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Businesses of all kinds may be suffering despite an increase in visitors

Dive Businesses Report Downturn

Wednesday, February 13, 2008
DIVING outlets questioned by Phuketwan reveal that one of the island's key industries is suffering a downturn this high season.

The Thai Diving Association says the fall across the board is 30 to 40 percent compared to high season 2006-2007. This is despite a larger number of visitors to the island and the surrounding region.

TDA vice-president Pragon Gaetgun speculated that misdirected promotion and package tours could be the prime reasons for the falloff.

''The impact can be seen everywhere,'' Khun Pragon says. ''Mostly the package tourists have a limited amount of money to spend.

''They tend to scrimp where they can and the local Thai economy fails to benefit.''

He said about 70 or 80 percent of the dive shops on Phuket were members of the association.

It has been estimated that there are about 130 dive shops around the island and along the Andaman coast and Phang Nga Bay, a dramatic increase on the estimated 90 five years ago.

Discounts were also affecting the industry, with prices being cut in a more competitive market.

While the increasing number of dive shops could have something to do with the levels of profit, package tours probably have had a larger impact this high season.

Khun Pragon called on the new government to examine the problems of the industry and take a fresh approach.

Khun Prasert from Ocean Divers in Patong said bookings were normal, but there had been many cancellations. Business was down about 50 percent.

He thought part of the impact might be because of the previously uncertain political situation.

Another Patong dive company, Scuba Cat, reported normal business this high season, after a low period over New Year.

Khun Prasit said group bookings mostly came via the Internet.

Khun Kanikorn of White And Blue Dive Club in Chalong said the number of customers had dropped between 30 and 40 percent.

The club's target group is usually Japanese tourists. Khun Kanikorn thought it might also have something to do with the local levels of crime.

But he had noted that while the island's resorts seem to have high occupancy rates, not many visitors seemed to be good spenders this high season.

Phuket prices were generally a little higher than Krabi or Phang Nga because of the extra distances boats had to travel to reach the Similans and other premium dive sites.

The comments tend to support Charlie's Theory of Phuket Economics, which explains why Phuket is enjoying a record number of visitors yet businesses on the island are suffering.

Guy ''Charlie'' Lidureau, proprietor of Seafarer Divers, believes a rush by resorts to package tours has triggered the economic downturn on Phuket, despite the increase in visitors.

Charlie also made the point that a small downturn in Europe and the US in 2008 could have enormous ramifications for Phuket because leisure spending is likely to be the first cut by people if they are forced to economise.

Here's how Charlie explained his theory in a letter last month to Suwalai Pinpradab, Director, TAT Southern Office, Region 4, which covers Phuket, Phang Nga and Krabi:

Sawatdee Khrap Khun Suwalai,

I came back on 20 January 2008 from France where I attended the largest dive show 'Le Salon de la Plongee' in Paris, Porte de Versaille from 11-14 January 2008.

I was invited by our four main representatives in France (Aquarev Voyages, Aquafun Voyages, AMV Voyages and Sport-Away Voyages) in order to promote diving trips to Thailand and in particular Phuket for diving courses, live-aboard and day-dive trips with our Thai company, Seafarer Divers, based in Phuket.

All agreed and I saw by myself the willingness of the French divers to come diving in Thailand but each time our agents tried to bought flights by Internet directly from the dive show travel booths, all cheap allotment flight seats were fully booked by package tour travel agents in Europe until the end of April 2008 and only seats at 1200-1500 Euros (57,600-72,000 Baht) were available on regular flights to Bangkok; leaving the individual travellers (FIT) with no choice but to switch to another dive destinations around the world instead to fly and spend their money in Thailand.

After the tsunami, many hotels and businesses in Phuket and Phang Nga Provinces got help from the Thai Central Government with a postponement of their loan payments for three years (2005, 2006 and 2007) with an interest at 2.5 percent interest per year only.

The beginning of 2008 is the time to repay all that loans with the normal interest rate of up to 9.5 percent per year.

So many hotels in the spring and summer 2007 were scared not to cover that new loan expenses for the fiscal year 2008 and decided to sell a lot of rooms on allotment basis at very cheap prices giving to the oversea tour operators the opportunity to make a lot of money at the expense of the Thai tourism businesses by promoting at large scale Phuket holiday resort package tours for the high season 2007-2008.

Many package tour operators in Europe have been selling that package tour to Phuket including air ticket, airport transfers and seven to eight nights in three-star hotels for less than 1100 Euros (52,800 Baht) per person.

Do not forget that on a 1100 Euros (52,800 Baht) package tour only 200 to 300 hundred Euros (9600 up to 14,400 Baht) will go into the Thai economy as airline companies, international hotel chains and oversea travel agents will grab most of that money and will squeeze local hotels and contractors for the cheapest price deals to increase their margin profits.

Air tickets were sold by airline companies on allotment basis at less than 600 Euros per round trip to oversea travel agents and few air tickets were left on each flights for individual travellers (FIT).

Tourists buying package tours have tendency to pay all their expenses at once and bring with them just enough money to cover small local expenses.

Today you can go around Phuket and see them eating as much as they can at the breakfast served as a buffet, then look them on the beach for the whole day with nearly no food eaten during that time and eating in the evening at the cheapest restaurants around their hotels and coming back to their hotels with plastic bags full of drink and snack in order to cut their local expenses by avoiding to order food and drink from the hotels.

When mass-tourism customers buy tours at bargain prices with up to 20 percent discount on brochure prices, you can find them in crowded speed boats and tour boats in Phang Nga Bay, Phi Phi Islands, Similan Islands, Surin Islands and Coral Island without any consideration for the environment as they come once in their life to that destination.

Phuket Province can not support mass tourism as roads are inadequate and not well suited for large buses and all port facilities such as Rassada Pier, Ao Po Pier and Chalong Bay Marina Pier are not up to international standards with easy accesses to board the tour boats as we may expect for a world class destination such as Phuket.

Instead, individual travellers are the best customers as they spend their money by paying directly their expenses to local people such as hotel rooms, food, tours and so on to local shops, restaurants, hotels and guest-houses; therefore supporting massively local Thai people.

They are the best customer spenders for the local economy but this high season, few of them are coming for lack of reasonable air ticket prices.

For the reasons above, boat and dive tour operators in Phuket have few customers since November 2008.

Seafarer Divers have been booked for only two dive live-aboard trips to the Similans since the end of November 2007 and none on January 2008.

Many other Thai dive boat operators from Phuket are in the same case as you can see up to 10 dive live-aboard boats are at Rassada Pier in Phuket Town and many other empty dive and tour boats at other port facilities and marinas around Phuket.

Day dive boats and liveaboard dive boats are sometimes going out with few customers and sometimes they do not have enough income per trip to cover the expenses for diesel, food and crew and if that critic situation continuous for a while, all of us will not have enough money for the low season for paying the Thai staffs and doing the yearly boat and dive equipment maintenances for the next coming 2008-2009 season.

We may hope that the Ministry of Tourism and Sport, Tourism Authority of Thailand and different Thai Tourism Associations will be able to correct as soon as possible that bad situation before it is too late.

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