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Home alone. Phuket hotels hit a speed bump.

Bill Barnett

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Home alone. Phuket hotels hit a speed bump. | The Thaiger
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by Bill Barnett of c9hotelworks.com

In the latest news, Singapore’s move to impose a stay-home policy or self-isolation for travellers within ASEAN, has hit the industry hard. Here in Phuket, hotels are winding down their traditional snowbird European business which for the most part was booked well in advance. Rates have somewhat held during this time.

One key barometer of things to come is the Russian segment, that has remained at reasonable levels in March and moves significantly downward in April. Once they move out, hotels are reporting negligible forward bookings.

Seasonal trading has shoulder and low season rates kicking in during mid-April to May and that is when room rates are expected to sharply drop.

As for the recovery bounce which everyone is talking about, the hope is that July and August which are two of the strongest months for Mainland China given school holidays and summer will see them return. Australia also ticks up in this season so if recovery is possible, these will be the first markets to return.

If the Coronavirus crisis is prolonged, a market recovery or the bounce will be pushed into the fourth quarter, when seasonal patterns emerge and the legacy snowbirds start to return.

Sadly, the low season supplementary business for MICE looks to be on the sidelines for much of the year, hence low season will see rate driven strategies to maintain cash flows.

Most worrisome is the impact on hotel and tourism employees, who often rely on more than 50% of their income in service charge. These core contributors to the Phuket economy in many cases will see a negative wealth swing, meaning debt will surpass assets, as do stress levels.

In our talks with hotels, many are working to assist employees in bank issues presently and this situation will grow worse in low season. Hotel owners face similar situations, and if any government intervention is needed, it’s within the consumer and business loan sector.

One of the biggest concerns on the island is over potential closures of bars and restaurants, which again will hit low-wage earners. Thailand has yet to act on this but from a risk mitigation point of view, this is a worst-case scenario.

Trying to predict the future is impossible, but history and cycles indicate that Asia will potentially lead the global recovery but the timeframe for this to trend in hotels is when higher rates are possible. Hence a fourth quarter uptick during the next high season, driven on seasonally strong travel patterns is the best forecast.

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Read more headlines, reports & breaking news in Phuket. Or catch up on your Thailand news.

Bill Barnett has over 30 years of experience in the Asian hospitality and property markets. He is considered to be a leading authority on real estate trends across Asia, and has sat at almost every seat around the hospitality and real estate table. Bill promotes industry insight through regular conference speaking engagements and is continually gathering market intelligence. Over the past few years he has released four books on Asian property topics.

Pattaya

Pandemic has washed away Pattaya’s “soapy” massage parlours

The Thaiger

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Pandemic has washed away Pattaya’s “soapy” massage parlours | The Thaiger

While the Covid pandemic has hit Thailand’s businesses hard, it has also washed away its not-so-legal soapy massage parlours after tourism has dried up its clientele. Such places, known as glorified brothels, have left many masseuses out of work as boards have barricaded the once booming establishments.

Soapy Massage (àap-òp-nûat, อาบอบนวด, literally bath, steam, massage)…
These are the bigger massage parlours where girls are presented in the fishbowl and you get the full program (including sex) for a fixed price, depending on the girl starting from 1,500 and up to 5,000 Baht.

Only a few of the soapy services have survived the pandemic in Pattaya, with Honey Massage Parlour being one of them, according to The Pattaya Mail. After adjusting to the new requirements for social distancing, the business has re-opened on November 19. However, its largest shop has closed, once known as Honey 1 on Soi Honey, or Soi 11, the windows are dark and barricaded. Honey Inn is also up for sale.

25 year old masseuse Maywadee, says she used to work in such parlours where she would get a cut of the 1,500 to 2,500 baht fee. She says she used to see up to 7 clients a day, but now that number has been cut in half as Chinese and Japanese tourists, who were her largest group of customers have dwindled. Now, she is thinking about heading back to her home city of Chiang Mai, to sell handicrafts, as her Pattaya income has dried up.

Such parlours feature masseuses that are usually not native to the area, as many come from lower socio-economic areas such as Thailands northeastern provinces, otherwise known as Isaan. Many make the trip to tourist-driven cities like Pattaya, Koh Samui, Bangkok and others, in an attempt to make a higher salary than they would if they were back in Isaan.

SOURCE: The Pattaya Mail

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Business

Bank of Thailand takes action to curb Thai baht’s strength

The Thaiger

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Bank of Thailand takes action to curb Thai baht’s strength | The Thaiger

The Bank of Thailand has moved forward measures, originally meant to begin early 2021, but most of which will now take effect from end of this month. The end result is that the new rules will make it easier for Thais to shuffle money overseas and invest in foreign assets. It will also make is easier for Thai citizens to hold foreign currency in local banks. The new rules will also require the registration of local and overseas bond investors.

“Following the U.S. elections and positive news on Covid-19 vaccine development, investors have turned toward investing in emerging markets, including Thailand. The situation has resulted in strengthening the baht quickly and can impact economic recovery.”

“The registration of bond investors will allow close monitoring of investor’s behaviours and thereby enable the implementation of targeted measures in a timely manner.”

Last week the Bank of Thailand assessed that the Thai baht’s recent rapid gains could affect the country’s “fragile” economic recovery. The Thai government has called on the central bank to do its best to use what tools it has at its disposal to restrain the baht to protect exports.

Khoon Goh, head of Asia research at ANZ Banking Group, says that he central bank also will continue to resort to direct intervention in foreign-exchange markets.

“The issue here is that local investors have a very strong home bias. Making it easier to invest overseas may not actually encourage them to do so.”

The Thai baht has been the 2nd best performer in Asia this month after foreign investors turned net buyers of almost $2.4 billion of bonds and stocks as appetite returns for riskier emerging-market assets amid a weak dollar, according to Bloomberg.

The Thai baht had recently rallied 8.8% from this year’s low in April, hitting a 10 month high last week.

SOURCE: Bloomberg

This morning, Thai time…

Bank of Thailand takes action to curb Thai baht's strength | News by The Thaiger

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Technology

Hotel investment group launches world’s first “green” hotel fund

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Hotel investment group launches world’s first “green” hotel fund | The Thaiger

Destination Capital, a hotel investment group in Bangkok, has announced that it will launch the world’s first ever “green” hotel fund. The fund will acquire hotels and implement sustainability systems and procedures to promote long term environmental and financial sustainability in investments using the EDGE certification programme. EDGE, an online platform, is an innovation of the International Finance Corporation, which helps property developers to build and brand “green” establishments in a fast and affordable way. EDGE is used by more than 170 countries and reportedly has kept almost 230,000 tonnes of carbon dioxide annually from entering the atmosphere.

DC’s fund, titled Descap I, is part of its efforts to acquire freehold, 4 star hotels in prime destinations all over Thailand. James Kaplan, the CEO of DC, says he sees opportunities to renovate hotels to accommodate “green” technology and systems due to the current Covid pandemic that has ravaged the tourism sector in the kingdom.

“Destination Capital’s adoption of the EDGE certification program will provide the Descap I with the opportunity to gain a competitive advantage by differentiating our products and improving carbon emissions of the hotels.”

“If there is one thing we have learned during Covid-19 it is that the environment and nature recover quickly from poor resource management practices. Our participation in EDGE will serve to encourage the hospitality industry to adopt best practices with respect to better managing our scarce resources, raise broader consciousness about global warming and stem the tide of environmental degradation. We will implement operational elements to reduce water consumption, reduce waste emissions, reduce electricity use, and to the best of our ability eliminate plastic usage.”

Descap I, is a Thai Private Equity Trust. The company partners with Private Equity and Institutional Funds to source hotel acquisition opportunities and manage assets in the Asia Pacific region, turning its main focus to Thailand.

SOURCE: Pattaya Mail

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