Hotel operators warned against further discounting

Thai Hotels Association (THA) president Prakit Chinamourphong said average hotel-room rates in Bangkok were already lower than those in other major cities in the region. Last year, many five-star hotels cut their rates to attract foreign tourists while at the same time joining world tourism trade fairs, such as the International Tourism Bourse in Germany and the World Travel Mart in the United Kingdom.

A recent study showed average room rates in Bangkok would be lower this year than last, because operators signed low-price agreements last October and November.

This year, the average hotel-room rate in Bangkok is expected to be Bt2,373 a night, down from Bt2,584 last year.

"What we're considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

They should be trying other strategies instead of cutting prices," Prakit said, adding that cutting prices would not help operators to

survive in the long term and would also damage the overall tourism industry.

A recent report on the Phuket hotel market prepared by local consultancy C9 Hotelworks said discounting by Phuket hotels cost the industry on the island US$300 million (Bt9.92 billion) in room revenue last year.

The Phuket Hotel Market Update said room-rate cuts averaged 20 per cent across the board last year, dealing a heavy blow to hotel profit margins despite tourist arrivals rebounding to 2007 levels late in the year.

The report said 2.9 million tourists visited Phuket last year, resulting in an occupancy rate of only 64 per cent. Average rates and revenue per occupied room slumped 20 per cent and 22 per cent, respectively, from 2008.

C9 Hotelworks reported a positive upward trend this year despite the suspension of many projects due to economic and political concerns that had resulted in new hotel supply on Phuket shrinking 19 per cent. The development pipeline now has 31 properties set to open over the next three years, offering 4,600 new rooms and representing a 12-per-cent rise over the existing market, it said.

The THA forecasts a 15-per-cent recovery in the hotel industry this year, due to lower pressure from political problems and the region's economic recovery.

Association of Thai Travel Agents (ATTA) representative Ekasith Jotikasthira said the number of tourists from long-haul markets like North America and Europe was low last year, because of the economic downturn. However, visitor numbers should rebound this year.

He called on hotels and tour operators to prepare for family travel and inclusive packages from emerging markets.

"Tourists are concerned about the expense of travel. In Europe, they are now looking for rooms with four beds, and that trend should spread into other regions," Ekasith said.

ATTA board member Sa-ngium Ekachot said tourism operators should diversify their business strategies, in order to deal with countries affected by the economic downturn and cope with increasing numbers of tourists from emerging markets.

If there is no further political turbulence, the ATTA expects Thailand to benefit from growing numbers of tourists from emerging markets like the Middle East, India, China and Eastern Europe, as well as short-haul markets.