Thailand trip and a few comments

Last month I went to Thailand for a 8 day vacation. It was my first trip to Thailand and second in the region (I have been to Malaysia before). The trip went very well and completely fulfilled my expectations. I had a few simple observations about the trip and I wanted to share those in this post.

  1. The Thai people are well-mannered and humble: In tech terms, Thailand is the most ‘user friendly’ place I have visited. For the first time visitor like me, everything was super easy. Full marks to the Thailand government for making this such an excellent tourist destination. However, more than the government I feel that there is a cultural/religious angle to it. The people were genuinely nice.
  2. The Indian influence in the culture cannot be missed: Starting from their names to architecture, I could see many similarities between Thailand and India. Once I came back to Dhaka, I decided to investigate this further and did a bit of digging. There was indeed clear linkages between India and Thailand in the forms of marriages and other ways. Therefore, there is no wonder that the culture looked similar.
  3. There are clear trade-off to growth of foreign tourism: Tourism can bring in a lot of foreign currency and ultimately become a massive driver of the economy. However, I do not see that happening in the case of Bangladesh even if infrastructure (roads, hotels etc) improves significantly. The reason is once again cultural and religious because alcohol and swimwear are considered taboo in Muslim majority countries like Bangladesh.

These are simple observations of a tourist and might not be of particular interest to my readers. Since, my blog focuses on finance I thought I should add a few more lines on the tourism industry that are more relevant to finance and economics students.

The hotel business is heavier on the fixed cost side. They have to incur these cost regardless of whether they get visitors or not. Therefore, in off-seasons they would prefer to price the rooms in such a way that they get most room occupancy (as long as marginal revenue>marginal cost). That is why, room rates fall so sharply in off-seasons and you see exceptional ‘value deals’ in online booking sites like Agoda and Booking.com. HOWEVER, if the tourist goes without a hotel booking and asks for room rates physically, rates will invariably be higher. With the absence of the ability to compare room rates, the scope of price discrimination is much higher.

The pricing mechanism of tourist attractions and packages are also interesting. The prices quoted in the brochures are always the peak season rates. In fact I would guess that they even put a premium on the going rate and then quote that in the brochures. When a tourist goes to buy a trip or a tour they would first show the brochure and ensure that we are ‘anchored’ to the high rates quoted there. Then they slowly offer small discounts giving the illusion of a bargain to the unknowing tourist.

 

Asif Khan, CFA

Asif Khan is presently a Research Analyst (Financial Sector) for Exotix which is a frontier market focused investment bank. He has more than 6 years of work experience as equity analyst in both buy and sell side roles across Asian frontier markets. Asif is a CFA Charterholder and has a dual major in Finance & Economics from North South University.

2 thoughts on “Thailand trip and a few comments

  1. I like this post, well observed and interesting. Thanks for sharing and good wishes for you and your family.

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