The story of SeaCanoe, the Bird’s Nest concession holders, the National Park and a shooting on the steps of the company’s office. It’s been over 20 years since the incident. There used to be some content online but it is not available any more. This story from Action Asia in 1999.
How Ecotourism can go wrong: The Cases of SeaCanoe and Siam Safari, Thailand
Noah Shepherd is an independent business consultant specialising in practical solutions for sustainable tourism development. With an academic background in Environmental Science, he worked in Britain for 10 years before moving to Thailand in 1993. Until the end of 1998 he worked as Director and General Manager of SeaCanoe Thailand before leaving to pursue a career in consultancy.
In 1989, two ecotourism operators started business in south Thailand. SeaCanoe, running kayaking trips in Phang Nga Bay, and Siam Safari, running nature tours in Phuket and South Thailand. Both companies have received international awards and recognition for their work in promoting environmentally sensitive tours yet their efforts seem to have been thwarted by the growth in mass tourism within South Thailand. This chapter looks at the relationship between mass tourism and ecotourism and questions whether the two are compatible or mutually exclusive.
Phuket, Thailand’s largest island is promoted by the tourist industry as the ‘Pearl of the South’. Through the 1980s and 90s, Phuket has developed into Asia’s top tourist resort. Phuket lies 7 degrees north of the equator and has a varied terrain with sandy beaches and limestone cliffs. Inland is found forested hills and rubber plantations plus a huge variety of tropical vegetation. The island is one of South East Asia’s main yachting destinations with full marina facilities and a deep sea port that is used by cruise ships.
Phuket was a destination for Thai tourists and backpackers until the start of mainstream tourism in the mid 1980s with the development of major hotels including Holiday Inn, Le Meridien and Club Med. Phuket International Airport receives hourly flights from the capital Bangkok, and daily scheduled international flights from around the region. With the advent of charter flights in the mid 1990s, the airport now handles 20,000 arrivals and departures a year. The island is connected to the mainland by two bridges, with bus services from Bangkok and the south of Thailand. There are 20,600 licensed hotel rooms on the island ranging from five star international resorts to small bungalows plus a large number of unlicensed guesthouses. Tourism has achieved a meteoric growth in the 1990s. Official arrival figures have doubled over a ten year period to 2.6 million in 1998. (1) More recently, Thailand’s tourism arrival figures have been boosted by three factors – The Tourism Authority of Thailand’s (TAT) Amazing Thailand 1998 – 1999 campaign, the Asian financial crisis and political instability in Indonesia. (2,3)
The area surrounding Phuket is a nature lover’s paradise. The dramatic
Phang Nga Bay, a UNESCO World Heritage site, is situated to the north east of the island and contains over 150 limestone islands, with stunning cliffs, pockmarked with caves that are home to swiftlets, bats and other tropical wildlife. Mazes of mangrove forest line the estuarine bay. Once in the bay, whilst only an hour or so from the mailnland, the experience is like being in the wilderness. Caves link the outside of limestone sea stacks to internal rooms, open to the sky known in Thai as a ‘hong’.
Within the caves and caverns swiftlets make nests that are harvested by the Birds Nests Monopoly. The nests that are sold for prices up to $US 1,000 a kilogram and are used in such delicacies as Bird’s Nest Soup. Traditional methods, are used whereby bamboo scaffolding is erected in the caves and workers scale the poles precariously to hand pick the nests from the walls of the caverns.
John Gray founded SeaCanoe, initially as an extension of his kayaking operation based in Hawaii. Gray had specialised in multi day kayaking tours in the South Pacific Islands with a customer base almost exclusively of US tourists. Gray had planned to expand his operating territory to the South East Asian region and in 1998 ran his first survey trip to South Thailand.
In exploring Phang Nga Bay, Gray found that it was possible to take inflatable kayaks through the caves to the inner rooms or ‘hongs’ within the islands. Whilst these caves were known by local fishermen, their exploitation for commercial tourism had never been considered.
The tourist market at that time whilst growing, was at a transition stage. Wealthy tourists, staying at luxury resorts were beginning to force out the backpacker market that had moved on to other destinations such as Ko Samui in the Gulf of Thailand. Phuket was growing as an up market destination, with some rooms in luxury resorts sold for several hundred dollars a night. There was certainly no real charter or package tourism market at that time, most of the tourists in hotels being FIT travellers, purchasing mix and match packages from specialist Asian destination travel brochures.
Gray found several local partners and the fledgling company started day trips to visit Phang Nga Bay. Gray’s plan was to establish Thailand as a destination for multi day trips sold abroad, but cashflow was essential and he decided to run day trips into the bay to build up the business.
Initially, SeaCanoe sold tours from the Diethelm Travel hotel tour desk at Le Meridien Hotel, near the resort town of Patong Beach. The tour was in stark contrast to others offered to tourists in Phuket. Phang Nga Bay’s ‘James Bond Island’ made famous by the film The Man with the Golden Gun was visited by many other tour operators. These tours sold for less than 1000 Thai Baht (then $US40) and included a boat trip to the island, with a stop for lunch at the stilted Muslim village of Ko Panyii in the North of the bay. The trip Gray offered was initially viewed by many as bizarre and expensive. Starting with a local ‘long tail’ boat, the vessel traditionally used by local fishermen, Gray and his colleagues took four people at a time into the bay. The boat was
loaded with inflatable kayaks and a cook who would prepare lunch for the guests. In the bay, the guests would board the kayaks, and be taken, when the tide was just right, through the caves in the islands, to the hongs in the middle of the islands, where wildlife could be stared in the eye. The hongs were like stepping back in time and remain to this day a marvel to tourists. The tour was very popular with guests, and sold for double that of any other tour offered around Phuket
One of the key points to SeaCanoe’s day trip tours was that the caves and hongs could only take a limited number of kayaks at any one time. Furthermore, the time factor was crucial, because the caves could only be entered at certain tide levels. Too many kayaks would mean congestion with subsequent burdens being put on the environment itself (something that SeaCanoe felt very strongly about). Safety was also major issue – too many kayaks with untrained guides could (and would) result in dangerous situation. For these reasons, SeaCanoe decided to limit the number of tourists that it would handle in one day – enforcing a no drinking, smoking, eating, talking or taking of souvenirs policy for its customers. Guide staff amazed customers by paddling off to collect floating garbage and taking it back to the escort boat for proper disposal.
The company had developed a statement of purpose, which claims that:
“SeaCanoe develops sustainable business opportunities with local people that promote environmental conservation by providing high quality recreational adventures specialising in natural history and cross-cultural education.” (4,5)
SeaCanoe’s business ethics, training and approach to the environment are not in question, on the contrary, there are very few businesses within the tourism industry in Thailand that are as passionate about environmental protection and rural development as SeaCanoe. Moreover the company had involved locals in its share structure, thus embodying the principles that were widely becoming accepted by the fledgling ecotourism movement.
In 1992, SeaCanoe experienced its first taste of competition, started by an ex partner. The tours offered the same destinations as SeaCanoe and used a network of the now extensive tour counters on the resort beaches of Phuket to sell their trips. At the time, it was widely recognised by the travel business that SeaCanoe was by far the better operator in terms of trip quality, staff training, equipment used and responsibility to the environment. However, bigger commissions to tour counters and a cheaper selling price helped to promote the growth of the fledgling competitor.
In many ways, SeaCanoe has been more successful in its overseas marketing than locally. By 1998, the company had received five tourism accolades, the first, in 1995 was a regional winner in the British Airways Tourism for Tomorrow Awards. This was followed by a commendation by Green Globe (1996); a Gold Award for ecotourism by the Pacific Asia Travel Association (1996); an environmental/ecotourism award from the American Society of Travel Agents / Smithsonian Magazine (1997) and Best Inbound
Tour by the Tourism Authority of Thailand (1998). The SeaCanoe management was experienced in marketing and promotion of its activities and over the years has been written about in dozens of newspapers and travel magazines as well as receiving extensive television coverage.
By 1996, the term SeaCanoe had more or less come to mean ‘sea kayaking tours in Phang Nga Bay’. The number of competitors had grown, and tour counters, and respectable travel agents tour operators and representatives were selling any of the now three other company’s products as ‘SeaCanoe’. In many cases, a SeaCanoe logo and sales brochure was shown on display, but the actual product sold was a cheaper imitator. Over the years, SeaCanoe hosted overseas tourism students for internships. The students were routinely sent to Patong Beach, the main resort town in Phuket to pose as potential customers. In nearly every case, when contacting tour desks to buy an original SeaCanoe trip, they were presented with other operators as better options, or indeed as ‘the original’ company. Names like ‘Sea Cave Canoe’ and ‘Sea Safari’ confused tourists, many of whom thought they were taking a trip with the company that they had seen on television. (6)
Nick Kontogeorgeopolous’ unpublished Ph D thesis (7) is probably the most thorough documented study of SeaCanoe’s business activities. In 1996, Nick made a survey of other kayaking operators and his field notes were published on the SeaCanoe web site to the annoyance of the other companies. In this report, Nick referred to other companies’ unappealing and sometimes disgusting food, decrepit escort boats, and noted that some companies ignored safety and natural history information. He also reported that some companies had minimal english language skills . (8)
Perhaps the most poignant statement made in Nick’s unedited field notes is:
“It basically seems to me that the passengers are all the exact same thing on all 4 companies. They all think the Thai guides are wonderful, friendly, etc., they all believe the food is good (whether it actually is or not), they all say how wonderful and fun and adventurous the trip is, etc etc. The only difference where the tourists are concerned is that some are FITs and some are not. The actual differences come 100% from the actual companies (supply side)” (8)
This final comment, in referring to the type of customer was key to the major problems that SeaCanoe were to experience in the latter part of 1990s.
There are several sales channels that can be, and were exploited that lead to the increase in SeaCanoe’s problems in the latter part of the 1990s.
Within the tourism industry, at a resort level, the overseas holiday company representative is a key figure. Many of the larger operators employ their own staff, smaller operators often use the services of ground handlers. The travelling customer’s point of contact with the overseas operator is the representative who can be a mine of information for their clients as well as a sales point for tours. In most cases, the operator such as SeaCanoe will make a contract with the holiday operator or their wholesaler and will pay a commission for all sales made. In many cases, the representative will be
salaried, and their company will pay a commission to them for all sales that they make. However, quite often, the representative will contract directly with a tour supplier, who will pay a full commission directly to him ‘under the table’. That representative is then free to sell whatever he pleases to his customers, much like a tour counter, with his own captive market.
As the number of charter and package tours increased in the late 1990s, so did the number of sea kayaking companies. Holiday companies, under continual pressure to increase bottom line profits found themselves in a position where they could contract with other companies for higher rates of commission. Their customers, who were, in many cases, because of the budget nature of the package tour, less selective than the more up market travellers, did not really care about who they went with, as long as the price was right, and they had a good time.
At about the same time, the Asian market started to take an interest in sea kayaking. In 1997, the contract price to agents for a SeaCanoe day tour was 2,000 baht plus sales tax. Some contractors demanded a net rate of 1,000 baht (or less) per customer which was something that SeaCanoe could not, and did not want to offer despite the promised number of tourists. The Asian travel business, with tourists especially from Korea and Taiwan moves people around in caravans of 54 seat coaches, from tours, to restaurants, to commission paying souvenir shops. The smaller kayaking companies, with their lower standards were happy to take up the offer of large numbers of low paying customers. Shuttle services into the caves became the norm, with escort boats that were licenced for 20 people (including crew) being loaded with sometimes double that number of people on board. In 1997, the first death at sea occurred, when a boat captain of a ‘Sea Safari’ vessel outside a cave reversed over one of their own guides who was sitting in a kayak and he was mashed by the boat’s propellers.
During the high seasons (December – March) of 1997/8/9 the situation in the bay, in and around the caves and hongs became nothing short of a disgrace. Quite literally, dozens of kayaks form traffic jams and queues which give the impression of Bangkok’s ‘floating market’ rather than a back to nature experience. Many of the kayak operators with no conservation policy and guests and guides were often seen getting out of their kayaks in the hongs, climbing mangrove trees, collecting coral, playing water fights and scaring off the wildlife such as monkeys which are rarely seen in the hongs nowadays. Despite much lobbying to the TAT and the Forestry Department, nothing was done by the authorities to improve the situation in the bay. What was once an exclusive nature experience had become a nightmare. The onus of responsibility was thrown back to the kayaking companies themselves by the authorities to sort out their own problems.
By 1998, there were some 11 sea kayaking companies operating in Phang Nga Bay, who formed a cartel known as the ‘The Paddle Club for the Protection of the Environment’. Within Thailand, trade associations are quite powerful and are looked to by the authorities to provide the lead in many aspects of business. Several years earlier, at the suggestion of SeaCanoe
and the TAT, an attempt was made to form a club to try and regulate the number of kayaks in the bay, but this was unsuccessful. SeaCanoe had advocated a system whereby time slots would be allocated to operators to reduce the number of kayaks in the caves at any one time. The agreement fell apart, and the fledgling association never got off the ground. The role of the new Paddle Club however was far more sinister. A partnership was made with the Bird’s Nest Monopoly who, under an old Thai law, had the right to harvest the swiflet’s nests found in the caves. The agreement was simple – kayak operators had to pay the club 100 baht per guest for the right to enter the caves, this money would be passed to the Monopoly who would restrict the overall numbers of kayaks in the caves. This position was, and is still in question legally and the right of the Monopoly to impose a charge has gone as high as the Prime Minister’s office. SeaCanoe refused to pay the charge arguing that the bay was a National Park and that the Monopoly only had the right to collect nests, not to derive income from tourism. In not paying, they were denied access to the caves by the Monopoly. SeaCanoe attempted to enter the caves, to the displeasure of the Monopoly’s armed guards and the dispute allegedly lead to one of SeaCanoe’s managers being shot and injured outside the company’s office in Phuket Town in October 1997. (9)
As a result of SeaCanoe not being able to enter the caves, bookings dropped off dramatically and the company suffered considerably by a lack of sales in the 1998/9 high season. In 1999, a deal was made directly with the Monopoly, avoiding the paddling club and SeaCanoe can now enter the caves in the late afternoon.
It has been argued by some operators that farang (western) managed companies are not beneficial to Thailand. These arguments are usually based on xenophobia rather than economics. Much of the actual revenues, especially where Asian tourists are involved end up overseas, not in Thailand. SeaCanoe retains 90% of revenues within Thailand, (10) but a survey comparison of trip revenues by cheaper operators shows a far different picture. In 1998, SeaCanoe charged 2970 baht for a one day tour. Almost all of their sales were made to local agents, which meant that effectively, all of the revenue remained in the country. One of their competitors however, sold its trip for 500 baht net rate. This trip was then resold to a Taiwanese operator for 1000 baht which was then offered as an optional tour for 4,000 baht equivalent – only 25% of the actual trip selling price found its way into Thailand. (11)
Robert Greifenberg moved to Thailand in 1989 after an agricultural background in Britain and Saudi Arabia. Greifenberg’s approach to starting the business was different to Gray’s. Whilst Gray had experience of the travel market from his time in Honolulu, Greifenberg had none. Starting with a small plot of land, together with his wife Srivilai, he ran a small bungalow complex catering to backpackers and FIT clients. Greifenberg offered his Siam Safari nature tours to his guests in the form of trekking and jeep safaris around Phuket as well as off the island to places such as Khao Sok National Park. Greifenberg also took interest in showing tourists southern Thai lifestyle, by
visiting rubber and other plantations and showing tourists a slice of village life. At that time, Phuket was nothing like as developed as today and Greifenberg used his four wheel drive jeep to take tourists to hidden parts of the island. It was not however until 1992 that tour agents began to take interest in his products and Siam Safari took off. (12,13)
It is often suggested that tourism is responsible for over development and in many cases, this is true. However in Thailand, whilst tourism development is now a major contributor to the country’s GDP, much of Thailand’s post war growth has mainly been fuelled by agricultural exports. As a result of Thailand’s increased wealth as a developing nation an infrastructure has been put into place that accommodates tourism well. (14) One of the benefits to farming and rural development in Phuket especially, has been the road infrastructure on the island. Previous dirt tracks and paths have given way to paved roads as part of Thailand’s accelerated rural development project, which meant that safari tours became less exciting as the island became scarred with asphalt trails.
In 1989, commercial logging was banned in Thailand. Elephants, previously used for logging purposes had in effect destroyed their own natural habitats as Thailand’s forests had reduced from 95% of the land area 150 years ago to about 15 – 20% today. Their mahouts, now out of work, took the elephants into cities like Bangkok where they were used for begging. Baby elephants were also found in major hotels where they were shown off as tourist attractions. (15)
At the end of 1994, Siam Safari was the first company to introduce elephants in Phuket providing trekking tours for tourists. Elephants are expensive to keep, eating 250kg of food and drinking 200 litres of water a day. As with the case of SeaCanoe, imitators sprung up all over the island. Many elephant camps were set up along the picturesque mountain roads in Phuket, which relied on passing trade as well as paying commissions to tour guides. At times of drought, it was been reported that many of the elephants were not given enough water to drink or bathe and many incidents of abuse have been reported. In 1998, Siam Safari, together with the Dusit Laguna Resort Hotel founded Elephant Help – the Thai Elephant Welfare and Conservation Project. Despite the efforts of Greifenberg and Elephant Help to support elephant welfare in Phuket, the introduction of treks brought many problems.
Siam Safari set up a camp on Phuket from which they runs elephant treks and multi experience one day and half day trips. Trip options are numerous with opportunities to also see working monkeys picking coconuts; visit rubber plantations; see traditional Thai food being prepared in the jungle; short kayak trips in mangrove estuaries and trekking in the jungle.
As with SeaCanoe, imitators, using similar logos, itineraries and generally passing off as Siam Safari have set up in business. Mass tourism has driven prices down and Siam Safari have experienced similar problems to SeaCanoe with unscrupulous tour operators and competitors. By 1999, there were 17 elephant trekking companies in Phuket with a total of 170 elephants of which Siam Safari had 23.
A different problem in the field of Jeep Safaris took place in Phuket with the advent of illegal operators. One company – and there are no doubt more – operates exclusively during the high season using all foreign guides (which is forbidden under Thai law) using rented Suzuki Jeeps. Package tour representatives sell the tours directly to German tourists. Such activity, apart from being completely clandestine and illegal does incredible damage to potential tourism income. All of the revenues are taken without paying any tax, no locals are employed and much of the money leaves the country.
Siam Safari was honoured by the TAT as the Best Tour Programme in 1996; in 1997, the company received the British Airways Regional Tourism for Tomorrow Award and in 1999, PATA awarded Siam Safari a Grand Award for Ecotourism and Thai Elephant Conservation.
Greifenberg tries not to use the word ‘ecotourism’ in his marketing, not because he does not apply those principles to his business, but because he feels that the word is far too abused. Recently, he has been at pains to ensure that his jeep safaris, treks and other activities have no impact whatsoever on the environment by completely avoiding sensitive areas.
The problems that Siam Safari has experienced in Phuket are less complicated than those experienced by SeaCanoe, but nevertheless the problems are real. With a fleet of 25 Land Rovers, over 20 elephants and the capacity to handle 150 people on a one day trip, Greifenberg is not happy with the way his company has grown. He feels that he has been forced into catering to mass tourism as the only means to survive. He claims that competition has forced the product into the mass market from its humble beginnings, which was never his intention. He sells at prices that are similar to those charged 10 years ago, despite considerable inflation, especially as a result of the Asian currency collapse in 1997.
What then is the future for ecotourism operators faced with a market of mass tourism? It is clear that the principles of ecotourism embodied in the two companies discussed are diametrically opposed to large numbers of tourists, bottom line profits of international tour operators and unscrupulous business practices. But what are the options? In both cases, the authorities are rather powerless to help. The Thai government has a rather laissez faire attitude to business and the government’s agencies and departments are rather powerless to help. The Tourism Authority of Thailand has a role of promoting tourism in the Kingdom, regulation is more a matter of registration of a business as a tour operator and there are no real laws to control what could be seen as esoteric principles of tourism activity. Whilst the overall control of the National Parks falls under the Forestry Department, the rules and regulations do not relate to overcrowding. As long as trees are not being felled, and wildlife is not being damaged, there is little that the authorities can do.
It is easy in the west to talk about rules and regulations within the tourism industry. Despite central government rhetoric, in developing nations,
understanding and principles of environmentally sensitive tourism at a local level is very hard to get across, especially in the light of potential business opportunities. Industrial development, especially in the Gulf of Thailand and dam construction for the country’s electricity demand imposes far more environmental damage than dozens of kayaks, jeep safaris or elephants in a discrete area. The new Thai constitution of 1997 includes such provisions, as “a person’s ultimate right to work to provide support for the family”. Ultimately, Thailand is a sovereign nation, and the authorities have the right to govern the Kingdom in whatever way they see fit, as long as International laws and human rights are not abused. Taking this into consideration, whilst ecotourism professionals and environmentalists may lament at such a tragic situation, maybe our efforts should be directed more to the mainstream tourism industry itself. The west is beginning to take the problems of child prostitution in Asia on board in an interesting way – offending nationals involved in sex with minors overseas can now be prosecuted back home in some countries. European Union laws make tourism operators responsible for the welfare of their customers whilst overseas. Maybe the west should be doing more to influence its own tour operators to be more responsible with what they offer to tourists.
Tourism Authority of Thailand, Statistics Department, Bangkok
Bangkok Post 1998 Economic Review, Bangkok 31st December 1998
Bailey, M. (1998) “Asia’s Tourism Market: The Ups & Downs”, Issues and Trends – Pacific Asia Travel Association, Bangkok
SeaCanoe Brochure (1997/8), SeaCanoe Thailand Co., Ltd., Phuket, Thailand
SeaCanoe Website (1998), http://seacanoe.com
Unpublished Survey of Phuket Tourists – (1998) Faculty of Hotel and Tourism Management, Prince of Songkla University, Phuket, Thailand
Kontogeorgopoulos, N. (1998) “Roughing it in Phuket, but the Jones’ Haven’t Been There (Yet): Reconceptualizing Tourism and Community Development inSouthern Thailand.” Unpublished PhD Dissertation, Department of Geography, University of British Columbia, Vancouver, BC, Canada.
Kontogeorgopoulos, N (1996), Unedited Field Notes
Rome, M (1999) “Shooting to Kill”, Action Asia February/March, Hong Kong Lindberg, K (1998), “Economic Aspects of Ecotourism”, Ecotourism – A guide for Planners and Managers, Vol 2, The Ecotourism Society, Vermont, USA
Lindberg, K (1998), “Economic Aspects of Ecotourism”, Ecotourism – A guide for Planners and Managers, Vol 2, The Ecotourism Society, Vermont, USA
Shepherd, N. (1998) “Ecotourism in Thailand – Where Does the Money Go? Tourism revenues in the light of the Southeast Asian Economic Crisis”, Institute of Ecotourism, Srinakarinwiroj University, Thailand – Third
International Conference – ‘Community Based Ecotourism” July 13 – 14 1998, Bangkok, Thailand.
Siam Safari (1999) Sales Brochures
Siam Safari Website (1999) http://www.siamsafari.com
Phongpaichit, P. and Baker, C (1996) “Thailand’s Boom”, Silkworm Books, Chiang Mai, Thailand
Greifenberg, R. et al (1998) “Nature Guide – Thai Elephants, Siam Safari, Phuket, Thailand
Another paper I presented many years ago when I was working in tourism consultancy. The contents are still relevant. This paper was given at a tourism conference in Laos in 2000.
Keywords: Leakage, Laos, marketing, Internet, revenues, LDC
The paper examines how ecotourism operators can maximise revenues to host nations.
A growing number of developing nations are promoting ecotourism as an alternative to mass tourism. Most of the ecotourism operators are small to medium sized businesses whereas traditional tourism operators are much larger. Many National Tourism Authorities are promoting the sale of ecotourism products through traditional channels that are normally used for the sale of mass tourism. However, the traditional sales channels are not that successful at selling ecotourism products. For example, wholesale / travel agent channels only allow about half of the customer’s money to stay within the host community. By using the Internet and other methods of communication, small ecotourism operators can deal directly with their own customers and gain the opportunity to keep much more revenue within their host community using. In doing so, ecotourism operators can avoid traditional agents and sales chains and can stick to one of the generally accepted principles of ecotourism – the involvement with and the benefit to local people. This presentation will outline the process by which small ecotourism operators and NTOs can use alternative marketing, to gain direct access to their customers and enhance their financial viability.
This case study relates to tourism promotion in the Lao People’s Democratic Republic (Lao PDR). Laos is a landlocked country surrounded by China, Vietnam, Cambodia, Thailand and Myanmar (Burma). The mountainous country has the Mekong River as its lifeline, a population of approximately 4.5 M and is one of the poorest countries in the world. Laos represents one of the last corners of unspoiled Indochina.
Tourism is a relatively new concept in Laos. Years of secretiveness and suspicion of the west followed the communist takeover of the ex French colony in 1975. Tourism was rare in Laos until the opening of the Friendship Bridge in 1994, the first bridge to span two countries across the Mekong River. Before this time, regulated tour groups were allowed, but Visa complications and a very poor infrastructure remained a big barrier to tourism. By 1998, the Lao government had relaxed visa requirements, introducing ‘Visa on Entry’ at Vientiane’s Wattay Airport and the Friendship Bridge.
The Lao government views tourism as a foreign currency generator and official statistics put tourism as the country’s top export earner (WTO/UNDP,1998). The Lao Government’s Board of Investment encourages investment in tourism and to date, there are a few joint venture programmes in the country. The approach of the NTO (The National Tourism Authority of Lao PDR – NTAL) and tour operators has been fairly typical of less developed countries – approved itineraries and programmes marketed to wholesalers and an NTO whose role is more administrative than proactive. Destination marketing is not well organised, indeed the role of the NTAL is more one of registration of tour operators and hotels than actively marketing the country. The ‘Visit Laos Years 1999 – 2000’ are hardly known outside the country and fall as a dim shadow to neighbouring Thailand’s highly lavish Amazing Thailand 1998 – 1999 campaign.
Laos received approximately 500,000 tourists in 1998. (NTAL, 1999) Of those, 370,000 or so were border tourists, most from neighbouring Thailand – probably as day trippers and visits to relatives. Of the remaining 130,000, possibly half of those were business travellers, aid workers and people traveling to Laos to renew visas for other countries. This left approximately 65,000 ‘real’ tourists. The total tourism revenue for Laos was $75M for 1998 (NTAL, 1999). Laos is a charming country that is rich in culture, nature and has specialist interest as an ex French colony. Having no beaches, it is not a Sun, Sea and Sand destination. There are no package tours, and most visitors seem to be highly educated, professional and managerial although no data has been compiled to support this. Most of what Laos has to offer falls within the areas of nature based, ecotourism, adventure travel and cultural tourism. In this respect, the entire country could be viewed as an excellent ‘ecotourism’ destination. On the negative side, there is little infrastructure and a limited number of arrivals by air. The Friendship Bridge is not always convenient for international tourists. The reputation of Lao Aviation is not good, having been the victim of travel warnings from a number of overseas governments (UNESCAP, 1999). Whilst the claims of the airline being unsafe have yet to be proven, the reputation of the airline has been seriously damaged and some operators will not book internal flights. In 1997Discover World Inc, a major subsidiary of the Japanes giant JTB suspended tours to Laos based on the Japanese Ministry of Foreign Affairs warning on travel to Laos (Iiad, 1999). The biggest problem however, is that very few people have even heard of the the country – recent research showed that few Australians, for example knew of the country, many thought it was in Africa. (King, 1999)
The resources of the NTAL are very limited. The staff is not very experienced in marketing to overseas customers, however the situation is improving. A WTO / UNDP plan for marketing has recently been completed, but the plan relies on advertising and promotional budgets that the country simply does not have. (WTO/UNDP, 1999)
Traditionally, NTOs in the Greater Mekong Subregion (GMS) have used the normal routes to promote their products – trade shows and wholesalers. In itself, not so much a problem, especially in developed nations, but with Laos, as with other GMS destinations there are several problems associated with this approach.
- There is little knowledge of the product down the supply chain from wholesaler to high street travel agent.
- High street travel agents have a fear of selling the unknown.
- There are very few specialist high street agents.
- There is a long time factor of about 18 months in bringing the product to the marketplace.
- Products can be turned on or off instantly by wholesalers.
- There is a lack of control – all the power is in the hands of the wholesaler.
- Financial leakage can be great.
The paper concentrates on these last two points, control and leakage. Leakage is the amount of money generated overseas from a sale that does not reach the host community and can be as high as 90% (Lindberg, 1998) A typical example from Laos follows and is based on published tariffs:
Hotel in Vientiane, rack rate (walk in/book direct) $25 /room / night
Bangkok based wholesaler sells this room to travel agents overseas for $41 / room / night
Overseas travel agent marks up this room, say 15% to $47.
Leakage is 47%, based on the rack rate, however we do not know the rate at which the hotel sells its allotment to the wholesaler. We can safely assume that the leakage in this case would be well in excess of 50%.
Within the business of selling packaged tours, the problem is similar. A typical one week tour retailing in the US for $1,200, would be sold from Laos for about half that figure. It is, of course, fair to argue that the wholesaler and travel agent supply chain does the job of destination marketing, and promotes the product in markets that the host nation operator is unable to do. However, there remains an option whereby operators can deal directly with FIT customers, resulting in the reduction of leakage. As long as the operators do not undercut the high street travel agents this option is fair to the wholesalers. The collapse of the supply chain can have a number of advantages to LDCs:
- Less may equal more – fewer tourists, spending more with local operators will allow greater revenues, whilst handling less individuals.
- There is far less demand on an often non existent, or unsophisticated infrastructure if there are less travellers.
- Empowerment – the local operator has more control of his destiny.
- Badly needed cash is put directly into the community.
- Rate of exchange fluctuations become less of an issue. In 1997, one major Thai wholesaler claimed that he made more from currency devaluation than from trading (Shepherd, 1998). This method of doing business has no part in the development of tourism in LDCs.
The local operators and NTOs in LDC have a number of options to collapse the supply chain. Firstly, dealing directly with independent travellers (FITs), through direct marketing, advertising and the use of the Internet -synergy between the parallel growth in ecotourism and the Internet is well documented (Mader, 1998). Second, FITs such as backpackers can be encouraged – backpackers often put more money directly into the host community although cultural sensitivity has to be treated with care (Luther et al, 1998). In Laos, backpackers will stay in locally owned guesthouses, eat local food, and travel on local buses. Finally, specialist agents can be identified and dealt with directly, without the need for wholesalers who traditionally package hotels and ground transfers and tours that are easier to promote to mass markets.
The promotion of Laos, by the NTAL and tour operators / hotels has been encouraged by the establishment of a Visit-Laos website and associated promotion. The website is provided by the private sector at no cost, but endorsed by the Lao government as the ‘official’ website. Funding comes from sponsorship and advertising. A number of low cost strategic marketing points have been established and are many are currently being implemented to help promote tourism. All of this work is provided by the private sector and attempts to push enquiries to both the website and individual operators. These strategies include, but are not limited to:
- The website itself, and associated website Laos-Travel.net, acting as a pointer to the Visit-Laos.com website. Search engines, whilst often good are only as successful as the data that is entered for a search. A recent report showed that ‘international leisure travellers use a website after they decided where to go’ (PATA, 1999)- bearing in mind that the country is relatively unknown, search engines may well not be the best method getting to the information for the end user.
- A postcard campaign has been launched to media that covers Indochina and South East Asia. The postcard – a full colour image of the website’s home page encourages media and other recipients to visit the website and find out more about the country. Publicity in traditional print media and television will educate the traveling public about the destination.
- Links from other non commercial sites covering travel in Asia have been encouraged.
- Press releases are planned from the website, informing media, agents and other interested parties of tourism activities in Laos.
- Targeted email lists are being established. These lists will be compiled from people who have visited the websites and other travellers who have registered at other websites for information about travel in Indochina. Purchasing email lists from organisations in being investigated, but the danger of ‘spamming’ is also being seriously looked at.
- The country and its websites are being promoted through specialist private subscriber only newsgroups.
- Specialist tour operators and adventure clubs are being contacted to make them aware of tourism potential in the country.
- In the US NGOs can in some cases, offer tours to tourists that are tax deductable – this option is also being investigated. The conditions of such a tax deductible holiday is only that locals should benefit directly from the tour.
Internet access in Laos is a relatively new thing and most operators have little understanding of the power of the Internet. To this end, it has been proposed by UNESCAP, that training in the use of the Internet be encouraged in Laos. Currently, a proposal is being prepared that will set up private sector and donor agency sponsorship of such courses to be held at the Mekong Institute in Thailand.
The empowerment of the NTAL and local tour operators and hotels will help to encourage tourism, especially ecotourism in Laos – such tourism may well result in greater revenues with less of an impact on the fragile infrastructure. Operators should be encouraged to be more independent of agents and wholesalers through intensive training in the use of not just the Internet, but also other methods of marketing tourism.
Iida, Y (1999) Approaching the Japanes Market, UN-ESCAP Seminar on Tourism Promotion in Lao PDR. UNESCAP, Bangkok
King, B. (1999) How to approach Major Travel Markets – Australia, UN-ESCAP Seminar on Tourism Promotion in Lao PDR. UNESCAP, Bangkok
Lindberg, K (1998) Economic Aspects of Ecotourism, p 105, in Ecotourism – A guide for Planners and Managers, Vol 2, The Ecotourism Society, 1998
Luther, HU., Faltin, G., Erber, G (1998) Backpackers: A Niche Market, in Entrepreneurship and Development, Lao-German Economic Training and Advisory Project, Vientiane.
Mader, R (1998) Marketing Ecotourism on the Internet. 8th Annual World Congress for Adventure Travel and Ecotourism, held in Quito, Ecuador, October 1998.
NTAL (1999) 1998 Statistical Report on Tourism in Laos, NTAL Statistics, Planning, Marketing and Cooperation Division
PATA (1999) USA Report (pp 26 – 28), Menlo Consulting Group, USA
Shepherd, N (1998) Ecotourism in Thailand – Where Does the Money Go? Institute of Ecotourism Third Conference, Bangkok, 1998.
UNESCAP (1999) Seminar on Expansion of Tourism in the Greater Mekong Subregion Through Improved Air Transport, Vientiane
WTO/UNDP (1999) Support for Tourism Development and Ecotourism, National Tourism Marketing Plan for Lao PDR. UNDP, Vientiane
WTO/UNDP (1998) National Tourism Development Plan for Lao PDR. UNDP, Vientiane
I presented this paper to the Institute of Ecotourism Conference in 1998. I had my own ecotourism consultancy business and I was also doing part time teaching at the Prince of Songkla University in Thailand.
Ecotourism in Thailand – Where Does the Money Go? Tourism revenues in the light of the Southeast Asian Economic Crisis.
Institute of Ecotourism, Srinakarinwiroj University, Thailand – Third International Conference – ‘Community Based Ecotourism”
July 13 – 14 1998, Bangkok, Thailand
Noah Shepherd, Faculty of Hotel and Tourism Management, Prince of Songkla University, Thailand
Governments view tourism as a practical source of foreign currency earnings. In the case of developing nations, these invisible exports can form a considerable proportion of a nation’s export revenue. In the case of Thailand, tourism is the nation’s largest single source of foreign currency. The nature of the tourism industry gives operators an ideal opportunity to channel revenues directly into local communities, however, this is not always the case.
Examples of ecotourism operators in South Thailand are used to show how in some cases, revenues remain overseas and in others, how revenues are retained in the host nation through niche marketing. The role of the travel agent and wholesaler is discussed and the nature by which these middlemen are responsible for a considerable reduction in host nation revenues.
The paper focuses on activities in the tourism industry from the time of the Asian financial crisis (July 1997) to July 1998. During this period, the Thai Baht collapsed from a fixed rate of 25THB:$US to a relatively stable level after about six months of 40THB:$US. At its worst, the Baht was trading at almost 60THB:$US. At the same time as the start of the currency crisis, the Tourism Authority of Thailand (TAT) launched its Amazing Thailand campaign for 1998/9 (1).
The campaign, planned in advance of the financial crisis, aimed to attract 17 million visitors to the kingdom and generate 600 billion Baht in revenues. This target related to a 7% increase in visitor numbers on 1997. Of those visitors to the kingdom 60% were from Asian countries – almost all of which had been hit by the currency crisis. By the end of quarter 1 of 1998, Malaysian arrivals were down 6% (2). The significance of this was that whilst Malaysians visit the kingdom for shorter periods of time than Europeans, the Malaysian marketplace, in terms of tourist arrivals is bigger than that of Germany, Austria, Switzerland and Scandinavia combined. Similarly, the Japanese market, down 7%, represented arrivals equal to that of the UK, USA, Australia, New Zealand and Canada combined. In this case, however, the length of stay by Japanese in Thailand was much longer than that of Malays and the drop in arrivals was extremely significant. Worst affected was the Korean market, which was down 80%.
The TAT was in an impossible situation, because of the financial crisis, it faced massive budget cuts of a billion baht, which would certainly affected promotion of the Amazing Thailand campaign. The reality was that following the collapse of the baht, a 60% increase in tourism arrivals was required to stand still in true US dollar terms – something that was completely unrealistic.
The start of the high season was marred by bad publicity. The smog from Indonesian farmers ‘burning off’ scrublands in Sumatra hit south Thailand for just three days. CNN reported severe smog in the region despite the fact that this was confined to Indonesia and peninsular Malaysia. Several wholesalers reported initial bookings as down for the season as a result of these reports (3).
By January, arrivals from Europe seemed to be higher than the previous year. This, in the initial stage was not due to the cheap baht, but to an increase in package holidays and charter flights, especially from Scandinavia. As, an example, Swedish holiday companies had run a massive ‘Thailand’ campaign that autumn which had been very successful.
At the beginning of 1998, the Bangkok Post (4) suggested that the cheaper baht was not affecting interest in travel to Thailand. However, as far as Phuket was concerned, there certainly was a considerable increase in tourism numbers based on the following evidence in advance of official figures from the TAT:
Local travel agents, hotels and ground handlers were reporting a very busy high season.
Overseas travel agents were selling Thailand as a “value for money” destination, although prices of package holidays had not dropped.
A considerable increase in the number of charter flights at Phuket Airport was noted.
A survey of 250 western tourists was carried out on Patong Beach, the major resort town of Phuket (5) on 14th January 1998. Of those surveyed, one third said that the cheap baht was a deciding factor and almost all said that they found Thailand to be “cheap” or “reasonable”.
Ten of south Thailand’s more experienced ecotourism operators were also surveyed and reported between a 30 – 40% increase in revenues. However, in these cases, some were charging in Dollars, some in baht. The increase was not clearly as a result of numbers, but in some cases as a result of prices quoted in dollars, and revenues received in baht at a different rate of exchange to the previous high season. What made many of these operators different however, was that several of them did not use wholesalers or travel agents to market their products.
The TAT ran a campaign in January to the travel trade to take advantage of the cheap baht. The campaign referred to “Sunny clear skies… warm smiles…hot discounts…47 baht to the US Dollar – Amazing Thailand, Amazing Value” (6). To the public, the TAT’s Value for Money ll campaign
promoted “Happy Hour in Thailand – Your pound now buys 59% more in Thailand” (7)
The Thai hotel industry, which is highly leveraged, was very badly hit by the devaluation. Room bookings may well have been up, but costs of electricity, directly linked to the dollar and oil prices were hitting their bills for air conditioning, in one of the hottest countries in the world. Imported goods, cost of foreign staff and overseas marketing costs were also badly affecting margins. These increased overheads were nothing compared to the cost of servicing their loans.
The first problem that hotels had to face in mid 1997 was the increase in VAT from 7% to 10% as part of the government’s austerity measures. Wholesalers insisted that the hotels absorbed this tax increase. The hotels held contracts with wholesalers, which used the previously stable Thai baht, negotiated in 1996 and early 1997, long before devaluation. The 1997/8 catalogues of holiday companies, showed prices in overseas currencies that related to old exchange rates. The wholesalers insisted that rates remain in baht, with no savings passed on to customers – who were paying in Pounds, Marks and Francs.
Many hotels announced that they would negotiate future contracts in US dollars (8), a point that angered the large wholesalers. One Bangkok wholesaler, in early 1998, claimed that his company was making more from the currency spread, than they were from trading. Others, trying to justify their position, claimed that they had bought currency forward to pay for their contracts.
The issue of charging in hard currency was introduced to the public by some hotels who introduced a ‘walk in’ rate in US$. Reports in the press suggested that the traveling public were not pleased with being charged in two currencies (9), however the trade argued that this was standard practice in many countries such as the Philippines, Indonesia and Vietnam. Some shops also started quoting prices is $US, but this was short lived.
On a smaller scale, some of the local ecotourism operators had an advantageous position because of the demographics of their own customer base. In 1997, 74% of frequent travellers who took active or nature based holidays in Asia possessed one degree or more, had a mean income of $82 K and more than three quarters of them took more than one holiday a year (10). This was a very similar profile to that of the earlier computer nerds who were the initial users of the Internet, and such people were more likely to be independently seeking their own holidays, taking an active part in the selection of destination and operator. The key was that those customers dealt directly with the operator, and paid in hard currency.
The Adventure Travel Society reported a 12% per annum growth in outdoor/adventure/eco type holidays (10). The Society attributes this growth to many factors, including more women travelling; people living longer; people travelling further afield and more frequent air services. Other sources (11,12,13) refer to growth in this field claiming opportunism and the greenwashing of nature based tourism. Whatever the reasons, this type of tourism is certainly gaining increased popularity.
In Phuket, ecotravel operators reported a definite trend of increased business, that seemed to be linked to increased general travel. It is fair to assume that this was as much a result of the increased popularity of the destination as anything else.
A WWF survey in Malaysia in 1995 (13), showed that ecotourists spent more cash in country than any other form of tourism. As a niche market, it is possible for ecotourism to capitalise on this by dealing directly with the client and avoiding the middlemen.
Agents and wholesalers may take 20% commission for booking tours although in some cases, this may be as high as 40%. Whilst, in most cases, sales tax or VAT is not payable for holidays taken overseas, this commission percentage is actually increased by the true costs of marketing to agents. Free inspection or familiarisation trips (FAM trips) are expected, not only for the buyer from the agency, but for many of their staff. Whilst this is sensible for agent education and product knowledge, the travel industry is built on a reputation of favours and expectations of free trips. This rubs off on the smaller operators, especially those who organise small groups who frequently experience unreasonable demands for FAM trips from wholesalers for friends, family and staff not directly involved in the selling of the programme. In addition to this, exhibiting and travelling abroad (all of which are hard currency costs) are expensive, but necessary to market to the traditional agency/wholesaler chain.
Considerable financial leakages can arise when comparing a tour product sold locally with another tour product sold overseas, the picture can be quite frightening. In the case of sea kayaking in Phang Nga Bay, Thailand, one tour operator sells its product locally to agents and tour representatives which are sold to mainly European tourists already ‘on island’, the other sells their product locally which is resold overseas in Taiwan
|Operator 1||Operator 2|
|Gross selling price to end user||2970 Baht||4000 Baht|
|Money received in||Phuket||Taiwan|
|Net selling price to wholesaler/agent||2376 Baht||500 Baht|
|Local agent net revenue||594 Baht||500 Baht|
|Retained in Thailand||2970 Baht||1000 Baht|
Operator 1 manages to sell a tour locally, retaining all revenues in country. Operator 2 sells cheaply to a local wholesaler, who, after adding on his markup, sells the product to an overseas agent, who charges the end user 4,000 baht (in Taiwan). This is an extreme example of such a case, but is very common, especially in the Asian group tour market.
Direct marketing of ecotourism products to end users is not an easy task, and in many cases, may require specific skills training. The use of specialist direct marketing, Internet web sites, mailing lists and PR may is alien to many ecotourism operators. There may be little knowledge of overseas market places and language too may also be a barrier – a product will often be sold a different way in each different market. There are also the problems of dealing with remittances from overseas which can be complicated. Taking all of these points into consideration makes the apparent simplicity of using a wholesaler immediately clear.
In conclusion, niche market products, such as ecotourism can benefit from selling directly to end users because of the affinity between operator and traveller. Selling directly allows the operator to dictate selling price, in whatever currency he chooses. Such a direct sale will reduce leakage and benefit the host nation far more than dealing through an overseas wholesaler. In the case of the Asian economic crisis, operators, through niche marketing of niche products can successfully ride out the recession.
Janarat, Jutamas and Williams, Lesley, Preconditions for Successful Collaborative Tourism Marketing: The Critical Role of the Convener, Third International Conference – Tourism and Hotel Industry in Indo China and Southeast Asia, Phuket, June 1998.
Phuket Gazette, International Arrivals Post Gain June 1998, p 3
Bangkok Post Economic Review Year End 1997, January 15th 1998, p 10
Bangkok Post, January 2 1998, Business p 1
Unpublished survey of Phuket tourists – 2nd year students of the Faculty of Hotel and Tourism Management, Prince of Songkla University, Phuket Campus.
Tourism Authority of Thailand Advertisement, Travel Trade Report, January 12, 1998, p12
Value for Money Campaign, Tourism Authority of Thailand, Bangkok Post, June 30th 1998, p 7
Travel Trade Report, Thai Hoteliers falter over decision to quote dollars, January 12th 1998
Bangkok Post, Dollar Change Irks Tourists, 19th January 1998
Rosci, Frank; Soft or Hard Adventure, ASTA Agency Management, December 1997, p 40
The Economist, How Green Can You Get? A Survey of Travel and Tourism, January 10th 1998, p 16
Gray, John; How Green is your Ecotour, Sawasdee January 1998
Shepherd, Noah; Educating the Traveling Public and the Investor, Proceedings of the 9th PATA Adventure travel and Ecotourism Conference, Kota Kinabalu, Sabah, 12 – 15 January 1997
In 1999, I made a deal with the Lao Government to produce a website for their Visit Laos Years 1999 – 2000. They were trying to promote tourism in the country but had no budget to speak of. All of the marketing spend was in country. I proposed to build an official website for them at no cost, but allowing my consultancy business to make revenue from it.
It was early days of the Internet. Images and copy were very limited. Lao had very few visitors but the country was opening up. I started by knocking on doors and selling ‘web pages’ to local businesses in Vientiane. I then took on a salesperson to work in Vientiane and subcontracted the advertising pages to others. The site was very successful and well received. Most of the businesses in Vientiane that were involved in tourism became customers.
In those days, very few people had Internet access in Lao. There were a couple of ‘internet cafes’ with really slow connections. Some people used to get an internet account in Thailand and make an international dial up call with their modems.
A hotelier who had a small hotel decided to pay for four pages of advertising. A few months later at a travel seminar in Vientiane, he stood up and told the audience that he used to be able to fill three or four rooms a night from walk ins. Since he advertised on the site, his hotel was always at 100% occupancy.
You can see an early version of the site here.
I sold out my consultancy business and became part of Asia Web Direct, an online hotel booking company. visit-laos.com and other sites we built are are now part of Expedia.