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Luzi Matzig in TravelAsia
TravelAsia, July 25, 1997
Asked if it applies to local operators as well, Peter Caprez,
Royal Garden's vice president and general manager, said, "Local
agents with whom we have contracts will get the letter too."
By Raini Hamdi
In a brave move, Royal Garden Resorts of Thailand is sending out
letters this week to its contracted travel agents, informing them
of its decision to fix the exchange rate and move away from quoting
in baht.
The group held a meeting on July 17 with owners and representatives
of other local Thai chains - Central Plaza, Dusit Thani, Amari
and Imperial - to seek concensus and a similar action.
At press time, these counterparts were adopting a wait-and-see
attitude.
The letter, signed by its CEO Bill Heinnecke, proposed no increase
in contracted rates to operators but "for any booking, US$
rates will apply in relation to your contract at a fixed exchange
rate of 27.50 baht to US$1, ie, the exchange proposed by the Thai
government on July 2, 1997". Payments and settlements would
then be made in US$.
Contracted agents could also choose to deal in their own currency.
The move, effective immediately for all new contracts, is expected
to be met with resistance from operators.
For existing contracts and those in place for 1997/98, the decision
is effective September 1, 1997.
Asked if it applies to local operators as well, Peter Caprez,
Royal Garden's vice president and general manager, said, "Local
agents with whom we have contracts will get the letter too."
Caprez admitted there would be resistance, saying, "This
is the first step of a whole action plan to find solutions agreeable
to both parties. We still have to talk to everybody."
The devaluation of the baht on July 2 added more hardship to hotels,
he said. On top of low rates, costs were expected to escalate
further. Bills for overseas tour operators became 25 per cent
cheaper than before July 2 for the same services rendered.
Caprez said Royal Garden had lost more than 150 million baht since
July 2, describing this as the biggest challenge in his 10 years
in Thailand.
As expected, an operator working with Royal Garden, Diethelm Travel
Thailand, reacted strongly against the move. Diethelm's group
general manager Luzi Matzig said, "It won't work. All the
big operators won't accept this - if they have a valid contract
in baht, why should they switch?
"It's absolutely unacceptable to Diethelm. I made the deal
in baht, we're in Thailand, which has not become the 52nd state
of the USA. It is still independent and its currency is baht."
Caprez agreed that Royal Garden risked losing business to other
hotels with this move but, he said, "We will suffer, but
in the short term. In the medium and longterm, it will prove to
be the best solution. If partners can't agree to help us, they
are not partners."
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