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Published on September 17, 2007

Thailand already has the advantage of scenic views and beautiful smiles, but these are not enough to compete on the global stage. There should be emphasis on upgrading the quality of service and anticipation of consumers' demands, Koenig said. "Luxury service requires design [decor], attention [from staff] and unique service to deliver a unique experience," he said.

For example, a small boutique hotel does not have to try to compete with giant five-star hotels. Instead, it can develop all aspects of its service to provide a unique experience, Koenig said.

Nevertheless, Thailand should also exploit its current strengths in developing luxury products, particularly craftsmanship. At the same time, it must invest significantly in human resources in the hospitality sector, and not just manufacturing and sales, he advised.

Koenig was speaking during MasterCard Worldwide's Luxury Week in Hong Kong early this month. The event showed the rising demands for luxury products and services in Asia, which man brands already foresee will generate the highest sales growth in future.

According to a MasterCard Worldwide Insight report released during the event, the value of the market for luxury products and services in the Asia-Pacific region will jump from US$83.3 billion (Bt2.85 trillion) in 2006 to $258.7 billion in 2016, driven by the rapidly growing of affluence young adults and the elderly.

Young "premium consumers" and older "premium consumers" will contribute 83 per cent of the estimated spending in 2016, the report said.

Yuwa Hedrick-Wong, MasterCard Worldwide's economic adviser for the Asia-Pacific region, said the younger premium segment comprised singles and childless couples under the age of 35 in the top one-third income bracket. These consumers have a great appetite for luxury goods and services because of their lifestyles as well as their spending power. Their lifestyles - focused on defining who they are and highly attuned to fashion trends of their peers -channel a relatively higher proportion of their discretionary spending toward luxuries as well.

Meanwhile, older premium consumers, defined as those aged over 60 years of age and in the top one-third bracket by net household assets, are living the healthiest and most active lifestyles with the longest life expectancy in history. They seek enjoyable experiences instead of just items to buy. They lead active lifestyles and like to travel to places of genuine cultural and historical interest.

In Thailand, the young premium segment is expected to increase its spending from $900 million in 2006 to $1.6 billion in 2016, while elderly premium consumers are expected to increase their spending from $400 million in 2006 to $1.1 billion in 2016.

Fast economic development in many Asia-Pacific countries in the region is the major factor for the growth of the luxury market. At the same time, the trend of people wanting to stand out from others is also getting stronger, according to Koenig.

However, selling luxury products and services in the Asia region requires marketers to put great effort into studying the culture and consumer behaviour in each targeted country to correctly adapt their brands to those markets.

Hedrick-Wong said the uniqueness of countries in Asia is that they have long histories and strong cultures. Hence, luxury-product manufacturers, and service providers particularly, need to emphasise a brand's heritage instead of the latest technology. And that's why staff in Asia need to be well-trained, so that they can truly represent the culture, he said.

Meanwhile, there are also people who buy luxury products and services as personal rewards or to show social status.

Hedrick-Wong classified Thailand as a medium-income country, with high earners and wealth concentrated in Bangkok. This makes the country an easy market to enter because companies do not to set up nationwide. The capital could account for as much as 95 per cent of their business, he said.

Nitida Asawanipont

The Nation

HONG KONG