Thailand: Sounding the alarm on zero-dollar tours

• Apr 19, 2023

As a popular tourism destination, Thailand expects to welcome at least 25 million foreigners this year, with roughly 5 million from China, representing 50% of the Chinese visitor total in 2019.

In the early stages of China’s reopening this year, Beijing listed Thailand as one of the first 20 countries where Chinese tour groups would be able to visit.

Combined with the flow of independent tourists, Thailand welcomed almost 500,000 visitors from the mainland in the first quarter.

However, the promising recovery has triggered concerns over the return of so-called “zero-dollar tours”, known for their unusually low prices, with local tour operators noticing the same old pattern re-emerging lately.

WHAT ARE THE COMMON ILLEGAL PRACTICES USED BY CHINESE TOURISM OPERATORS?

Many local business operators relied on Chinese tourists for a considerable amount of time, with tour operators envisioning an opportunity to profit from the large number of visitors to Thailand.

Among regular businesses, some operators offer zero-dollar tours to Chinese tourists, named as such because their package prices are below cost.

These agencies seek to earn a profit by sending groups to local Thai agencies without paying any tour fees, with the tourists then forced to visit places and spend their money on goods and services at a higher price than the market rate.

In the worst-case scenario, tourists could be left behind without notice if operators are unable to make a profit or tourists refuse to spend money or visit scheduled destinations.

This scenario occurred many times before the pandemic, with tourists seeking help from the authorities. There were also reports of tourists being injured by their tour guides.

Similarly unwanted “kick back tours” are when Thai agencies pay a fee per person to Chinese tour operators in exchange for a commitment to send large groups to them.

Local tour operators earn a profit by taking tourists to visit pre-arranged shops or attractions. This method is akin to buying a “head count” from Chinese tour operators.

In many cases, these operators are also involved with nominee businesses, referring to companies legally owned by Thai nationals that have foreign operators, including Chinese, funding them or directing them behind the scenes.

HOW HAVE ZERO-DOLLAR TOURS AFFECTED THAILAND’S TOURISM INDUSTRY?

As an organised network, the profit for these tours tends to be limited to certain operators in a closed-loop supply chain.

The impact harms Thailand’s tourism reputation, particularly when tourists encounter distorted fees or policies while travelling with a tour group escort.

With a regular tour programme, tourist expenditure supposedly is spread among local operators along the supply chain, including hotels, restaurants, shops and attractions. The closed-loop system has foreign investors selecting a restricted number of businesses for their networks and reaping the profit by taking groups to those places.

Zero-dollar tours actually force tourists to pay a higher price during the trip, while the quality of products and services are mostly sub-standard, which can create a negative outlook towards Thailand’s tourism industry.

In some cases, these tour operators also hired Chinese nationals as their tour guides to save on costs. This practice is illegal as tour guide is a protected occupation under labour law reserved solely for Thai nationals.

As a result, a significant amount of money flowed out of Thailand, with the government unable to collect as much tax revenue as it should have.

HOW DID THESE TOURS AND OTHER ILLEGAL ACTIVITIES CHANGE FOLLOWING THE PANDEMIC?

Many operators are worried shady businesses will return and have a greater impact, with even larger systematic crimes, which the Tourism Authority of Thailand (TAT) has dubbed “closed-circuit tours”.

A closed-circuit tour is run exclusively among a network served by specific nationalities, with more systematic management and working divisions.

For example, tour agencies can take groups to eat at their own restaurants and shop at stores run by operators of the same nationality, using only imported tour guides.

Some Thai tour operators refer to these Chinese networks as “Ang Yi tours”, referring to the Ang Yi definition used in Section 209 of Thailand’s Criminal Code regarding punishment for members of a secret society whose proceedings are private and unlawful.

Earlier this month, local news reported that local operators saw a Chinese tour network send a group of 70 Chinese tour guides to work in Thailand.

Some tour companies that used to operate zero-dollar tours in Thailand have transformed into broker agents for large Chinese operators.

Yuthasak Supasorn, governor of the TAT, said the emergence of closed-circuit tours is at an early stage as the tourism industry only just recovered from the pandemic.

Mr Yuthasak said while not all the tourism income is being drained from Thailand, only a small portion remains in local hands because of these trends.

These tour services need to be carefully regulated for the sake of locals, he said.

However, Mr Yuthasak admitted that as long as they operated legally in terms of registration, it would be difficult to track down or prevent such operators from doing business.

HOW DO THE AUTHORITIES SOLVE THESE ISSUES NOW COMPARED WITH THE PAST?

Related authorities, including the Tourism Department and Tourist Police Bureau, have received a number complaints involving irregular tours since Thailand reopened to tourists.

In 2016, the government imposed strict regulations to crack down on zero-dollar tours, such as imposing a minimum price for tour fees of at least 1,000 baht per person per day, and an optional tour of no more than 3,000 baht per trip to prevent overcharging.

Pol Lt Gen Surachate Hakparn, deputy commissioner-general of the Royal Thai Police who was Tourist Police chief at that time, claimed those measures helped Thailand earn about 10 billion baht more in revenue from tax collection in 2017 than the previous year.

This year the Tourism Department plans to sign a memorandum of understanding with China’s Ministry of Culture and Tourism to address these issues on a long-term basis.

Jaturon Phakdeewanit, director-general of the department, said the agency already compiled a list of 189 legal Thai operators who partnered with Chinese companies, provided to the Foreign Affairs Ministry and the Chinese government.

Mr Jaturon said operators excluded from the list would face a full inspection and need to provide evidence regarding their business operations to the authorities to proceed with their tour services.

Any Chinese operator found guilty in Thailand of either operating nominee businesses, zero-dollar tours or using foreign guides will also be prosecuted under Chinese law, he said.

Pol Maj Gen Apichat Suriboonya, deputy commissioner of the Tourist Police Bureau, said the bureau received more complaints involving illegal tour activities, mostly small-scale operations in major tourist cities, such as Bangkok, Chiang Mai, Phuket and Pattaya.

He said closed-circuit tours, illegal guides and nominee businesses are not only limited to Chinese nationals, but also utilised by visitors from Eastern Europe and South America.

In terms of regulating illegal businesses run by Chinese agents, Thailand enacted an extradition treaty with China and regularly exchanges and coordinates with the Chinese police to monitor these activities, said Mr Apichat.

The bureau is in the process of gathering evidence, preparing for a major arrest of a large criminal network soon, instead of targeting only minor criminal cases, he said.

Mr Apichat said criminals today tend to be more professional, having a stronger foundation in terms of capital, understanding of the law and its loopholes.

WHAT ARE THE CONCERNS FOR LOCAL OPERATORS?

Sisdivachr Cheewarattanaporn, president of the Association of Thai Travel Agents, said damaging the reputation of Thailand’s tourism industry is more harmful in the long run than the illegal tours.

He said illegal activities may remain relatively minor as Thailand is receiving fewer Chinese tour groups than in the past, but news reports have already damaged tourist confidence to some extent.

The authorities should locate illegal businesses and clear their operations completely to prevent legal tour operators from being tarred with the same brush, said Mr Sisdivachr.

A negative impression of Chinese tour groups among locals would also create anxiety and tension in terms of relations between the two nations, he said.

Mr Sisdivachr said the industry and authorities have to accept that foreign tour guides could settle in Thailand because there is a shortage of local tour guides able to speak other languages.

In practice, local operators rely on foreign guides, so the government should resolve this issue because the number of local guides will never be sufficient to keep up with demand from the Chinese market, he said.

Source: https://www.bangkokpost.com/business/2552350/sounding-the-alarm-on-zero-dollar-tours