Where have they gone? Thailand's tourism numbers this year will be far below what the government had hoped for.
Where have they gone? Thailand's tourism numbers this year will be far below what the government had hoped for.

Airport drama hits Thai tourism



From empty sun loungers at luxury hotels to vacant bar stools in dingy pubs, tourism in Thailand is going through its worst slump in decades, a result of the global economic slowdown and its own political turmoil. "This is the hardest hit we've ever encountered in the 48 years we've been promoting tourism to Thailand," Phornsiri Manoharn, the Tourism Authority of Thailand (TAT) boss, said, adding that the airport shutdown put the December 2004 tsunami, bird flu and Sars in the shade.

Her gloom is echoed by everybody in an industry that accounts for 6 per cent of the economy in the self-styled "Land of Smiles", and which directly employs 1.8 million people - about the same proportion of the eligible labour force in Thailand. With arrivals numbers for the key holiday month of December likely to be 500,000, which is one third of forecasts, the TAT's ambitions of attracting 15.5 million tourists this year and 16 million next year are lying in tatters.

Far from enjoying the 70 per cent occupancy they normally see in December, Bangkok's top hotels are 25 per cent full, forcing management to close floors, lay off contractors and ask staff to take unpaid leave. At the height of the airport blockade, one luxury hotel was rumoured to have had just one room occupied. "It would be fair to say that this will be the lowest monthly occupancy we've experienced in the history of the hotel," said Wayne Buckingham, the managing director of the Royal Orchid Sheraton on the banks of Bangkok's Chao Phraya river.

Particularly hard hit has been the hotel corporate and conference business, which is more sensitive than individuals to the travel warnings issued during the airport occupation, the climax of months of sometimes violent political confrontation. "People have been through tough times in Asia before and they've got out of it at the other end, and we'll do as well. It's just that this one will take a bit longer," Mr Buckingham said, estimating 12 to 18 months before things "return to normal".

With the export-driven economy already feeling the pinch from the global economic slowdown, many analysts believe the airport protests by the People's Alliance for Democracy (PAD) may prove to be the decisive factor in tipping Thailand into recession. Even if tourism avoids the large-scale layoffs already hitting manufacturing, getting the industry back on its feet will be yet another headache for the new prime minister Abhisit Vejjajiva, now in charge of a shaky, multi-party coalition.

If the Oxford-educated economist starts diverting provincial cash to tourism in Bangkok or the south, where the best beaches and strongest support for his Democrat party are to be found, he risks further alienating voters in the north and north-east, where loyalty to the former leader Thaksin Shinawatra runs deep. However, the political and economic pressure to intervene will be large, given that the lack of visitors has consequences way beyond topless hotel waitresses and tour guides standing idle outside Bangkok's glittering Grand Palace.

"I've been here for 16 years and it's the first time I've seen business like this," said Tom Casey, a tailor from Chennai in India, waking up from an extended sleep on his shop's sofa to serve his first customer of the day. The only people still smiling are the foreign visitors who decided not to be put off by the likelihood of more political unrest, and who now find themselves getting all the best seats and seeing the sights without the crowds.

"We were very nearly victims of the credit crunch and very nearly victims of the airport blockade, but our hearts had been set on this holiday for a long time and there's no way we weren't coming," said London businessman Michael Gude, who nearly lost his savings in a collapsed Icelandic bank. * Reuters

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

The specs

  Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4

ANALYSTS’ TOP PICKS OF SAUDI BANKS IN 2019

Analyst: Aqib Mehboob of Saudi Fransi Capital

Top pick: National Commercial Bank

Reason: It will be at the forefront of project financing for government-led projects

 

Analyst: Shabbir Malik of EFG-Hermes

Top pick: Al Rajhi Bank

Reason: Defensive balance sheet, well positioned in retail segment and positively geared for rising rates

 

Analyst: Chiradeep Ghosh of Sico Bank

Top pick: Arab National Bank

Reason: Attractive valuation and good growth potential in terms of both balance sheet and dividends