Thailand's hotel industry is now entering a recovery phase following the easing of lockdown measures, including inter-provincial travel restrictions.
According to the JLL Hotels Recovery Guide, occupancy in both Bangkok and Phuket will likely bottom out soon, with an expected surge in domestic tourism, the reintroduction of domestic flights and the anticipated opening of international borders in the coming months influencing the pace of recovery.
The coronavirus pandemic has devastated the tourism and hotel sectors of many countries. In Thailand, hotel revenue per available room (RevPAR) trended downward during the first four months of 2020, led by declines in occupancy.
But optimism about a gradual recovery remains high, given strong domestic and global brand recognition and a mature hospitality sector well-prepared to align with stringent health and safety guidelines introduced by the Tourism Authority of Thailand under the Amazing Thailand Safety and Health Administration programme.
In 2019, Bangkok was named, for the fourth consecutive year, the world's most popular travel destination in Mastercard's Global Destinations Cities Index, while Phuket was rated the second most popular destination in Asia by TripAdvisor.
"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," said Chakkrit Chakrabandhu Na Ayudhya, executive vice-president for investment sales in Asia Pacific at JLL Hotels & Hospitality Group.
"With both government and bank support, we're optimistic that a market like Bangkok, with its well-balanced offerings to business and leisure demand, will be among the first hotel sectors regionally to display meaningful recovery, while Phuket will take relatively longer as it relies more on international and leisure demand."
The maturity of Thailand's hotel sector, 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 flow 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 Hotels & Hospitality, operators and investors in Thailand's hotel industry should consider several factors to optimise their recovery strategies:
- Critically evaluate hotel positioning and segmentation mix in light of extensive current supply and the future pipeline.
- Calculate break-even occupancy and factor in gradual demand ramp-up, taking into consideration potential travel bubbles being considered by the 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 domestic tourism promotions 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 reopening.
"Thailand's hotel industry has a unique opportunity to get ahead of other global markets in welcoming guests back, leveraging its well-established commitment to traveller-centric experiences," said Pitinut Pupatwibul Robbins, senior vice-president for strategic advisory and asset management in Asia Pacific at JLL Hotels & Hospitality. "Each location will require a different recovery strategy, but the industry's ability to re-instill traveller confidence will be coming from a high base, which should give operators and investors optimism."