Hotel Operators Warned Against Further Discounting

[george]

Hotel operators warned against further discounting

BANGKOK: -- Hotels and tour operators have been urged not to offer extra-low room rates and low-priced package tours to foreign agents, because of the possibility of long-term damage to the tourist industry.

Thai Hotels Association (THA) president Prakit Chinamourphong said average hotel-room rates in Bangkok were already lower than those in other major cities in the region. Last year, many five-star hotels cut their rates to attract foreign tourists while at the same time joining world tourism trade fairs, such as the International Tourism Bourse in Germany and the World Travel Mart in the United Kingdom.

A recent study showed average room rates in Bangkok would be lower this year than last, because operators signed low-price agreements last October and November.

This year, the average hotel-room rate in Bangkok is expected to be Bt2,373 a night, down from Bt2,584 last year.

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

They should be trying other strategies instead of cutting prices," Prakit said, adding that cutting prices would not help operators to survive in the long term and would also damage the overall tourism industry.

A recent report on the Phuket hotel market prepared by local consultancy C9 Hotelworks said discounting by Phuket hotels cost the industry on the island US$300 million (Bt9.92 billion) in room revenue last year.

The Phuket Hotel Market Update said room-rate cuts averaged 20 per cent across the board last year, dealing a heavy blow to hotel profit margins despite tourist arrivals rebounding to 2007 levels late in the year.

The report said 2.9 million tourists visited Phuket last year, resulting in an occupancy rate of only 64 per cent. Average rates and revenue per occupied room slumped 20 per cent and 22 per cent, respectively, from 2008.

C9 Hotelworks reported a positive upward trend this year despite the suspension of many projects due to economic and political concerns that had resulted in new hotel supply on Phuket shrinking 19 per cent. The development pipeline now has 31 properties set to open over the next three years, offering 4,600 new rooms and representing a 12-per-cent rise over the existing market, it said.

The THA forecasts a 15-per-cent recovery in the hotel industry this year, due to lower pressure from political problems and the region's economic recovery.

Association of Thai Travel Agents (ATTA) representative Ekasith Jotikasthira said the number of tourists from long-haul markets like North America and Europe was low last year, because of the economic downturn. However, visitor numbers should rebound this year.

He called on hotels and tour operators to prepare for family travel and inclusive packages from emerging markets.

"Tourists are concerned about the expense of travel. In Europe, they are now looking for rooms with four beds, and that trend should spread into other regions," Ekasith said.

ATTA board member Sa-ngium Ekachot said tourism operators should diversify their business strategies, in order to deal with countries affected by the economic downturn and cope with increasing numbers of tourists from emerging markets.

If there is no further political turbulence, the ATTA expects Thailand to benefit from growing numbers of tourists from emerging markets like the Middle East, India, China and Eastern Europe, as well as short-haul markets.

-- The Nation 2010-01-29

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Related link:

http://hotels.thaivisa.com

[ozzieovaseas]

Easy it is to advise the high end foriegn owned multinationals on their pricing policies

They certainly arent the ones facing the short-term problem of putting food on the table for their families.

Amazing Thailand allright

The hub of contradictions

[waza]

Hmmm another case of if times are tough raise prices. If I have this right, they want to stop discounting to US, and European tourists, but increase targeting asian tourists?...."

Edited January 28, 2010 by waza

[basinboy]

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

So no concerns about offering Thai's further discounts?

What is driving prices down is simple supply and demand, short of colusion and artificial price fixing, market conditions, not Thai Hotels Association will determine prices.

[givenall]

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

So no concerns about offering Thai's further discounts?

What is driving prices down is simple supply and demand, short of colusion and artificial price fixing, market conditions, not Thai Hotels Association will determine prices.

Thai business mentality.

If not enough customer just raise the price so you can make more money from fewer customers. Complete contradictory from the rule of business supply and demand. No wonder the education system in Thailand worth nest to nothing

[Maestro]

This is the same Prakit Chinamourphong, president of Thai Hotels Association, who two weeks ago told the world that Thai hotels were so bad that it will take at least five years for them to reach the standard of hotels in other ASEAN countries.

He said operators would need at least five years to prepare for international service standards, capital investment and human skills.

Source: http://www.thaivisa.com/forum/Thai-Tourism...43#entry3268443

I admire this man for his honesty, but less for his marketing skills.

--

Maestro

[bangon04]

"Tourists are concerned about the expense of travel. In Europe, they are now looking for rooms with four beds, and that trend should spread into other regions," Ekasith said.

That's the answer - put 4 beds into every hotel room in Thailand and charge per person. If you cannot find 3 people to share your room then you have to pay more. So it will usually be cheaper to hire someone to fill the extra beds for the night.

[mca]

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

So no concerns about offering Thai's further discounts?

What is driving prices down is simple supply and demand, short of colusion and artificial price fixing, market conditions, not Thai Hotels Association will determine prices.

Thai business mentality.

If not enough customer just raise the price so you can make more money from fewer customers. Complete contradictory from the rule of business supply and demand. No wonder the education system in Thailand worth nest to nothing

The MICE hotels I know of are cutting their seminar package prices to the bone making the smallest profit considering ( using common sense perhaps) that it's better to have 1000 delegates making a few baht per person profit than have a nice big completely empty function hall.

Edited January 29, 2010 by mca

[ozzieovaseas]

This is the same Prakit Chinamourphong, president of Thai Hotels Association, who two weeks ago told the world that Thai hotels were so bad that it will take at least five years for them to reach the standard of hotels in other ASEAN countries.

He said operators would need at least five years to prepare for international service standards, capital investment and human skills.

Source: http://www.thaivisa.com/forum/Thai-Tourism...43#entry3268443

I admire this man for his honesty, but less for his marketing skills.

--

Maestro

did this guy have any affilliation to the other guy that said they wanted to focus NOT on tourist numbers but instead focus on a higher "quality" of tourist..who would pay more...

AND not to forget that other guy that wanted to encourage a broader range of tourist by attracting the young trendy types who would stay longer

OH, and i wonder what the guy that wanted to cut down on hooligan farangs misusing ed and tourist visas is doing today?!!?....

the truelly AMAZING thing about LOS is the jokes are neverending and the punchlines just keep rolling in

come and get it...hubs,scams,riots,crackdowns ect ect..we got the lot

just need a few whiteish thai girls getting slapped in the mouth and we'd have the perfect soap

[Tejas]

What discount? Seems to me the assumption is wrong to begin with. I have not seen any reduction in prices.

[Thai at Heart]

I really do wonder if the people running the TAT have any experience what so ever in the tourism industry.

At 2373 bht that is about 75 USD per night on average. Add a probable ++ and 85 USD beckons. If you are planning to stay in 4* anywhere around the major shopping or CBD districts, you won't find much that cheap. That pricing is up there with medium quality Singapore and KL. Offering to agents is another thing, but in this business climate, I don't see what option they have.

I think what the TAT first needs to acknowledge is that Bangkok doesn't have a monopoly on anyone wanting to come for a short holiday hop to do some shopping. Who knows how many people were put off from coming to Bangkok specifically because of the protests etc, no one can know exactly but it must be significant.

The report said 2.9 million tourists visited Phuket last year, resulting in an occupancy rate of only 64 per cent. Average rates and revenue per occupied room slumped 20 per cent and 22 per cent, respectively, from 2008.

Meanwhile, the most obvious statistic shows that discounting only goes so far which begs the question "what is IMPROVING for the tourist in this country?" 64% occupancy at heavy discounts. Not a good sign.

[animatic]

Sounds like a pontificating someone who's job performance is based on the numbers,

irregardless if international economic woes and localize political chaos.

He has no control over the lack of significant tourist numbers,

nor of serious worries for some of safety in Thailand right now.

But he can try to look like he is doing SOMETHING, how ever irrational.

Let those hotels starve, priced out of the REAL market, so his numbers MIGHT look good.

Yes quality before quantity, even if there are few customers period.

Edited January 29, 2010 by animatic

[Ricardo]

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

Rather than offering foreigners further discounts, aren't those hoteliers merely maintaining their price in foreign-currency terms, which of course generates fewer Baht, due to the ever-stronger exchange-rate ?

[Crushdepth]

Hotels and tour operators have been urged not to offer extra-low room rates and low-priced package tours to foreign agents, because of the possibility...

...that it might stimulate economic recovery in tourism, which is not important to Thailand at all.

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

Just ban those dam_n foreign tourists, that'll work.

Edited January 29, 2010 by Crushdepth

[Samuian]

Plaza Athenee in Bangkok offers for the next 28 days - 2943.- ThB per night! if that isn't cheap and well below

standard pricing - I don't know...

Just saw an interview with a Hotel owner who invested 100 Mill. Baht and is facing now a 10.000 Baht Interest bill a day!

We'll see a strong correction in this market - it can't be pushed up and up and up.... and after all a standard room remains a standard room!

[Meridian007]

The government needs to remove this Prakit now.

Now is the time to be cutting prices as much as possible to entice tourists back to Thailand. The advertising of lower prices in Europe is the exact reason why tourism seems to be bouncing back now. I think Prakit thinks that the foreigners will come back no matter what, so we should gouge them at the earliest possibility. The low prices are there to cover over any worries about political instability, and pi$s-poor infrastructure here. If you can't offer them that, they will look elsewhere.

Thailand needs to rebuild its image as a destination now, as the market slowly crawls back to normal. Then, after a few years, when everyone is raving about Thailand again, they can increase the prices. If they don't have a loss-leader to pull them, the tourists will just go to other ASEAN countries. Get them here on cheap room and/or flight packages, then gouge them (but not too much) on everything else. That's how the Caribbean has done it for decades. It brings in the money needed for the infrastructure overhauls.

If they could just remove their focus away from their greed for a year or two, and get Thailand up to the same standards as the rest of ASEAN, we wouldn't see these issues. But, as a typical reaction, they'll circle the wagons and blame the foreigners. Sad.

[MacWalen]

This is rubbish! What are they thinking? Of course they should be lowering the prices to catch up with where the market is. Prices for hotels in Bangkok are already crazy and it is right that people should refuse paying this kind of prices. They will price themselves out of the market soon.

Also what about that beer price? It was supposed to be cheaper, right? Some tax was removed but I do not see any price reduction.

[JAS21]

What discount? Seems to me the assumption is wrong to begin with. I have not seen any reduction in prices.

Well we have just booked a 5* resort in Koh Lanta for early May..Pimalai for 8 days..every other night free!!, through the guy advertising on this site..........I was amazed at how low the price was....you just have to look.

[RKASA]

Or you could let the hotels have casino and not an empty room in the country.

Let people do with their money what they like to do, its their money.

You need a draw if you want demand. The girls arn't cutting it anymore.

[ScubaBuddha]

This explains a strange phenomenon I have been experiencing. I travel around Thailand for work and when I walk into a hotel to check a price, I often see their advertised price, lets say 1,900 baht a night, and I ask what I can get it for, and it's often half that!!

[bkkjames]

I think the guy is implying regulation of rates (price fixing in layman's terms no?).

5* you pay xx baht, 4* xx baht and so on.

This will come in especially handy for handing out *s. Before you know it, we will only have 5* hotels available until somebody gets greedy and tries a burj al arab so they can get 7*.

[Reasonableman]

At least some of our hotels seem to have taken the hint and are already cutting back on cleaning and maintenance costs....even winning international awards for the standards they can achieve!

Oh-Oh, am I in the right thread, here...?

[citizen33]

"A recent report on the Phuket hotel market prepared by local consultancy C9 Hotelworks said discounting by Phuket hotels cost the industry on the island US$300 million (Bt9.92 billion) in room revenue last year."

So lowering prices leads to a loss calculated by subtracting the actual receipts from the income that could have been gained at the old 'standard' prices? I wonder if any of these experts have any conception of the economics of supply and demand and price elasticity.

[bkkjames]

"A recent report on the Phuket hotel market prepared by local consultancy C9 Hotelworks said discounting by Phuket hotels cost the industry on the island US$300 million (Bt9.92 billion) in room revenue last year."

So lowering prices leads to a loss calculated by subtracting the actual receipts from the income that could have been gained at the old 'standard' prices? I wonder if any of these experts have any conception of the economics of supply and demand and price elasticity.

Exactly, it's like they are saying "we could have charged more but decided not too because we are nice".

[Tigs]

The Hotels must do whatever is required simply to pay there staff and their utility bills. If they can break even at the moment that is the best situation they can hope for. For a Senior spokesman to suggest otherwise is folly. The current down turn in Tourists is not the fault of the Hoteliers, why the hel_l should they have to pay and/or sacrifice anymore. There would not be as big a problem if the Government got it's sh*t in one pile and sorted out the real reasons why the numbers of people coming here has dropped off. Protests, airport closures, political violence on the streets of Bangkok, and never ending threats of coups and red shirt violence/take over of airports. It would also help if TAT started a decent marketing campaign and stayed out of politics.

[losworld]

What a ridiculous news release. First how can anyone be so dumb as to state "foreigners need to pay more". This should play real well with visitors. As if the statement to increase prices wasn't ridiculous enough he singles out the very people he is wanting to attract.

Okay I say raise the rate to that of Hong Kong or Singapore hotel rooms but let's also see that same level of service and the same level of pay for employees and the same level of taxation for the state.

This is nothing but a handful of greedy hotel owners trying to keep their profits in a falling economy.

[sinplyred]

I would think that the operators of these major multi billion dollar companies have a better idea on how to run their properties than any TAT mouthpiece

[animatic]

I would think that the operators of these major multi billion dollar companies have a better idea on how to run their properties than any TAT mouthpiece

An THAT is more on the mark than most anything this guy ever said in his career!

[BarryM]

I've just returned from five nights in a five star hotel in Gran Canaria that is simply light years ahead of the likes of the Sheratons in Pattaya and Phuket in terms of food and service.

Room rate was around half what I'd pay to holiday in Thailand, as was food. Wine was a quarter of the price - and volume for volume, brandies etc were about one fifth of the price.

Massage in the spa was 50E an hour and the therapist was a trained chiropractor. In Thailand in a five star hotel it's usually more expensive and the therapist generally has just three months' training - two of which were spent learning to arrange orchids and towels, making over sweetened tea and asking "is the plessure OK for sir?"

Oh. The taxis had meters too.

[Nignoy]

What discount? Seems to me the assumption is wrong to begin with. I have not seen any reduction in prices.

We found out the hard way one well known phuket hotels interpretation of discount do the right thing thinks I!! book 6 months in advance, pay in advance,get confirmation of payment and booking! pay the extra fees for a triple room, all done and dusted thinks I WRONG!!!!!!!!!!!!!!!!! Arrive at hotel after along drive down from BKK,sorry sir we have no have no record of your your booking, you should speak with booking agent!!but I have confirmation of payment and booking Emails from the hotel says I, they are forgeries sir maybe you printed them yourself!slowly after 3 hours tooing and frowing tempers are staring to fray men in brown have been called, methinks thats it!police side with hotel staff , seems to be a well planned scam end result our discount hotel room in Phuket cost me an extra 28000baht for 8 nights, of course for any Sceptics or died in the wool rosecoloured spectacle wearing , it could never happen to me thailand experts, I can supply name of hotel and copies off all confirmations,last but not least did you know that a mastercard payment is only protected for #months so we lost out there too, Just another little entry in our book of life in thailand!!