Hotels braced for even tougher times ahead

Hotels braced for even tougher times ahead

The hotel industry is preparing for the downturn to continue in the second half of this year after seeing revenue drop to below 10% of pre-pandemic levels, according to a report by the Tourism and Sports Ministry.

The second quarter, which marked the start of the third wave of Covid-19 infections, saw a quarter-on-quarter decline in domestic tourism of 56.8% to 7.43 million trips, down 13.2% year-on-year.

Hotel operations were battered by the pandemic in the first half as average occupancy hit 12.2%, down 17.2% year-on-year.

A total of 24.6 million domestic trips were made in the first half, trailing behind the annual target of 90 million trips.

Weak domestic demand impacted hotels' performance, especially as local tourists have been almost their sole source of income since borders were closed last year.

Marisa Sukosol Nunbhakdi, president of the Thai Hotels Association, said most hotels have depended on domestic consumption over the past year. The current lockdown restrictions mean hotels must prepare for more tough months ahead.

According to the report, financial instability could lower hotels' competitiveness as 50% of them are earning less than 10% of their normal revenues, while 68% of them had sufficient liquidity to keep going for just three months.

Meanwhile, three-quarters of all hotels remain closed as they want to wait until the situation improves, possibly in the fourth quarter.

Mrs Marisa said the association was also conducting a survey on hotel operations during the third quarter, focusing on the number of hotels that remain active.

Initial results showed 50% of hotels in Bangkok are temporarily closed as they could not provide dine-in services at restaurants, which previously helped earn income when room sales were below target.

She suggested the government adopt new practices or safety protocols for dine-in service that would be practical for consumers during the pandemic, instead of imposing a ban across the board.

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