TICA MICE UPDATE

Revenue per room uptick projected

Despite hotels in Thailand tallying a 6% plunge in revenue per available room (RevPar) in 2019, the prospect of 40 million tourist arrivals this year has led to the likely addition of 50,000 new rooms across the country over five years.

The weak performance resulted from a decline from the Chinese market and other headwinds.

Of the total, 15,000 of the new rooms will be in Bangkok, which was the least affected destination with a 2% dip in RevPar last year, said Jesper Palmqvist, area director of Asia-Pacific for STR, a hospitality market analyst.

At the Thailand Tourism Forum 2020, STR forecast Bangkok hotels will improve RevPar this year by 2.2%, buttressed by meeting, incentive, conference and exhibition travellers, apart from the strong leisure market.

"Thailand was not the only country suffering from softer demand from Chinese tourists, as rivals in Southeast Asia and New Zealand also felt the sting after the Chinese government upgraded domestic infrastructure, such as high-speed trains, aiming to spur the domestic economy," he said.

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RevPar in popular beach destinations such as Phuket, Krabi and Koh Samui dropped by more than 10% last year.

Chiang Mai, another popular destination, saw a RevPar decline of 9%, while Pattaya and Hua Hin fell by 4% and 2%, respectively.

Last year, the overall hotel occupancy rate stood at 73.1%.

Mr Palmqvist forecast the rate will drop slightly in 2020 due to uncontrollable challenges.

"The Thai hospitality segment has to diversify from China into India, Japan, South Korea and the US because these markets contribute almost 20% of international arrivals," he said.

For the 50,000 rooms in the pipeline, Bill Barnett, managing director of C9 Hotelworks, said investor confidence followed positive vibes from tourist arrivals, which are expected to reach 40 million in 2020.

Although the industry anticipates decelerated growth, this does not mean stakeholders should jump into a price war as that would only enforce the perception of Thailand as a cheap destination, said Mr Barnett.

He encourages tourism operators to improve products to comply with Western standards, making Thailand stand out from competitors. Adopting sustainable practices for hotel development will drive Thai hospitality towards sustainable growth and maintain competitiveness in the long run.