Doubt sown over peak season reopening

Doubt sown over peak season reopening

Slow vaccination pace a factor

The latest Covid-19 outbreak decreases the likelihood of the planned reopening taking place during the peak season, as slow vaccination might derail the ability to open up more broadly, says STR, a hospitality market analyst.

Jesper Palmqvist, area director of Asia-Pacific for STR, said the global situation is still volatile because of setbacks from new outbreaks or variants, causing a delay in recovery. The latest outbreak in Thailand makes the outlook for the final two quarters more precarious, he said.

This third wave is hampering the confidence of tourists and authorities, as well as slowing efforts to reopen the country.

"The Phuket sandbox, which is scheduled to begin 60 days from now, sounds quite ambitious," said Mr Palmqvist. "But this is a long game and we need to be ready for surprises."

Once the latest wave is brought under control, the hospitality business would gradually return for certain groups, such as hotels within driving distance from Bangkok in Hua Hin and Pattaya. Unfortunately little demand is projected for hotels elsewhere, he said.

It is hard to project any noticeable demand in the third quarter, given the speed of the vaccine rollout in Thailand, said Mr Palmqvist.

Forward bookings for hotels in Bangkok saw the occupancy rate stand at 10% in May, with fluctuations between 4-7% until the middle of January next year, with a slight peak during the New Year holidays.

He said the sluggish bookings rate could be attributed to the lack of inbound travel and the third wave of the pandemic, which is reducing interest in hotel accommodation.

However, the rate of bookings is much higher at resort islands such as Koh Lanta and Koh Samui, as tourists want to skip big cities because they have a higher risk of infection.

There are two main strategies countries can take to restart international travel, said Mr Palmqvist. One is the Maldives model, in which isolated islands offer testing protocols in combination with accelerated public vaccination.

"My concern with Thailand is vaccinations, which are the key factor, are taking a long time," he said.

"As a result, it could jeopardise the speed at which international travel returns."

The other strategy is governments offering the tourism industry direct financial support to help retain employment, as seen in Singapore and Australia, as well as tourism campaigns to boost domestic travel, said Mr Palmqvist.

Singapore's government already extended its Jobs Support Scheme, which it started in February 2020, to offer wage support of up to 30% for the aviation, aerospace and tourism sectors until September.

The Australian government introduced the Tourism Aviation Network Support programme to offer 800,000 half-price domestic airfares to selected regions that depend on tourism, running from April to July 31 for travel until Sept 30, he said.

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