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The story of Diethelm & Asian Trails
Issue of Travel Weekly East, June 30, 2000
When Diethelm Travel Thailand decided to shake up its operations more than a year ago, little did it realise that it would be starting a chain reaction of events that would forever change the landscape of tour operating in Thailand and the Mekong region.
What's happened in this saga is the stuff of novels - of heroes and villians, of rebels and victims. First, the boss of Thailand gets kicked upstairs to allow another boss to take over the Thailand reins. This strategy is called "put your man in holding pattern until it's time to let him go".
Boss No 1, having been neutralised, then gets neutered, with most of his powers taken away. He is then let go. With 25 years under his belt in the same company, he does the obvious - he sets up a competitive company which today is staffed by his former loyal soldiers. Some clients also moved with him.
The sting in the tail - as his key investor in Asian Trails, Luzi Matzig brings in the daughter of the family who owns his former company but has been sidelined by the board.
Meanwhile, back on the Diethelm ranch, the new boss is not having an easy time adjusting and leading the business. But Big Boss of the group is behind him - they have to re-establish the company's long-established status as the leading inbound tour operator in Thailand and Mekong. They hire new executives. They inundate trade shows with their presence. They cut prices to keep market share.
Towards the end of last year, in a move some said was desperate and others saw as enlightened, the company's chiefs decided to bring home their prodigal son to manage the business. Armin Schoch had left Diethelm some years earlier to set up his own company, Insight, which initially operated in Myanmar and later expanded to Thailand. To get their man, they had to buy his company. They reportedly paid US$2 million as proof of their determination to win the game.
Schoch came in and immediately shook the tree. Two apples dropped - the general manager and the incentives manager resigned. Meanwhile, before Schoch came into the picture, Diethelm had put out feelers for a group general manager.
A Kuala Lumpur-based headhunter had done several calls, approached several familiar names in tour operating. The package, it was rumoured, was highly attractive.
The man who got the job, Don Jolly, left Tour East to start at Diethelm. Right after or even before he started, Schoch was in the picture. Today, Schoch is group general manager and Jolly is regional general manager. Senior vice president of Diethelm & Co Chris Schmid appears to be taking a personal interest in the company - he has been working trade shows, including the recent ITB Berlin, with his soldiers.
The stage is now set for keener competition in the tour operating scene in Thailand and Mekong, and all eyes are on Diethelm Travel and Asian Trails, the two main actors in this play.
"We're after new business" Over at the Asian Trails stable, group managing director Luzi Matzig insists he has no deliberate strategy to fight Diethelm. "We want to get new business, and we are trying to win worldwide business. Diethelm happens to be one of the many players we have to compete with but our strategy is not aimed at Diethelm specifically.
"Initially, yes, most of our accounts came from Diethelm but now we have other sources of business. We are creating a totally new market - for instance, at ITB, we talked to two major operators who are doing new Far East programmes. They had heard of us, and came to see us."
Currently, Diethelm's former accounts represent about 60 percent of Asian Trails' business but Matzig says that is expected to drop to 40 percent within the year.
Matzig says that while the competition has resulted in lower prices, it has also led to more creativity. "We have to think and find new and better ways of doing things."
Asian Trails is going heavily into the FIT market and has come up with a new series of products - Trails of Asia - which are a departure from the traditional seat-in-coach tours. "We are trying to upsell so that we give clients a good experience instead of a cheap experience."
Matzig says he is not prepared to match prices if they went below cost. "We don't want to get the business just to show off."
Asian Trails, which opened September 9, 1999, has offices in Thailand, Cambodia, Laos, Vietnam, Myanmar and Indonesia.
Next week: Europe's operators gain from competition
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