Despite the upcoming lower power tariff, midscale and small hotels are still facing a surge in expenses due to high interest rates, while their rate of revenue growth lags behind those of five-star properties.
Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association (THA), said the lowering of the power tariff to 4.45 baht per unit in September would help ease hotels' expenses, but the rate remains high for small and medium-sized operators as their revenue has not yet seen a strong recovery.
Mr Suksit said the power tariff has been one of the major expenses for hotels, representing around 10% of their income. A suitable rate for hotels to bear this cost should be below 4 baht per unit, given that hotels have not had many guests due to low season, while the overall number of arrivals remains a far cry from the levels recorded in 2019.
The mid-scale hotels that usually rely on tour groups are suffering more than other hotels, as this type of tourist, especially those hailing from China, have yet to return to the high levels seen before the pandemic.
"Only 20% of hotels nationwide, mostly five-star properties, are able to cope with the high expenses by raising their average room rate. Some of them successfully increased the room rate to higher than that of 2019. However, the remaining 80%, most of them four-star properties or below, still have to charge a low rate to customers," Mr Suksit said.
Mr Suksit said hotel operators are also worried about the minimum wage increase proposed by certain political parties since it would add a burden to their operational costs.
This policy would be expected to affect specific areas, not the whole country.
Udom Srimahachota, vice-president of THA's western chapter, said the upward trend of interest rates has been a burden for many hotels, especially independent and small ones which borrowed from banks to pay for renovation costs.
This issue would also affect the purchasing power of domestic tourists, and indirectly impact hotel businesses, as people will reduce the number of domestic trips they make or spend less during each trip.
Mr Udom said many hotels below three stars had to sell their rooms at a rate even lower than their operational costs during low season to compete for guests.
According to THA's survey, the average occupancy rate nationwide in June stood at 45.5%, and is expected to stand at a slightly higher rate of 45.8% in July.
The El Niño phenomenon could affect the agriculture sector at the end of this year, and consequently result in higher food costs for hotels.
