Hotels in North face severe glut
Up to 6,000 jobs may go after Songkran
- Published: 1/04/2009 at 12:00 AM
- Newspaper section: Business
Hotels in the North saw their occupancy rates plummet to 55% in the first quarter of this year and more than 6,000 layoffs are expected after the Songkran festival. The mounting problems faced by hotels in the region, particularly those in Chiang Mai, stem from the economic recession and oversupply, said Kanong Suvannavisutr, president of the Thai Hotels Association Northern Chapter.
''I can say that the average hotel occupancy in the North is the lowest when compared to other regions. Several hotel executives in Chiang Mai saw their salaries cut and most staff will eventually accept the leave-without-pay option,'' he said.
Layoffs of at least 20% of the 26,000 people in the region's hotels are likely after the Thai New Year celebration.
Initially, many hotel operators had pinned their hopes on Songkran but advance reservations are only 50-55%, compared to 70-80% last year.
Mr Kanong said it was difficult for all related parties such as the Tourism Authority of Thailand (TAT) and private operators to promote tourism in the North amid the oversupply.
''Hotel room rates are very cheap. The rate for five-star hotels is 3,900 baht including breakfast, per room per night, four-star 1,200 baht, and three-star 900 baht,'' he said.
The association estimated that there are now 31,000 hotel rooms in Chiang Mai and the number will continue to increase because a lot of small hotels, with 40-80 rooms, are under construction, exacerbating the glut.
Prakit Chinamourphong, the THA president, said the association would work with the Federation of Thai Tourism Associations (Fetta) to organise the Fetta Grand Sale in August. More than 2,000 booths including hotels, airlines, travel agents, and car rental firms, will join the fair and they will offer more than 50% discounts.
The THA expects that the event will help tourism operators in all regions sell their products amid the slowdown.
As well, Mr Prakit said the association would ask the government to provide more financial assistance to help big hotels with assets worth more than 200 million baht. The government recently approved a two-billion-baht fund for small and mid-sized hotels with assets below 200 million baht. To date, 49 hotels have applied for soft loans worth 1.021 billion baht.
Mr Prakit expected that if the government approved an additional fund for big hotels, more than 100 operators with nearly 10 billion baht in assets would apply for aid.
''If the government turns down the fund request for big hotels, we will see more layoffs because they have hired a lot of workers,'' he noted.
About the author
- Writer: CHADAMAS CHINMANEEVONG
