Will The Stronger Baht Kill Thai Tourism?

Finally, an article in the almost English online daily Thai news, that mentions that the strengthening of the Thai baht may have an impact on Thai Tourism.

Up until today, the only concerns for a rising baht was exports, not Thai Tourism, but we now have the usually clueless Finance Minister, Kittiratt, telling something other than a white lie.

Thai Tourism Currency Exchange

Thai Tourism Currency Exchange

Now, Kittiratt is usually telling the Thai people white lies about how much the Thai economy will grow, but this time he gets one thing right – Thai Tourism WILL be impacted by a stronger Thai baht.

Baht rise a threat to tourism: Kittiratt is spot on but the rest of the Thai Government seems to think that the rest of the world has money to burn and will visit Thailand even if it is not value for money.

As usual, there are quite a few discrepancies in the article, but Thai Tourism is sure to feel the pain of a stronger baht.

Tourism operators and Finance Minister and Deputy Prime Minister Kittiratt Na-Ranong yesterday acknowledged that the strengthening of the baht in the long-term is a new challenge for the tourism industry, especially in its attempt to achieve revenue of Bt2 trillion in 2015.

The two trillion number is pure fantasy but we will be told that it was achieved since there is no way for anyone, anywhere, to know how much tourists spend.  It is impossible.  And, once the Thai Government announces it, it will be gobbled up and spit out by all the almost English online dailies and no one will ever verify the Thai Tourism numbers.

Kittiratt said the tourism sector is similar to the export sector, which is concerned with foreign currencies. If the baht appreciates more, the tourism sector will be in danger. Clearly, foreign tourists will feel that they get less value from the currency they spent when compared to the previous day.

What Kittiratt doesn’t mention is the impact that a stronger baht has had the past 5-10 years on Thai Tourism.  It has impacted Thai Tourism but will never be admitted by the Thai Department of Tourism, the Ministry of Tourism and Sports, or the Tourism Authority of Thailand.  Instead, they will continue their bullshit that foreign tourist arrivals increase annually despite political unrest, airport closures, terrorism, or floods.

He insisted on helping the baht maintain a suitable exchange rate. The issue was raised yesterday at a seminar, “Overall Perspective and Economic Policy for Thai Tourism to reach the Target of Bt2 trillion in 2015”, held by the Association of Thai Travel Agents (ATTA) and Thai Hotels Association (THA). Tourism operators gathered to discuss issues from problems to cooperation with the government in order to strengthen the industry outlook.

This is the problem. The Thai Government manipulates the Thai baht instead of letting it trade freely on the open market.  How else did the Thai baht get stronger during the riots of 2010?

Surapong Techaruvichit, THA’s president, said the stronger baht is still acceptable in the industry. It’s not a serious problem right now. Compared to other nations in Asean, they have faced the same destiny with a stronger rate of their local currencies. Also, the Japanese yen has dropped 15 per cent so far. Eventually, he believed the foreign tourists would not abandon Thailand to travel to other nations instead.

Foreign tourists have already abandoned Thai Tourism and are headed elsewhere.  Or, they shorten their holidays in Thailand, stay in cheaper hotels or guesthouses, and eat at street vendors instead of fancy restaurants.  I guess no one has told THA that foreigners are now visiting Cambodia, Myanmar, Laos, and Vietnam in record numbers.

This year, the number of foreign tourists to Thailand is projected to grow 8 per cent to 24 million, while the number of domestic travellers is expected to increase 5 per cent to 118 million trips.

The Kasikorn Research Center and the Tourism Authority of Thailand both predict an increase of 10% to 24.5 million foreign tourists.  But, it doesn’t matter.  Both Thai Tourism numbers are bullshit.  A great number of “tourists” according the UNWTO definition used by the Thai Department of Tourism, are actually day laborers from Cambodia, Burma Myanmar, and Laos,  The Tourism Ministry also counts foreigners that make visa runs 3-4 times per year, individuals on business in Thailand, and perhaps, even geckos crossing at the many Thai checkpoints.

Kittirat said the tourism industry is one of the key economic drivers. He agreed to cooperate with the private sector in projects initiated by operators to help boost the industry’s revenue, especially foreign tourists who are the key spenders for the industry.

The only thing that Kittiratt can do to help Thai Tourism is get the Thai baht back to about 40 to 1 U.S. dollar.

Regarding the Bt2 trillion revenue target in 2015, he said there were three ways it could be achieved: increase the number of foreigners visiting the country; increase the length of tourists’ stay, or wooing more wealthy tourists. Tourism revenue from foreign tourists makes up 3 in 4 of the total spending.

But, the only way Thai Tourism revenue of 2 trillion baht will be achieved is that the Thai Government will say it was achieved and have absolutely no way to prove it.

The three Thai Tourism suggestions are only common sense but the Thai Government needs to find ways to make them happen and so far, they haven’t done squat to attract more tourists, increase the length of their stay, or attract the wealthy.  If anything, the Tourism Authority of Thailand does just the opposite for Thai Tourism by promoting the 3-day Songkran celebration, the drunken debauchery of a Full Moon Party, and a concert sponsored by Paris Hilton for New Year’s Eve on Phuket.

Last year, the total tourism revenue was Bt1.46 trillion and will increase to Bt1.59 trillion this year.

No, it was not. According to Thai Tourism figures from the Department of Tourism, 2012 Thai Tourism revenue was under 1 trillion baht. And, again, the Thai Government has no fucken’ way to know how much revenue was generated by Thai Tourism

Tourist safety is another concern and must be solved. Kittirat said at present Thailand is considered unsafe. He said tourism sites should be made more attractive and new sites should be opened, which will be connected with mass transport projects.

The only thing true is that Thailand is considered unsafe.  The rest is Thai Tourism political rhetoric.

The private sector hoped an increase in room rate would help boost their revenue. By doing so, they have looked for ways to control an imbalance in demand and supply in some areas. Especially unlicensed operators, they have adopted pricing wars to attract tourists, leading to the real rate dropping. They said if its rate increases 5 per cent that means its revenue would rise by Bt300 billion.

And, this just goes to show that most Thais don’t understand economics.  Raising Thai Tourism rates is fine when there is value on offer.  When Thai Tourism is suffering, like it is now, lowering rates and offering special promotions is the way to go.

This year, a new ministerial regulation will take effect to crack down on illegal operators.

And new Thai Tourism committees will be formed, and meetings will be held, and budget money will be allocated, and nothing will happen and Thai Tourism will continue its downward spiral.

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