Connect with us

Phuket

Phuket hoteliers seek solution to price-cutting woes

Legacy Phuket Gazette

Published

 on 

PHUKET: In a bid to keep small hotels and guesthouses in Patong from falling into bankruptcy, a group called the Patong Hotel and Guesthouse Association (PHGA) is calling for hoteliers to end current price wars by agreeing to set minimum room prices.

The informal consortium of hoteliers wrote in its “Letter of Awareness Awaking” sent to members last week: “During the past high season, even on New Year’s Eve, several hotels where selling good rooms at 700 baht per night. This year, new hotels have opened up nearby and I am afraid that due to competition the prices will go even lower than that,” the statement read.

“If a solution is not found quickly, for the incoming high season this ‘war of prices’ will continue and even though the number of customers may increase, lower room prices will not be sufficient to cover all the costs and many hotels will face bankruptcy,” it warned.

The letter suggested adopting several “price seasons” and a basic framework for classifying standard rooms so that minimum prices could be agreed on by any hotel joining the campaign.

However, the letter also recognized the limited impact the campaign would have if only a few hotels took part. It also acknowledged that classifying and categorizing rooms would be a “difficult task”.

The PHGA listed a downturn in tourist arrivals, operating cost increases and the strengthening of the Thai baht as factors contributing to the crisis, but it identified the main culprit as oversupply.

According to the the most recent Tourism Authority of Thailand (TAT) figures, Patong has 14,821 rooms in 264 “accommodation establishments”, or about one-third of the total 43,036 rooms on the island.

“People do not come to Patong because the rooms cost 500 baht. They are coming anyway and they are used to paying more. It is the ‘war of prices’ between the hotels which has set the prices so low,” the letter read.

“Even though there is still an economic crisis in [the] USA and in Europe, a room for 1,000 baht is still a cheap room. But of course, if we sell it cheaper, anyone will be glad to pay as [little] as they can,” it continued.

Bert van Walbeek, chairman of the Pacific Asia Travel Association (PATA) Thailand Chapter, supported the call, but said the campaign was unlikely to garner wholesale support.

“I think working on this terrible price dumping that is happening everywhere is very good. It’s a sad story that the hotel rates in Thailand, including Phuket, are 30% less than anywhere else in Asia,” he said.

Creating better marketing awareness and sales training would be much more effective than setting certain rates, because implementing something like this in Thailand is ‘mission impossible’, he said.

Trying to establishing fixed minimum rates might also run into legal difficulties, he added.

Preechavude “Prap” Keesin, President of the Patong Taxi Federation and son of Patong Mayor Pian Keesin, agrees with the proposal.

“If this problem goes on, it may cause business operators to suffer and ruin confidence in investing in Patong,” Mr Prap said.

“The real problem is that oversupply has forced prices down, and I think it would be better if the prices were regulated,” he added.

Despite agreeing that a state of oversupply exists, Mr Prap’s Pisona Group last week reportedly took the first step towards applying for permission to build a new 744-unit resort across 20 rai high in the Patong hillsides. If completed, the project would be the largest on the island in terms of room numbers.

Phuket Chamber of Commerce (PCC) President Dr Sirichai Silapa-archa disagrees with minimum prices, arguing that the forces of supply and demand should be left alone.

“There should be a better solution. The problem is too many rooms and not enough customers. If prices were set [artificially] high, they wouldn’t sell and trade would go ‘underground’,” he said.

Suchart Hirankanokkul, President of the Thai Hotels Association (Southern Chapter), was also wary of the legality of such ‘price fixing’.

“Actually they cannot do that; it’s competition in the free market and without legal support there would be no way of making sure [PHGA] members cooperate,” he said.

What they should do is call a meeting and just ask for cooperation to stop the price war,” he said.

— Sittipong Nongkaew

 

Get more from The Thaiger

📱 Download our app on Android or iOS
👋 Have your say on our Thailand forums
🔔 Subscribe to our daily email newsletter
📺 Subscribe / Join YouTube for daily shows
👍 Like/Follow us on Facebook
🐦 FOLLOW us on Twitter
📷 FOLLOW us on Instagram

image

Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Best of9 hours ago

Phuket’s 5 most family-friendly resorts

Transport9 hours ago

Transport Company announces bus services are suspended until August 31

Thailand12 hours ago

Thailand News Today | 29 provinces now on curfew, booze ban in Phuket

Welcome back to Thailand!

Thaiger is getting behind local businesses for the restart of tourism in Thailand - up to 50% discounts across all advertising packages!

Insurgency12 hours ago

Volunteer ranger killed in grenade attack by suspected insurgents

Best of12 hours ago

Top 5 Spas in Koh Samui

Thailand13 hours ago

Hemp ice cream hits the Thai market

image
Join the conversation on the Thaiger Talk forums today!
Chon Buri13 hours ago

Chon Buri sets local order, restaurants in malls to only offer food for delivery

Thailand13 hours ago

Samut Prakan man dies in fire, possibly self-inflicted

Thailand14 hours ago

Royal Thai Police say bitterleaf can’t cure Covid

Coronavirus (Covid-19)14 hours ago

Tuesday Covid Update: 18,901 new cases, provincial totals

Thailand15 hours ago

Air Asia technician arrested for allegedly stealing electronics

Pattaya15 hours ago

“Pattaya Move On” reopening likely to be postponed as Covid cases surge

Thailand15 hours ago

3 metre long python caught near family’s house in Phuket

Thailand17 hours ago

Government says not to buy Favipiravir/Avigan online, says it might be fake

Phuket17 hours ago

Phuket bans alcohol sales at restaurants, issues order amid rise of Covid cases

Thailand5 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism5 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket5 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism5 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand5 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism5 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand6 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand7 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand7 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand7 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand7 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand7 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand7 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand7 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand7 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Trending