The Coronavirus effect – Phuket and hotel report

by Bill Barnett, c9hotelworks.com

“Perhaps the biggest wild card is the mounting number of travel advisories across the globe based on Covid-19”

In what is a continuing storyline on the global coronavirus outbreak, Bill Barnett reports on the impact on Thailand’s most popular island destination, Phuket. He says that the impact on the Phuket tourism market is creating a challenging landscape.

“Looking at the largest single drop according to STR data, was the week of January 20 – 27 in the lead up to Chinese New Year, market-wide occupancy fell from 90% down to 60%.”

As of February 17, occupancy was sitting at the mid-50% level, though rate room rates have remained static during the past month. This week hotel numbers continue to shift downward as sentiment worsens due to travel advisories and a uncertainty over return travel are key issues.

Moving over to the aviation gateway of Phuket International Airport as of the February 25, month-to-date arrivals compared to the same period last year were down 37.5%. Looking at Bangkok’s Suvarnabhumi Airport, the comparative figure is a negative 45.2%. which ramps into the Phuket situation given it’s a feeder of business to the island.

Forward trading remains speculative, but there remains widespread postponement and/or cancellations of MICE events.

(The Thaiger was speaking to the owner of a big MICE company in Phuket last week who said that they started the year with a good portfolio of upcoming MICE events on the island but ALL had been cancelled)

While there is some movement to motivate the Thai domestic market by the TAT, all of Thailand’s markets are chasing that same tail. The upcoming Songkran period is likely to be dominated by staycations versus international trips abroad. Expectations are that that declining demand and airlift are key factors impacting occupancy and we are starting to see rate-driven promotions which will undoubtedly hit ADR’s (Average Daily Rate).

Perhaps the biggest wild card is the mounting number of travel advisories across the globe based on coronavirus (Covid-19), and for now, travel and tourism are working on day-to-day management of the situation. As the majority of hoteliers are looking for some historical context and the closest thing to grab onto is the SARS crisis in 2003. For Thailand the market hit a freefall over five months from March to July, as market-wide occupancy bottomed out just under the 30% level in May of that year.

Or course, what followed was the big bounce and pent up demand drove recovery in August. It continued with spectacular growth in the decades since.

In the case of the coronavirus, the only takeaway from the current situation is a bit like the Back to the Future gab… “where we’re headed, there aren’t any roads”.

(Almost, the actual quote from the movie is “where we’re heading, we don’t need roads”)

Read a report from The Thaiger about the effect of Coronavirus on the Thai property market HERE.