Red light over Russian market

BANGKOK  Kasikorn Research Centre estimates an investment in Thailand’s hotel sector will expand by 7.1% to 10.0% representing between THB513 and THB527 billion this year.
The centre said the country’s hotel sector would grow this year, despite a decline in European tourists, high competition and the failure of the Russian economy.
“Poor economic outlooks in Russia and the EU – both major inbound tourism markets – will hurt hotels in Pattaya, Surat Thani (Samui, Pha-Ngan and Tao islands) and Phuket.”
The centre added: “The sheer number of operators offering extensive choices in the hospitality industry has triggered a more aggressive slowdown and fierce price competition. Three-star hotels, in particular, may encounter stiffer price competition than other higher-grade premises.”
inside no 3More ASEAN travellers are expected to visit Thailand and there is a growing interest in property investment from richer ASEAN nations.
The bank claimed the arrival of AEC at the end of 2015 (start postponed twice since 2013) will encourage more travel within the 10-country region.
Government initiatives to offer tax deduction on travel and seminar activities for individuals and juristic persons should help invigorate the domestic hotel market.
The centre forecasts investment will reach THB513 to THB527 billion in the hotel business in 2015, expanding 7.1% to 10.0% year on year.
Of that, THB344 to THB353 billion will come from foreign sources, growing 4.9% to 7.6% year on year, while Thai investors will spend THB169 to THB174 billion in the industry, an increase of 11.9% to 15.2% year-on-year.
The centre warned that hotel operators should avoid depending too much on specific tourist markets because it could jeopardise their earnings if markets collapse.
Russia is seen as a potentially dangerous market to have all your eggs in one basket. Despite the warnings, there are still plans to invest heavily in promotions for the Russian market, despite clear messages that the market is in big trouble.
“To mitigate that risk, operators should look toward ASEAN member states…they should put more emphasis on attracting local holidaymakers as well.”
Supporting factors for brighter prospects should also follow from the government’s “2015 Discover Thainess” campaign, which may even shift market share to other lesser-known provinces– Lampang, Phetchabun, Loei, Buri Ram, Trat, Chanthaburi, Chumphon, Trang, Samut Songkhram and Ratchaburi, helping bolster business opportunities for hotel operators there, the centre cited.
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:ttrweekly.com