The Thailand Pacific Asia Travel Association (PATA) Chapter announced this week that Royal Orchid Holidays (ROH), a division of THAI Airways International has introduced price reductions of 50%, which is described as a self-defeating tourism recovery strategy for Thailand by Chapter Chairman Bert van Walbeek. In a statement, he said ROH expects hotels to sweeten the pot further with free dinners, cash vouchers and room upgrades.
Just a few weeks ago, the Thailand PATA Chapter expressed the fear that, once the latest crisis in the country ended, some international wholesalers would use their position of power to pressure hotels and tour operators to lower contract rates by an unreasonable amount. The statement said that putting Thai tourism product suppliers under revenue management and cash flow stress does not help Thailand’s tourism industry.
‘It will only create more post-crisis challenges for tourism organizations that have already suffered low occupancy and demand due to the political crisis over the last eight weeks or so,’ Mr. van Walbeek noted. Thailand already provides services at a much lower rate than most Asian countries. It is arguably the best value destination in Asia now without price cutting.
If room rates are lowered by 50%, Mr. van Walbeek argues that it may take up to four years to achieve the same average room rate as 2009/10. ‘The problem is not price,’ he stated. ‘The problem is how to show travel buyers and consumers that Thailand is safe, stable and more welcoming than ever. We need a unified, consistent response, not knee-jerk price cutting.’
The Thailand PATA Chapter recommends all national stakeholders to join the Tourism Authority of Thailand’s inclusive ‘welcome back’ campaign which is currently being created based on constructive ‘all for one, one for all’ principles. Accepting ROH’s invitation will put unnecessary, untimely and unwelcome downward pressure on all other hotel rate structures in domestic, Asian and international markets.
History shows that while brutal price cutting may offer some short-term relief but creates artificial benchmarks that are used against Thailand’s hotels and tour operators in the medium and long term. The PATA members in Thailand are urging ROH and others considering a similar move to quickly reconsider their demands and work with the hospitality industry to come up with alternative value added ideas.