and the Philippines follow with 457,000 and 315,000.

Looking at the outbound market in Asia, Japan, as the number one outbound tourist

destination deserves special attention. According to the Japanese Ministry of Land, Infrastructure

and Transport the country's eight largest travel agencies reported approximately 290.000

cancellations in international trips during September alone. These cancellations represent 1.4% of

the agencies annual revenue. The JTB, Japan's largest travel agency alone saw bookings fall by

10% to 15% during October and November compared to last year's period. Most of the cancelled

trips were to the U.S. mainland or resort hotels in Hawaii and Guam. But to blame solely the

attacks on the World Trade Center and Pentagon on this development would be wrong. The

Japanese outbound market is highly influenced by the struggling economy since the Asian crisis,

which is shown later when looking at Japanese tourist arrivals to Thailand. On the other side

there is hope for the Japanese inbound market. When the 2002 World Cup takes place in Japan

and South Korea during the month of June hotels expect occupancy rates of 100%.

The current development implies that not only Japanese but also many other travelers from

Asia will be looking for alternative travel destinations, supporting Intra-Asian travel. The

aviation industry quickly responded to the shift in demand. Japan Airlines for instance cancelled

17 weekly flights to the U.S.A. and 17 weekly flights to Hawaii. A possible rerouting to tourism

destinations in Asia is possible as the demand in tourism and travel will not disappear but only

shift to other regions. Speaking for the airline industry in East Asia in general terms, the situation

looks much better than in the consolidating European and U.S. markets. Many Asian carriers are

in a better financial situation, following reforms and belt-tightening after the 1998 Asian financial

crisis.

PATA A special report by STRATFOR, "The post September 11 outlook for travel and tourism in East Asia

and the Pacific", Bangkok, Thailand, October 14

, 2001

Overall the terrorist attacks and the following military campaign in Afghanistan represent

only a secondary factor to the Asian tourism industry. A more direct impact comes from

economic and psychological issues. A Price-Waterhouse-Cooper survey found out that 84% in

the lodging demand is related to the economy rather than concerns about travel. The PWC

analysis is based on the idea that the change in demand elasticity to economic indicators explains

the change in demand related to the economy. In the eyes of PWC, actual lodging demand

decreased by 6.5% in the fourth quarter of 2001. According to the PWC analysis, 5.4% of the

total decrease is directly attributed to the economy and only 1.1% to non-economic factors and

concerns, such as travel safety and terrorism related fear of flying. Therefore the economy

explains 83% of the decline in lodging demand. Bjorn Hansen, Ph.D., PWC Hospitality &

Leisure Practice says: "the economic effects of September were incorporated into an overall

slowdown in economic activity, and it is the economy that explains most of the decrease in

demand, not fear or even the increased inconvenience of travel".

But, this does not imply that

concerns about travel safety are not of importance to the market.

However, there seems to be hope for recovery on the horizon. WTTC President Mr.

Baumgarten agrees with the earlier mentioned standpoint that the response of local governments

and the long-term perspective for the industry in Asia remain positive again. He said that "[.] the

industry has reacted positively and swiftly through cost cutting, creative advertising, innovative

promotions and seeking new market opportunities".

Forecasts predict that five of the top ten

performers in the Asian market will grow in travel and tourism demand, despite the impact of the

terrorist attacks. China, Laos and Vietnam are expected to lead the way in the near future. The

expected boom in Asian travel and tourism over the next years would see some of the fastest

growth in industry related capital investment. The WTTC expects investment growth in

Malaysia's and China's tourism sector at an annual rate of 8.4% through 2012, followed by India

at 7.7%, Hong Kong at 6.9% and Thailand with 5.9%.

www.traveldailynews.com (4-15-2002)

N.A.: Tourism knocked down, but not out, WTO, Madrid, Spain, September 17, 2001, in:

www.world-tourism.org/newsroom/Releases/more_releases/RO10917.html (5-27-2002)

PATA A special report by STRATFOR, "The post September 11 outlook for travel and tourism in East

Asia and the Pacific", Bangkok, Thailand, October 14

, 2001

2.2.3 The Impact of 9-11 on the Hospitality Markets in Asia

International hotel chains dominate the Asian markets in terms of hotels and rooms. Leader of

the pack is Bass Hotels & Resorts followed by Accor Asia Pacific, Starwood Hotels & Resorts,

Marriott International and Hyatt International. Before as well as after the September incident,

each of theses companies holds well structured expansion plans for the Asian region.

The continued recovery of the Asian hotel market following the financial crisis was hampered

in 2001 by overall global slowdown, particularly in the U.S.A. and Japan as well as by the

aftermath of 9-11.When measured in US$, only 5 out of 28 Asian markets reported a positive

RevPar, according to Andersen's well-respected Hotel Industry Benchmark Survey. The survey

saw Ho Chi Minh City outperforming the other markets with an increase of 15% to US$29 in

2001, followed by Shanghai, Osaka, Bangkok and Kuala Lumpur.

This surprising result can be explained with a rather low staring RevPar level as well as the

strong and aggressive marketing campaign by the Vietnam National Administration of Tourism.

In addition, Vietnam experienced a notable increase in foreign direct investment as international

hotel chains see Vietnam as a future market with high potential. Furthermore, Vietnamese

authorities facilitated some visa requirements and re-opened a number of international flights,

which helped to promote tourism in the country. Runner-up Shanghai had to absorb a number of

newly added hotel rooms, while the city emerges as Asia's leading financial center. Shanghai

managed to increase RevPar by 14.2% as the average room rate was raised by 14.4%. China's

future for leisure travel and corporate business looks very promising especially after its entry into

the WTO and continuous increase in FDI.

Sydney and Manila were the two worst affected markets in the Andersen survey. Sydney

experienced a drop in RevPar of 28%, what many analysts see as the post Olympic hangover

mixed with the combined impacts of a slow economy and 9-11.The hotel market at the moment is

very competitive, because the city has not yet absorbed all the newly added capacities from 2000.

Manila with 24% less in RevPar continues to suffer from the perception of the Philippines as an

unsafe destination.

Change in RevPar 2000 vs. 2001

Sydney

Hong Kong

Bali

Osaka

Kuala Lumpur

Yangon

Manila

Seoul

Bangkok

Shanghai

Ho Chi Minh City

-40,00%

-30,00%

-20,00%

-10,00%

0,00%

10,00%

20,00%

Melbourne

Beijing

Xian

Guam

Jakarta

Tokyo

Penang

Auckland

Singapore

Taipei

Phuket

Table B (The Andersen Hotel Industry Benchmark Survey 2002, Annual Review Asia Pacific)

Bali, a previous top performer in the survey, recorded a drop in RevPar of 27.5% during the last

four months of 2001, but was able keep the decrease for the complete year at 2.4%. This

represents a major set back, as Bali raised RevPar by 11.9% in 2000 compared to 1999. The

dramatic decline in RevPar is referred to a major drop in occupancy, which dropped from 80.2%

to a low 56% in 2001.

2.3 Thailand

It is time now to look at Thailand and the performance of Bangkok's first-class hotel market.

Thailand is about the size of France and home to a population of 61.8 million people. The capital

of the kingdom is Bangkok, where 1/6 of the total Thai population live. Almost 25% of the

country's inhabitants belong to ethnic minorities, including Chinese, Malay and tribe people.

95% of the Thais are Buddhist, while Moslems make up the 2

largest religious group with 4%.

The kingdom's neighbors are Laos, Cambodia, Malaysia and Myanmar. Its climate is tropical

hot with humidity ranging from 60% to 90%. The best and main travel season is from November

to February, when the climate is warm and dry. Little cooler temperatures can be found in the

subtropical northern area of the nation.

In earlier times the agricultural sector dominated the nation's GDP. In 1974 agricultural

products were accountable for 55.7% of GDP, whereas the primary sector in 1999 contributed

only 13% to the GDP.

Over the years the service sector became the most important factor for

Thailand's GDP, reaching 47% in 1999. Although the economy has diversified significantly,

most Thais are still linked to the agricultural sector. But the slow growth within the sector means

that there is now a wider economic gap between urban and rural people. This discrepancy caused

major migration of the population from rural destinations to the towns and cities, especially to

Bangkok.

2.3.1 Thailand and its Economic Performance

Thailand enjoyed the world's highest growth rate in the period of 1985 to 1995, averaging

almost 9% annually. Economists worldwide saw the kingdom as the next nation to join the

exclusive club of the Newly Industrialized Countries (NIC). However, increased speculative

pressure on Thailand's currency led to a crisis - resulting in the Asian economic crisis - that

uncovered financial sector weaknesses and forced the government to float the Baht in 1997. Long

pegged at Baht 25 to the US$, the currency reached its lowest point of Baht 56 to the US$ in

January of 1998. At the moment 1 US$ equals roughly Baht 41.

Thailand was the first country to be affected by the financial crisis in Asia and it has been

among the first to show strong signs of recovery. In 1999 the government implemented a budget

that was aimed at stimulating general economic growth, boosting consumer confidence and

encouraging investments. As a result, a loosening of monetary policies and steady stabilization of

the national currency occurred. In particular the consumer, tourism and hotel sector contributed to

the improved economic performance of Thailand.

After two years of negative growth rate, Thailand marked a come back with 4.4% in 1999,

being able to maintain the growth at 4.6% in 2000, led by the general economic upswing,

N.A.: CIA The World Factbook, Thailand, January 24, 2002, in:

www.cia.gov/cia/publications/factbook/geos/th.html (3-2-2002)

growing export and tourism markets.

General predictions for 2001 were positive until 9-11

rushed away the little remaining hope following the global economic downturn in late 2000. For

the entire year exports declined when Thailand's most important trading partners reduced their

imports. The U.S.A. and Japan contributed to the economic slow down since the beginning of

2001. Part of this contraction in foreign demand could be offset by domestic stimulus from the

government sector. But with substantial production capacity remaining unutilized, demand for

new investments in machinery and equipment remained low, especially in the export-oriented

industries. Household consumption continued to rise, but at a slower pace than during the

previous year. Consumer confidence was shaken by the terrorist attacks, but improved steadily

after hitting a year deep in September. Besides all these negative effects, Thailand's economy

was able to prevail under the struggling global environment with a growth rate of 1.8% in 2001.

One very positive factor for Thailand's overall economic performance represents the tourism

industry, which marked a record-breaking result in 2001.

2.3.2 Thailand's Tourism Sector

Thailand lies at the geographical center of South East Asia and is made up of four major and

diverse regions with complementing resources. The northern mountainous region includes many

cultural ruins, temples and distinct ethnic hill tribes set around the ancient city of Chiang Mai.

The semi-arid Korat Plateau is set in the North-East region of Thailand, which represents the

least visited region of the kingdom. The central part on the Chao Praya River is the most fertile

and populous area, as it is centered around Bangkok. The southern region, which occupies much

of the Malay Peninsula, offers visitors the opportunity to experience outstanding coastal and

beach resort destinations.

For some time now, the Thai kingdom ranks among the top three tourism destinations in Asia

just behind China, which is believed to own the top spot in the near future. Over the years

Thailand has experienced significant growth in international tourist arrivals. This outstanding

performance is due to several factors, including the economic and political stability compared to

www.moc.go.th/thai.dbe/stat/tra_wto/ecoth1-eng.htm (3-2-2002)

www.moc.go.th/thai/dbe/stat/tra_wto/ecoth1-eng.htm (3-2-2002)

neighboring countries, the increase of flights to Thailand, increased financial support from the

government and greater cooperation from the private sector.

Only a brief look at the tourism arrival numbers is necessary in order to see the success story

of Thailand's tourism sector. Since the gulf war in 1991 arrivals have been rising, breaking one

record after another. Even the economic crisis year of 1997 saw arrival numbers increasing

slightly by 0.41%. In 1998 arrivals jumped 7.53%, mainly caused by the floating Baht and the

resulting price/value relationship. Even the high-end hotel market paid tribute to the weak

currency. Hotels sometimes lowered their rack rates weekly by up to US$ 20, up to rates that did

not exceed US$ 80 per night.

In 2000 the tourism industry comprised 200 billion Baht or 5% of Thailand's GDP. The

industry also helped to stimulate production and maximize the use of resources from other related

sectors as well as it eased off the employment burden, helped to distribute income and gave rise

to other related businesses. The real significance of the tourism industry for Thailand becomes

clear when looking at the tourism income multiplier. For Thailand the multiplier is 1.08, while all

other industry multipliers stayed below 1.0.

A tourist income multiplier of 1.08 means each tourist dollar spent generates US$ 0.08 for the

nation's GDP it works as follows. Every tourist dollar entering an economy brings in new

money. The part of the dollar that remains in the economy is spend and respend and determines

the tourism income multiplier.

Tourist or business traveler staying at a hotel will spend money

in many ways. The hotel itself will spend a certain amount of that money at local markets, such

as paying local employees, buying goods at local markets and stores, etc. The money spent in the

local environment will stimulate the economy and cause further spending in the same way as

described above. In comparison to other nations, this multiplier is still considered to be rather

low, e.g. countries with less tourism oriented government such as Ireland and Canada show

multipliers well above 2.0. However, in order to make a clear statement on the tourist income

multiplier, special attention should be laid on the import propensity, which shows how much of

the tourism dollar leaves the economy as it is used for imports.

Tourism for Thailand is not only a generator for foreign exchange; it also supports

development, employment and infrastructure for the economy as a whole (e.g. roads, railways,

airports, harbors and power stations). Additionally it is an active contributor to decentralization

www.thaimain.org/en/intro/tourism.html (4-27-2002)

Lundberg, Donald E.: The Tourist Business, 6

Edition, van Nostrand Reinhold, New York, U.S.A, 1990

and a generator of supporting services and industries with backward linkages into other sectors

such as agriculture.

In the 21

century, the kingdom's tourism industry seems to be on the right track, despite a

rather low economic outlook for 2001. Earlier in 2001, the tourism industry was expected to see

arrivals cross 10 million for the first time in Thailand's history.

Before the world was

confronted with the 9-11 events, the Tourism Authority of Thailand estimated 10.3 million guests

to visit the kingdom, which would have meant an increase of 7.53% to the prior year. The first

eight months of 2001, saw continuous growth to a total of 6.764.568 visitors, representing an

increase of 8.10% to same period in 2000. But over the following three months, Thailand faced

the first decline in monthly tourist arrivals since February 1998. From September 2001 to

November 2001 visitor numbers dropped on average by 2.69%, whereas November got hit

hardest with a decrease of 4.29%.

Monthly Arrivals to Thailand 2000 vs. 2001

685326

904041

822840

725028

861283

943128

684245

882689

757295

739177

797561

783028

801858

817764

879526

807222

1044636

724823

857440

733160

863071

787330

841709

958256

500000

600000

700000

800000

900000

1000000

1100000

Jan

Feb

Mar

Apr

May June July

Aug

Sep

Oct

Nov

Dec

2000

2001

Table C (TAT Tourism Authority of Thailand)

Karantzavelou, Vicky: TAT adjusts plans to maintain tourism growth, Travel Daily News, 22 October 2001, in:

www.traveldailynews/travel&tourismnewsletterforGreece&Cyprus3.html (3-2-2002)

Against the trend, tourist numbers in December 2001 exceeded the magical one million

margin since record taking started. Despite the performance during the three negative months of

the last quarter, the December result led Thailand to finish the year with 10.124.627 visitors, an

increase of 5.70% over 2000. And for the first time in the kingdom's history visitor arrivals

topped 10 million.

Not even the economic crisis could stop the increase in tourism arrivals in the late 90's. In

1999 tourist arrivals had risen 19.8% and in 2000 numbers climbed 32.65% using 1997 as the

base year. The largest potential lies with the Chinese travelers. As travel restrictions have been

eased and China finally entered the WTO, outbound travel from China accelerated. In 1999

Chinese travelers made up 9.4% of total arrivals, which meant an increase of 36% to the previous

year. In 1999 the largest groups of travelers arrive from Japan and Malaysia, with 12.8% and

12%. Thailand's prime tourist generating market, the Intra ASEAN market saw arrivals growing

from 1999 to 2000 by a modest 0.5% despite the economic hardship. Looking at the top 10 tourist

markets for Thailand for 2001 shows the mixed impact of recession and terrorist attacks. Former

number one generating source Japan lost its top position from 2000 to Malaysia.

Tourist Markets for Thailand - Share in 2001

11,71%

11,63%

7,91%

7,30%

6,52%

5,42%

5,25%

5,21%

3,98%

3,46%

Malaysia

Japan

China

Taiwan

United Kingdom

Korea

Singapore

USA

Germany

Australia

Table D (Travel Trade Report, February 6-12, 2002; Vol.25 Issue 5)

Please see Appendix 1 for the Change in Int. Tourist Arrivals and Appendix 2 for Visitor Arrivals to Thailand

1990 2001

In 2001 arrivals from Japan declined by 2.24%, whereas Malaysian arrivals continued to grow by

6.67% to 1.185891, a total share of 11.71%. As second largest source Japanese visitors made up

11.63% to a total market share of 12.55% 2000.

China remained in third place with an increase

of 6.31%, now contributing 7.91% to the number of total arrivals. Besides Japan, the market of

Singaporean travelers generated the only additional decline in tourist arrivals to Thailand;

numbers declined by 5.65%. Overall the top ten tourist markets for Thailand made up 68.40% of

all arrivals in 2001, whereas the European, U.S. and Australian markets play only a minor role in

this statistic. The best performing non-Asian nation is the U.K. in fifth position.

3. Bangkok and its First-Class Hotel Market

The previous pages show that tourism in Thailand is still on the rise and quite resilient to

general economic downturns and military conflicts. The kingdom's capital Bangkok benefits

from the increase in arrivals as well.

Also referred to as city of angels, Bangkok is a cosmopolitan city with a diverse mix of

tradition and technology. In spite of being a unique example for East Asian modern development,

it manages to retain its unique cultural identity. Key characteristics symbolizing this mega-city

are its massive population, traffic jams, high-rise skyscrapers, traditional architecture, a steamy

nightlife as well as its beautiful temples and palaces.

In addition, Bangkok is on the way to one of the most preferred convention and conference

destinations in Asia. Top facilities include the Queen Sirikit Center for up to 4800 participants,

the United Nations Conference Center for over 2000 participants, the Thailand Cultural Center

for 6000 people, the BITEC with 20.000 sq. meters the largest single level convention facility in

South East Asia and the Impact Exhibition and Convention Center. Hotels offering some of the

finest conference facilities in South East Asia, complement this portfolio and aim at the growing

MICE market.

Thailand as a whole is well equipped to handle the increased tourist and corporate business

development. The kingdom offers many excellent hotels and resorts in every business and tourist

destination throughout the country. In 1999 the Thai hotel market included over 2500 hotels with

N.A.: Thailand's top 10 tourist markets, in: Travel Trade Report Vol.25 Issue 5, Bangkok, Thailand, Feb. 6-12.

2002, page 16

Details

Seiten
Erscheinungsform: Originalausgabe
Jahr: 2002
ISBN (eBook): 9783832459079
ISBN (Paperback): 9783838659077
DOI: 10.3239/9783832459079
Dateigröße: 1 MB
Sprache: Englisch
Institution / Hochschule: Hochschule Harz - Hochschule für angewandte Wissenschaften (FH) – Wirtschaftswissenschaften
Erscheinungsdatum: 2002 (Oktober)
Note: 1,8
Schlagworte: tourismus september asien hotel industrie internationaler

Autor

Christian Westbeld (Autor:in)

The Impact of 9-11 on Thailand's Tourism Industry by Focusing on the First-Class Hotel Market in Bangkok

Zusammenfassung

Leseprobe

Inhaltsverzeichnis

Details

Autor

Christian Westbeld (Autor:in)