What exactly is this Chindia? In a nutshell it’s a flash drive marketplace with 1/3 of the world’s population – China and India.
For a great number of Phuket hoteliers, the first half of 2018 saw marketplace velocity, where RevPAR’s rose on surging demand, and the most often heard comment was the ignominious ‘same same’. Though room rate growth was not there, volume ruled the day.
Next came, what is referred to on the Mainland as the ‘boat sinking’ and suddenly the monsoon gloom thrust the blazing sun into a dark room, way out back. Chinese numbers sunk, airlift declined and online chatter in China denounced not only Phuket but cast a broader shadow on Brand Thailand.
The traditional concept that the mojo of Thai teflon would result in only a slight momentary blip turned out to be erroneous. While the fallout from the incident has lessened, there remains a strongly demonstrated downward shift in Mainland Chinese tourists to both Phuket and Thailand.
What is clear is that there can be no separation in negative sentiment between Phuket and the larger Thai brand. Essentially both get a collective emoji award with an ‘un-smiley’ face.
Another negative has been the depreciation of the Mainland Chinese currency, the yuan. While most of the damage has been done over the past 4 years, this year has seen further erosion, as the Thai baht has remained strong.
Hoteliers staring into the looking glass of the fast approaching 2019 are increasingly being fixated by the magnetic attraction of Chindia. What exactly is this Chindia? In a nutshell it’s a flash drive marketplace with 1/3 of the world’s population – China and India.
What’s most attractive is door-to-door average flying time to major gateways in both countries of 4 to 5 and a half hours. Over the years I have been asked the question “what is the secret of Phuket’s success?” A great deal of it actually has to do with geography.
Geography has a lot to do with accidental tourism. One can look back to 1967 and the ensuring decade when Thai Airways was instrumental in opening up broad access to Bali which was a connector from Bangkok, and fitting into the Sydney to London route as key access points. In those days, the constraints of long-haul flights made the refueling stop necessary but fast forward to the present and the emergence of single body dominated low-cost airlines fits like a glove into the Phuket Chindia equation. Yes history buffs, Thailand’s flag carrier was a key enabler of early stage Bali hotel growth.
There is little doubt that Indian tourism holds great promise for Phuket. Geography helps, as does the depth of the islands tourism sector to cater to marque events like Indian weddings. Looking into the numbers is enlightening, as there are two significant events on the island which are both valued in excess of US$10 million in spend.
Leading the change has been India’s GoAir who launched direct flights between Phuket and New Delhi as well as Mumbai in October. Next month Bengaluru will be added. Will other Indian carriers such a IndiGo or Jet Airways follow, or will AirAsia join the fray? It’s clearly only a matter of time.
Just last week, I was talking about STR hotel performance data on Phuket in October, and the fact is year-on-year performance remains ‘constrained’ or in straight talk -broad business is down. Inside the numbers some hotels have held traction but in the big picture, the loss is evident event to the blindsided types out there.
The China situation has been hurtful. And though it’s comforting to see Russian travelers at Phuket International Airport lugging pink and blue plastic buckets of mangos around, the reality is the island’s tourism market is a year-round proposition and relying on snowbirds alone won’t cut it.
We live in an industry that flirts with the thin line between love and hate. The Chinese came, they were loved, then hated and now truly missed. With India, the play is cautious optimism, but the mounting importance of a solid Chindia strategy is the most prolific question facing island hotels now and in the coming year.
December 4 – Thailand’s national day of shame
Today is Thai Environment Day. Today convenience stores, trade stores and shopping malls will refrain from providing single-use plastic bags to shoppers and at the same time will campaign for donation of cloth bags to be distributed to hospitals for containing medicines.
Whether any of this actually happens, we will see.
The proposed plastic bag-free day is the outcome of a memorandum of understanding signed by the Ministry of Natural Resources and Environment and operators of convenience stores, trade stores and shopping malls to reduce the use of single-use plastic bags.
The cynical campaign is another chance for the Thai government to indicate its ‘commitment’ to the Thai environment and the reduction of single-use plastic bags whilst doing next to nothing to actually solve the problem.
Encouraging Thais to reduce their use of single-use plastic bags for one day out of 365 should be seen as national day of shame.
Thailand is one of the region’s main contributors to plastic waste floating around the seas with daily photos of dead sea-life making their way onto social media. Dead sea animals are routinely retrieved and, upon examination, are found to have ingested plastic bags or suffocated with plastic lodged in their mouths or around their necks.
The problem of single-use plastic bags, the removal of these items out of the retail chain and the proper disposal of plastics remains unmanaged and unplanned in Thailand.
Back in October the Central Pattana Group in Phuket, the operators of Central Festival and Central Floresta, who also own the TOPS supermarket chain and Family Mart convenience stores, loudly lauded their ‘no plastic bag’ campaign which meant they would ask customers if they really needed a plastic bag and offered a 200 baht cloth replacement… ONE DAY A MONTH.
Another cynical PR stunt without substance or any real commitment to reduce the amount of single-use plastic bags marching out the doors of their retail stores and shopping centres.
The Ministry of Natural Resources and Environment is saying that after the “plastic bag-free day” today, all the stores and malls will work out their own measures to reduce the use of the plastic bags, such as designating a day or a few days of a week that no plastic bags will be provided to shoppers.
In other words next-to-nothing. No commitments, no targets, just vague words without any concrete action from the Thai Government.
According to unofficial estimates, each Thai generates 1.4 kilograms of garbage a day or 74,000 tonnes of garbage a day for the entire population which means that a total of 2,960 10-wheel trucks with the capacity of hauling 25 tonnes of garbage each will be needed to carry the trash to dump sites or land fills for disposal.
There is enough evidence from multiple studies and surveys (or just walk along any Thai beach) to show that single-use plastics are a major environmental threat and need urgent political attention and action instead or meaningless words and PR stunts.
And watch today as thousands and thousands of Thais will, like every other day, stop on the roadside to purchase their delicious Thai iced coffee in a plastic cup, with a plastic cup-cover, in a plastic bag with a plastic straw.
Koh Samui balancing on tourism razor’s edge
“…shrinking Chinese demand due to the economic slowdown and depreciation for the yuan versus the baht”
The time has come to open the discussion about the troubling drop in one of Thailand’s leading resort destinations, Koh Samui.
Looking into the island’s performance numbers, according to data from international hospitality benchmarking group STR, at the end of August room night demand was down year-to-date by 4.4%.
Viewing a broader market metric C9 Hotelworks research has shown through September that hotel occupancy for the first nine months of the year declined by over 7% compared to the same period in 2017.
One cannot simply account for the dismal numbers as an effect of the China ‘boat sinking’ crisis which was triggered in the middle of the year. Airlift is the elephant in the room of island tourism destinations. During the first six months of this year, domestic arrivals at Koh Samui Airport dropped by 19%, with each month reflecting a negative variance compared to the same month in 2017.
Many industry watchers have pointed to the termination of Thai Airways International flights between Bangkok and Koh Samui in September as a trigger. The reality of the airlift in fact is TG retired an aging 737-400 jet that was used to service the route. It lacks an appropriate replacement given the island’s short runway and negotiated a codeshare agreement with Bangkok Airways to ensure travelers transit seamlessly.
One telling indicator of the market malaise is Surat Thani Airport on the mainland. Over the past few years a rising number of Chinese travelers had used the gateway and were ferried on to Koh Samui. Diving into the latest available data, international arrivals at Surat Thani for the period of January through September dropped 36%, while domestic arrivals only slightly moved downward by 1%.
Armed with the numbers I started a dialogue with island hoteliers to better understand the situation. For the most part, there were similar stories about shrinking Chinese demand due to the economic slowdown and depreciation for the yuan versus the baht.
Arguably the legacy European markets were slower based on the impact of a World Cup year. Lastly is the rise of Vietnam’s beach destination’s including Da Nang, Nha Trang and Phu Quoc.
Ultimately there is little doubt though that the sheer cost of airfares to Koh Samui remain a vital barrier to entry. Phuket continues to see more low-cost airline carriers which has contributed to growth in price sensitive markets. Samui’s environmental restrictions on the number of daily flights and lack of airline carrier diversity in the LCC space has created a glass ceiling.
For hotels, frankly there is no easy answer. The island has somewhat avoided the massive development crush of other resort locations in Thailand and Southeast Asia, but the nature of the island’s economic dependence on tourism has caged the golden goose. Damned if they do or damned if they don’t, the path to tourism maturity comes with a price tag with either staying small or going big. The hotel and tourism sector will likely remain stressed going forward, though certain niches such as luxury properties and wellness offerings tend to buck the trend.
To sum up the future, something has to happen with the airport issue to balance mounting infrastructure drains. The continued influx of Full Moon travellers transiting to nearby Koh Phangan and early stage development of Koh Tao are just another part of the equation.
In short, Koh Samui either needs to find a way to grow the existing airport or else find a new location and long-term solution to the airport conundrum.
A perfect storm hits Flight JT 610
If you get into a car that has had, and officially logged, malfunctions over the past four outings – all critical malfunctions to the correct operation of the car – would you start the key and head out into the traffic?
That appears to be what Captain Suneja, and his co-pilot on Flight JT610, did as the sun rose on Monday, October 29 in the fatal Lion Air crash into the waters off Jakarta.
In the four preceding flights investigators now know there was a persistent problem with systems – either instrumentation or software, or both – that measured the plane’s angle-of-attack – the relationship between the angle of the air flying over the wing vs the plane’s airspeed. Too high an angle-of-attack and too little airspeed could result in a stall, when the plane’s nose would routinely dip down and need urgent attention from the pilot.
Whilst it could be months until we have an exact cause of the events that led to the fatal accident (the investigation will be much easier with the recovery of the cockpit voice recorder), we do know there was some key clues in the flights leading up to the disaster. All point to a preventable crash and the death of 189 people.
The pilot would have read the maintenance logs before preparing for the flight. Why would he take-off knowing that there had been systemic problems with the same plane over the past two days? In the two days before the flight engineers had tried to fix the issue at three different airports. Maintenance staff, the pilot and the airline would have been aware of the problems.
Still, just 13 minutes into the flight, the plane was hurtling, nose-down, engines at full power, into the sea. Hitting the sea at such speed has dislodged the cockpit voice recorder from its usual position, presumed to be be sitting in the muddy bottom awaiting discovery.
There was no distress call, no turn back to the airport. Whatever happened clearly embraced the full attention of the two pilots in mere moments.
Boeing, not mentioning the fatal crash, has issued a global bulletin this week advising pilots to follow its operations manual in such cases.
Bhavye Suneja, the 31 year old Indian pilot, and his 41 year old Indonesian co-pilot, Harvino likely had seconds to decide what to do. They certainly didn’t have time to refer to the jet’s operations manual. As the nose of the plane plunged downwards the pilots, under stress, had to ascertain the discrepancies of their instrumentation with what they could see and experience outside the windows of the cockpit – all whilst considering the passengers and crew sitting behind them, radioing for help and their own survival.
The Boeing operating manual refers to the pilots needing to switch off the power to the stabilisers in the tail of the aircraft that were pitching the plane into an increasingly problematic dive. The series of switches to turn off these systems, and the routine to disable the plane’s stabilisers, was probably not intuitive to the pilots on a new series, highly-automated plane.
Lion Air is also coming under acute scrutiny with a decade of safety-related issues. Boeing and Airbus are struggling to keep up with the demand of aviation growth around the world and the training of new pilots, maintenance, operational staff and air safety regulators appears to be lagging behind.
The smaller, discount airlines are under even greater stress to find competent, trained pilots and usually end up with the pilots with the least hours on their log books. At the same time pilots routinely seek jobs with larger, more prestigious airlines. Captain Suneja had 6,000 hours under his belt before he stepped onto the new Boeing 737 Max 8 jet on Monday, October 29.
“The problem is, the less-desirable airlines are the ones with the least resources that are scraping the bottom of the barrel in terms of human resources,” says Martin Craigs, chairman of Aerospace Forum Asia, an industry advocacy group in Hong Kong.
Lion Air started 20 years ago when an Indonesian travel agent established the budget airline to provide low-cost flights through the many islands of Indonesia. Over the 20 years there have been 15 major safety lapses and pilots complaining about being overworked and underpaid. A former investigator for Indonesia’s National Transportation Safety Committee claims that Lion Air repeatedly ignored orders to ground planes for safety issues.
Since the crash of flight JT610, Lion Air was involved in at least two other minor safety issues. A plane’s wing clipped a pole taxiing on the ground in Jakarta and a flight from Malaysia suffered hydraulic failure after landing.
As the investigation continues to unfold, and details about the incident are revealed, it is clear that a perfect storm of problems were already lined up before the plane dropped its nose and started hurtling towards the sea below.
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