Optimism is building for a revival of Thailand’s hotel industry, as the sector enters a recovery phase with the country’s easing of domestic tourism restrictions, allowing for inter-provincial travel.
Occupancy in Bangkok and Phuket will likely bottom out this month, on the back of an expected surge in domestic tourism and the restarting of domestic flights, predicted JLL’s Hotels Recovery Guide. The anticipated reopening of international borders in the coming months is also set to influence the pace of recovery.
Chakkrit Chakrabandhu Na Ayudhya, executive vice president, investment sales, Asia Pacific, JLL Hotels & Hospitality Group, said: “Thailand’s hotel industry is a bellwether market in global and regional hospitality circles, and its Covid-19 recovery will be closely observed by operators and investors.
“With both government and bank support, we’re optimistic a market like Bangkok, with its well-balanced offering to business and leisure demand, will be amongst the first hotel sectors regionally to display meaningful recovery, whilst Phuket will take relatively longer as it relies more on international and leisure demand.”
The maturity of Thailand’s hotel space, as well as bank and government support so far, have helped the industry alleviate the full impact of Covid-19, despite widespread issues with cash flows and fixed operational overheads.
JLL expects fewer distressed asset sales in Bangkok, compared to other markets in Thailand, due to robust balance sheets held by many owners. Investors have been looking for opportunities in Thailand, with greater interest expected initially from developers and private equity firms who tend to be less risk-averse, as the recovery gains momentum.
According to JLL’s Hotels & Hospitality, operators and investors in Thailand’s hotel industry should also consider several factors to optimise their recovery strategies:
• Critically evaluate hotel positioning and segmentation mix in light of extensive current supply and future pipeline
• Calculate breakeven occupancy and factor in gradual demand ramp up, taking into consideration potential travel bubbles being considered by the Thai government
• Focus on brand, operating and distribution partners when setting out a differentiating strategy to the local market, while following the opening of borders carefully
• Take advantage of the government’s domestic tourism promotion to help restart operations and build local customer loyalty; launch staycation packages to take advantage of pent-up domestic demand
• Look for every opportunity to get guests ready for post-Covid-19 travel, embrace the restrictions and set up health and safety protocols for the reopening