Deep discounting causing deep divisions in Bangkok

Thailand’s private sector tourism recovery strategy appears to be coming apart at the seams.

Following the end of political unrest that paralysed central Bangkok for two months, moves to deep discounting by some hotels in a bid to revive tourism to Thailand is causing divisions within the industry.

Thailand Pata Chapter has criticised Thai Airways International’s Royal Orchid Holidays division for asking its hotel partners to provide promotional deals to speed up the country’s recovery.

In a press statement, Thailand Pata Chapter chairman, Bert van Walbeek, accused Royal Orchid Holidays of inventing a “self-defeating tourism recovery strategy for Thailand – price reductions of 50 percent”.

He stated: “ROH expects hotels to sweeten the pot further with free dinners, cash vouchers and room upgrades.”

According to Travel Trade Report, THAI’s ROH division chief wrote to hotel partners asking them to join a campaign until the end of the year that would offer airline passengers discounted stays at hotels in Bangkok and up country resorts served by the airline’s network.

The deals started with a pay for one night, get one free including breakfasts.

The request forwarded to hotel partners late last week prompted criticism mainly from Bangkok hotels led by the Dusit Thani Group.

The Thailand Pata Chapter chairman’s statement was issued after gaining the green light from the executive committee late last week. There are 16 members on the committee representing hotels, tour operators, TAT and Thai Airways International.

According to the Chapter chairman, the THAI representative was not present at the meeting, when the committee decided to challenge the national airline’s tour division’s sales strategy.

Commenting on THAI’s decision to ask hotel partners for additional discounts, the Thailand Pata Chapter stated: “It is easy to drop room rates by 50 percent. If we do, it may take up to four years to achieve the same average room rate as 2009/10. That would be a big step backwards.”

However, TTR Weekly said it has contractual evidence that shows leading hotel chains in Bangkok were already offering deep discounts to tour operators that were negotiated last week and will extend until the end of October.

Many of them are Pata members and some were privy to the decision to publicly criticise THAI’s latest request for discounts.

Van Walbeek acknowledged he was aware that his own chapter members were engaging in similar strategies to the national airline that he had roundly condemned in his statement.

Pacific Asia Travel Association president, Greg Duffell, has also come out against discounting.

“We believe that we must rebuild international confidence in Thailand as a destination that already offers tremendous value.

“As we now enter the low season, hotel rates are extremely competitive. We prefer to see an image building campaign, rather than a strategy based on product discounting.

“We are also advising hotels to add value to room rates by including free wi-fi, breakfast rather than simply slash prices,” Duffell said.