Thai hotels face 111 million baht loss after FTI Group collapse

The collapse of German tour company FTI Group has resulted in significant financial losses for Thai hotels, totalling over 111 million baht. Hotel operators in Thailand are now seeking assistance from the German Embassy through coordination with the Tourism and Sports Ministry.

FTI Group, the third-largest tour operator in Europe, filed for insolvency in June, impacting tourists and operators across multiple countries, including Thailand.

The Thai Hotels Association (THA) and the Tourism Authority of Thailand (TAT) plan to submit a letter to the Tourism and Sports Ministry to coordinate with the German Embassy in Thailand. They aim to discuss potential methods for claiming compensation.

TAT Deputy Governor for Europe, Africa, the Middle East, and the Americas, Siripakorn Cheawsamoot, noted that only 250,000 travellers in Germany who purchased tour packages could expect reimbursement via the German Travel Security Fund, according to a recent report from Germany.

“However, there has been no progress on compensating affected agencies outside Germany.”

In Thailand, most tourists who booked through FTI had already completed their trips, but hotels have been unable to claim expenses from the company, explained THA president Thienprasit Chaiyapatranun. Some Thai hotels have reported losses ranging from 3-4 million baht due to this single case.

New bookings

Thienprasit mentioned that since the collapse occurred two months ago, hotels have not received new bookings from FTI, which has helped to prevent the accumulation of new debts.

One of FTI’s partnered agencies in Thailand has reached out to THA, requesting affected hotels to submit booking invoices to calculate reimbursement.

During the pandemic, Thai hotels also faced a large amount of unpaid bookings from a top Russian operator but were fully compensated years later by that company.

Given the ongoing global economic challenges, hotels still depend on wholesale tour companies by providing them with credit systems to maintain customer volume, as online bookings alone are insufficient to fill their rooms.

Hotels may now consider reducing the credit amount or credit duration for tour operators to minimise their risks. TAT Executive Director for Europe Chiravadee Khunsub mentioned that since FTI’s financial instability became apparent early, some hotels swiftly shifted to a pre-paid system before receiving guests from FTI.

Chiravadee added that unfortunately, many of them could not access the information, resulting in suspended payments. To prevent similar incidents, TAT’s offices in Europe and its marketing representative will offer consultation and verify the credibility of tour agencies for Thai operators if requested by hotels.

Chiravadee assured that the collapse of FTI should not disrupt the European inbound target for Thailand, as tourists can opt for other travel companies or booking methods.

As of July 31, European tourists numbered 4 million, with the TAT aiming to reach a 7 million target, reported Bangkok Post.