257th Meeting – Tuesday, January 25th 2005

Redeveloping & Repositioning Chiang Mai as a Tourist Destination

A talk by Shane K. Beary

Present: Paul Barber-Riley, Mark & Dianne Barber-Riley, Baudil, Hans Berkmuller, Bodi Blokker, Jackson Braddy, Manus Brinkman, Alex Brodard, John Cadet, Bea Camp, Richard Crichton, Bill Dovhey, Jack Eisner, Lorenz Ferrari, Tom Heinz, Annelie Hendriks, June Hulley, Otome Klein Hutheesing, Annette Kunigagon, Mike Long, Micah Morton, Richard Nelson-Jones, Thomas Ohlson, Marquis Op de Laak, Mike & Margaret O’Shea, Chris Paine, Adrian Pieper, Aileen Roantree, Lilli Saxer, Armin Schoch, Peter Schupp, David Steane, Michael Wilson. An audience of 44.  

Resume - Shane K Beary.

Born in Dublin, Ireland in 1952.
Started ‘Track of the Tiger’, an adventure tour operation in 1986, and built ‘Mekok River Lodge’ in 1988, both aimed at the soft adventure and the educational tourism market currently enjoying a boom.

Currently expanding ‘Track of the Tiger’ 'special events management' arm throughout SE Asia having formed an alliance with a well-respected regional tour operator.

Opened 'Just Khao Soy' in 2004, and with copyrights and trademarks now in place, is developing the franchise model to take it international in 2006.

Shane’s Introduction: “I personally don't believe that Chiang Mai should have been developed as a tourist destination. It should have been left as a charming, slow paced place to live, for both the Thai and the handful of foreigners, who for one reason or another call it home.

However, given that the decision to do develop for tourism has long been taken, and is now irreversible, I feel compelled to do what I can to coerce the stakeholders into adopting a more sustainable approach to that development.

My proposal to redevelop and reposition Chiang Mai on the regional tourism map is therefore aimed at channeling the funds already earmarked for tourism development into projects that will boost tourism revenues - in a sustainable manner, minimise, if not reverse, the damage inflicted by the existing tourism development model, and significantly improve the overall return of investment.

They are, more importantly, designed to improve the tourism product in the short term whilst improving the quality of life for the city's inhabitants, as well as their prospects for the     post-tourism era that surely must come.”

Shane’s proposal runs to 33 pages. The full proposal is available in PDF file format from Shane K Beary tiger@loxinfo.co.th . This is a synopsis, compiled by your convenor, of the chapter headings with some of the more pertinent details.

Analysis of tourism statistics

Tourism Growth

From 1997 to 2002 the number of tourist visitors to Thailand increased by more than 40%, whilst in Chiang Mai this increase was only 13%. Suggested reason for the disparity between the percentages – there is either something wrong with the Chiang Mai tourism product, or with the way it has been managed.

Guest Wallet Share

1997 to 2002, the average daily foreign tourist expenditure (accommodation, food, shopping, recreation) was 27% lower in Chiang Mai than in Bangkok, Phuket and Pattaya. Suggested reason – there is either something wrong with both the shopping and the tour product in Chiang Mai, or the way it is managed.

Average length of stay

TAT say 4 days. Major inbound tour operators, however, say 2.1 days for tour groups and 2.4 days for independent travelers. Suggested reason – Chiang Mai is generally regarded as a stopover on around Thailand tours, not a destination.

Return Visitors

Average percentage figure for tourists returning to Thailand for a second visit is 52%, for Chiang Mai 15%. Suggested reasons for disparity – as given above.

The history of tourism development in Chiang Mai

Three pages describing a chronology of tourism from the 1880’s with Norwegian Carl Bock making a trip from Bangkok to Chiang Mai and then on to Fang, Ban Thaton, Chiang Rai and Chiang Saen, to the 1980’s and 90’s with MICE and ‘soft adventure incentives’ along the Kok river. At present we have Chiang Mai native Thaksin’s intention to make the city a regional air hub, the advent of low cost airlines – appealing to S.E Asian residents and high earners in finance and IT capitals looking for weekend getaways, the current construction of eleven 4-5 star hotels, locally owned resort under construction around the city, and numerous enclaves of specialized furniture boutique shopping areas - this development driven not by tourists but by wealthy Thai buyers looking for original, limited edition items, although the more savvy up-market foreign tourist is starting to take notice.

The problems with Chiang Mai – from the tourist visitor’s perspective

What do tourists think of Chiang Mai’s ‘Major Attractions’?

Wat Doi Suthep – Commercial, lacking the reverence and tranquility of a Buddhist temple. Access road difficult and dangerous. Pollution haze obscures promised panoramic view of the city.

Shopping:

San Khampaeng, Borsang, Ban Tawai – Products designed and mass-produced for export market, no ‘unique’ items. Cheaper than Europe but not ‘bargain’ prices. Quality and finish don’t match the asking price. Cost of shipping home often more than cost of product. What savings are made are not worth it, most items commonly available in Europe.

Night Bazaar – Not the ‘oriental shopping experience’, more like a run down, 1960’s architectural style western shopping centre. Goods are either trinkets, fake designer goods, or mass-market product line factory over runs – little appeal to the ‘serious shopper’. Overcrowded stalls make walking access difficult, no places to rest, no international standard public toilets.

Elephant Camps – Not in the ‘jungle settings’ portrayed in promotional literature. Most rides little more than a circuit through deforested areas around the camp – not the ‘jungle safari’ envisaged. Mahouts are scruffy men in torn western clothes who display little kindness to their animals. 

Sightseeing Tours – Apart from temples, attractions are limited, contrived, and not representative of cultural heritage of the north. Tour guides steer tourists towards ‘shopping attractions’ as opposed to ‘tourist attractions.’ Tours included little of traditional city life, or rural village life as depicted in promotional literature.

Hill Tribe trekking – Very few of the tourists in this survey had ever tried trekking, or had any interest in doing so. Many had however enjoyed ‘nature trail’ or ‘eco-trail’ soft adventure trips in other countries.  

Chiang Mai City – The city, its temples and culture have lost their allure, overshadowed by modern development. The people are losing their northern charm and easygoing nature as they replace Buddhism with Bahtism. Chiang Mai people are, however, more friendly than those in Bangkok and the South. No adequate public transport system. Difficult to communicate with tuk tuk and songtaew drivers.  

Problems with Chiang Mai – local tourist business operators’ perspective  

Chiang Mai almost entirely dependent on Bangkok based tour operators for its supply of tourists. Bangkok ‘monopoly’ creates ‘middleman’ problem. Geographic location of ‘downtown’ area, including night Bazaar, combined with poor public transport system works against local hotel operators. Bangkok ‘monopoly’ uses ‘poor access’ to drive down room rates for out-of-downtown area hotels, and then use these low rates to drive down room rates for in-downtown area hotels. Local hotel owners have not worked together to establish minimum rates – they are cutting each other’s throats. Hotels built in 1970’s and 80’s on a flawed business model. Oversupply of hotel rooms in Chiang Mai favours Bangkok ‘monopoly’. Difficult for entrepreneurs to establish new viable tourist related businesses in Chiang Mai. ‘Spa’ business already fallen victim to poor business model syndrome. After less than three years as a new attraction, the local market is overcrowded with spas now cutting prices to compete. A combination of the Bangkok ‘monopoly’ and inept local management are denying the people of Chiang Mai the potential rewards from tourism.

With the impending glut of hotel rooms in a city that tourists are increasing starting to dislike because of its loss of tradition, culture and charm, what is going to be done to make the city more attractive in order to attract more tourists prepared to pay viable hotel rates?

Tourism Development – Seeking compromise to ensure a workable development plan

Within the local tourism industry there are two distinct opinions on which development model best suits Chiang Mai:

Group 1 – Supporters of Mass Market development

·        Provide a low cost product aimed at the emerging Asian and Eastern European block countries.

·        Improve old attractions and create new ‘man-made’ attractions.

·        The volume of new tourists will compensate for the number of those who, dissatisfied with the product, will not return.              

·        Cannot rely on improved old attractions, must move forward in creating new modern products.

Group 2 – Supporters of smaller volume, higher yield per visitor model

·        Environmental degradation cost of mass tourism is too great and unsustainable.

·        City’s geographic location, layout and character not suited to infrastructure development required by mass-market model.

·        Mass-market development would destroy all that originally attracted tourists.

·        Natural attractions to the north of the city are not suited to mass-market development.

·        Don’t extend the airport, move it away from the city. Address problems of pollution and congestion before attempting to attract more tourists.

Group 3 – The Government, development plans and strategies dictated from Bangkok

·        Intends to pursue both mass-market and low volume/higher yield tourist markets.

·        Regional Hub – committed to extending the airport to accommodate bigger aircraft and higher volume of air traffic.

·        Major convention centre project to attract MICE business.

·        A raft of major infrastructure and tourism development projects to attract more tourists.

The Need for Compromise

Groups 1 & 2 must play a role in the decision making process and develop their own development master plan. Any development plan should be part of a strategy to reduce the city’s long-term dependence on tourism revenue.

Considerations for a master plan

·        Long term, 30-50 year view. Anticipate global patterns that could lead to a downturn in tourism and tourist interest in Chiang Mai.

·        Long term environmental and social health issues should be carefully considered.

·        Resolve problems of traffic congestion, air and noise pollution.

·        Implement viable, ‘environmentally friendly’ mass transport systems – trams, electric vehicles, underground railways, etc. More roads and conventional buses are not viable.

·        Tourism development as a business venture. Each project should have realistic projections based on return on investment and profitability.

Changing Chiang Mai from a ‘stopover’ to a ‘tourist destination’

Three things need to be done to achieve this objective:

1.      Select new Unique Selling Propositions, USP’s. These must be unique in regional terms and have broad appeal.  

2.      Create new, or redesign existing tourist activities that tourists will want to come back to do again.

3.      Design and implement an effective and sustainable campaign to promote Chiang Mai directly to the world.

 Expected result – Increase in tourist numbers and length of stay. Direct bookings from overseas wholesalers and F.I.T.’s.

Creating USP’s for Chiang Mai

USP 1 – The Shoppers Holiday

·        Reinvent and expand what already exists to make Chiang Mai a hub where its own product, as well as product from the Greater Mekong Sub-region is finished.

·        Finished product then showcased to tourists, worldwide interior design/home décor and other markets.   

·        Newly emerging ‘boutique shops’ on the river road, Nimmanhaeminda Road and other areas in the city already attract wealthy Thais and are beginning to attract up-market foreign tourists.

From local attraction to shopping hub.

·        Air and road infrastructure combined with relaxed regulations for the movement of goods between GMS countries facilitates the transfer of raw, semi-finished and finished goods from neighbouring countries to Chiang Mai.     

·        Northern Thai designers and craftsmen could use to cheaper imported raw materials to create an expanded range of home décor, fashion and other products. Chiang Mai would become recognised as the shopping hub for the whole GMS area.

USP 2 – The River Market

·        Build 3km long 6 metre wide floating walkways along both sides of the river, probably with Nawarat Bridge at the center. Moor environmentally friendly river barges of a classic 'rice barge' design, as shops, cafes' and entertainment venues along the length of the floating walkways to create the Ping River Market.

·        The turnstiles at access points would facilitate both entry fee collection and allow policing for overall safety.

·        Some barges could double as stadium styled seating units creating a special 'venue' for floating parades - Loy Krathong, Songkran and many others to be created, all capable of generating huge revenues for the city.

·        Establish 'park and ride' stations some 2 km distant from each corner of the 'Ping River Market'. Ban roadside parking in the riverfront area to ‘encourage’ people to use public transport running on circular routes between the 'park and ride' stations and the Ping River Market.

·        Use a combination of carrot and stick techniques (financial incentives and social restrictions - early closing hours), to entice tourist related businesses to relocate from the city centre to the new Ping River Market.

·        Redevelop the 'reclaimed downtown areas' converting ugly buildings into 3-4 floor parking garages, banning roadside parking and turning pavements into tree filled promenades.

·        Provide development funding for building owners willing to refurbish or reconstruct their buildings in keeping with an accepted La Na design code. These buildings can then become boutique outlets, sidewalk cafes, and accommodation clusters where perhaps three or four boutique style hotels share common public areas and restaurant facilities.

How should Chiang Mai be redeveloped and repositioned

The city area

·        Short and medium term - the focus should be on the downtown area where existing tourist infrastructure is most concentrated.

·        Medium to long term – redevelopment of the old city within the walls. This would include restoring old buildings, banning or severely limiting vehicular access, relocating light industry outside the inner city area (perhaps to the airport area if the idea to relocate the airport is favourably considered.), complete the ‘cobble stone’ streets, increase green areas, ban all billboards, neon and electronic signs.

·        Between the inner and outer ring roads

·        Zone this area for housing, schools, universities, etc, with secluded sub-zones for light industry.

The hills around Chiang Mai

Develop the higher altitude areas in the hills/mountains around Chiang Mai into 'all year round' long stay resorts, health retreats and spas, golf courses, back to nature hill stations. These products to be target marketed at the more affluent tourist, the MICE meetings and incentive business, and the retiree market.

The Tourist Markets

If this, or a similar proposal was accepted and implemented - How would Chiang Mai benefit?

·        Mainstream tourism – ‘return visitor appeal’ would increase the volume in all aspects of this market.

·        Niche Market tourism – Golf and Spa holidays combined with low cost airfares would increase weekend getaways.

·        Long Stay tourism – Golf and Spa attractions, plus cooler all year round climate of hill stations offering nature trail and soft adventure activities appeal to this market.

·        Health Service market  - When Chiang Mai hospitals establish a level of service that can compete with Bangkok hospitals, proximity to the recuperation facility will give them a distinct advantage.

·        MICE Market – Upgrading existing meeting facilities combined with room rates that are up to 50% cheaper than Bangkok would give Chiang Mai a distinct advantage in attracting small and medium MICE market trade.

“We are confident that once the recommended USP’s are put in place, and properly promoted, the increase in volume and spending power of the tourist visiting the city and staying in deluxe boutique, or 4 and 5 star international hotels, will provide custom for a better product.”

In conclusion

Three elements have combined to provide the city with a second chance to redevelop and reposition itself:

1.      P.M. Thaksin has fast tracked tourism development for the kingdom, and in particular Chiang Mai.

2.      Low cost airfares now encourage more people to travel.

3.      The Ping River is a natural asset that can be the cornerstone of redevelopment.

 

“There are very few second chances offered in life, especially to development planners. We should not miss this one.”