TO DISCUSS YOUR PROJECT OR LEARN MORE ABOUT OUR SERVICES:

  • This field is for validation purposes and should be left unchanged.

Phuket's Hotel Discounting Impacts Recovery

Category: Hotels, Posted:29 May 2009 | 09:50 am

Phuket hotels have hit panic mode after a high season which saw average occupancies plunge by 20-30% and rates are now in freefall mode. Moving into the island's low season one of the most telling comments I've heard was the Director of Sales and Marketing of a branded 5 star resort saying "if they had to offer any lower rates, they'd be paying people to stay." Perhaps the strongest 'truism' of the present situation is that the hotels set rates and not consumers so most of the blame has to lay on the business practices in the industry.
In a talk by Jonas Ogden of Smith Travel Research who are the industry leader in worldwide data gather for hotel statistics the macro trend for the current market started to register dramatic decreases during 'black October" 2007. Since then every market in the world say downward performance with the exception of the Middle East who started to nose dive in 4th quarter of last year. Market retractions and negative growth are currently being with the exception of the later.
The beginning of the 4th quarter in 2008 hit not only Thailand hard but the entire Asia Pacific region. Looking at RevPar growth in 1st quarter 2009 for major markets only Indonesia with Bali and Jakarta were in positive growth mode. The hardest hit were Beijing, Shanghai, New Delhi, Mumbai, Bangkok and Phuket.
Jonas pointed out the downside of heavily discounting that can in turn result in taking the market years to recover average room rates. In a bull market everyone follows a leader in pricing, while during a downturn or panic the flock of sheep mentality is inherent. Annual budgets and shorter term forecasts become increasingly difficult to manage while 'discounting' often simply multiplies mounting losses from a slowdown. In the current market place the challenge is somehow to match buyer's expectations with those of sellers and arrive at a business strategy that accounts for not only today but a longer term horizon.

Other News

Read more

Serviced Apartment Sector Surges In Pandemic

Category: Real estate, Posted:16 Apr 2021 | 10:41 am Probably the best performing tier of accommodation in the pandemic has been serviced apartments and extended stay. Much has to do with the spacious unit sizes and kitchens for work from home guests.  Additionally they have limited, less crowed facilities so there is less of a fear factor versus larger hotels. In Thailand, during the […]
Read more

Hua Hin Set To Grow International Airlift

Category: Tourism, Posted:12 Apr 2021 | 06:00 am One of Thailand’s best performing hotel sectors is Hua Hin. Well, let’s just say it is the best market over the past twelve months of the pandemic. The destination is now poised to look ahead post-Covid and is looking to increase overseas airlift once the country reopens. Aside from the current expansion of the gateway […]
Read more

Mass Phuket Hotel Vaccination Drive Underway

Category: Tourism, Posted:10 Apr 2021 | 17:14 pm Check out an insightful view of how Phuket’s tourism industry has come together and are pushing forward on a massive vaccination drive for hotels across the island. An inspiring story of how the island is working together. Over the past week more than 70,000 people, mostly staff of Phuket hotels have been vaccinated across the […]