Price wars threaten survival of smaller players in Thai inbound sector

Outside Grand Palace, Bangkok

The economic slowdown in Europe and stiff competition in the marketplace are spelling a particularly tough period for smaller players in Thailand’s European inbound tour sector, who have seen tour prices plunge by half in recent years.

European travellers have become price-sensitive, resulting in a price war that put smaller businesses at a disadvantage, said Sunee Pianngam, managing director of Tai Pan Reise Center (Thailand).

“Big players cut package prices, (putting) small and medium-sized ones who have no international networks out of business. Today, the (European inbound) market is occupied by only four to five big players.”

The price of a five-day package starts at 8,000-9,000 baht (US$227-256), down from 20,000-30,000 baht five years ago, Sunee said.

Also seeing depression in tour package prices, Montri Ramruangsakul, managing director of Arlymear, said the price of a 12 day-tour package is now just 10,000 baht, down from 20,000 baht in 2011.

“It’s now a buyer’s market. Supply is higher than demand. Running business today can only generate cash flows,” he said.

The setbacks are hitting agents amid an already-challenging landscape, as Montri shared that tour operators have been losing business due to rapid technological development and the growth of LCCs and OTAs.

Affected agents are pinning their hopes on baby boomers, who they said have higher purchasing power and a preference for traditional tour agents.

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