Despite a resilient recovery, three-star hotels have been unable to raise prices during the third quarter, while tax cuts for second-tier cities could not effectively increase hotel revenue as planned.
Thienprasit Chaiyapatranun, president of the Thai Hotels Association (THA), said the hotel operator sentiment index for July, which polled 102 hoteliers across Thailand, found an average occupancy rate of 59% for the month, up seven percentage points from June, thanks to the government's tourism promotions and several long-weekend holidays.
However, most hotels estimated the occupancy rate could dip to 56% in August, a decrease year-on-year.
He said the occupancy rate in the second half would not fully recover, as the shortage of international flights still limits the number of inbound passengers.
"If the aircraft shortage could be resolved, full resumption of flight capacity could happen by next year," said Mr Thienprasit.
As visitor profiles have shifted to the premium segment, he said hotels rated three stars and lower, which mostly target group travellers, would face a tough second half.
According to the index, 45% of mid-tier hotels have maintained their room rates in the third quarter, while more than 20% said they even had to slash their prices.
Among four-star hotels and higher, only 22% have kept their rates unchanged, but 33% have increased their rates by no more than 10%, and 33% have upgraded their prices by more than 10%.
"Hotels in the central and southern regions have higher potential to increase their room rates than others. Most hotels in the Northeast have maintained their room rates close to the same period last year," said Mr Thienprasit.
The index also indicated that 50% of hoteliers in second-tier cities didn't expect to benefit from the government's tax deduction on travel expenses in second-tier cities.
Moreover, 30% of hotels in second-tier provinces estimated that the scheme might increase their revenue by less than 5%, while only 20% expected to boost revenue by 6-10% from the tax measure.
Mr Thienprasit said the THA has been encouraging hotel operators to refurbish their facilities and improve their services to be ready for the growing tourism markets.
However, as mid-tier hotels have gained a low volume of guests, investing in an upgrade might not be feasible as they would be burdened with additional costs.
This situation could lead to disadvantages for small players in Thailand, which cannot compete with illegal hotels that are newly opened with lower operating costs.
