The Lost Summer. Phuket Hotels Set To Take A Time Out

Back in the early days of May, the sheer heat of the coming monsoon added fire to the anxiety of the island’s hotel sector. The assumption at the time was for a reopening of Phuket International Airport on 16^th May with domestic flights, and that Bangkok would reopen international flights on 1^st June.

As the monsoon rains came, tourism plans for the summer season that has Europeans on summer holidays come to Phuket, Australians from down under escaping winter and a growing China market in July and August.

The two biggest annual dips in tourism here are May to mid-June and September, which remain consistent year in, and year out.

Today, the single biggest setback is CAAT’s decision to delay international flights to Bangkok to the beginning of July, which is further compounded by no set date to reopen the Phuket gateway domestic aviation hub.

For hotels, you can’t stay here if can’t get here, so uncertainly looks to undermine a summer return of significant proportion.

Hotel operators and owners, are now reassessing the need for a quick return to reopen and from our talks, many are looking at pushing back to October or even later given the economics simply do not add up. Even the domestic thrust of staycations are unlikely to provide the traction larger hotels need to scale up. Domestic business for island hotels on a broad basis is sub ten per cent of the market mix. For smaller hotels, targeting domestic is fishing where the fish are, and makes absolute sense.

While I remain largely optimistic over the long-term prospects for Phuket tourism, it’d hard to deny that the worst is yet to come for hotels.  The current State of Emergency has created a  temporary holding pattern for businesses but over the next two months as the travel restrictions hopefully ease, reality is set to bite. And it’s going to be a very hard bite indeed.

Hotels that are seeing their summer season diminish are being forced to evaluate their eventual market re-entry at considerably lower levels, and this needs a rethink of staffing, facilities and cash flow viability.

Phuket’s hardest yards for tourism are still in front of us and the loss of jobs will be enormous. No candy coating here, but it’s the reality of the situation.

Thailand’s tourism and travel industry employment represents between six to seven million jobs and the stress being created by delays in reopening domestic and international airlift will come at a staggering price in job losses.

So what can Phuket hotels can do to plan reopening?  There is no one size fits all solution. The East is now where the West has been for decades in that labor costs and efficiency are a key link to bottom line profit. Operating models will change, they have to, or businesses will perish. As for the traditional hospitality method of annual business plans, Covid-19 has taught us that business changes 24/7 and strategies are now changing daily.

Again, to close this out, every hotel and every business has their own opportunities and threats so the worst thing hotels can do is to simply react to what everyone else is doing. If business levels are going to be volatile and there is uncertainty, the key message here is get your hotel model in order. The lost summer will pass, as will the monsoon in time, and the most important things to remember are to maintain relevance, maintain composure and maintain financial viability.