TWO POTENTIALLY ANTAGONISTIC TOURISM MODELS FOR THAILAND?

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1 TWO POTENTIALLY ANTAGONISTIC TOURISM MODELS FOR THAILAND? Peter J. Morton 5 Parichat Kheawcha-um 6 ABSTRACT This paper analyzes questionnaire data collected by co-author Parichat Kheawcha-um, for her thesis on the motivational and perceptual underpinnings of Thailand s tourism industry, especially as they relate to sex tourism. The database is concerned mainly with subjective factors, studying the attitudes of Thais and foreigners about the moral and reputational consequences of sex tourism to the host society. However, it contains self-reported background data about tourists incomes and their expenditures of both money and time in country. These may be used to improve our understanding of the revenues and foreign exchange generated by different types of tourists. Additional analysis of the database may address such questions as the degree of market segmentation and overlap between what we have come to call the red light tourists who visit specifically to enjoy sex-related entertainment, and the green light tourists who are mainly interested in more traditional holiday recreation. How distinct are the two groups from each other? How do their aggregate spending and lengths of stay tend to differ? Can their needs be met simultaneously in a complementary fashion or are they likely to repel each other? The tourism sector s direct contribution to Thailand s GDP was estimated to account for almost 13% by 2013, and to be following an increasing trend, so it is important to understand not only its role as a leading sector of overall economic growth, but also the internal tensions within the industry that may constrain its future growth and profitability. KEYWORDS Hospitality, Travel, Sex Tourism, Market Segmentation, Opportunity Cost etc. INTRODUCTION Before continuing to read this paper, the reader can conduct an informal survey to identify and rank the world s most conspicuous sex tourism venues. Enter a search phrase like Sex Tourism Top Destinations into the Google home page, and work down the first page of links, clicking on each in turn. Most will offer a subjective ranking of the different places a sex tourist might go, along with some photos and commentary. Differences in methods and criteria may make it difficult to combine the various lists into a slightly less subjective meta-ranking, but the predominance of the number one destination should emerge as a matter of near consensus. In my own inspection of eight different websites, one country, Thailand, received six first-place endorsements, and ranked high on the remaining two lists. Thus, we can conclude that at least in terms of reputation, this large Southeast-Asian country of 66 million people enjoys the dubious honor of being the world s most widely recognized sex tourism destination. Yet, tourists visit Thailand for a wide variety of reasons. A few minutes of additional Google searching will reveal that the country s appeal is not one-dimensional. Cultural and historic sites, exotic dining, scenery, recreation, wildlife, shopping, all exert the same tourist appeal in Thailand as they do when they are found in other countries, and Thailand has many such attractions on well-publicized offer. However, the association with sex tourism is quite a solid indication that those who already have that subject in mind will quickly think of, or be reminded of, Thailand. In an era of globalized travel, many of them will then come to visit. The foreign tourists bring with them foreign currency, of which they spend a large part on the same hospitality-related goods and services that other tourists buy. In many venues, they interact with locals and with fellow tourists in conventional ways. However, at other times, and under other circumstances, they seek entertainments that their peers decide to do without. In the process they rely on their their own private risk-reward calculus, in which they are free to decide what weight to place on the undesirable consequences of their sex recreations for the local society, morality, and public health. Some of these consequences accumulate and cause visible changes in the local culture, and the relationship that exists between the locals and foreign tourists generally. Jobs are created, but the growth sectors may not be those that are universally regarded as a net gain for the host society. The longterm risk is that some Thais may no longer feel comfortable in their own country, and some potential tourists may likewise decide that they prefer to spend their vacation time elsewhere. 5 Professor, Department of Economics, Chinese Culture University, Taiwan, mortonpj@gmail.com 6 All-English M.A. Program (International Business Administration), Chinese Culture University, Taiwan, mai_mee@hotmail.com 1686 P a g e

2 This paper will use its questionnaire data to try to determine first whether the sex tourists visiting Thailand should be viewed as a category unto themselves, or whether they constitute one extreme of a distribution comprising the whole tourist population whose favored pursuits run the entire gamut from the most sex-oriented activities to the least. The finding of a unified single-peaked distribution of tastes would suggest that marketing appeals could be incrementally adjusted to match tourists preferred menu of attractions, while a bimodal distribution would suggest that Thailand would face pressure to specialize as it positions itself to compete for tourists in the global marketplace. Particularly in the bimodal case, it will be useful for Thais to understand the longterm economic consequences of committing to a red light or more conventional green light tourism model. This is not to imply that such choices should be determined solely by economic considerations, but only that the economic consequences should be weighed against the competing social concerns. Our investigation therefore also examines the association between tourists preferred activities, their length of stay, and their rate of spending. BACKGROUND The importance of travel and tourism to the world economy is already large and continues to increase. According to the United Nations World Tourism Organization (UNWTO, 2015) most recently, this cluster of related industries accounted for one in eleven jobs worldwide, as well as 9% of world GDP, 6% of exports, and 30% of service sector exports. For the developing economies, evidence suggests that the linkage is even stronger (Ivanov, 2013). Sahli and Nowack, (2014) comment that, Tourism is increasingly viewed as one of the best opportunities and most viable options for the sustainable economic and social development of developing countries. Expanding on Sinclair (2010) the authors claim that international tourism ranks among the top five sources of foreign exchange in 83% of the world s developing economies, and is the most important source in one-third of these. Among the special benefits of tourism as a driver of economic development have been cited its labor market effects, such as: overall labor intensity, variety of skilled and unskilled jobs created, geographic dispersion of job opportunities, creation of job opportunities for women and young people, and the creation of entrepreneurial opportunities for Small, Medium and Micro Enterprises, or SMME s (United Nations Conference on Trade and Development, 2001). Recognition of tourism s value as a stimulus to broader economic development frequently comes with a caveat about sustainability referring not only to impacts on the natural environment but on the social environment as well. A 2013 report, also by UNCTAD, lists four prerequisite factors, if the tourism sector is to contribute effectively to the growth of the national economy as a whole. These included the existence of forward and backward linkages between tourism and related industries, the diversion of tourism revenue to help develop supportive infrastructure, implementation of complementary pro-development government investment policies, and finally, National efforts to assure that tourism activities are carried out sustainably and meet economic, social and environmental objectives. In the case of Thailand, the country s success as a tourism-driven developing economy has been tempered by disagreement about this fourth factor; in particular about what the country s social objectives truly are, and how they can be reconciled with a tourism promotion model heavily dependent on the adage that Sex sells. In strictly economic terms, Thailand has made steady progress. Inbound tourism, in all its diverse forms and motivations, has played an important role in Thailand s economic growth and development during recent decades. Sustained growth in tourist arrivals has coincided with increasing per-capita incomes, not only in Thailand but in many neighboring Southeast Asian countries as well. Yet even in a region of vigorously competing destination countries, a survey of the basic data reveals that the relative importance of tourism is greatest in Thailand. Table-1: Relative Importance of Tourism in Thailand and Neighboring Economies 1687 P a g e

3 With the exception of China, Thailand hosted the largest number of foreign tourists in 2013, but tourism accounts for a much smaller part of China s GDI. The benefits of tourism specialization have been widely debated, with some authorities like Chang, Khamkaew and McAleer (2009), finding widespread increasing growth returns to specialization, and others emphasizing caveats and conditions following Azreki, Cherif and Pietrowski (2009) and Figini and Vici (2010). Note that the difference in arrivals between Thailand and Malaysia is not large, but the two cases diverge in terms of their economic impact, with tourism earnings accounting for approximately twice the share of overall export earnings and national income (GDI) for Thailand as for Malaysia. This difference can be traced to an approximate 2:1 difference in the average amounts spent by foreign tourists in Thailand compared to those in Malaysia. The present study only examines the case of Thailand, but a similar study of Malaysian tourism might lead to a more complete understanding of this discrepancy. METHOD The original motivation for the questionnaire that generated this dataset was to compare the habits and perceptions of Thai domestic tourists with those of foreign tourists traveling to Thailand. Questionnaires were prepared in both Thai and English, thus effectively excluding the participation of foreign tourists who could not read English. Questionnaires were distributed on site in Pattaya, Thailand, and were made available online to tourists who were unable to complete the paper variant. In total, 147 questionnaires were returned by foreign tourists, of which 114 (77.6%) were found to be usable for the current investigation. These included 75 self-described Asians and 39 self-described Europeans, Russians, North Americans, Australians, and other. 65 respondents (57%) claimed to be identified as male in their travel document. Note that in addition to the foreign tourists, 156 questionnaires were collected from Thai tourists. Table 2 below contrasts the self-reported activities of the two groups. Table-2 RESULTS The correlation weighting designates the weights given to each activity in constructing a summary Likert Index of Sex Tourism Venues (LISTV). The iterative procedure used to construct this index borrows from the D-NOMINATE process used by McCarty, Poole and Rosenthal, (1997), to rank legislators on a liberal-conservative scale according to their voting patterns. Substituting activity choices for votes cast, and restricting the scale of outcomes to a single dimension of sexual vs. non-sexual tourist pursuits, we construct our measure by assigning index activity weights that reflect the degree to which each individual argument is correlated with the summary index. By starting with an arbitrary assignment of all weights equal to one, each successive iteration assigns a new vector of weights to eventually converge on a stable solution that gives increased importance to any subset of arguments that varies in concert with the whole index. Thus, in this instance, we observe that the items strongly associated with sex tourism are the drivers of the summary index, while the non-sex pursuits common to a wider range of tourists fail to exert much influence. Figures 1, 2 and 3 on the following page plot the LISTV index values against a standardized normal distribution in the process of testing the hypothesis of unimodality. In the case of all 270 indexed domestic and foreign tourists. The Chi-squared test statistics and their associated P-values indicate that the hypothesis of a unimodal normal distribution of tourist index values can be rejected with 90% confidence for the whole sample, and with greater than 99% confidence for the foreign respondent group. The Figure-2 graph clearly shows that the distribution displays broad shoulders and the lack of a central peak, consistent with bimodality. However, when the foreign respondents were split into red light and green light categories according to whether their LISTV values fell below or above the mean, their demographic characteristics, shown in Table 3, revealed many similarities P a g e

4 For the Thai domestic tourists, the pattern was different. In Figure 3, despite a conspicuous frequency spike for those whose high index values indicate a relative lack of interest in sex tourism pursuits, the unimodal distribution was not rejected P a g e

5 A second Likert-scale index variable, LITI (Likert Index of Thailand s Image) attempts to specifically describe the degree to which the tourist questionnaire respondents identified Thailand with a series of suggested images, ranging from the conventional, like markets and handicrafts, to the overtly sex-related, like sex shows and prostitution. The third column of Table 4 shows that high LITI values, indicating a country image associated with green light conventional sightseeing, are strongly negatively associated with the dependent index of sex tourism venues attended, LISTV. Not surprisingly, the image associated with Thailand by foreign tourists is a strong predictor of what sort of entertinment they choose to patronize when they arrive. CONCLUSION Results from the present data set suggest that Thai domestic tourists interest in sex tourism activities are distributed unimodally, whereas the interests of foreign tourists are more broadly dispersed and very likely bimodal. This is consistent with the foreigners being a more self-selected group, of whom some are attracted specifically by the publicity Thailand receives as a friendly destination for sex tourism. The foregoing analysis finds that for both red light and green light tourists, the average spending per stay is much greater than the amounts reported for Thailand and neighboring countries in Table 1. Since spending is a measure of the economic value of tourists to the host country, it is important to understand the determinants of this variable in Thailand. Breaking down the spending-per-stay estimate into its two components, rate of spending and duration of stay shows that the discrepancy is mainly traceable to the unexpectedly long durations reported by our respondents. The self-described sex tourists reported average stays of 12 weeks, and the non-sex tourists reported even longer stays of 19 weeks. These high averages are attributable almost entirely to a subset of 30 respondents, seven from the red light group and twenty-three from the green light group, who can hardly be considered tourists in the conventional sense, because they reported stays in excess of one year P a g e

6 One way to account for these long-term stayers is to regard them as foreign residents rather than foreign tourists. We did not include questionnaire items to identify them as students, teachers, retirees, and/or employees of foreign businesses, but those who are employed in country will differ from the holiday visitors. They may have incomes that do not represent foreign-exchange inflows to Thailand, and those who marry in country during their stays will have at least that reason to change their sex-tourism habits to a monogamous model. If the long-term stayers were excluded from Table 3, the results would show that the per-stay spending would be just $703 for the remaining 83 tourists, with the red light respondents spending an average of $837 per stay and the green light respondents spending $522 per stay. Long-term stayers may be over-represented in our sample because they are over-represented in Pattaya and on some of the expatriate websites where our questionnaires were posted. Nonetheless, their importance to Thailand s hospitality sector justifies more focused study. When they are excluded from the analysis, it appears that red light tourists substantially outspend the green light tourists, but the long-term stayers who are the most important spenders tend to identify mainly as green light tourists, thereby reversing the previous result. The inability to fully describe the role of the long-term visitors: why they came to Thailand initially and the evolution of their activities and their circumstances since their arrival represents both a limitation of the present study and an important avenue for follow-up research. REFERENCES 1. Azreki, R. R. Cherif, & J., Piotrowski. (2009). Tourism Specialization and Economic Development: Evidence from the UNESCO World Heritage List (Working Paper, WP/09/176). IMF Institute and Fiscal Affairs Department. 2. Chang, C., Khamkaew, T., & McAleer, M. (2009, October 29). A Panel Threshold Model of Tourism Specialization and Economic Development. Retrieved from Figini, P., & Vici, L. (2010). Tourism and Growth in a Cross Section of Countries. Tourism Economics, 16(4), Ivanov, S., & C., Webster. (2013). Tourism s Contribution to Economic Growth: a global analysis for the first decade of the millennium. Tourism Economics, 19(3), doi: /te Koonathamdee, P. (2013, June). A Turning Point for the Service Sector in Thailand (ADB Working Paper Series No. 353). Asian Development Bank, Manila. 6. McCarty, N., K., Poole, & H., Rosenthal. (1997). Income Redistribution and the Realignment of American Politics. Washington, D.C. American Enterprise Institute for Public Policy Research: The A.E.I. Press. 7. Sahli, M., & J., Nowack. (2005). Migration, Unemployment, and Net Benefits of Inbound Tourism in a Developing Country (Fondazione Eni Enrico Mattei, Working Paper 148). Retrieved from 8. Sinclair, M. (1998). Tourism and economic development: A survey. The Journal of Development Studies, 34(5), DOI: / (2001, May). Tourism in the Least Developed Countries, ed. D. Benavides and E. Perez-Ducy, Brussels, United Nations Conference on Trade and Development (UNCTAD). 10. (2013, March 14-15). Trade and Development Commission Expert Meeting on Tourism s Contribution to Sustainable Development Geneva. UNCTAD. 11. (2015). World Tourism Barometer, 13(2). UNWTO. DOI: /wtobarometereng (2012). Databank: World Development Indicators. World Bank. Retrieved from ***** 1691 P a g e