Thailand 'elite' Program In Tatters

[george]

Thailand 'Elite' program in tatters

Thaksin's dream of luring the elite lies in tatters

Former PM Thaksin Shinawatra, above, speaks at the launch

of the Thailand Elite Card, his brain child. File photo.

BANGKOK: -- It started with a flourish and some wildly optimistic predictions but it looks like it may end with a whimper

It was one of the most ambitious plans initiated under the Thaksin Shinawatra regime and intended to give birth to the country's richest state enterprise.

In November 2003, Mr Thaksin proudly presented 80 gold Thailand Elite cards to international VIPs and eminent people, including Japanese trade chiefs and US banking and financial supremos. The cards promised fast-tracked immigration, discounts at luxury resorts and golf courses, and many other perks.

The optimistic estimates to attract the world's wealthy were mind-boggling; a million subscribers to generate a trillion baht in revenue.

But early signs were not encouraging. After four months, a meagre 400 memberships had been sold, barely a dent in the 100,000 target for the first year of operation. Panicky officials talked of targeting China's nouveau riche, and predicted they would attract 30,000 Chinese within 12 months.

But six years later, the total number of members is a risible 2,570, and the Thailand Privilege Card Company (TPC), set up by the Tourism Authority of Thailand (TAT), to run the scheme has a crippling net loss of 1.4 billion baht.

Next month, the Cabinet will be asked to decide the company's fate. The TAT is due to decide this Wednesday on whether the company should be closed, privatised, form a joint partnership with the private sector, or, come under the control of the TAT.

Reality has overtaken fantasy. "It was unrealistic in the first place with such an ambitious target of one million members," said Udom Metatamrongsiri, acting president of TPC.

The scheme was developed by TAT staff under the directive of the Thaksin government, which hoped that it could help generate income at "the rate of a leap of a frog", according to an internal company report.

Under the scheme, members obtained five-year visa entry, which was renewable once it expired. They also had access to unlimited privileged leisure services which included golf, spas and VIP transport in BMW 7 series vehicles.

"In principle, we cannot totally say that the scheme was unfeasible in the first place," said Mr Udom, a board member who took over the presidency earlier this year.

"I think the first generation of the company's executives would never think that what they offered as secondary benefits would become the company's big burden."

In the first year of operation, the company sold 139 Elite Card lifetime memberships. However, the number so far this year is a measly two. The total memberships equate to 2.5 billion baht in revenue, which has not all been declared in the company's annual financial statements. By law, Thai companies are permitted to spread income figures over a 10 year period, a practice which is stated in TPC's annual report (see graphic).

So how is it meeting financial commitments with companies involved in the scheme? According to Mr Udom, TPC has to pay every service fee to tourist facilities that its members use, including the golf courses, spas and luxury transport. This costs up to 100 million baht a year on average.

For example, the company pays 4,600 baht for its members to a play a round at one golf course. So far this year, there were 5,300 visits to golf courses by its members and 11,200 spa visits. Only 200 applied for the main privilege, renewal of the five-year visa.

Besides the big financial burden from the luxury services, Mr Udom has found flaws in the company's previous management. For instance, it paid some golf courses in advance with amounts of up to 20 million baht.

Another case involves the planned purchase of an IT system for 100 million baht to improve the company's communication services for its members. But there was never a clear explanation as to why the new system was needed, and the new board decided to suspend the project.

Mr Udom admitted that the company has been plagued with transparency problems, and some of its spending is now subject to investigation by the Office of the Auditor General.

A review by Thammasart University's Economic Faculty's Economic Academic Services Centre - commissioned by the company around two years ago - found the scheme would lose 26-60% on each million baht membership fee, based on modelling done on 2006 figures. The review recommended raising the membership fee to 1.8 million to generate a 20% profit on each membership.

But it found positive long-term economic spin-offs from the Elite Card service, as based on interviews they discovered members spent three billion baht in Thailand in 2006 and would invest 21 billion baht in future projects.

After the Democrat-led government instructed the company to review its operations in January, one option that emerged is closure.

If it does close, it risks having to pay back 2.5 billion baht to present members and the prospects of lawsuits if it cannot fulfil its commitments.

Mr Udom said another proposal is joint investment, with private firms boosting capital to run the company. The other option is that the company is transferred to the TAT, and run as an internal department.

"I don't know which will be picked by the government, but the first option [closure] is unlikely, as this will yield only bad results," said Mr Udom.

Mr Udom said he had cut down the company's costs for this year to 200 million baht. This has angered card holders as a number of premium leisure services and venues have been removed. The membership contract carries a clause that the company "reserves the right to change, revise, or withdraw the service without advance notice".

According to the major agent selling Elite Card membership, only about 12 golf courses are now available to members, down from 35 at the beginning.

Soontaree Chanprasit, president of Aktiv Holding, TPC's sales agent, said the scheme had run into problems partly due to inconsistent government policy.

She said whenever there is a change of government, the scheme is subject to review, and this affects the sales of cards and services for members. Currently, the situation is at its worst, as the company's board has suspended operations, including the sale of new memberships.

The cut in premium services have also prompted many complaints to her company from existing members. Up to 200 complaints have been reported by TPC so far this year.

One card member wrote to the company expressing that he felt sorry about what had happened to the scheme.

He said he personally could see how it should be improved, but "it might be too late now".

-- Bangkok Post 2009-07-26

[FairwayJack]

Apparently some of the golf courses have been reinstated...but the key benefit and the reason I joined was the family visa. The family visa was removed 3 months after I joined. I cannot understand why they would remove the virtually cost-less visas for the wives and children of members.

[Loaded]

They never protected the downside.

Nobody considered what would happen if they didn't meet sales targets. Now, will there be a refund to the card holders (2,570 times 1,000,000 baht) or just close shop and tell customers nothing. Either way, a scandalous scam from beginning to end.

[dkstoney]

If it does close, it risks having to pay back 2.5 billion baht to present members and the prospects of lawsuits if it cannot fulfil its commitments.

Let's hope so.

[PoorSucker]

Let Thaksin pay, his idea-his money.

Take the frozen assets for this.

[barry]

i agree with groucho marx:

i would never join a club that would have someone like me

for a member

[trogers]

A classic problem of politicians and bureaucrats running a business, instead of serving a country.

[hardy1943]

i agree with groucho marx:

i would never join a club that would have someone like me

for a member

I agree these are the rich and greedy, to bad they did not get more to take their money.

Feel Sorry for them HE-LL NO

[tuky]

"I don't know which will be picked by the government, but the first option [closure] is unlikely, as this will yield only bad results," said Mr Udom.

If something doesn't work the first time, try it again, If something doesn't work the second time, try it again, maybe this time it will be ok, but remove some of the benefits to make sure.

If something doesn't work after that, put the price up, that will surely make it succeed.

If something still doesn't work, dont stop trying because that would lead to a bad result.

[jalansanitwong]

The Thai elite card fiasco tells you more about corporate excesses than anything else. Most of the cards would of been bought by companies for their overpaid,over-rated employees . Thaksin simply took advantage of them. Anybody that knows Thailand knows how to get great deals anyhow! Who needs a stupid plastic card. Those companies obviously didnt!

[Chang_paarp]

They never protected the downside.

Nobody considered what would happen if they didn't meet sales targets. Now, will there be a refund to the card holders (2,570 times 1,000,000 baht) or just close shop and tell customers nothing. Either way, a scandalous scam from beginning to end.

What do you think this is? A place with consumer legislation?

Most probable outcome.

[webfact]

I remember when this "Elite program" was introduced.

Many many people (including members of this forum) voiced their strong concern that this "scheme" might backfire one day!

The time has come the money has gone! TiT !!!

Edited July 26, 2009 by webfact

[spidermike007]

They were happy to take the 2.5 billion baht, and now they want to close the program. In most civilized countries, the money would be

set aside for just such cases. With all the changes in the policy, why would anyone want to join. The correct thing to do would be to give

back the 2.5 billion baht to the thousand or so believers, who were willing to put up that kind of money. No benefits equals the right to a

refund, right? More than likely, the Thailand Elite CEO pocketed most of the money, and it is nowhere to be found. Just another nail in

the Thailand tourism/ex -pet market. They seem to be incredibly creative in finding ways to convince foreigners not to come to Thailand.

[dr_Pat_Pong]

ThaiVisa predicted this outcome several years ago. Do a search on here.

[brommers]

The scheme was an ill judged & naive concept from the beginning, and was run by people who had no competence in a highly complex product discipline. Having designed & run such products for global airlines and other in the travel industry, and others, I can see no way that Elite can be turned into a viable business.

The core issue is that there is no consumer demand for such a product with a cost/benefit offer that is so lacking in value. The recommendation by Tammasart University is laughable in it's naivety, but then what would one expect from a study conducted by such an organisation.

Thailand has deep problems to solve in terms of tourism and the national airline. Elite is nothing more than a costly and time consuming minor side issue that needs to be dealt with once and for all. The country could recoup much more goodwill by simply returning the million baht fee to each member, and walk away from an initially unsustainable concept. Then it can focus on dealing with the intense global challenge of refurbishing a badly tarnished reputation and an industry that needs to deal with the fact that Thailand been sidelined by more attractive destinations.

[dr_Pat_Pong]

"I don't know which will be picked by the government, but the first option [closure] is unlikely, as this will yield only bad results," said Mr Udom.

If something doesn't work the first time, try it again, If something doesn't work the second time, try it again, maybe this time it will be ok, but remove some of the benefits to make sure.

If something doesn't work after that, put the price up, that will surely make it succeed.

If something still doesn't work, dont stop trying because that would lead to a bad result.

Were you at their board meeting Reith ?

[BlackJack]

You are all wrong and this is easily fixed

Bring back President Taxsin

all will be righted and the sun will shine again

[hansnl]

Like so many countries or companies or schemes opting to cater for "high-end" customers, and forgetting the "bread-and-butter" basic customers, this plan also went down the drain. The choices made are wrong, very wrong. And might I say, very expensive.....for the deluded customers.

Middle class tourists bring in most money per head per day, not the mass tourist organised in groups, not the high end customers.

So woo the "disgusting" backpackers, because they will keep coming back, even when they get older and richer.

[grantbkk]

I even considered joining in 2003 and dropped the idea after the privilege to buy property through Thai Elite was ruled illegal a few month later. The five year visa would be nice and I just had a friend who had his visa renewed for a second five years.

This program is a colossal failure. I wonder how much money was siphoned off by corruption within Thai Elite. It should be allowed to die and become a historical footnote like so many other Thai schemes that come and go.

Give all the members their money back and a visa for life should put an end to the bleeding. Will it happen? No.

[hansnl]

The scheme was an ill judged & naive concept from the beginning, and was run by people who had no competence in a highly complex product discipline. Having designed & run such products for global airlines and other in the travel industry, and others, I can see no way that Elite can be turned into a viable business.

The core issue is that there is no consumer demand for such a product with a cost/benefit offer that is so lacking in value. The recommendation by Tammasart University is laughable in it's naivety, but then what would one expect from a study conducted by such an organisation.

Thailand has deep problems to solve in terms of tourism and the national airline. Elite is nothing more than a costly and time consuming minor side issue that needs to be dealt with once and for all. The country could recoup much more goodwill by simply returning the million baht fee to each member, and walk away from an initially unsustainable concept. Then it can focus on dealing with the intense global challenge of refurbishing a badly tarnished reputation and an industry that needs to deal with the fact that Thailand been sidelined by more attractive destinations.

!!!!!!!!!!!

[SCARLETIBIS1]

Apparently some of the golf courses have been reinstated...but the key benefit and the reason I joined was the family visa. The family visa was removed 3 months after I joined. I cannot understand why they would remove the virtually cost-less visas for the wives and children of members.

You spent 1000000 baht or more to get a, "cost-less visa". Sounds strange to me. Wish I had your money. You aren't a Thai mole working for the government are you?? LOl

[hardy1943]

They were happy to take the 2.5 billion baht, and now they want to close the program. In most civilized countries, the money would be

set aside for just such cases. With all the changes in the policy, why would anyone want to join. The correct thing to do would be to give

back the 2.5 billion baht to the thousand or so believers, who were willing to put up that kind of money. No benefits equals the right to a

refund, right? More than likely, the Thailand Elite CEO pocketed most of the money, and it is nowhere to be found. Just another nail in

the Thailand tourism/ex -pet market. They seem to be incredibly creative in finding ways to convince foreigners not to come to Thailand.

Most likely they pocketed the money. " Elite " reminds me of people that can draw the last drop of blood

out of everyone especially the poor. Well not all but I personally know a few.

[george]

From "Thailand Elite Card" promotions:

The World’s Best Privilege Card

Photo: Public Relations

Department, Bangkok

The Thai government, through the Tourism Authority of Thailand, is offering a special privilege card - Thailand Elite Card - to foreign visitors fascinated with Thailand and her various offerings, such as travel, sports, health, cuisine, and culture. At a membership fee of US$25,000 per person, Thailand Elite Card membership is limited to 1 million persons.

Members of Thailand Elite Card will enjoy a wide range of benefits and special discounts offered at government and private services, including spas, golf courses, restaurants, shops and department stores, health centers, travel and transport operators, and countless more.

Their lifetime membership offers cardholders the privilege of additional assistance to make their stay in Thailand truly convenient, as well as business and investment opportunities in Thailand. Members’ special benefits are clearly specified in the membership contract.

Source: Public Relations Department, Bangkok

[anon467367354]

I'm just surprised this is in the news. Didn't this go away once already? Is the dead horse that's kicking not dead? "I'm not dead"

"but you will be very soon"

[aussimike]

They never protected the downside.

Nobody considered what would happen if they didn't meet sales targets. Now, will there be a refund to the card holders (2,570 times 1,000,000 baht) or just close shop and tell customers nothing. Either way, a scandalous scam from beginning to end.

this program was doomed from its very inception - the so called great saviour of the economy and tourism -- there are so many failed TAT projects that there is no room to list them here -- no wonder the program could not attract new members as they (the company and TAT) kept changing the rules - no fool in his right mind would be investing even that sort of money when you never know from one day to the next exactly what benefits the fancy gold card in your wallet will give you - and there are so many safer and stable tourist destinations now that people are not going to throw away money like this

if u ever go to bangsaen = take a drive up to the hill = take a look at the huge white elephant buildings there - also the lovely shopping area and huge car and bus park at the foot of the mountain - never been used - occupied by a security guard and a troop of monkeys - the grounds at bangsaen beach resort (owned by TAT) that used to operate the Hotel and Tourism Training Institute HTTI a low cost school producing some of the best tourism and hotel trainees in the country = closed by former gov of TAT on a whim - the SIP project -funded by Japanese govt- 1.5 million US and thrown away on so called training projects -- like pathum students being taught to be guides - the governor of one province even sent 5 million bt back to TAT near the end as he feared he might be audited and he knew he could never be able to justify the expenditure of funds provided = honest man - the list just goes on and on

TAT - TIT

[mads]

In U.S.A the government bailout private companies. In Thailand the private sector has to bailout the government

[thaibkk]

in a land where rules for immigrants (who may spend many millions here but get nothing in return) may change every few times a year without any full ownership of business or land, one must be crazy to spend so much money on a piece of paper

I guess a lot of costs are made by the Thai wannabees who run the company ... 20 million baht golf fees, wow, smells like a good bribe... they can make and own many for that price... if you see a Thai labour earns not even 200 baht a day and land is cheap for Thais...

[grantbkk]

I'm just surprised this is in the news. Didn't this go away once already? Is the dead horse that's kicking not dead? "I'm not dead"

"but you will be very soon"

The Elite Card program has survived a couple of near death experiences. The government needs a bit more time to come up with a solution that will "amaze" us. You can say TIT all you want but I suspect we will see a new level of dumbness of epic proportions. This has been a public relations nightmare for years and the various government agencies are passing Thai Elite around like a hot potato. preferring to confront the issue. If there is no money to siphon off there is no interest in dealing with the program.

[Siamfan]

I wonder why nobody here talks about the real point of the elite card..... At the beginning it was introduced, that every member could buy 1 Rai of land with house on his personal foreign name as freehold..... if this would have happened without restrictions I am sure they would have sold much much more cards! Why not use the bad times now, reinstall the old idea, and sell houses and land to foreigners like Malaysia’s Home away from home program. This would make life so much easier for so many here, and the Elite system would survive and work! Cut the golf, limo and spa crap and go for the real stuff that everybody wants: House, land and Visa ![/size]

[ovenman]

Why not use the bad times now, reinstall the old idea, and sell houses and land to foreigners like Malaysia’s Home away from home program. This would make life so much easier for so many here, and the Elite system would survive and work!

Perhaps because Thailand does not now nor ever has had any interest in selling even one square waa of its land to foreigners.