High Season Price Increase Madness

[chiang mai]

My friendly Starbucks person tells me that Starbucks will increase their prices by 25% at the end of this week, only in Patong it seems, nonsense I reckon and will surely lose me as a customer. But then another business tells me that they are increasing room rates from Baht 1,900 to Baht 2,300 effective this week. I wonder how many other businesses will ignore current economic conditions and simply follow the calendar, seen any evidence of such a thing?

[gotlost]

TIT... when you are not making money increase the hel_l out of your product to off set your losses. You figure.

[metisdead]

My friendly Starbucks person tells me that Starbucks will increase their prices by 25% at the end of this week, only in Patong it seems, nonsense I reckon and will surely lose me as a customer. But then another business tells me that they are increasing room rates from Baht 1,900 to Baht 2,300 effective this week. I wonder how many other businesses will ignore current economic conditions and simply follow the calendar, seen any evidence of such a thing?

I won't step foot into Starbucks, I think their prices are too high as it is. On the other hand, at our local golf course, they reduced the green fees for August and September due to poor attendance and on October 1st went back to normal prices. Meanwhile the number of golfers did not go up either.

[nakachalet]

the best way to show the company that we do not approve of the price increase or whatever they are doing or are planning to do.... is to

NOT GOING THERE, NOT PARTICIPATING OR NOT BUYING ANY OF THEIR PRODUCTS.... OR SIMPLY.... TO BOYCOTT THOSE PLACES....

[ScubaBuddha]

the best way to show the company that we do not approve of the price increase or whatever they are doing or are planning to do.... is to

NOT GOING THERE, NOT PARTICIPATING OR NOT BUYING ANY OF THEIR PRODUCTS.... OR SIMPLY.... TO BOYCOTT THOSE PLACES....

But then their prices will just go up more, right?

[nakachalet]

the best way to show the company that we do not approve of the price increase or whatever they are doing or are planning to do.... is to

NOT GOING THERE, NOT PARTICIPATING OR NOT BUYING ANY OF THEIR PRODUCTS.... OR SIMPLY.... TO BOYCOTT THOSE PLACES....

But then their prices will just go up more, right?

-----

my humble estimation is that.... if we continue and use other sources for what we need or what we think we need....

these establishments will eventually fold, for certain.... because of lack of cash to function

we have the green and we can surely choose and opt where or who we wish to buy from or support.... right?

most of these establishments depend on farangs.... locals can surely not be able to frequent as often as farangs do.....

they can up the price as much and as often as they wish.... for they surely have their rights to do so as proprietors of businesses....

but it is also our sole right to choose whom we wish to support.... that was what they taught me in economics 709.... lol

by the way, mind you.... i also wrote a paper entitled cesium 137 and strontium 90: their economic impacts.... which was bestowed an a+.... lol

Edited November 3, 2009 by nakachalet

[simcity]

Is that the same starsbuck company who close 75% of it store in Australia ?

Presume they can increase the price only with busy stores & patrons with low gustative appreciation for café

[puyaidon]

The owners of those businesses who are raising their prices during this economic time must have graduated from the university from which I recently retired. Most only think of the short term profits and not the long term. You would think they would learn from China and Japan but they seem to think that jacking up the prices will make their businesses appear to be better as it is more expensive. Look at some of the universities. Lots of good looking stuff but teacher salaries are very low even for foreigners. Spending money on looks and letting quality go down the tubes. We will see another "97" before long. They didn't learn then and won't learn when it comes again.

[keestha]

Seen from the perspective of a hotel owner:

Hotels always have high season and low season rates. Charging low season rates during the high season because pickings are slim would hardly bring any more customers, the demand simply isn't there. Besides that, maintaining low season rates all year round would mean sure bankrupcy.

Traditionally, high season rates are charged from November 1 on. Sure there are not many people around yet, but to my experience the stream doesn't really start flowing till about November 12.

Again, stunting with prices just doesn't bring anything when demand is lacking. A 4 star hotel just around the corner from me is asking 1300 Baht now, including breakfast. Of their 120 rooms, 10 are occupied now. So for the time being I will resist the temptation to put up a big banner at the airport advertising a crazy offer.

[nakachalet]

ALSO ranting--from proprietor of a few hotels and resorts, both in pacificrims and orange county, usa:

my view is a little different from keestha's....

the renting prices are subject to traffic; of course, there is a set price. we usually will discount our rooms 15% to 30% to attract travelers and potential customers.

we were filled to 70% occupancy on the average during the 2008 season....

we could do what keestha and most others can not.... that is....

we only incur liability both long terms and short terms combined to no more than 15% of the value of each entity.... is that the secret? i truly do not know.... i only can say that it works for us.... even during this serious downturn.... and all are run by immediate family members and relatives.... it helps alot really.... and no, we are not--patel.... lol

[simon43]

No downturn for my hotel in Phuket either Business is good!

Simon

[madmitch]

You can see the hotel trade's reaction to the arrival of November 1st by looking at Latestays or Rates to go. Last week you could find a 3 star hotel in Karon for 800 - 900 baht, this week it's about 3,000 baht.

Hotels don't make money in low season. Prices are reduced to attract a bit of custom to offset the losses. Just about all profit is made between the middle of November and the end of March.

With the smaller places, budget hotels and guesthouses, I haven't seen the overnight doubling of prices that has been evident before but you can be sure that by the beginning of next month high season prices will have properly kicked in in most places.

As a guesthouse owner, I would say that we don't double our prices in high season, we halve them in low season. There's a major difference.

I would also add that many people book well in advance. They are quoted what is considered to be the market rate at the time of booking and that also dictates the pricing policy to a certain extent.

As for Starbuck's, that is pure greed and poor management.

[LivinginKata]

As a guesthouse owner, I would say that we don't double our prices in high season, we halve them in low season. There's a major difference.

That's what I was thinking. The low season rates are discounted, the high season rates are just full price.

[chiang mai]

Interesting to note that it's only the Starbucks in Patong that is raising its prices (that I know of), certainly I was told that the Starbucks in Central will not - and without getting caught up in a Starbucks debate, I think the message here is more about the mentality and strategy of businesses in prime tourists areas than anything else. Actually I've noticed similar tactics by Carfooo in Junceylon where the prices of some specialty farang foods are hiked pretty substantially in November, a good case in point is their French loaves/bread sticks, 22 Baht when we first arrived in low season, 36 Baht in high season, currently 30 baht and surely headed for 40 before the month is out. All fair and good business practice I suppose but it makes it frustrating at times for resident expats, not a grip, just an observation.

Edited November 4, 2009 by chiang mai

[LivinginKata]

Interesting to note that it's only the Starbucks in Patong that is raising its prices (that I know of), certainly I was told that the Starbucks in Central will not - and without getting caught up in a Starbucks debate, I think the message here is more about the mentality and strategy of businesses in prime tourists areas than anything else.

It's not just Starbucks. Just compare the prices of McD in Patong and Phuket town. Prices seem much cheaper at Phuket town McDs as they have 'special' offers, whereas McD in Patong never seem to have any 'offers'.

[katabeachbum]

As a guesthouse owner, I would say that we don't double our prices in high season, we halve them in low season. There's a major difference.

That's what I was thinking. The low season rates are discounted, the high season rates are just full price.

Well put.

Even with 40% discount in the low season we were not fully booked, but this high season is fully booked at full prices.

As for Starbucks, most major chain-restaurants in Patong are more expensive than the rest of Phuket and LOS, like McD, KFC, Burger King, Subway, MK. Due to higher overheadcosts they say, and perhaps due to higher purchasingpower. So why not Starbucks too?

[LivinLOS]

Interesting to note that it's only the Starbucks in Patong that is raising its prices (that I know of), certainly I was told that the Starbucks in Central will not - and without getting caught up in a Starbucks debate, I think the message here is more about the mentality and strategy of businesses in prime tourists areas than anything else.

It's not just Starbucks. Just compare the prices of McD in Patong and Phuket town. Prices seem much cheaper at Phuket town McDs as they have 'special' offers, whereas McD in Patong never seem to have any 'offers'.

A lot to do with having a fixed price menu that franchise mandated and variable priced rents..

Sure a beach Rd or Jungceylon branch gets more foot traffic but the rents in JC are just insane !!

[fire and ice]

Again, stunting with prices just doesn't bring anything when demand is lacking

Nonsesne, many people will make new plans etc if they see a bargain - my brother was thinking of going to Hawaii (form Sydney) on holidays when I pointed out to him the current bargain hotel prices in Patong (he has been to Patong before). He promptly switched plans and make the booking.

My wife & I stayed at seaview patong in October for only 1900baht for a double room. The place was very bsuy whereas the string of hotels immediately to the north of it were almost empty - we were in Phuket (at another hotel) and checked the rates before we chose seaview and the 'empty' ones were charging normal prices (for the season) and wouldn't bargain either. ....empty => Som non na!

The 1300 baht place was probably just poor at promoting their low rate, I'd be surprised if it was on wotif.com (for example).

I run a tour business (in Australia); when we offer special rates on select dates it has a big effect on demand for that tour.

Usually it potential repeat customers that get turned on by rate reductions, and this includes people who have been to Patong before, not necessarily the same hotel. Of course there is the referral element here too. I have told a lot of peoepl about bargain rates in Thailand and many are now looking at making plans to come here purely because of this.

[LivinLOS]

A whole bunch of expats moaning about the Chalong golf course going up a lot in last week.. Driving range balls up 50% overnight etc..

I dont golf but seems to have upset a lot of people who have put up with a lot of teething troubles over low season, swearing off the place or saying its a once a week not twice a week now etc.

[Damaz6052]

No downturn for my hotel in Phuket either Business is good!

Simon

That's good news what do you put in down to?

[harleyclarkey]

I just don't go near any chain coffee shops, burger joints, chicken or pizza places. I managed 50,000 kms in the States on a bike with but a single chicken burger (heavy rain outside) and didn't eat it. So if I manage to avoid them there I sure as heck won't eat/drink in them anywhere else.

Give me the local diner, restaurant...the Mom and Pop motel any day.

By the way...what is the word on the street from those in the trade (Simon?) for the number of tourists around????

Edited November 10, 2009 by harleyclarkey

[cotambear]

As a guesthouse owner, I would say that we don't double our prices in high season, we halve them in low season. There's a major difference.

That's what I was thinking. The low season rates are discounted, the high season rates are just full price.

This is a bit glass half full/half empty, but surely the `normal` price is the one that is in place for the majority of the year?

[harleyclarkey]

As a guesthouse owner, I would say that we don't double our prices in high season, we halve them in low season. There's a major difference.

That's what I was thinking. The low season rates are discounted, the high season rates are just full price.

I see it as the low season rates are what could be considered near enough to normal, while the high season rates reflect the increased demand and so ...jack up the rate and make hay while the sun shines. It's business!

[stevenl]

I see it as the low season rates are what could be considered near enough to normal, while the high season rates reflect the increased demand and so ...jack up the rate and make hay while the sun shines. It's business!

A lot of places will make a loss in low season, and just stay open because anything that comes in is welcome.

High season is necessary to cover the losses in low season, and make a small profit. It may be different for the bigger places, but that is the way a lot of the smaller places operate.

[sadman]

Isn't the price of flights likely to have more impact on hotel demand/occupancy than the hotel's own pricing structure? Flights over the Christmas period from the UK are around 900 - 1,000 GBP, so a family of 4 paying 4,000 GBP probably won't be worried about paying full hotel price, while even big hotel price reductions won't tempt people who can't afford the flights.

Obviously, low season is different because the flights are less than half than in high season.

[endure]

The place that I stay in Chiang Mai has dropped the price of a room by 200bt a night and made internet access in all rooms free. They were pretty good value before.

[HDRIDER]

Hi

You must admit it look good when they say 30% discount on rooms then it must be cheap.

My GF make 200% on the “stuff” she sells and then she put a sign up saying 20-50% discount i must say she work hard for it, buying all the stuff in BKK and then sit on the bus down to Phuket with 100kg “stuff”

[chiang mai]

Isn't the price of flights likely to have more impact on hotel demand/occupancy than the hotel's own pricing structure? Flights over the Christmas period from the UK are around 900 - 1,000 GBP, so a family of 4 paying 4,000 GBP probably won't be worried about paying full hotel price, while even big hotel price reductions won't tempt people who can't afford the flights.

Obviously, low season is different because the flights are less than half than in high season.

I somewhat doubt that is a factor, you would be surprised to see how many people book their travel/holidays far in advance thus taking advantage of lower travel costs, peak season air fares mostly impact those people who are late deciders or impulse travellers.

[chiang mai]

Hi

You must admit it look good when they say 30% discount on rooms then it must be cheap.

My GF make 200% on the “stuff” she sells and then she put a sign up saying 20-50% discount i must say she work hard for it, buying all the stuff in BKK and then sit on the bus down to Phuket with 100kg “stuff”

No self respecting Thai female who is a serious shopper will buy unless the sign says 70% discount, all meaningless of course but effective.

[HDRIDER]

Hi

You must admit it look good when they say 30% discount on rooms then it must be cheap.

My GF make 200% on the “stuff” she sells and then she put a sign up saying 20-50% discount i must say she work hard for it, buying all the stuff in BKK and then sit on the bus down to Phuket with 100kg “stuff”

No self respecting Thai female who is a serious shopper will buy unless the sign says 70% discount, all meaningless of course but effective.

HI

I will tell her to change the signs tomorrow