Tourist Industry Starting to Feel the Pinch

[Gaybutton]

The following appears in THE NATION:

_____

 

Hotel Struggle as Occupancy Rate Plunges 19%

 

By SUCHAT SRITAMA

THE NATION

 

The closure of Bangkok's main airports at the height of anti-government protest is now taking a heavy toll on the country's hotel industry in terms of low occupancy rates and fewer working days for hotel workers.

 

Employees of luxury hotels in Bangkok, Chiang Mai and Phuket have seen a cut in their working days as operators try to reduce operating costs without having to lay off workers in the light of plunging tourist arrivals.

 

Prakit Chinamourpong, president of Thai Hotels Association (THA), said on Tuesday that luxury hotels in Chiang Mai had reduced employees' working days to five days a week due to fewer customers.

 

Many hotels in Phuket and Bangkok have also cut working days to four and five days per week.

 

"Some luxury hotels are running with a single-digit occupancy rate, sharply down from the average 70 per cent rate recorded in the same period last year."

 

"For the overall hotel industry, the average occupancy rate this month alone has declined 19.1 per cent," he said, adding that the impact of the Bangkok airports' shutdown was greater than the 2004 tsunami.

 

From January to early this month, the average occupancy rate is 65 per cent, down from 68 per cent over the same period last year.

 

Prakit said some luxury hotels in Bangkok had also decided to cancel their gala dinner packages already booked for New Year's Eve after customers cancelled reservations.

 

THA forecast that the hotel sector would slow until June 2009,with small and medium sized hotels suffering the most, so THA is asking the government to help by granting soft loans.

 

He said that about 30 per cent of workers in the hotel sector are expected to lose their jobs next year.

 

The closure of the Bangkok airports caused damage which could amount to Bt130 billion as the country could lose up to 2.3 million foreign tourists.

 

Airports of Thailand (AOT) said about 15,000 flights had been cancelled during the eight-day closure of airports, but all airlines had resumed operations at Suvarnabhumi International Airport with the total number of flights now close to the usual 547 flights per day.

 

However, Phornsiri Manoharn, governor of Tourism Authority of Thailand (TAT), remains optimistic, saying the tourism sector's growth could be revived as TAT and six other industry bodies plan to launch a series of post-crisis promotional campaigns.

 

TAT also plans more sales and marketing activities to boost domestic tourism next year.

 

Meanwhile, industry sources said Starwood Hotels and Resorts, the world's largest international hotel chain operator, is considering the shut down of its regional Asia Pacific office in Bangkok, following the work-hour cutback at some luxury properties in major tourist cities.

 

The regional office was part of a world wide business expansion covering its multibrand management of hotel properties, including Le Meridien, Westin, Sheraton, St Regis and W Hotel.

[Guest lvdkeyes]

I have a friend from UK who was planning to come here this February, but now has canceled his plans because of the turmoil. Sad!

[PattayaMale]

Today as I was waiting for a car to take me and my Thai friend to the airport in Samui, I talked with the director of operations at the resort I stayed at. He told me that last year at this time through high season his occupancy rate was 80%. Right now it is 10% and they only have reservations which at the peak would put occupancy at 20% this year. He fears he may lose some of those who have made reservations. Some people are waiting to see if things (economy and political situation) worsen.

 

Resort construction is booming but he feels that not enough customer growth will be able to sustain all the properties.

[Gaybutton]

None of that comes as a surprise to me. What does surprise me is that none of the hotels seem to be doing anything much to attract customers. Simply hoping to survive isn't going to be enough, especially is either of the political groups stir up even more trouble.

 

The way I see it, unless the hotels start offering incentives good enough to attract people despite the problems, then they've had it. The same goes for the bars. It's difficult enough to get customers now, and yet I don't see much of anything going on to convince people who are considering going to places other than Thailand to come anyway.

 

I think it would serve the hotels well to start offering substantial discounts and packages. Better to take less of a profit and start filling up their rooms than to end up going out of business. The bars can do things too. Free off drawings and contests, happy hour prices . . . that sort of thing.

 

It wouldn't kill the government to step in and start relaxing some of the rules that drive tourists away. They can start by doing away with these absurd rules that force the bars to close at 1:00am and maybe even allowing the gay bars to open at whatever time they please during the day. The bars, both gay and girlie bars, are what made Pattaya in the first place. Many people already stopped coming to Pattaya because of the 1:00am closing times. Now the tourist industry is in terrible shape and the authorities seem to be sitting on their butts and doing absolutely nothing substantial about it.

 

There have been no major raids lately. They ought to keep it that way. They can find ways to check for under-age bar workers and boys on ya ba besides conducting massive raids that both inconvenience and frighten tourists.

 

It also wouldn't kill them to make it easier for farang to stay in Thailand longer than thirty days. I can understand the motivation to try to eliminate the people who circumvent the law through constant visa runs, but what would be so terrible to allow people to pay a fee at the Immigration offices to get extensions to their tourist visas instead of forcing people to leave the country to do the same thing? Instead, they just imposed new rules that make it even tougher. The fact that they picked now to impose these rules made it to my "I Don't Get It" list.

 

If things don't turn around soon, then Songkran 2009 is going to be the driest in many years . . . in more ways than one.

[Guest lvdkeyes]

If things don't turn around soon, then Songkran 2009 is going to be the driest in many years . . . in more ways than one.

Water-wise, we couldn't be so lucky.

[Guest Steve1903]

Maaan, there are some real bad numbers in that report. Gotta be honest though, if I was intent on travelling to Thailand any time soon, looking at those figures I'd be playing hardball when booking a room. No discount = no customer.

[Guest fountainhall]

The way I see it, unless the hotels start offering incentives good enough to attract people despite the problems, then they've had it.

 

Before my short trip to Pattaya last week, I checked all the websites, including 3 late-booking sites and that of the hotel I booked. In the end, I got a better rate by calling direct. Do hotels seriously believe tourists from overseas will bother to call them to check prices? That's nuts! If there is a base price hotels are prepared to accept, it is surely madness, as GB says, not to advertise this to the world in these distressed times.

 

A friend wants to go to Krabi in mid-January (well after New Year and before the lunar New Year holidays), but some hotels are still quoting rates of 10,000 Baht up per night. Granted these represent discounts of 25% - 45%, but who is going to pay US$300 or more per room with so few tourist arrivals? I am often amazed at how little most Thais understand about the basic principles of marketing. This sadly reconfirms it.

[Guest xiandarkthorne]

Actually, if you are talking about those places with international star ratings, they might belong to Thais but they are run by farang general managers more often than not. And it is usually the GM who sets the upper and lower limits of room prices. Directors of Sales can give discounts but anything more than 50% off the rack rate has to have the GM's approval first (in most cases) - unless it is part of a package which the GM has already approved. And NO discounts off package prices. That is the normal practice is Asian international resorts and hotels.

[Guest fountainhall]

if you are talking about those places with international star ratings

 

The hotels and resorts I have been checking fall into both categories - but with more being Thai owned and managed than part of international chains. In my admittedly limited experience, hotels in the 4- and 5-star groupings with experienced foreign management are usually more willing to offer deep discounts in times of crisis. The problem is these rates are not generally advertised. So, when hotels are averaging less than 20% or so and are mostly dependent on incoming foreign tourists, how on earth do they boost occupancy if they keep these discounts quiet?

 

Is it, I wonder, something to do with having one group of guests paying Baht X,000 per night, who all booked and paid pre-crisis, staying alongside another last-minute group paying much less? Whilst I see a certain reasoning in that concerm, managers only have to look at the entertainment business to see that most people understand that rates can vary. Book early for a Broadway show and you will pay the advertised price. If demand holds up, so will the price; when it crashes, so does the price. A hotel room, an airline ticket or a show ticket are perishable commodities. Any manager who does not discount before the deadline date loses all potential revenue from that room or ticket for ever.

 

To me it makes sense to get at least something. Witness Malaysia Airlines which for weeks has been offering a lot of free tickets to KL. The rationale is that it at least gains a minimal revenue through the various surcharges, not all of which are paid out in fuel costs and landing fees etc. That may be taking the argument to the extreme, but sometimes you have to go that route when the going gets really tough.

[PattayaMale]

The concept of discounts are not only a Thai disconnect. One friend of mine who owns a restaurant (Farang) was complaining that he is not getting in the customers these days and so he "must raise prices". I mentioned that I did not think that was going to work???????

[Guest lvdkeyes]

One friend of mine who owns a restaurant (Farang) was complaining that he is not getting in the customers these days and so he "must raise prices". I mentioned that I did not think that was going to work???????

 

In my view this is very warped thinking.

[Gaybutton]

In my view this is very warped thinking.

I agree. Anyone ought to realize that if you're not getting customers the thing to do is offer incentives to get people to come in. Somehow, a price increase isn't going to be an incentive that works to get me to come in.

 

The same logic, or lack of it, applies to many Thai mom-and-pop businesses. A Thai friend of mine used to set up a nightly sidewalk shop along the Wat Chai market. He sold clothing. But there were dozens of others doing the same thing. I suggested to him that he needs to do something to get people to shop at his stall in favor of the others. I told him he could do simple things, such as at least putting up a sign with the name of his shop and then handing out business cards that would attract local shoppers. "Bring this card and get 10% off." Put up a "Buy 4, get one free" sign. Do something that sets your shop apart from the others to make your shop the place people will seek out. Of course, he never did a thing.

 

RichLB posted a set of suggestions that Thai boys could do to make a lot of money without having to invest very much. I know at least half a dozen Thai boys who I spoke with, some of whom I took to see RichLB. We sat with them and explained all the details of what they could do and how they could do it. We even offered to help them get started. Not one of them ever even tried.

( see: http://www.gaythailand.com/forums/index.php?showtopic=2057 )

 

Just the other day, one of my friends told me about a woman he knows who runs a neighborhood bar. She is offering incentives, but still isn't attracting more customers. She couldn't understand why. My friend pointed out that she needs to advertise her incentives. Nobody knows about them. "But I put sign in window," was her response as she pointed to a sign not much bigger than a standard size sheet of paper.