Omicron stymies tourism recovery
Hospitality business poised to see U-shaped gradual recovery until 2024
Even though the tourism industry has started to see optimism from the country's reopening on Nov 1 last year, a fresh whiplash in travel sentiment from Omicron variant has put the brakes on recovery prospects in 2022.
There remain challenges for business to quickly adapt to weather the storm.
The most likely scenario for Thai hospitality business is U-shaped gradual recovery until 2024, starting with domestic leisure travel which has already resumed, said Boriwat Pinpradab, managing director and partner at Boston Consulting Group (BCG).
However, business travel is expected to face slower recovery from the trend of remote working and sustainability which targets reducing the carbon footprint from frequent business trips.
Mr Boriwat said there are changing consumer behaviours in hospitality including rising consumer profiles from the luxury segment as well as generations Y and Z who seek travel experiences and love to share via social media.
Tourists will be more aware of health and wellness which offer opportunities for medical tourism in Thailand with a compounded annual growth rate (CAGR) of 13% expected from 2019-27.
He said hotels have to combine more services with other segments like wellness centres, co-working spaces for long-stay guests, or retail department to offer one-stop tourism hubs that meet tourists' expectations and add more value.
Meanwhile, hoteliers need to upskill and reskill on analytics to optimise data for planning business amid uncertainties and keeping up with emerging trends.
Yachts docked at Royal Phuket Marina. (Photo: Achadtaya Chuenniran)
A BUMPY ROUTE
"There will be new Covid variants which are unavoidable, but travel restrictions and Covid-related policies from source markets are the most critical concern to hoteliers this year," said Ravi Chandran, chief executive of Laguna Phuket.
The overall occupancy for seven properties is expected to see weaker performance in the first quarter at 40-50%, compared to 50-70% last December.
He said Laguna Phuket has to be flexible amid the pandemic. It has to diversify to other market segments and domestic market to make up for the loss of the Chinese market.
Laguna Phuket also plans to host several international sports events this year to lure more tourists and represent Phuket as a global hub for sports tourism, including Asian Tour golf tournaments, Laguna Phuket Marathon and Laguna Phuket Triathlon.
He said cost-saving methods have to be employed, as well as prudent financial discipline to monitor cash burn and adapt business with occupancy and demand.
Lina Abdullah, regional general manager for Cambodia, Myanmar and Thailand at Oakwood, said the suspension of the Test & Go scheme is the most worrying threat for the hotel business.
Ms Abdullah said the outlook for this year will see moderate recovery from 2021 as the number of tourism arrivals is estimated to increase by 30%.
However, the country should attract potential segments such as international film crews and medical tourists which have a longer length of stay to help support tourism recovery.
Oakwood will highlight the extended-stay segment to reduce risks from the volatile situation which could be driven by expatriates and emerging remote work.
Bookings for Oakwood's portfolio in Thailand in the first quarter are anticipated at 60%, thanks to its long-stay model despite the possible tourism slowdown from the new virus wave.
She said Oakwood currently manages seven properties in Bangkok, Chon Buri and Phuket, while planning to increase its portfolio by 40% in 2023 to potential areas like the outskirts of Bangkok to serve demand for serviced apartments, as well as Rayong and Chachoengsao.
The Laguna Phuket Marathon. Laguna Phuket also plans to host several international sports events this year to lure more tourists and represent Phuket as a global hub for sport tourism, including Asian Tour golf tournaments, Laguna Phuket Marathon and Laguna Phuket Triathlon.
SAILING THROUGH THE CRISIS
Yachting is considered as one of very few travel segments that remain unfazed by the pandemic as tourists with high purchasing power have to assure their safety and opt for more private choices from luxury travel services, said Vrit Yongsakul, group managing director of Boat Lagoon Yachting.
Demand from key targets for yachting in Phuket, including Singapore and European countries, has started to gradually pick up after the country's reopening last year.
Most importantly, high-spending locals who enjoy yachting also compensate amid the lack of international travellers and outbound trips.
He said the company's revenue has increased by three times during the outbreak as more Thais invested in yachts for rental service.
Phuket welcomed 40-50 super yachts per year with an average length of stay of 1-2 months with US$1-2 million per trip, while the rental cost for a yacht at 15-30 million baht per week gained popularity.
"Targeting the wealthy segment helped recover the battered industry faster without losing many environmental resources," said Mr Vrit.
Thailand Yacht Show 2020 at Royal Phuket Marina.