This report will discuss how the rapid growth and mismanagement of the Hospitality, Tourism and Events Industry has impacted the island of Phuket, Thailand. The Tourism Industry is a major source of revenue for the island and therefore has a significant impact.
The Tourism Industry has only been developing on Phuket since the 1970s, and the increased employment opportunities and income have resulted in much better living conditions for residents in this short period of time. However there are multiple problems caused by local and Thai government’s mismanagement of the industry.
The sharp decline in tourist arrivals after the 2004 tsunami demonstrated the need for a wider target market in order to sustain the local economy. A major segment with the potential to bring considerable revenue to Phuket is MICE (Meetings, Incentives, Conferences and Events), which is an area of rapid growth in South East Asia.
However the local government has failed thus far to develop a world class conference centre on the island. This failure to plan is also affecting the environment in Phuket, as the island does not have the capacity to dispose of the waste produced by the increased population: particularly during peak tourist season. This is just one of many problems that the government and community in Phuket must resolve in order to develop an economically and environmentally sustainable Tourism Industry.
This report will discuss the impact of the Hospitality, Tourism and Events Industry on Phuket, in Thailand. It will first briefly explain the fundamental characteristics of the HTE Industry. It will then talk about some of the many costs for Phuket caused by the ineffective management by the government of the rapidly developing HTE industry.
This failure to plan has led to an unsustainable economy and an unsustainable environment which negatively affects the residents of Phuket. It will discuss how Phuket’s lack of diversity in the HTE Industry hinders potential growth in the economy. However not all of the impact on Phuket is bad. The rapidly developing Tourism Industry makes a very large contribution to the health of the local economy.
It has elevated the standard of living on the island by supplying the residents with wider employment opportunities. The challenge is to find solutions to the problems faced by Phuket which satisfy the stakeholders with different priorities: residents, businesses, development and environmental departments. Its government needs to enable its various stakeholders to collaborate in order to resolve the social, economical and environmental issues caused by the rapidly expanding HTE Industry.
This needs to happen in order to develop Phuket into a sustainable tourism destination. 2.0 Fundamental Characteristics of the HTE Industry
The HTE Industry consists of three segments: Hospitality, Tourism and Events. The three segments are classified as separate industries, yet they are not always easily defined as separate because many elements of each are overlapping (William Blue MGT102 Study Guide, 2013). A definition of hospitality is “The friendly and generous reception and entertainment of guests, visitors, or strangers” (Bieringa, 2012). In the HTE industry a guest is a customer, and the host is the businesses who offer services for a fee. A host can also be a place, and Phuket the city performs as a host to many tourists as a popular tourism destination.
The hospitality industry consists of a wide range of businesses who provide services such as accommodation, food and beverages (William Blue MGT102 Study Guide, 2013). Na Sakohakorn (2011) explains that “Tourism involves all activities which are conducted away from home”. Therefore a business is part of the tourism industry if it conducts business with customers who are travelling outside of their home territory.
Events are an integrative effort of various services with the end result of an ‘experience’ (William Blue MGT102 Study Guide, 2013). All three co-exist in a mutually beneficial relationship in which the different segments work together to meet the varying needs of their guests. 3.0 Development of HTE Industry in Phuket
Phuket is the largest island in Thailand, which has been called the ‘Pearl of the Andaman’ by the Government and local tourism operators in a bid to market it as an oasis of paradise floating in the Andaman Sea (Kontogeorgopoulos 2005). It is Thailand’s second largest international gateway by air, with nearly 20 million tourist arrivals in the year 2012 (Tourism Authority of Thailand, n.d). It was a popular trading port for tin from the 16th century, until the last tin mine closed in 1992 due to a worldwide drop in tin prices (Asia News Monitor, 2009). In the 1970s the Tourism Authority of Thailand commissioned firms to come up with plans for the development of Phuket (Lauzon, 2009.).
This development resulted in heavy investments in the local tourism industry from foreigners and mainland Thais, leading to increased employment opportunities and resultantly a strong reliance of the local economy upon the sustainability of the tourism industry. This reliance has been increased overtime with the shift from traditional occupations such a tin mining, rubber tapping and fishing to jobs within the tourism industry (Kontogeorgopoulos 2005). The impact of the HTE industry here is significant due to the unusually large effects it has on the lives of local people. 4.0 Impact of HTE Industry on the Local Economy
The HTE Industry is a vital element in the growth and sustenance of the local economy. This is because 38.5% of Gross Provincial Product comes from hotels and restaurants in Phuket (Ichinosawa, 2006). About 80% of locals work within the HTE Industry, with only around 20% remaining in traditional occupations. Because tourism has become such an integrated part of the economy, even traditional occupations such as fishing and manufacturing also indirectly rely on the industry for income.
Tourism has many benefits to Phuket, such as increasing revenue intake, increasing employment and aiding social development by stemming the migration of youth to the mainland (Sakolnakorn, 2011). However the government has damaged opportunities to develop a sustainable plan for tourism with constant political infighting (Asia News Monitor 2009). Sustainable development is defined in the 1987 Brutland report (William Blue MGT102 Study Guide, 2013) as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” ` 5.0 2004 Tsunami’s Impact on the HTE industry in Phuket
The catastrophic Tsunami of 2004 served to highlight the vulnerabilities within Phuket’s economy. This Tsunami was the biggest the Indian Ocean has ever seen with a devastating 155,000+ fatalities in the 11 countries it hit (Do Something, n.d).
The Tsunami left a secondary impact of a stagnated regional economy in its wake. As Kasperson (2004) says, “Unfamiliar or distant places may easily fall play to distorted or stereotypical perceptions.” Tourists stopped coming after the Tsunami, and there is no insurance against stigma. The tourism agencies selling the majority of packages to Phuket were located in foreign countries therefore local businesses could not develop good supply chain relationships with them to ensure sales continued.
Phuket’s marketing strategies revolved solely around its ‘Pearl of the Andaman’ image as a paradise of sun and beaches. The Tsunami tainted this image by increasing the perception of risk for tourists visiting its famous beaches. Sales in the beginning of 2005 dropped to only 10-30% of normal rates (Ichinosawa 2006). Phuket paid the price for relying upon a small segment of a potentially diverse HTE industry. 6.0 Events as a Potential Major Source of Revenue
A segment of the HTE industry with vast untapped potential for Phuket is the Meetings, Incentives, Conferences and Exhibitions, or MICE, segment. MICE events are one of the fastest growing segments in the industry and particularly in the South East Asia region. According to a study done by IHG in 2012, 50% of delegates coming to South East Asia for MICE events come from outside the region.
However Phuket handicaps itself in this sector as despite decades of talks and studies it still lacks a world class conference centre (Fein, 2012). There was an attempt to build 2.6 billion BAHT centre in 2011; however the project is still in limbo as the environmental impact assessment was rejected. This is an example of the constant struggle between government departments for environmental planning and tourism resulting in a lack of efficient city planning. A world class conference centre would contribute to the local economy by diversifying the market and drawing in high spending MICE delegates (Asia News Monitor, 2010).
The failure to build a conference centre demonstrates the continued failure of the Phuket government to build a sustainable economy. 7.0 Impact of HTE Development on the Environment
The rapid growth combined with ineffective management has resulted in many environmental issues in Phuket. An article in the National Geographic Traveller rated Phuket’s environmental status as 46/100 and categorized it as ‘in serious trouble’. These problems spawn from a lack of planning, combined with irresponsible environmental behaviour due to lack of discipline in Thai culture, and increasing materialism and consumerism (Boonchai, Beeton, Srichai).
The rising population and urbanisation have drastically increased the use of natural resources, with approximately 75% of the environmental impact being caused by the consumption of non-durable goods, water and energy (Ruiz-Molina 2010). An example of the problems caused by over-population is the piling up of solid waste on the island. Phuket’s incinerator only has the capacity for 250 tonnes of waste per day, while the island produces 300-350 tonnes per day.
This means that the excess waste is piling up at the rate of 50-100 tonnes every day. Phuket also can only provide 30,000 cubic meters of water, yet the demand is 40,000 per day (Lauzon, 2009). The disputes between development and environmental protection sectors of the government hold back progress in finding solutions to these issues.
These government departments fail to seek the input of the many varied stakeholders on Phuket who could offer vast insight into potential solutions: the business owners and local people (Boonchai, Beeton, Srichai). Once again these unresolved issues highlight the inability of the local government in facilitating a satisfactory compromise to achieve long term sustainable development in Phuket. 8.0 Impact on Local Residents
The development of the HTE industry in Phuket has brought many increased challenges into the local people’s lives; however the benefits outweigh the costs for most residents. One particularly dark segment of the industry which affects local women and children is Sex Tourism.
Prostitution began due to a lack of employment opportunities for uneducated women during the Vietnam War (Ehrfurcht, n.d). It has been illegal since 1960, but the law is rarely enforced due to the government’s reliance upon it to maintain the economy (Morison, 2008). A wide survey of tourists revealed that 17% thought that the sex industry was motivation to come back to Thailand as it is easy to find (Rittichainuwat 2008).
It is so easy to find because it is practiced widely in bars and brothels, and like in other segments of the Tourism Industry locals are increasingly being replaced by foreign women (Hanenberg 1998). Another area where the Thai people are being replaced is the labouring industry. It is increasingly expensive to employ residents due to the high cost of living on Phuket, which means more labourers are being hired from the Union of Myanmar (Sakalnakorn, 2011).
The increasing migration of people from the Union of Myanmar, also known as Burma, is causing a perceived loss of culture and increased crime rate in the local community. Despite all of the negative aspects introduced to Phuket by the HTE industry development, quality of life has been improved for residents. 9.0 What the Future Holds for Phuket
Phuket has rebounded from the economic downturn following the Tsunami. The average hotel occupancy rate was a very healthy 75% for the year 2012 (Chinmaneevong, 2012). This rebound has been spawned by new direct flights from China and Eastern Europe, combined with lower costs from competition with the local cheap airlines.
The Tourism Authority of Thailand’s marketing targets for 2014 and beyond are health and wellness tourism, golfers, honeymooners and weddings, and ecotourism. It is targeting the first three areas due to the high spending customer demographics in each segment. Kontogeorgopoulos (2005) says that the “Desire to spend leisure time in natural settings is a key factor behind the recent rapid growth of ecotourism”.
The challenge for tourism operators is Phuket is to give the Ecotourists the perception that they are still on a paradise island, despite the mass tourism and close proximity to urban areas.
This is achieved partly through “communicative staging” (Kontogeorgopoulos 2005) where the landscape near resorts is designed to give the appearance of a natural environment. Guests to Phuket can also go for day trips to Phi Phi and other nearby islands which remain untouched by urbanisation to experience the sense of exploring a natural island environment (Lauzon, 2009). All stakeholders in the Phuket community (locals, businesses and government alike) wish for Phuket to be regarded as a ‘Green City’ in the future (Boonchai, Beeton, Srichai). This can only be achieved by engaging all members of the local community to form a comprehensive and sustainable development plan for Phuket (Xing, 2011). 10.0 Conclusion
This report discussed the effects of the Hospitality, Tourism and Events Industry on the island of Phuket. The Industry’s rapid development has resulted in economic benefits, but has had some negative side effects upon society and the environment.
The problems have been caused by the Thai and local government’s lack of compromise, lack of planning and failure to enforce laws. Phuket seems to have not learnt from the 2004 Tsunami that economic reliance upon a small segment of the HTE industry is not a good long term plan in the changeable modern world.
The new era of mass tourism which is hitting Phuket now, combined with the level of opportunity currently growing within the MICE segment in South East Asia, is an opportunity to develop more diversity in order to maintain its economy. It is vital that sustainability of the Tourism Industry is achieved as the local economy has become dependent upon it. Protecting the environmental is of equal importance as the Tourism Industry and people’s livelihoods depend on an attractive and natural-seeming environment in order to keep the guests arriving. Hopefully the many stakeholders in Phuket can find solutions so the island can develop as a Green City with a stable economy.
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