Continous Violence in Bangkok Hurting Tourism Industry

It will come as no surprise to learn that the ongoing crisis in Bangkok is having a significant negative impact on the city’s hotel performance.

Daily data compiled by STR Global shows the immediate impact while monthly trend data shows a marked resilience by hoteliers in the Thai capital during the last few years.

A dramatic decline in occupancy was experienced across the city following several disturbance-related fatalities during early April. After a slight rebound, occupancy plummeted again as the foreign offices of several key Thai feeder markets, such as Germany and the U.K., advised against all but essential travel to the market.

With the safety of both guests and staff in mind, some international hotels near areas of intense violence closed and have yet to reopen. Quite astonishingly, the Dusit Thani, which is right in the heart of the action, directly on the front line, remained open during all the recent violence, but has confirmed that it will today close after guests and staff spent Sunday night in the basement.

These daily performance fluctuations mirror the market’s long-term monthly occupancy trends. Declines in the metric began during 2006 at the onset of military control and bounced around throughout 2007. The 2008 protests were more significant: Unrest during August result in poor September occupancy levels; following the November airport closures, December also suffered with occupancy of only 38.6%.

The latest protests are a real blow given that occupancy, in the light of the improving global situation, had begun to trend toward historic norms during the end of 2009 and into early 2010.

However, ADR has shown resilience in the face of both fluctuating occupancy and broader ongoing difficulties in the market. April’s ADR of THB3,096 shows a less significant drop from February (THB3,371)and March (THB3,331) than the declines in occupancy, which fell 0.2 percent during April 2010 to 44% compared to relatively strong showings during February (71.4%) and March (63.3%).

“In spite of violence and significant recent declines in occupancy this past month, Bangkok’s hoteliers have held firm with rates, recognising that price reductions do not stimulate demand that just isn’t there,” said Elizabeth Randall, managing director of STR Global. “Discounting would only double the pain for hotels already suffering from falling occupancies”.

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