Sunday, May 10, 2009

Thailand's downturn leads to hotel sales

HOSPITALITY

Published on May 11, 2009 

More than 100 hotels and resorts nationwide are being put up for sale, as operators succumb to the impacts of the economic crisis and political unrest, industry insiders said. 

The number is expected to rise if the situation does not improve within two years, said Chanin Donavanik, chief executive officer of one of Thailand's largest hotel chain operators, Dusit International.

"This year is the worst for our hotel industry in 20 years," he said.

As if the worsening global economy and domestic political unrest weren't enough, Thailand's hotel and tourism industry now faces the threat of swine flu.

A property sales representative in Samui, who declined to be named, said most of the hotels being sold are in the major centres and provinces of Bangkok, Phuket, Koh Samui, Hua Hin, Pattaya and Chiang Mai.

"They include not only small hotels but also five-star hotels," she said.

Hotels in famous destinations such as Samui and Phuket have been the first to feel the pinch of the economic and political problems, as their local economies mainly rely on tourists, whose numbers have declined continuously since November's temporary seizure of Suvarnabhumi and Don Muang airports by opponents to the then government.

Phuket's visitor numbers declined by 60 per cent in the high season from November to March.

Koh Samui benefited after the tsunami wrought its destruction on the Andaman coast in 2004, which saw many foreign tourists opt not to visit Phuket. Hotels mushroomed on the island in subsequent years.

"But the situation has changed. Many new hotels on Samui are suffering from waning tourist numbers. Some owners have decided to sell as they cannot make any income from tourism, while still being saddled with loans," said the sales representative.

Forward booking for Koh Samui's high season at the end of this year has been very slow, as tourists seek to avoid turbulence in Thailand.

According to the property agent's firm, Samui Buri Resort and Spa is selling for Bt1.1 billion, while newly opened Villa Lawana wants Bt1.5 billion. Meanwhile, Ban Taling Ngam is being sold at public auction, listed at Bt1.8 billion with 250 buyers, and Nora Beach Resort and Spa is offered at between Bt2 billion and Bt2.5 billion.

Some hotels in Chiang Mai have suffered the same fate. Unlike Phuket or Samui, Chiang Mai's tourism sector relies mainly on Thai visitors. The province has witnessed shrinking domestic tourist numbers this year, as Thais are hardly in the mood to spend and travel amid the gloomy economic conditions.

As a result, one of the top luxury hotels in the province is reportedly being put up for sale, along with three other hotels in Chiang Mai.

In the capital, 24 hotels are reportedly on the market, including the Millennium Hilton, Swissotel Le Concorde and The Emerald Hotel.

Prakit Chinamourphong, president of the Thai Hotels Association, said many hotels have struggled to survive the impacts of the economic and political unrest, offering heavy room discounts, making staff cuts and selling off businesses.

Up to 70,000 hotel employees are expected to lose their jobs if the problems are not solved, he said.

To deal with the crisis, the Tourism Authority of Thailand (TAT) and the private sector are preparing a series of tourism promotions.

The agency also plans to venture overseas to rebuild confidence, joining the Arabian Travel Mart in Dubai this month. Moreover, the TAT is revising its marketing strategies to encourage non-high season tourism.

Nonetheless, the agency has revised downward its projected number of tourist arrivals for this year from 14.8 million to approximately 12 million.

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