TO DISCUSS YOUR PROJECT OR LEARN MORE ABOUT OUR SERVICES:

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

The Case For Temporarily Closing Hotel and Restaurant Operations

Category: Tourism, Posted:31 Dec 2020 | 11:00 am

As the final days of disruptive 2020 come screeching to an erratic end, hotel and restaurant owners are peering into an unpredictable year ahead. Here in Thailand over the past week, the tourism industry has been shaken to its core over an uptick in Covid-19 cases and backroom speculation over fears of another round of lockdowns.

With domestic tourism being the only operating segment at present, the market reality is that the lag in vaccinations could take nine to twelve months in 2021. We are now facing a situation that it’s highly unlikely a significant reopening of international travel will effectively gain traction until 2022. What’s more worrisome for hotels that have been trying to survive low-levels of occupancy over the past six months is that the combination of anti-travel sentiment and volatile restrictions could see a worsening of trading conditions next year for an extended period.

No need to put on rose-colored glasses for tourism businesses here and the most relevant concern is how to survive, stay afloat, and manage cash flow. While every situation is different, there is a case for some enterprises to temporarily close and hibernate next year until borders are broadly open again. Did I hear a groan? Yes, reality bites. But the key messaging here is there is no point planning long term if you can’t fund up mounting losses for much of 2022.

Hotels and restaurant owners in particular now need to assess the situation on the ground. If you have been losing money over the past six months, can you continue to fund cash flow next year, month after month? The traditional tourism season in Thailand has shifted, and domestic holidays and weekends are the only real opportunities to claw back revenue.

Looking at hotels, big-box types versus smaller properties with decentralized systems are entirely different when looking at the viability of closures. Take into account fixed and variable costs and try to come to grips with break-even scenarios and cash resources. If you are in the red, are you prepared to fund up another twelve months of losses? Moving into the New Year, the expected drop in travel in January onward is looming so it’s critical to do the numbers and decide what strategy is best for the businesses. If bank financing is in place, it’s time to start talking to lenders and if needed secure additional funding.

In 2020 Thailand’s hotel and tourism industry has stood tall and optimistic. I share the long-term optimism but the prospect that next year could swing downward more is a clear and present danger. Given hotels and restaurants are service-related, the ethics of retaining jobs is critical and has to be a primary focus, but if the operating losses result in later permanent closure, owners have not done anyone a favor by swimming against the current.

Let’s be clear, I am no in any way advocating the entire industry to temporarily close and retire to a dark room for zoom conferences and endless Netflix episodes. But the message here is if you are losing money now, and likely to be unable to fund a longer period of losses, take action now. In a passionate foray like hospitality, it’s imperative not to let a false sense of pride or fight take over reason and business sense.

My end of year messaging is just that, be prepared for worse days to come. It’s painful to write but if you plan, strategize and understand there is light at the end of the tunnel but you have to get to the end of the tunnel first, that is what matters. Look at your options in 2021 and I look forward to seeing all of you on the other side.

Other News

Read more

C9 Hotelworks Releases Mid-Year Phuket Hotel Market 2023

Category: Hotels|Tourism, Posted:10 Sep 2023 | 15:42 pm In the first half of 2023, Phuket experienced a resurgence, signaling a promising path toward recovery. International and domestic flights both saw significant increases, accounting for 75% of the total flights in 2022. Airlines and travelers alike are eager to reengage with Phuket’s offerings. In terms of passenger arrivals, the first half of 2023 displayed […]
Read more

The Green Minute – PHIST 2023

Category: Hotels, Posted:10 Sep 2023 | 14:11 pm For those of you who missed PHIST 2023 and those of you who did attend, please find a selection of video short Green Minutes from the event. Sustainability has to be a priority for the hotel and travel sectors and hopefully the ideas and messages here, give you your own inspiration to go green. PHIST […]
Read more

TG’s Big Birds Set To Fly Phuket Bangkok Route Again

Category: Tourism, Posted:08 Sep 2023 | 16:14 pm One good indication of Phuket’s return to tourism recovery is airlift growth. Making news this week is Thai Airways International’s reported resumption of service on the high-traffic Phuket Bangkok route. The airline will start a once-daily right on 1st October 2023. Thai Smile (WE) will still operate other flights til the end of November when […]
SiaJai logo

Thailand's Leading Homecare Marketplace