Bang Bang Baht Making Waves For Hoteliers

It’s only February and more than a few hotel General Managers in Thailand have sunk into a deep depression over subpar performance compared to their budgets.

By late January the Thai baht was up 3.67% versus the US dollar and considering that the predominate practice of international hotel chains is to express their operating budgets in dollars has spelt bad news for operators depending on what exchange rate they forecasted.

Looking at currency predictions, the common opinion is that the baht is expected to strengthen considerably further in 2018. Watching Wall Street’s sharp decline at the end of last week, coupled by inflation worries, this only adds to the toxic mix.

Actually, other Asian currencies are on a rampage, with the Malaysian ringgit outpacing the baht, while the yen, yuan and Singapore dollar are also on the rise.

For hotels in Phuket though the imminent increase of the average wage which is scheduled for April 1^st is more in the spotlight.

As many readers are aware the two biggest expense items in hotels are staff and energy costs.

Whenever there is a rise in minimum wage levels it often has a domino effect to not cause wage diversion and the result can be significant.

After Bangkok, Phuket has the highest cost of living in the country, and the minimum wage boost will be to THB330 per day which is a 7% increase.

Remember it’s only February but for hoteliers expect more volatility in the coming months.