Hike Inevitable But First, The Mind Games

Hike Inevitable But First, The Mind Games

BANGKOK: Thai hotels look set to increase rates but the question, aside from how much, is when. “We would like to gradually increase hotel rates because this will allow our hotels to upgrade the quality of their infrastructure and service further,” says Juthamas Siriwan (Juthamas@tat.or.th), governor of the Tourism Authority of Thailand (TAT). “However, the increase will depend very much on the level of competition among hotels in Bangkok as well as in competing regional destinations. In short, while an increase can be expected, more importantly, we know we need to maintain our position as a value-for-money destination.”

Hoteliers agree that occupancy rates in Bangkok hotels have in general remained “predominantly good”, even with the global travel downturn. They are unanimous in the view that rates should go up, but are less resolute with regards how or when this should be realised. Quality- and service-wise, Bangkok hotels are still perceived as “anomalously priced” below hotels in other major Asian tourist destinations.

Unfortunately, the clamour for rate hikes is nothing new. Many Thai hoteliers have long openly clamoured, and continue to clamour, for increased room rates. Few are willing to lead the charge, fearful of losing their affordable edge. “Bangkok remains a very competitive destination but increasing the average room rate remains a challenge,” admits Duncan Webb (webb@amari.com), vice-president for sales and marketing of Amari Hotels & Resorts. “Regrettably people globally are increasingly becoming sensitive to pricing. They often make their holiday decisions on the basis of what they think the best value is.”

Jones Lang LaSalle Thailand revealed last February the five-star hotel market in Bangkok registered a 20 percent increase in average daily rate (ADR) to 4,840 baht (US$111) in 2001, and only experienced a five percent drop in average occupancy (to 63 percent). But things in the four-star category were not as rosy. This segment closed with an ADR of 1,563 baht, down 16 percent from 2000. The occupancy rate of 74 percent was below 2000’s by two. The latest figures are not immediately available.

But just this month, some executives from five-star hotels asserted Bangkok room rates have fallen, partly because of the effects of post-September 11, and also because of the strengthening of the Thai baht. Most room rates, especially those in the five-star range, are quoted in US dollars.

Anne Marie Arrowsmith (anne.arrowsmith@fourseasons.com), The Regent Bangkok’s director of marketing, says that the city’s hotel rates are holding year-on-year, but “they’re flat”. The hotel is running an occupancy rate of 66 percent notwithstanding “corporate business is not growing”.

Industry-wide, TAT puts the annual average occupancy rate in Bangkok hotels last year at 60.26 percent, up 3.09 percent from 2000. TAT says January to March 2002 figures are still being tabulated.

What’s becoming disturbingly clear among industry executives is that travellers are increasingly looking for cheaper hotels, while still expecting the best service. The latest available statistics from TAT indicate that while 49.57 percent of visitors staying in Bangkok hotels in 2001 chose properties priced at 2,500 baht and above, those who opted for hotels costing between 1,500 and 2,499 baht a night registered a strong increase of 11.35 percent.

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