Eurozone troubles worry agents

BANGKOK, 26 July 2012: Association of Thai Travel Agents says its member companies are pursuing new markets to make up for declines in the Eurozone. Two markets that are showing strong potential are ASEAN and Eastern Europe with the latter escaping the economic impact of a declining Euro and a debt crisis in the EU.

ATTA president, Sisdivachr Cheewarattanaporn, said travel firms should not overlook the importance of neighbouring country markets as they will become important producers of year-round business over the next three years.

“A sovereign debt crisis in Europe, will hit our turnover in tourism even though the market still increased in the first half of the year.”

Sisdivachr Cheewarattanaporn

From January to June, 2,971,939 European travellers visited Thailand an increase of 11.12% from 2,674,551, according to the Ministry of Tourism and Sports data.

“The industry actually is more worried about political uncertainties here in Thailand than the euro crisis,” he added.

He was referring to the simmering conflict over whether former Prime Minister, Thaksin Shinawatra and other political figures should be cleared of all wrong doing through a reconciliation bill that still needs parliamentary approval.

But no one except for Thailand’s Minister of Tourism is underestimating the on-going crisis in the Eurozone. It has spread from Greece to Portugal and Spain. Both Ireland and Italy were hit by the crisis, but none of their debt burden comes close to the debt crisis that is now engulfing Spain.

“One country market we can rely on at present is Russia that supplied 1 million visits last year from about 200,000 in previous years, while Poland is also a potential market for Thailand’s tourism industry.”

Only arrivals through ATTA agent members, the Eastern Europe market improved 8.02% to deliver 4,729 visits in the first half of this year compared to 4,378 visits during the same period last year.

ATTA president also expected a positive impact on travel from the ASEAN Economic Community when it comes into play in 2015.

It will free up air routes giving airlines based in ASEAN the right to fly between capital cities eliminating all traffic right restrictions. Airlines will still need to file their intention to serve a city to the appropriate civil aviation authorities, but under the ASEAN skies are open.

There will also be easier regulations governing flights to secondary destinations, although airlines will still need to gain permission and meet conditions outlined in bilateral aviation agreements

While competitive air space in ASEAN will draw more visitors to Thailand, AEC will also open the door for international tour operators who have a company registered in Singapore to expand to Thailand without requiring a 51% Thai equity in the operation.

It could drive small and medium-sized tour operators out of business, the ATTA president warned. The practice of partnering with a Thai to satisfy the 51% local equity rule will no longer be necessary for foreign companies that have a base in ASEAN.

International tour companies can hold 100% equity in a Singapore-registered travel firm and that in turn would give the Singapore entity an open door to own a travel company in Thailand outright without local partners under AEC rules.

Some Thai travel firms that fell on hard times since the 2008 to 2010 political crisis  were hoping they could sell a 49% stake to a foreign partner to save their business.

AEC puts a serious damper on those ambitions.

“As the government is aiming to double tourism revenue from about Bt800 billion annually, the government must be careful about the AEC’s impact on small tour operators. It could take tourism out of Thai hands entirely if we are not careful,” he warned

Sourced: ttrweekly