By Chan Sue Ling
May 21 (Bloomberg) -- About 860 kilometers (534 miles) south of the rioting in Bangkok, the island of Phuket is again counting the cost of events beyond its control.
The worst political violence in at least 18 years, which escalated yesterday as security forces struggled to clear rioters from buildings in the city, is deterring travel to Thailand and damaging Phuket’s $3 billion tourism industry. Hotel occupancy there has dropped below 40 percent, about a third less than normal, according to the Bangkok-based Thai Hotels Association.
At least 43 countries have warned people against visiting parts of Thailand during the ten-week standoff in Bangkok. From hoteliers to elephant handlers, workers in Phuket say the fighting may be more damaging to the island than the 2004 tsunami which wrecked its coastline. Tourism accounts for 70 percent of the resort’s economy.
“The situation now is graver than during the tsunami,” said Vivian Ng, a resort sales director, who checks her Blackberry and iPhone for the latest news about the protests. “With the tsunami, the world knows it’s just a one-off.” Now, she said, “there are concerns about security and safety.”
Ng says her employer, Minor International Pcl’s Anantara resort, has hosted American actor Kevin Spacey and the British fashion model Kate Moss, and is now losing business by the day.
The Mai Khao coast resort’s 83 private-pool villas have received 70 cancellations for rooms between April and August, said Ng, an eight-year Phuket resident. The Anantara is asking workers to take vacation days and turn off unneeded air conditioning and lights to save on electricity, she said.
Nationwide, tourism revenue may fall by about 20 percent to 480 billion baht this year, Kongkrit Hiranyakit, president of the Tourism Council of Thailand, said in a telephone interview.
“The impact will be the worst in 50 years of Thai tourism history” and it may take long as eight months to win back confidence, he said.
At Amazing Bukit Safari, a lack of customers has left elephant minders passing the time by sleeping in hammocks and watching television.
“Tourists are scared to come to Thailand because of what’s happening in Bangkok,” said Oi Supawadee, who oversees the animals at Bukit’s elephant ride concession. “We only have about 20 rides a day since April compared with about 60 last year.”
The slump is also forcing down prices. Gogo.com, a Singapore-based travel agent, is offering seven-night stays at the JW Marriot Mai Khao for S$59 ($42) a night until June 10, about one quarter the one-night room rate offered at the hotel’s own website. Thaianna Padgong, who takes tour bookings from a closet-sized booth in a shop she shares with a cell phone supplier at Phuket’s Patong beach, said she’s cut some prices by 50 percent to win customers.
“Some days, I had no bookings,” said Thaianna, manager of Thaianna Tour & Travel, watching TV for news from Bangkok. “I can’t sleep sometimes because I have bills to pay.”
Clashes in Bangkok between Thai security forces and so- called Red Shirt demonstrators, who want fresh elections and view Prime Minister Abhisit Vejjajiva’s rule as illegitimate, have left more than 70 dead in the past six weeks.
“Those travel advisories against Thailand are affecting everyone, not just travel to Bangkok,” said Somboon Chirayus, president of the Phuket Tourist Association. “Some insurance companies don’t cover if an advisory has been issued. What we worry about is the new bookings going forward.”
Thailand’s $261 billion economy, Southeast Asia’s largest after Indonesia, may also suffer from less foreign direct investment because of the riots, according to Fitch Ratings.
Following the tsunami, Thailand’s economy contracted 0.6 percent in the first quarter of 2005 from the fourth quarter of 2004, partly due to a drop in tourism, which makes up 6.5 percent of the economy.
“This is a self-inflicted wound, where you shoot yourself in the foot not once but twice or three times,” said Wolfgang Meusburger, an Austrian living in Phuket for 19 years. “Something is broken and you hope that it can be mended, but this time, the damage is very great.”
Thai security forces yesterday clashed with rioters at a Bangkok shopping center as an overnight curfew was lifted, with several fires still burning a day after the forced surrender of anti-government protesters left 16 people dead.
“This unfortunate situation is yet another blow to Thailand’s recovering tourism industry,” said Robert Bailey, president of Singapore-based Abacus International Pte, Asia’s largest travel agency. “A protracted stand-off will only further dampen confidence in Thailand’s government and its country’s stability.”
For some, Phuket’s jungle groves and beaches are far enough away from the street battles in Bangkok.
“We don’t think it’s going to impact us, because most of the problem is in Bangkok and not outside,” said Ken Brunton, a retired Sydney real-estate agent on his way to dinner in Patong Beach. “We are not overly concerned, although we have been reading the papers and following the news.”
Thai Airways International Pcl has kept its two daily direct flights to Phuket from Tokyo, Minako Komata, a spokeswoman for the airline, said yesterday by phone. Passengers are avoiding Phuket flights that stop in Bangkok, she said.
HIS Co., Japan’s second-largest travel company, stopped offering travel packages that include Bangkok as of May 25, Manabu Shimizu, a spokesman for the company, said.
“In Phuket, there is incredible bounce-back for tourism,” said Bill Barnett, managing director of C9 Hotelworks Ltd., a Phuket-based asset management and hospitality company. “We saw it after SARS, we saw it after the tsunami. It roars back.”
Meantime, Oi said her 17 elephants may be the only ones benefiting from the lull, munching bananas and leaves under corrugated iron shelters and taking baths at a nearby pool.
“I think the elephants are happier these days because they have less work to do,” said Oi. “You could almost see them smiling.”
--With assistance from Daniel Ten Kate, Suttinee Yuvejwattana and Supunnabul Suwannakij in Bangkok and Kiyotaka Matsuda in Tokyo. Editors: Dave McCombs, Michael Tighe, Chris Collins