Thailand Hotel Market Declines More Than 30%

[george]

Thai hotels RevPAR slumps by 30 percent

SINGAPORE: -- Over the five months from November 2008 to March 2009, the four Thai markets (Bangkok, Chiang Mai, Hua Hin, Phuket) tracked by hotel market information specialist STR Global have reported monthly declines of more than 30 percent in revenue per available room (RevPAR) against the comparable period the previous year.

The falls in RevPAR were driven by declining occupancy levels that were not matched by similar declines in average room rates.

"It is reassuring to see that average room rates declined significantly less than occupancy, and RevPAR should be able to start improving as soon as occupancy and travel demand recovers”, said Singapore-based Jonas Ogren, area director Asia for STR Global.

According to STR Global, Chiang Mai had the lowest occupancy rate (43%) during the five-month period, followed by Bangkok (52.7%), Hua Hin (57.4%) and Phuket (60.8%).

Phuket had the highest RevPAR (TBH 3236.9), followed by Hua Hin (THB 2968.2), Bangkok (TBH 1879.2) and Chiang Mai (1616.3)

STR Global said the political unrest of November 2008, which flared up again most recently in April 2009, has not directly impacted tourists, but the airport closures during November's protests and foreign governments’ travel advisories have made visitors more wary of the destination.

"Security is a main concern of travellers, and the recent media coverage of violent protests will deter many business and leisure guests contemplating travel to Thailand", said James Chappell, managing director of STR Global.

The market reaction has been swift. Demand in Bangkok in the middle of April has rapidly fallen by more than half of that of the previous year, down to as little as 33 percent on certain days.

Despite such low occupancies, hoteliers are holding their rates as best they can with year-on-year declines of four percent and an average rate of THB 3,323 for the first three weeks of April.

The result of this relative firmness in rate is that the city's RevPAR decline remains similar to that for the November-to-March period.

However, taking a longer-term perspective data from STR Global shows that Thailand has been underperforming the southeast Asian market as a whole since September 2006, the time of the most recent military coup.

The percentage change in year-on-year RevPAR for Thailand has been consistently worse than that for the region since then.

-- Travelmole.com 2009-04-30

[Thailand]

"Despite such low occupancies, hoteliers are holding their rates as best they can with year-on-year declines of four percent and an average rate of THB 3,323 for the first three weeks of April."

Says it all really!

[MHM]

This is extremely serious. Kanchanaburi is virtually empty of tourists, many businesses are laying off staff, and we haven't hit the floor yet by any means

[hansnl]

30% to 50% less bookings and occupancy?

In Thailand?

And that all on account of the unrest?

So the unrest in Thailand is also the reason for the decline in bookings in the rest of Asia, Europe and Australia?

The blame, for the biggest part is the economic decline so nicely loaded onto the world by the professional people like bankers and other so called financial specialists. (aka rip-artists)

The people who grab, grab, and grab in a very obscene and near criminal way.

Indeed, the unrest inThailand will not help, quite obvious.

The banks don't help either by charging 150 baht for a withdrawal.

Although the price of oil tumbled, the airlines still do nothing about prices, they cancel planes to get the occupancy high.

But most Thai venues prefer empty rooms and no sales.

Lower prices?

No, prefer to go bust!

It is indeed very difficult to understand in the business world that in times of decline, you have to go with the flow.

Like one can do the other way around in better times.

Some businesses know.

They try to do something about the results of the crisis and try to cope.

They will survive, hopefully.

Edited April 30, 2009 by hansnl

[catmac]

Good to see some independent statistics that are free from political whitewashing!

Of real interest is "However, taking a longer-term perspective data from STR Global shows that Thailand has been under performing the southeast Asian market as a whole since September 2006, the time of the most recent military coup.

The percentage change in year-on-year RevPAR for Thailand has been consistently worse than that for the region since then."

The constant meddling of the Military in domestic politics has brought nothing but trouble for all sectors of the Thai economy, and when this is coupled with the present Government's disastrous economic performance - sky-high Baht exchange rate, refusal to accept that Thailand does not have some kind of immunity from the World recession, etc., etc. - and a Minister of Tourism who still thinks that tourism is increasing in spite of all the evidence to the contrary, I don't hold my breath for the good news to come!

[PatinBKk]

Thailand aint cheap like it used to be, especially if you are living from Sterling.....when gas prices went through the roof so did prices in the supermarkets...tuna up from 21 baht to 28 baht...bread 24 baht up to 36 baht are just two examples....factor that in with low exchange rates and cost of living has doubled in a year.....gas prices tumbled but food prices have stayed the same.....in order to atttract tourists, prices need to come down and the Baht devalued....

[geriatrickid]

Careful kids. The data is self reported. If Hoteliers submit incorrect information, or the entities reporting are drawn from only one market segment, the results will only be useful for that market segment. Look at it this way, if the only people reporting are Hilton, Marriott, Sheraton, Intercontinental and not Somchai's 10 room lodge, then the data only provides insight into the the types of hotels that reported.

STR Global claims to track data from more than 38,000 hotels in over 1,300 markets worldwide. How many of those hotels are in Thailand? 10? 20? 30? If only 5 hotels reported in Bangkok, was that a good statistical population sample? I don't think so.

STR sells its services and this is a way to get free publicity.

[mommysboy]

Careful kids. The data is self reported. If Hoteliers submit incorrect information, or the entities reporting are drawn from only one market segment, the results will only be useful for that market segment. Look at it this way, if the only people reporting are Hilton, Marriott, Sheraton, Intercontinental and not Somchai's 10 room lodge, then the data only provides insight into the the types of hotels that reported.

STR Global claims to track data from more than 38,000 hotels in over 1,300 markets worldwide. How many of those hotels are in Thailand? 10? 20? 30? If only 5 hotels reported in Bangkok, was that a good statistical population sample? I don't think so.

STR sells its services and this is a way to get free publicity.

Nevertheless the report seems to fit in with other reports particular to the market and the Thai economy as a whole, wouldn't you say ?

[geriatrickid]

Nevertheless the report seems to fit in with other reports particular to the market and the Thai economy as a whole, wouldn't you say ?

Yes and no.

Yes because there is indeed a decreased demand.

No because unless one knows which hotels are involved in the survey and the actual numbers of participants the actual results could be something along the lines of 50% decrease for hotels that cater to package tours or higher end tourists, with the economy/budget range hotels only suffering a small downturn.

For all we know there could have been a shift in demographics with people opting for a 3-4 star place instead of a deluxe 5 star hotel. All markets have seen people still traveling but doing so by "downsizing". The room rates might have been skewed by the impact of one type of hotel. Alot of the larger chains have come up with innovative packages like taking a booking for a basic room but upgrading the guest to a deluxe room. If Sheraton and Hilton have done it in NYC, you can bet they are doing it in Bangkok. Hotel loyalty plan members that are frequent guests can score some sweet deals now.

[thaibar]

Nevertheless the report seems to fit in with other reports particular to the market and the Thai economy as a whole, wouldn't you say ?

Yes and no.

Yes because there is indeed a decreased demand.

No because unless one knows which hotels are involved in the survey and the actual numbers of participants the actual results could be something along the lines of 50% decrease for hotels that cater to package tours or higher end tourists, with the economy/budget range hotels only suffering a small downturn.

For all we know there could have been a shift in demographics with people opting for a 3-4 star place instead of a deluxe 5 star hotel. All markets have seen people still traveling but doing so by "downsizing". The room rates might have been skewed by the impact of one type of hotel. Alot of the larger chains have come up with innovative packages like taking a booking for a basic room but upgrading the guest to a deluxe room. If Sheraton and Hilton have done it in NYC, you can bet they are doing it in Bangkok. Hotel loyalty plan members that are frequent guests can score some sweet deals now.

Yes hotels are running more promotions, and providing cheap upgrades to better room types, this is how they are surviving right now. Some hotels are 100% occupied whilst the one next door can be empty. re:Political instability hopefully the tourists will just 'get used to it' or they are the type of tourist who are not put off by a few mere riots.

[hansnl]

Thailand aint cheap like it used to be, especially if you are living from Sterling.....when gas prices went through the roof so did prices in the supermarkets...tuna up from 21 baht to 28 baht...bread 24 baht up to 36 baht are just two examples....factor that in with low exchange rates and cost of living has doubled in a year.....gas prices tumbled but food prices have stayed the same.....in order to atttract tourists, prices need to come down and the Baht devalued....

Oops!

Please take into account that the pound declined in general, globally.

That is not the fault of the baht!

Prices went up because of the oil prices, which is a trifle strange, and prices in supermarkets will never decline again.

Why should they do that, you need food anyway, and getting lower prices is nearly impossible.

However, I see a lot of moneysaving going around in Tesco, Big C and even Makro.

So let us hope that one way or another the prices will go down.

But TIT, and lowering prices seems to be a loss of face, so don´t pin your hopes on that.

Better try to tone down your spendings, or change your lifestyle.

Both are the only way to cope.

Forget the notion that prices need to go down and/or the baht should be devalued.

In your case, the pound is the biggest culprit, so tell your politicians to get the worth of the pound higher.

And yes, I also lost money because of the financial crisis and the loss of value of the pound.

However, I am paid in euros, so it is not to bad for me.

[Priceless]

For what it's worth:

This week the Swedish forex dealer X-change published a list of the cheapest holiday countries. It is based on common tourists' expenses, excluding the travel cost to/from the destination country. The index is based on the Swedish price level being 100. (Greece&Spain=95, UK=99, Germany=106 and Italy=114.) The ten cheapest countries were:

1. Malaysia 52,3

2. Indonesia 52,8

3. Hungary 59,9

4. Mexico 60,5

5. Poland 60,9

6. New Zealand 61,8

7. South Korea 61,8

8. South Africa 61,9

9. Thailand 63,2

10. Philippines 63,5

Not that encouraging for Thailand, not exactly being a 5-star destination (whatever the TAT may believe).

/ Priceless