Thai tourism takes a hit from protest turmoil

The Red Shirt anti-government protesters have gone home, but Thailand's tourism industry is still seeing red.

Armed soldiers, smoky streets and looted stores were the sad finale to two months of street protests seeking to force new elections. Those images have lingered in many minds, especially for tourists, a few weeks since the protests ended.

Thailand now has the challenges of repairing its image and its tourism industry.

The number of visitors dropped significantly since the protests closed down Bangkok's main shopping and tourist district in early April. Forecasts for this year were revised to 12 million visitors, down from 15 million, according to the Federation of Thai Tourism Associations.

The political standoff and the subsequent violent clashes caused losses of about $1.9 billion to $2.2 billion in tourism-related revenues, according to Atthachai Burakamkovit, permanent secretary of the Tourism and Sports Ministry. The government is talking with trade organizatons to pinpoint the exact amount of the losses.

"Different trade associations have their own estimates to serve their own purposes," said Atthachai.

Already, the government has earmarked $154 million to help tourism-related businesses affected by the turmoil and rioting. The package is awaiting the Cabinet's approval.

"Using government funds to help private companies is always a difficult situation. And I don't think anybody will hold their breath while this occurs," said Bill Heinecke, chairman and CEO of Minor International, which operates 16 hotels in Thailand, including the luxury Four Seasons Hotel Bangkok.

The Four Seasons, on the front lines of the protests, was forced to close for seven weeks and expects to lose at least $3 million as a result. Several other nearby upmarket hostelries were also shuttered.

"In my 40 years in the hotel industry, I haven't seen anything this bad," said Prakit Chinamornpong, president of the Thai Hotels Association.

The number of guest check-ins indicates a dire situation. Prakit said Bangkok's occupancy rate for May dipped to about 10 percent. The hotel association wants the government to help loan repayments, fixing the interest rate at a 3 percent for at least a year, and to help workers.

During the turmoil, major travel agencies suspended tours to Bangkok, and that had a ripple effect on other destinations in Thailand. JTB Group, Japan's largest travel agency, only resumed ticket sales to Thailand on May 27, after a month's stoppage. Japanese made up the second-largest group of inbound tourists to Thailand in 2009, with almost 1 million visitors.

Prakit said the situation was worse than the 1997 financial crisis, the bird flu epidemic and even the occupation of Bangkok's Suvarnabhumi international airport in 2008 by the People's Alliance for Democracy, the Red Shirts' ideological rivals.

"It took us five months to recover from PAD's 9-day airport closure. But this time it'll be at least six months - or even more," said Prakit.

As the result of the airport closure, the total number of inbound visitors in 2009 fell to below pre-crisis projections. The 12 million arrival forecast for this year would see Thailand return to pre-2006 figures.

Any previous efforts by the government to drum up confidence abroad since has been futile.

"It doesn't matter how many times the prime minister went to Japan to boost the country's image earlier this year, we've got to start all over again," said Prakit.

Bangkok's Montien Hotel saw its occupancy tumble from a February high of 80 percent to 3 percent as of May, said resident manager Somsak Akaktanond.

For the short term, hotels are now trying to attract Asian tourists, believing that they are more understanding of the situation.

"Memory is very short-lived. We've seen events like the tsunami (which killed about 5,000 people in Thailand in 2004) and other incidents like the Bali bombing They pass very quickly," said Heinecke.

The Thai tourism industry has managed to recover from the past recent crises.

"The fundamentals of Thailand are still extremely strong," said Heinecke. "I don't think Thai people have changed. I don't think Thai food has changed. And I don't think the destination has changed."

Some tourists are not fazed. French visitor Melanie Turleque, 33, was in Bangkok when the clashes took place.

"Everybody we talked to - Thai people - they're saying it's OK as long as you didn't go into the area I'm not afraid," she said. She had also been to Samui and Chiang Mai as part of her trip and found the two places to be "peaceful," remote from problems.