Long road to recovery for Thailand hoteliers

Signs prohibiting entry to the Royal Hotel in Bangkok, an alternative state quarantine hotel for people returning to Thailand from abroad, on Sept 28.
OCTOBER 08, 2020 - 5:47 PM

HOTELIERS in Thailand could see losses continue until late 2021, as foreign visitors continue to stay away, even though the industry may be past the worst of its earnings crisis.

Despite two domestic tourism stimulus packages unveiled in July, local take-up has been muted and consumer spending at hotels remains below operators’ break-even levels, said UOB Kay Hian analyst Peerawat Dentananan in a report.

As such, he expects that hoteliers will likely need another 12 months’ liquidity on hand to keep going, even as the recovery is uneven across different parts of the country, where the southern and central regions have been traditionally more dependent on international travellers.

With overall occupancy and average daily rates are below pre-Covid-19 levels, Mr Peerawat called the meetings, incentives, conferences and exhibitions (Mice) market a “glimmer of hope” in the fourth quarter but warned that a shift to online events could disrupt Mice activities too.

“Travel planning is now being done over a shorter time frame due to the high uncertainties,” he wrote. “Huge price cuts and other incentives remain key to drawing out demand.”

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Still, he noted that there are sizeable downside risks, which include a delay in vaccine development, a second-wave Covid-19 outbreak in Thailand, and lower-than-projected tourist arrivals, which would weigh on sector earnings.