Hotels in leisure destinations such as Phuket, Krabi and Pattaya tended to slash room rates too low during the low season when the average occupancy has sharply dropped, says hospitality market analyst STR.
Jesper Palmqvist, senior director for Asia-Pacific at STR, said both independent and branded hotels in every segment follow the same patterns with lower rates during low-season months.
Hotels typically drop their room rates during the low season to increase their room nights, said Mr Palmqvist.
For instance, during the past 10 years, Phuket hotels have discounted their selling rates by 50% between May and September, despite the occupancy rate only dropping by a third.
He said only luxury hotels could maintain consistent high rates for the whole year, as their target segment is travellers with high budgets.
This trend has been observed in major leisure destinations like Pattaya and Krabi, but not in Bangkok where room rates stood almost the same during the low season.
He said STR data showed the dip in the occupancy rate in Phuket, particularly during July and August, wasn't that severe, meaning there was still tourist demand.
"The low season appears to be an opportunity for Phuket hotels to revisit their revenue strategy," he said.
Mr Palmqvist said it is more difficult to boost profit during the high season, as most hotels reached their peak in terms of occupancy and room rates during this period.
After enjoying soaring room rates and revenue growth in 2023 and this year, he said hotels in Phuket would eventually experience slower growth from next year, attributed to higher costs, which would be more challenging for budget management and operations.
Operating expenses have been increasing recently, led by labour costs which account for 30%, as well as food and beverages, electricity and water prices.
Across Asia-Pacific, labour cost per available room in June 2024 increased by 7.5% year-on-year, while total revenue per available room grew by only 6.4%, according to STR.
Therefore, seeking opportunities in the low season is essential to help maintain profits, said Mr Palmqvist.
He said tourism in Thailand and especially Phuket remained bullish, as previous bouts of political turmoil and natural disasters did not prevent a robust rebound.
Phuket recorded fewer tour groups, but more independent tourists seeking unique experiences related to culture, food, beaches and massages.