How Populist Policies left Thailand Mired in Debt

What has gone wrong in the economy for the Land of Smiles? Once the darling of the Asian tigers, some analysts suggest Thailand is stuck in the middle-income trap with improvements in human capital stagnating. In the short term, Thailand has had to cut its 2013 growth forecast as the country entered recession in Q2 2013 when GDP unexpectedly shrank 0.3%. This was the first time since the global financial crisis that the country had entered recession, yet its economy had been slowing down for several quarters as even in Q1 2013 growth was just 1.7%. These results have lead to a forecasted 2.8% economic growth by end of 2013. Previous forecasts were for 5.1% growth, revised down to 4% growth before this latest revision.

Blowing the Populism Trumpet

The main problem is populist policies. The ability of ordinary people to spend has been curtailed, with many obliged to service loans for cars bought under the government’s first-time buyers scheme. The scheme is a tax rebate on first cars promised in Yingluck Shinawatra’s election campaign of 2011, which has had 1.2 million car buyers applying for the refund so far. However, the tax rebate is not the only factor to blame for increased consumer debt; consumer debt has risen sharply since 1997 due to rapid urbanisation, increased presence of loan sharks in the lending system and higher consumer spending. Household debt has risen rapidly from 28% of GDP in 1997 to 63% of GDP in 2010 to 70% in 2011 to 78% in 2012 and 80% currently. Yet the 80% figure still does not take into account informal lending such as by loan sharks. Meanwhile a third of the 80% household debt is derived from consumer finance in the commercial banking system. Moreover, the debt service ratio of 52% of disposable income for low-income earners in 2011 far exceeds the appropriate level of 28-30%, and has grown from 46% in 2009. Low-income earners are classed as those earning less than THB10,000 a month (GDP200). The debt service ratio is the proportion of debt payment to disposable income with a higher ratio indicating more vulnerability to the upward interest rate cycle. The picture was better for those earning more than THB10,000 a month with their debt service ratio being 25%. Despite the high level of household debt, there are no signs of mass default yet. The key factors in mass default would be higher interest rates, living costs exceeding income, and unemployment. Thailand boasts one of the world’s lowest unemployment rates of 0.77%, meaning people generally have enough income to borrow from banks. That there are no signs of mass default is evidenced by non-performing loans in the commercial banking system currently standing at only 2% of outstanding retail lending.

Unable to get the Scissors Out

However, the high household debt limits the scope for the Bank of Thailand to cut interest rates. The Bank of Thailand had cut the policy interest rate from 2.75% to 2.5% a few months ago, which has consequently inhibited economic growth from Q1 2013 to Q2 2013. The cut had originally aimed to cushion downside risk to consumption, yet has not had the intended effect with domestic consumption still slowing. The Bank of Thailand should ideally like to cut the interest rate by 25 basis points as private investment and consumption continue to slowdown – consumption was predicted to grow 6.7% now revised to 3% and private investment by 14.4% now revised to 3.4%. However, cutting the interest rate could have an unintended consequence of opening room for new loan applicants and increased household debt by alleviating the financial debt burden of existing borrowers. It is this factor which is keeping Thailand mired in consumer debt and lacklustre economic growth, as well as forced the Bank of Thailand to hold its policy interest rate at 2.5% at its August 21^st meeting, after Assistant Governor Paiboon Kittisrikangwan said high household debt limited the scope for further easing.

Infrastructure Spending has its Dangers

Another area where debt may be an issue is concerning government debt. Thailand’s government debt is 44% of GDP. Compared with other emerging markets, Thailand’s debt is higher than the average and forecast to increase due to various government infrastructure projects, unlike the average of others. However, compared to developed economies, Thailand’s debt is significantly lower and it is also under the 80% “danger level”. One avenue that Thai policy makers are pursuing to prop up growth is to initiate government spending plans. They are planning to spend THB2 trillion (borrowed from banks) to develop transport in the country with 40% spent on high-speed train networks, 20% to double track rail improvements and 23% to Bangkok’s mass transit systems. The remainder will be allocated to new highway expansion, freight terminals, customs checkpoints at key border crossings and port improvements. This will be hugely beneficial for growth as Thailand’s land transport costs are relatively high, driving the country’s overall logistics costs to 15.2% of GDP or THB1.75 trillion. Land transport now makes up almost 86% of overall transport, wth marine travel 12%, rail 2% and air 0.02%. Given the average cost of transport, land routes cost THB1.72 per tonne per kilometre, rail 93 satang and marine 64 satang. Furthermore, an ill-thought out rice pledge scheme has led the government to waste billions propping up rice farmers throughout the country.

The Flow of Funds Worldwide

Thailand is also targeting amending one of its ministerial regulations in order to better control capital inflows and outflows. After the new rules take effect, the government will be able to issue measures to control capital flows once the Bank of Thailand proposes them to cabinet. These could be both fiscal measures and monetary measures. Existing regulations only allow the government to regulate capital inflows. A mechanism to cub capital inflows and outflows was needed because the government projected a further appreciation of the Thai Baht over the remainder of the year. However, rhetoric from the US Federal Reserve that quantitative easing may end has removed this need. Quite the opposite, Thailand now fear a massive outflow once quantitative easing ends definitively. Massive capital inflows caused by the quantitative easing measures of the USA, the EU and Japan have reached US$5.86 trillion (THB175.8 trillion baht, triple the US$1.85 trillion of inflows during the US financial crisis of 2007-2008. The major concern with the massive capital inflows is that it is not direct investment in real asset sectors but in the bond and stock markets, which could cause volatility and asset bubbles. The new regulation includes allowing unlimited currency exchange for investments in foreign securities and in foreign-currency denominated securities sold in Thailand. Individuals are limited to buying US$1 million worth of foreign currencies a year to send to their relatives overseas. Buying foreign currencies to invest in property overseas is capped at US$10 million a year. More stringent measures may be needed if the currency’s movement either way is too fast. Thailand’s exports were under pressure due to the baht strength, yet this has now been replaced by the danger of a slowdown in demand from China for Thai exports.

What has gone wrong with Thailand’s growth story? Well the short answer is volatility in its exchange rate due to global quantitative easing and rising household and government debt. The four core economic growth engines are public spending, domestic consumption, investment and exports. These are all experiencing challenges currently. Public spending is on the rise with the government set to borrow heavily for infrastructure projects, domestic consumption has been hit by rising household debt, and exports are also under pressure from a slower-growing China. Meanwhile investment is low compared to Thailand’s neighbours with annual growth in foreign direct investment from 2004 to 2012 just 5% compared to 34% in Indonesia, 23% in Vietnam, and 10% in Malaysia. Nonetheless forward-looking indicators suggest both businesses and consumers continue to hold positive sentiments for the economy, a crucial ingredient in any economic growth story.

The Rising Value of Super Brands: Steinway Musical Instruments

This deal is just one of many that highlight the increasing power of super brands, which is translated into exorbitant monetary values. Warren Buffett’s purchase of Heinz, 3G Capital’s acquisition of Burger King, and now Paulson & Co’s US$512 million takeover of Steinway Musical Instruments all fit this pattern of the super brands enduring legacy.

Steinway has been in business for 160 years, but has recently struggled to maintain its profit margins. Its pianos are a status symbol, a must-have for famous pianists such as Sviatoslav Richter, wealthy piano enthusiasts and luxury concert halls. The typical Steinway grand piano costs around US$50,000, but could cost far higher. Steinway also sells many other notable musical instruments including Bach Stradivarius trumpets, C.G. Conn French horns, Leblanc clarinets, King trombones, Ludwig snare drums, Selmer Paris saxophones, and many others. Globally, it employs 1,700 workers and operates 11 manufacturing facilities in North America and Europe. Steinway has been looking for a buyer since December 2012, after concluding a 17 month strategic review prompted by sales growth of just 2% in 2012 and an ailing share price. At the time of purchase, its market capitalization was US$440 million and the announcement that Paulson & Co would buy 100% of Steinway Musical Instruments for US$512 million prompted shares to rise to US$40.51 on the New York stock exchange.

Whilst the purchase is seen as an unusual move for Paulson & Co, he is no doubt banking on the resilience of the Steinway super brand to eventually generate increased demand from the traditional musical markets of North America and Europe as well as from the emerging musical markets of Asia and Latin America. Moreover, some pruning of costs and loss-making brands will ensure a highly profitable IPO in a few years.

The Universe of RFIDs: Stars Microelectronic Thailand

Tiny RFID

The universe of RFIDs is an important component of the debate on security versus privacy. RFID or radio frequency identification tagging is an automatic ID system using small radio frequency identification devices to identify and track people, pets and commercial products. The technology is gaining traction in the USA, Europe and Asia, with the retail, distribution, transportation, military, and healthcare industries the major demand for the technology. Globally the RFID market was worth US$7.67 billion in 2012, an increase of 18% from 2011. In fact, over the past five years the RFID market has increased by a CAGR of 14%. In total, 4 billion RFID tags were sold in 2012 compared with 2.95 billion in 2011. The major drivers of growth in the RFID market are:

·         Growth of passive UHF systems for tagging apparel – this alone makes up demand for 1 billion RFID labels, with this set to grow to 1.4 billion tags in 2013;

Ethical Dilemma - Tracking Humans

·         Growth of RFID for tickets used in transportation – this accounts for 500 million tags demand in 2012;

·         Governments increasingly promulgating legal requirements to fit RFID into pets and farm animals, such as in New Zealand and Europe;

·         Governments utilizing RFID in non-stop road tolling, library books tagging, national ID cards and passports, and military applications;

·         Emerging market adoption of RFID technology.

Nowhere is private in the universe

One company seeking to take advantage of the eagerness of emerging markets to adopt RFID technology is Thailand’s Stars Microelectronic Thailand (SMT), which is listed on Bangkok’s SET stock exchange. They currently trade at THB6.90 per share, within a 52 week range of THB6.30-12.80 and with a market capitalization of THB2.9 billion. SMT provides microelectronic modules assembly (MMA) and integrated circuits, with MMA revenue contributing 60% of total revenue in 2012. MMA is used to put together hard disk drives, computer notebooks, touch pads, clear pad assemblies for touch screens for smart phones and mp4 players, and liquid crystal display (LCD) modules for office and mobile phones. Currently SMT also trade in the USA and boast major clients in North America, Japan, Europe, and Asia. They are Thailand’s only full-service manufacturer providing both MMA and integrated circuits packaging together, a quality highly sought after by the world’s leading computer and electronic equipment manufacturers. Furthermore, SMT is the only company listed on the SET currently to enjoy a corporate income tax exemption for eight years (with no cap) from the Board of Investment of Thailand, which will inevitably save the company millions of dollars over the remaining five years.

Whilst SMT is currently expanding its MMA production capacity to 100 million units per year and its integrated circuit packaging production to 1,200 million units per year, they are making a concerted push into the RFID market. They plan to move swiftly into the market by tapping into advanced technology from a Japanese partner, Sinfonia Technology. They have a JV called SS RFID, which is 75:25 between SMT and Sinfonia, and expected to list itself on Bangkok’s SET exchange within three years. The advanced technology from Sinfonia is expected to halve operating costs and enhance SMT’s global competitive advantage. SMT aim to increase its RFID manufacturing capacity to 500 million pieces per year by 2018, from 100 million currently, which would propel them into one of the largest global RFID manufacturers. They are on track to realise revenues of THB100 million this year from RFID manufacturing alone, a 30% increase from 2012.

The Eurozone Crisis Isn’t Over: Spending Can End It

Euro in Crisis

There is a simple explanation for the Eurozone Crisis and an equally simple explanation for why it isn’t over. The Eurozone accounts for 7% of the world population, 25% of world output, and 50% of the world’s social expenditure. This is fiscally unsustainable. With the Eurozone growing by 0.3% in Q2 2013, there was widespread promulgations of an end to a record 18 months of recession for the 17-country union. Yet, the overall figure masks the mixed economics of the various countries, whilst the growth figure remains low.

Eurozone Members

Economic data is still bleak. Unemployment is 29% in Greece, 24% in Spain, 18% in Portugal, 15% in Ireland, 10% in Italy, and 8% in the UK. Meanwhile Greece, Italy, Portugal and Spain are struggling to balance their current accounts, especially when one considers the immense bailouts they shoulder. Ireland has received a EUR58 billion bailout, Greece has received EUR150 billion, Portugal has received EUR62 billion, and Spain has received EUR100 billion. In the Eurozone as a whole, government debt as percentage of GDP widened in Q1 2013 to the already high level of 92.2%, with government debt 130.3% in Italy, 91.9% in France, and 88.2% in Spain. Meanwhile Markit data on France in revealed economic activity continued to contract in July with its composite PMI at 48.8 due to a lagging services sector. Any figure above 50 for a composite PMI evidences growth. France has also experienced 26 continuous months of workers applying for unemployment benefits. Most importantly, before Q2 2013 the Eurozone had yet to record any quarterly GDP growth since Q3 2011 and is still forecasted to remain in recession for a second consecutive year.

Do the Best Things Come in Threes?

Europe still hasn’t sorted out its problems with its banks. There are far too high levels of debt in the European economy, which is patently obvious in their banks’ massive balance sheets and the fact that banking assets in Europe are valued at EUR32 trillion, or three times the Eurozone’s GDP per annum. In order to comply with the new Basel III regulations on capital and leverage that will come into force in 2018, Europe’s banks need to remove EUR3.2 trillion of assets and generate EUR47 billion of fresh capital. Europe’s banks have already shrunk their balance sheets by EUR2.9 trillion since May 2012. However, this is not easy as banks are also not obtaining enough new capital to write-down the many non-performing loans they have on their balance sheets. Moreover, banks are cutting assets by renewing fewer loans, repurchase and derivative contracts and selling non-core businesses (i.e. RBS is attempting to sell around 360 of their branches and Barclays sold Barclays Global Investors to Blackrock). The banks most in need of fresh capital are Deutsche Bank, Barclays and Credit Agricole. Basel III regulations are aimed at increasing banks’ capital reserves and decrease their balance sheet debt in order to avert another calamitous burden on taxpayers due to government bailouts of financial institutions. Whilst it is imperative for banks to deleverage and reduce their loans-to-reserve capital ratios, they also need to be lending money to more small businesses in order to facilitate growth generation in the Eurozone.

Eurozone must be wary of the Domino Effect

Another risk is that the Eurozone is clefted by a two-speed recovery. Already Northern European countries such as Germany are showing a faster recovery than the Southern Europeans, such as Italy and Spain, that still find themselves mired in recession. The theory behind creating the Eurozone and the single currency, was that the impossibility of devaluation by member countries of the currency would enable it to be a harmonising force across Europe. However, there is de facto devaluation occurring within different countries evidenced in the contrasting unit labour costs, a manifestation of relative productivity. Germany’s labour costs have increased by 13% cumulatively since the euro launched in 2000, a bare change, whilst unit labour costs in Greece, Spain, Italy, and Portugal have risen by 20 to 30% since the euro’s inception. It is not only different countries that may be recovering at different speeds; it is also different sectors within the economy. Generally in Europe services are recovering faster than the manufacturing sector.

Outside of the Eurozone, fears of a tightening in US monetary policy due to the Federal Reserve stopping their asset purchase stimulus program could lead to higher bond yields in Europe. Higher bond yields would raise borrowing costs, with its biggest damage being potentially fuelling fears of Eurozone stagnation or break-up.

Despite all the negative data, optimism twists slight details as signs of economic recovery when more signs are necessary. Investors picked up on Goldman Sachs Asset Management’s increase of its exposure to European equities by doubling its position as they bet on the end to recession in Europe. Yet the bank’s trading data reveals that they do make big bets and sometimes take big losses. Optimism has also been captured by Markit’s composite purchasing managers’ index for Europe (considered an indicator of GDP data) shuffling to 50.7 in July, just slightly above the 50 mark indicating growth and a pick up in business activity. It is hardly a seismic shift worthy of pronouncing that recovery is in sight. The German PMI increased to 52.8 in July from 50.4 the month before on the back of gains in both the services and manufacturing sectors, yet Germany is also the stand-out performer in Europe. The stark contrast can be found with Greece, whose economy shrunk by 4.6% on an annual basis in Q2 2013, down from 5.6% in Q1 2013, which was swiftly proclaimed a gradual deceleration of the country’s longest-recorded recession of six years. We have been on the data merry-go-round several times before where data incites optimism which is revealed to be ill-founded the next month.

To solve the crisis requires consolidation of the many voices. This means more banking union, fiscal union and political union. The latter two however are likely to prove elusive.

Austerity is hardly the most effective antidote for Europe’s economic crisis. Yes, it could work if the demand squeeze imposed on the troubled peripheral countries engenders a fall in prices and costs relative to their neighbouring countries, which could then lead to greater competitiveness and a recovery in living standards and unemployment rates. Yet, this would take many years or even over a decade to occur. Unlocking spending is a better antidote for Europe, yet one that is difficult to institute with the bickering among the various parties due to a lack of fiscal and political union in Europe.

Spend, Spend, Spend!

Another option is for better-resourced European countries such as Germany to adopt inflationary policies or subsidizing policies that can facilitate the Southern European countries’ recovery. This is unrealistic unless the current geopolitical dynamics are transformed by closer fiscal and political union. At least banking union is being realized, which will help identify which banks need to be recapitalized and will enable banks to provide credit to SMEs again.

The European Central Bank may also have to cut interest rates and initiate another round of monetary easing in order to boost the European economy hampered by the ill-thought austerity policy’s spending cuts. Unlocking uniform spending across the Eurozone would boost growth and aid a recovery. Yet, it is more complicated than just tinkering with interest rates.

Firstly, let’s look at the drivers of spending. There are some overall drivers that influence spending such as:

·         Gross national income;

·         Minimum wage per month;

·         Inflation;

·         Birth rate;

·         Unemployment rate (male one in particular);

·         Manufacturing employment;

·         Finance and business services employment;

·         Foreign students in higher education;

·         Marriage rate; and

·         Divorce rate.

There are also drivers that influence personal care spending, where personal care is viewed as a necessity:

·         Median age;

·         Fertility rates;

·         Population completing high school;

·         Number of people per household;

·         Savings ratio;

·         Annual newspaper circulation;

·         Smoking rates;

·         Internet subscribers;

·         Students in higher education; and

·         Length of maternity leave.

The European government should target each of these measures to increase them, which like Abenomics’ Three Arrows philosophy in Japan, should work when they are all targeted in unison.

Asian-based Real-Time Strategy: PhilWeb

Gaming Nation

PhilWeb Corporation is the Asia-Pacific’s leading gaming technology provider and they have a real-time strategy for winning over the hearts and minds of Asian gamers. Their vision is to be dominant gaming solutions provider in Asia-Pacific. Founded in 2000 and listed in the same year, PhilWeb is currently trading at PHP14.5 per share within a 52 week range of PHP12.1-17.1 on the Philippine stock exchange.

PhilWeb has several subsidiaries including:

·         BigGame Inc – operates 15 internet casino station operations;

·         Premayo sa Resibo Inc – develops and markets computer systems, applications, programs and gaming platforms;

·         PhilWeb Casino Corporation – develops and maintains gaming systems and applications for all types of casino operations;

·         PhilWeb Asia-Pacific Corporation – incorporated in 2010 with aim of imitating Philweb Corporation’s gaming solutions and operations in Asia-pacific. Already has presence in Cambodia, Guam and East Timor. Products include Gold, Scratch N’ Win, Gold Lotto, Gold Mobile and The Sweeps Center;

·         E-Magine Gaming Corporation – develops computer-based automated terminals for the gaming industry with around 277 e-Games cafe outlets; and

·         PhilWeb Leisure & Tourism Corporation – establishes, operates and maintains leisure and tourism-oriented activities.

Their 300 employees are highly productive as the company, with a market capitalization of US$480 million, generated revenues of US$36 million and profit of US$23 million last year. In fact, their revenue has been growing at an annual rate of 22% and, as is typical for internet-focused companies, it has been done without any reliance on debt.

Asian-based Real-Time Strategy

PhilWeb is focused on building its internet-based gaming products and services by operating in two geographical segments: domestic and foreign operations. Domestically, they serve over 40,000 customers a day through a network of online cafes, sports betting kiosks and mobile games throughout the Philippines. Internationally, they have a presence and gaming license in Guam and East Timor. PhilWeb also has several internet casinos along the Laos-Thailand border, which are targeted at Thai customers as gambling is illegal in Thailand. Casinos are also being built along the Laos-China border and in Vietnam and Cambodia. Furthermore, PhilWeb plan to expand into Nepal, Sri Lanka and Palau in 2014. The aim? By 2017, they want their international operations to account for 50% of revenue. Currently they contribute 10% of total revenues.

This is a highly productive company with a great asset of gaming technology as well as sales network that taps into the demand inelastic Asian desire to gamble. Buy now at P14.5 to hold to sell around P20 at the end of the year when its international expansion plans are clarified.

A Town in Heaven: Dusit Thani Group and the Asian Tourism Boom

The "Town in Heaven"

Earlier last century, King Rama VI of Thailand had a vision of hotels which could literally be a town in heaven. This vision was the birth of Dusit Thani Group (aka Dusit International) as “Dusit Thani” literally means “a town in heaven”.

Founded in Bangkok in 1948, Dusit Thani Public Company Limited trades on the SET stock exchange. It is currently priced attractively at THB64 per share. The company’s vision is to make Dusit Thani one of the world’s most valued hospitality brands across the luxury hotel segment. It is well on its way with 22 hotel properties in Thailand and overseas. Dusit Thani Bangkok was the company’s first hotel and is still the flagship hotel. The second property acquired became Dusit Thani Pattaya, their first resort hotel. In 1995, Dusit Thani acquired their first overseas hotel in Manila. Dusit has also opened some hotels in India and China, with several more in the pipeline. Their strategic plan is to build from its strong base in Thailand to focus expansion on Asia, especially emerging regions of hospitality in the Middle-East, India, China and Africa. More specifically their future projects include:

·         Expansion in UAE, Saudi Arabia, Bahrain, Qatar and Oman;

·         Dusit recently signed a 10-project joint venture with a Chinese partner to build hotels in Shanghai, Kunming, Chengdu, Chongqing and Hainan;

·         Domestically, the company is launching a hotel in Khao Yai National Park, a world heritage site, in 2013;

·         The company will open a hotel in Nairobi at the end of 2013, making it the first Asian brand to have a hotel in an African city.

All together, Dusit’s plan is to have 50 properties worldwide by 2018. They are determined to grow as a niche international player specializing in the luxury segment of the market, whilst maintaining its deep Thai roots resulting from its 60 year history. In preparation for the ASEAN economic community’s commencement in 2015, its education division founded Dusit Thani College in 1993. It has links with leading hospitality educator Lyceum of the Philippines University and Le Cordon Bleu (world’s largest distinguished culinary arts institute). The Lyceum of the Philippines University, with 4,000 students enrolled yearly, gives Dusit access to a low-cost hospitality talent pool with crucial English language skills. The opening of the AEC will enable this talent pool to circulate throughout the ten countries. In addition, 2007 saw the opening of Le Cordon Bleu Dusit Culinary School, the first of its kind in Southeast Asia. Furthermore, the company’s sales organization is highly effective with dedicated China, Japan, Russia, and Korea sales teams and an additional 30 sales networks worldwide. In Q1 2013, Dusit International achieved revenue of THB1.42 billion, up 27% from last year, for a net profit of THB162 million, up by 138%.

Dusit Thani Dubai

One of the dangers for Dusit Thani will be the many established developed market hotel chains focusing on Asia for expansion. Starwood Hotels and Resorts Worldwide has 153 pipeline projects in Asia, while InterContinental Hotels Group (IHG) plans to double its Southeast Asian presence. Accor is also planning for 45% of its 104,000 new rooms to be located in the Asia-Pacific region. The Marriott also has 58 hotels under development in order to add 16,000 new rooms to the Asia-Pacific region, whilst Shangri-La is planning to open 13 new hotels in Asia just this year. Meanwhile, major Asian hotel chains are intensifying efforts to become major global hotel operators. I think Dusit Thani have the right strategy of focusing on emerging hospitality hotspots. Others such as Taj Hotels of India are seeking to export its brand to developed markets where they already have Taj Boston and The Pierre in New York. Conversely, Jin Jiang Hotels (China’s largest hotel operator) is planning cautiously by first entering JVs with international operators to manage some of their domestic properties in order to learn from them before venturing abroad.

So what is behind all these expansion plans? Rapid economic growth across the Asian region has fuelled a burgeoning middle-class that provides higher demand and higher requirements for quality travel services. More recently, occupancy rates for rooms in Asia have been around 70% with revenue per available room down slightly by 2% to US$91. Yet by 2015, Asia-Pacific should overtake the Americas to become the world’s second largest tourism region (measured by arrivals), after Europe. Within Asia, the major destinations are China, Hong Kong, Malaysia, Thailand and Singapore. Growth in hospitality services demand should be around 6.4% annually until 2020, despite the global financial crisis, compared with forecast growth rates of 3.8% for the Americas and 3.1% for Europe. In addition, Asian countries are competing harder for tourist cash with new attractions. Shanghai announced in 2009 a Disneyland, whilst Singapore opened two resorts – Marina Bay Sands and Resorts World Sentosa in 2010. Similarly, Macau continues to open more casinos to keep ahead of Las Vegas and Thailand develops tourist traps like Asiatique in Bangkok and the Sanctuary of Truth in Pattaya. Yet, whilst these countries are competing with each other, these new attractions all complement each other by attracting tourists to the region who may then go on to neighbouring countries. Currently there are 2.15 million rooms in Asia-Pacific in 976 hotels, with 172,000 rooms under construction.

Most Popular Cities by Arrivals
City	Visitors (millions)
Bangkok	15.98
London	15.96
Paris	13.92
Singapore	11.75
New York City	11.52
Istanbul	10.37
Dubai	9.89
Kuala Lumpur	9.2
Hong Kong	8.72
Barcelona	8.41
Seoul	8.19
Milan	6.83
Rome	6.71
Shanghai	6.5
Amsterdam	6.35
Tokyo	5.8
Vienna	5.37
Taipei	5.19
Riyadh	5.05

 

Most Popular Tourist Countries
Country	Number of Visitors (millions)	Amount spent per person (USD)
France	83	645.8
USA	67	1883.6
China	57.7	866.6
Spain	57.7	968.8
Italy	46.4	888
Turkey	35.7	719.9
Germany	30.4	1253.3
United Kingdom	29.3	1249.1
Malaysia	26	808
Russia	25.7	435.8
Austria	24.2	781
Ukraine	24	208.7
Hong Kong	23.8	1348.7
Mexico	23.4	542
Thailand	22.4	1343.8