Thailand’s 5-Star Hotels Squeeze Small Operators With Discounts

A stunning plunge in international visitors during the pandemic has been a disaster for Thailand’s tourism industry, decimating the ranks of small operators and leaving the landscape dominated by luxury hotels.

“Most hotels in key tourist destinations, such as Phuket and Samui, have been hit hardest, with some 80% of those hotels remaining closed since the first lockdown last year,” Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, told Bloomberg TV on Tuesday. About half of workers in the economically critical sector have lost their jobs, she said.

Thai hotels have been forced to compete on price to capture the domestic market as restrictions such as a mandatory two-week quarantine deter deeper-pocketed foreigners. Tourist arrivals to Thailand slumped to 6.7 million in 2020 -- their lowest level in at least a dozen years, down from nearly 40 million in 2019 -- and could fall as low as 3.2 million this year, according to the government’s economic planning agency.

Thailand’s 5-Star Hotels Squeeze Small Operators With Discounts

Tourism has accounted for about 20% of Thailand’s economy -- among the highest levels in the world, according to the World Travel and Tourism Council -- with foreign visitors providing more than $60 billion in revenue in 2019. Now, luxury hotels are slashing prices and offering other perks in a desperate attempt to stay afloat.

A 20-billion baht ($649 million) government campaign to support domestic tourism through subsidies on hotel rooms and airfare has helped boost occupancy rates.

However, smaller operators with 2- or 3-star ratings can’t compete with the packages on offer from luxury chains, and would just lose money if they opened in this environment, Marisa said in a separate telephone interview. Many of these smaller hotels will go out of business if foreign holidaymakers don’t return soon, she said.

“Not being able to welcome tourists for over a year now, we’re urgently requesting the government to reduce the lockdown days,” she told BTV.

Thailand’s 5-Star Hotels Squeeze Small Operators With Discounts

The Bank of Thailand cites uncertainty about foreign tourist arrivals as a “major risk” to the economic outlook.

“Thailand’s tourism industry is dependent on the foreign travel market,” Bangkok Airways Pcl Chief Executive Officer Puttipong Prasarttong-Osoth said Monday in his capacity as president of the Thai Airlines Association. “While money from the domestic market can help sustain some operations, the scrapping of all quarantines remain the most helpful way to support the travel industry.”

©2021 Bloomberg L.P.

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