Thai tourism players are pinning hopes on a soft tourism opening in Phuket to bring back international travelers. May the so-called “tourism sandbox” model be more solid than a castle in the sand.
Exasperation is palpable in Thailand’s private tourism sector, which is pressing the government to move faster with vaccinating its population and to reopen the country to inoculated tourists without mandatory quarantine by July 1.
This runs counter to the government’s plan to reduce quarantine from 14 to seven days for vaccinated visitors from April 1, with the possibility of removing it completely only from October 1 subject to factors such as Thailand achieving herd immunity. This plan was approved by the country’s Centre for Covid-19 Situation Administration last week.
But tourism businesses are clearly at their wits’ end, having endured a long year marked by dashed hopes of reopening that have time and again left the trade confused and crushed. The business is in a “dire” situation; even a four-month wait until July is already too long — let alone October, warned major hotel owners.
They called for the government to speed up the vaccination process in order to gain herd immunity quickly, and to waive quarantine for vaccinated tourists. Owners argued that tourists wouldn’t want to go to Thailand to stay in a room for 14 days even if it’s a five star, moreover endure one of — if not the strictest —quarantine “imprisonment” in the world where even alcohol consumption is prohibited.
To-date Thailand said it has secured around 61 to 64 million doses of the Sinovac and AstraZeneca vaccines, with inoculations to start in three phases from April to October. At this level, less than 50 percent of the population will be covered. The country on Monday also reportedly started the first human trial of a locally-developed vaccine, with the rollout expected to begin next year.
Minor International and Asset World Corporation, two hospitality heavyweights, said they are willing to bear the costs of vaccinating their staff.
“The cost of not vaccinating, for any investor, is much larger than the cost of the vaccine, which is much less than the money we’re losing every month,” said Stephan Vanden Auweele, Asset World’s chief hospitality group officer.
William Heinecke, founder and chairman, Minor International, said the prime minister should use emergency powers to allow hospitals to import vaccines. “We’re still waiting to vaccinate our staff and we, as with other hotels and companies, would only be happy to pay any private hospital to vaccinate them, reducing the pain for the government and increasing the speed [of vaccination].”
At Thailand Tourism Forum on Monday, an annual private sector event organized by C9 Hotelworks, Heinecke said, “I’d give them [the government] an A for having kept the virus at bay, but an F for not moving quickly to open the country safely.
“We have to ask the government to speed up the whole vaccination process. It’s taking too long, it’s not as transparent as it should be, and it’s dependent on two vaccines at the moment, AstraZeneca and Sinovac. Frankly we need to get vaccines that have been approved by the Food and Drug Administration of other countries and not make [the vaccine approval] go through a bureaucratic Thai FDA [evaluation] which could take anything between three and six months.”
Marisa Sukosol, president of Thai Hotels Association and executive vice president of Sukosol Hotels, told Skift an open letter outlining the urgency, signed by tourism associations in Thailand, will be presented to the government this week.
“Our demand is for the government to let in vaccinated tourists by July 1 without quarantine. For Phuket to be the pilot and vaccines to be allocated to workers in tourism services there. And for a formal announcement and a clear timeline [to achieve this],” she said.
Phuket is “perfect” for a pilot, said the hotel owners. It has its own international airport. Around 450,000 people needs to be inoculated for a 70 percent herd immunity, which means only 900,000 doses are required.
The famous Thai resort island is scheduled to submit a “Sandbox Tourism” plan to the central government on Friday. The plan calls for nearly a million doses of vaccine for local residents. Vaccinated tourists will still have to take a PCR test at the airport and must activate a ThailandPlus tracing app.
Dirk de Cuyper, CEO of S Hotels & Resorts, a Singha Estate company, draws parallels between Phuket and the Maldives as a “controlled environment,” saying Thailand could look to the Maldives, which reopened in July 2020, as a prime example it can be done. “Our hotels there are performing well; the ramp up is good,” he said. “Phuket will be a great kickstart [as] it’s a major driver of tourists.”
In 2019, passenger arrivals at Phuket International Airport totaled just above nine million. In September 2020, this dropped to around 120,000, with a dramatic change of domestic-led length of stay to 1.8 days, half that of foreign visitors, according to C9 Hotelworks data.
The island instead is a prime example of the policy flip-flopping that has happened in Thailand on tourism reopening. Its “Safe & Sealed” plan to reopen last October in time for peak international travel season was scrapped after the first local Covid-19 case in Bangkok in more than three months in September.
Thailand has fielded a string of schemes to welcome back international tourism safely but by and large these programs have been criticized as being too onerous, with some believing authorities might have over-estimated the destination’s popularity in post-pandemic travel.
Last year, Thailand welcomed 6.7 million visitors, most of whom were from January-March before the lockdown. That’s a fraction of the 40 million visitors in 2019, which suggests that schemes like the Special Tourist Visa and, more recently, golf quarantine, villa quarantine and yacht quarantine, though well-meant, aren’t going to bring in big numbers.
The villa quarantine, piloted by the government’s Organisation Quarantine last month with 58 travelers at a five-star resort in Phuket, is an example of arduousness.
Guests were not allowed out of their rooms for the first five days. After a second negative Covid-19 test result, they were free to participate in five activities, including lunch or dinner at the restaurants and walking within designated zones.
The hotel was divided into a quarantine “red zone” and a non-quarantine “green zone,” limited to 150 people comprising 58 guests and 92 staff, including the hotel’s Covid-19 manager and team and members from the Observation Team for Disease Prevention appointed by Phuket’s disease control committee. Additionally, local Phuket officials “monitor the situation from outside the bubble via CCTV, offering daily evaluations via Zoom to the Covid-19 manager and OTPD members,” said a Tourism Authority of Thailand.
Sandbox or Sandcastle?
“The most important thing is, tourism in Thailand won’t take off until we eliminate quarantine. A reduction of quarantine to seven or 10 days is not going to help,” said Heinecke.
The industry is pinning hopes that the July 1 quarantine-free Phuket pilot will go through but, as Sukosol said, “The fact they [the authorities] are willing to reduce quarantine to seven days [from April 1] is already a big step.”
A ministers’ meeting next week will discuss the Phuket Sandbox model, she added.
The big question is, what happens if the Phuket Sandbox crumbles faster than a sandcastle?
“Then the Thai economy will go south,” said Heinecke. “I have more confidence that Europe and the United States will open up quicker. Even Singapore, Malaysia, Hong Kong, Cambodia, Vietnam have all started vaccinations much quicker than we have, so they going to steal the tourism trade from Thailand.
“Vietnam successfully took over the rice trade, now they are going to take over the tourism trade. So the government has to wake up and realize we’re not exclusive on tourism, it is a competitive field and we must be competitive, which means more vaccines and vaccinate faster. Thailand is moving so slowly.”
It also means more tourism workers will be out of job. As it is, half of hotel staff are now unemployed, said hotel owners. A December survey of the impact of Covid-19 on Thailand’s tourism supply chain by the Pacific Asia Travel Association shows 75 percent of workers have lost their jobs and most of the rest are in “severe” situation.
“Can we survive another three, four, five months without tourists? We know that in Samui and Phuket some of the business will not open again,” said Asset World’s Vanden Auweele. “More people are dying from no income than the coronavirus.”
More hotel owners are facing financial stress, he said.
“The number of hotels that knock on our doors — it’s many. The way I look at this is actually we should have the best hotels after this crisis. But I can tell you the owners who are in financial distress are not investing and so the quality of hotels, their safety, might not be good afterwards. Yet, it’s really about making hotels ready for post-Covid travel. We are accelerating investment in these areas as we want to profile Thailand as the safest, most hygienic and wellness-oriented in the world, welcoming people back in safe environment.”
Few hotel owners however have a low debt ratio as Asset World, whose coffers were boosted by $1.5 billion (48 billion baht) from an IPO in 2019.
“But trust me, we also suffer,” said Vanden Auweele. “We lost money in the hotel business last year; for whole AWC we posted a loss of 1.8 billion baht [$58 million], because we have commercial office buildings and retail. Commercial did reasonably well, with a small drop, unlike the 80, 90 percent drop with hotels.”
Profit in the first quarter of 2020 before the lockdown helped reduce the hotel losses in 2020 but Vanden Auweele warned this year would be painful for everyone if there were no arrivals.
“Just to understand the seriousness of the situation, we lost operationally more money in January in hotels than we lost in the full year of 2020,” he said.
This, is the largest hospitality portfolio in Thailand, with 18 hotels and close to 5,000 rooms throughout the country as of June 2020, managed by international chains such as Marriott, Hilton, InterContinental, Banyan Tree, Melia, Okura and soon, Hyatt.
Imagine the predicament for the majority of hotels and other tourism businesses, which are small and medium enterprises.
The pandemic has also bared open the disappointment of Thai industry players over what they said is a lack of private and public sector partnership to decide on the course of action for tourism recovery.
This is unlike the Maldives, whose success at reopening was credited in huge part to the government and private sector working hand in glove to chart extremely detailed and comprehensive health and safety protocols.
Said Heinecke: “The private sector is very open to work closely with government. Unfortunately, the government is distracted with many problems [including student-led] demonstrations, Covid, economic crisis, that they haven’t been open in drawing us.
“Certainly the government has to move its game up to work with private sector which is very capable, and more than willing to work responsibly to help the country get past this crisis. We have to measure safety along with safety of economy. Right now the entire focus has been on safety of individuals, little given towards importance of getting economy on track.”
Thirayuth Chirathivat, CEO, Centara Hotels & Resorts, agrees. “If our voice is big enough things will probably move faster,” he said.
But he believes the government is starting to work with the private sector, though slowly, having realized that “tourism is big engine and it’s about to die.”
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Photo Credit: A famous outcrop near Phuket. Raini Hamdi / Tourism Authority of Thailand