Hotels view second quarter cautiously

Kasikorn Research Centre warns that extended political conflicts could harm Thailand’s hotel business growth in 2014.
The bank’s think-tank unit has studied Thailand’s hotel business and concluded that the hotel business can weather the political storm as long as foreign tourists continue to disregard travel advisories and visit the country in big numbers throughout the first quarter, the main peak season of the year.
The real concerns focus on the possible business outcome in the second quarter.
Hoteliers in Bangkok are convinced that if the crisis continues for two quarters the losses in foreign tourists will be considerably more than estimates and could result in the country suffering a major decline in visits for the entire year. If the year closes with less than 26.7 million tourist arrivals, achieved in 2013, it would be the first real decline in arrivals for more than two decades.
Most estimates suggest a more positive outcome with losses of around 2 million visits which would still allow Thailand to close the year with a substantial gain on 2013 possibly around 28 million.
Backing an optimistic outlook, the bank points out that many vacationers are visiting destinations in the provinces and making only a short stopover in Bangkok to avoid the protests.
Also the economies of Europe are showing signs of recovery and this should translate in higher travel demand for travel to Thailand that remains one of the most popular destinations for long-haul travel. There should be increases from ASEAN which could help to offset any declines from China.
The centre estimates that if the political conflict eases during the first quarter this year, the country will close the year with 28.5 million foreign tourists up 6.6%, and earning revenue of around Bt369.84 billion for hotel business, which represents a 5.7% expansion.
But if the turmoil lasts into mid-year, foreign arrivals will be cut to 28.0 million, an improvement of 4.7% year-on-year. Hotel business would then see a 3.4% gain in revenue of around Bt361.80 billion.
There are supporting factors that will invigorate local tourism such as marketing campaigns by hotel operators, long public holidays and even cool weather during the first quarter of the year.
As the demonstrations in Bangkok ease, hotel business should revive quickly. Phuket and Pattaya are expected to see a steady growth in accommodation business whatever the outcome.
A gloomy economy and political uncertainties are the two factors prompting large hotel chains to place more emphasis on provincial destinations, rather than the Thai capital.
The centre believed that these chains will increasingly view three-star accommodation as the best option to serve an expanding middle-income tourist market.
Smaller operators may have to slash rates particularly in the three-star market, which is already oversupplied. Downward pressure on four-star rates will encroach on the rate scale in the three-star category, which will in turn force lower star categories to cut rates to remain in contention.
Kasikorn Research Centre is a subsidiary company of Kasikorn Bank, which conducts tourism and business research mainly on Thailand’s economy including tourism with reliable recommendations and indicators on business prospects.

Sourced: TravelDailyNews