Tourism has long been an important source of revenue for Thailand. Last year, there were approximately 35 million visitors to Thailand, generating total income of around 1.8 trillion baht, according to the Ministry of Tourism and Sports.
Unfortunately, in recent years Thailand’s tourism industry has been affected by what is dubbed as “poor quality tours”. The challenge is how to shift the focus from quantity to quality when it comes to promoting tourism in Thailand.
In the past, the majority of foreign tourists came from Europe, Japan and the United States. But over the past several years, the biggest wave of tourists has come from China, thanks to Beijing’s decision made two decades ago to give its citizens the green light to travel overseas for the first time.
To serve the subsequent surge in Chinese tourists to Thailand, many tour companies have been opened on Thai soil. Some were owned by Chinese people but were registered by their Thai nominees. The cut-throat lowest-price competition resulted in the notorious “zero-dollar tours”.
How does a zero-dollar tour work? Chinese tour operators on the mainland offer extremely low-priced package tours to mainlanders that cover airfares and accommodation. When they arrive in Thailand, they are supervised by local tour operators who provide them with free city tours, but force them to buy highly overpriced goods from designated stores or buy over-priced tickets for certain shows. This is how the operators indirectly earn actual income.
If the Chinese tourists refuse to purchase these “extras”, they are abused or threatened, for example, their passports or room keys are taken away. In some cases such action has ended up with violence. It was reported recently that 33 Chinese tourists were left stranded in Thailand because they refused to shop where they were told to.
Though low-price tour packages may be a legitimate marketing strategy to attract price-conscious consumers, they sometimes come at the expense of the tourists’ own personal safety as evidenced by the recent tragedy in which nearly 50 Chinese tourists died when a dive boat, the Phoenix , capsized in rough waters off Phuket. The tour operator risked tourists’ safety by ignoring a bad weather warning and failed to provided them with proper insurance coverage. Apart from the terrible loss of life, the incident damaged the country’s tourism reputation.
Though the tourism market in Thailand appears unruly, it is still a regulated sector. The Department of Tourism screens the qualifications of tour companies wanting to register here, requiring a financial guarantee of between 10,000-200,000 baht depending on the type of tour business.
This money goes into the Tourism Business Protection Fund that can be drawn on in the event of tourists being cheated or not getting the services they are promised. Currently, there is about 100 million baht in this fund.
In addition to this fund, in 2015, after a bomb at Bangkok’s Ratchaprasong intersection killed and injured many foreign tourists, the government set up a 200-million-baht compensation fund for foreign tourists.
However, money is not the answer. Indeed, it cannot reinstate a tarnished image, unsavoury experiences and loss of lives. A better solution is to raise the quality and standards of tour operators. How might this be done?
First, part of the problem is the lack of due diligence among tour operators. My research has found that many big tour operators with annual revenues of as much as 500 million baht have no website for their business. Whenever there have been complaints about operators cheating tourists, only the nominees have had action taken against them, not the real owners, who sometimes are Chinese nationals. The regulator should do a more thorough job of checking their qualifications and should punish the nominee companies at fault.
Second, self-regulation can help lift the quality of services of tour operators. The regulator should make it a requirement that tour companies belong to a certified tourism association in Thailand that establishes minimum standards for members. However, the regulator should supervise such an association to ensure its transparency in the certification of members.
Third, the government should set a minimum amount of registered capital for a tour company, as the Japanese government does, to raise the quality of tour operators. For example, class 2 inbound tour operators in Japan are required to to hold registered capital of around 7 million yen (approximately 2 million baht). In addition, the regulator should require operators to provide bank statements so that their financial backgrounds can be checked and financial stability can be guaranteed.
Fourth, the current mandatory contribution from tour operators to the Tourism Business Protection Fund of 10,000-200,000 baht each is too little and cannot cover actual losses. For example, in the case of the Phoenix dive boat tragedy, the compensation for the victims amounted to more than 29 million baht. Currently, the government is considering raising the financial guarantee amount. In Japan, the financial guarantee in the form of operation bonds and compensation bonds for inbound tours is 13 million yen (around 3.8 million baht).
Last, the regulator should make it a requirement that a tour company should have a designated certified tour manager as required in Japan. The certified manager must pass exams in three subjects: laws and regulations pertaining to tourism, travel agreement terms and conditions, and domestic travel practice. This would help improve the quality of tour operators while ensuring that their managers take responsibility in the event problems arise.
Tourism is an important engine of growth for the country’s economy. According to the Ministry of Tourism and Sports, tourism accounts for 17.6% of gross domestic product (GDP) and, more importantly, the income reaches grassroots people.
The government is eager to see Thailand became a centre of world-class tourism. To achieve that goal, it is essential that tour operators be regulated well. They should provide services with high professional standards. At the end of the day, this would mean the country develops a sustainable tourism sector focusing on quality rather than quantity.
Khanitha Pakinamhang is a researcher at the Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.
First Publish: Bangkok Post on Wednesday, September 12, 2018