07/05/2021

THAILAND DAILY

NEWSPAPER / MAGAZINE / PUBLISHER

just-when-things-couldn’t-get-worse,-covid-19-does-it-again-as-hoteliers-face-an-even-greater-crisis

Just when things couldn’t get worse, Covid 19 does it again as hoteliers face an even greater crisis

Danucha Pichayanan, the Secretary-General of the Economic and Social Development Council (NESDC) has said unemployment caused by the collapse of the tourism sector combined with a rapidly rising household debt level is a grave concern for the economy. It comes as the President of the Thai Hotels Association in Eastern provinces, Phisut Sae-Khu, calls on the government to implement further debt and interest repayment moratoriums and provide 50% support payments for staff being kept in employment by hard-pressed tourism industry concerns trying to navigate through a renewed crisis.

Tourism industry leaders and one of the country’s top economic officials have confirmed that the kingdom’s economic prospects have again fallen prey to the Covid-19 outbreaks both in Thailand and across the world. This comes, as now, even demand for Alternative Quarantine Scheme rooms is experiencing a lull as visitors to Thailand begin to dwindle due to a relaxation of entry requirements in competing countries and a chaotic international flight network which has seen a raft of cancellations in the past few weeks.

covid-19-leaves-hoteliers-economy-facing-a-bigger-crisis
Danucha Pichayanan, the Secretary-General of the Economic and Social Development Council (NESDC), has expressed concern for the economy in the first quarter of 2021 with unemployment concerns linked with tourism, soaring household debt and tightening liquidity which may make things even worse for tourism-related business concerns. Thailand’s export drive will also be decided by conditions in western countries and whether the virus advances or retreats.

The deepening second wave of the virus here is scuppering survival plans for many tourism operators who had been adapting to the new normal in the hope that there would be an improvement in the latter half of 2021.

Over the weekend, Mr Thanes Supornsahasrungsri, President of the Chonburi Tourism Council, said that during December Pattaya’s hotels had begun to see booking and occupancy rates of 30 to 40% but the latest outbreak in that province and across the kingdom has seen all hopes dashed.

Some Pattaya hotels have occupancy rates in single digits this High Season says industry leader

Mr Thanes indicated that some of the hotels in Pattaya, at present, are looking at room occupancy rates in single digits. This is a disaster for what normally is the busiest time of year and the High Season for tourism.

He also revealed that, increasingly, Thailand is losing ground even in hitherto loyal markets to other countries which are opening to tourists without quarantine.

He referred to Russia where strong interest was expressed among tourism operators there recently about sending Russian holidaymakers to Thailand even under the kingdom’s strict quarantine rules only to have the proposal withdrawn in favour of Turkey where there is no quarantine requirement except for screening at the airport on arrival with a Covid-19 test.

Other countries reopened but still experienced slack demand of up to 5% of normal traffic

Other countries such as the Maldives reopened their borders to tourists earlier in 2020. Despite a promising start with booked out hotels in mid-July 2020, the Maldives, a popular world holiday resort situated in the Arabian Sea, however, only managed to attract a fraction of its past numbers approaching something like 5% of normal visitor numbers by October 2020. 

The island, in September, also introduced a Covid 19 negative test requirement within 72 hours of travel to Malé.

Thailand, from the latter half of the year, had only managed to attract a small fraction, about a tenth of one per cent of normal tourist traffic to the kingdom.

Even the lucrative Alternative Quarantine Scheme is experiencing a lull in bookings going into 2021

As the kingdom enters into the first days of 2021, even the lucrative Alternative Quarantine Scheme which had seen strong demand following Thailand’s slow and cautious reopening to foreigners from the middle of last year, with high occupancy rates, is now seeing a lull in bookings for 2021.

Mr Thanes said that the ALS hotels in Pattaya had seen occupancy rates of 70 to 80% in the run-up to this latest Covid-19 outbreak.

The severity of the current Covid-19 virus wave in key countries such as the United Kingdom, the United States and Europe has devastated any resurgent demand for foreign holidays this year.

This has also fed into a wave of flight cancellations which has spread across the international flight system, something which directly impacts Thailand which is a key transit hub and further undermines confidence in the whole industry.

Message on tourism even from the senior minister is clear, it’s not happening in the early months of 2021

The message is clear. Even without the government’s strict entry criteria, now needed more than ever with reports of a more infectious UK variant being found in Thai quarantine hotels, demand for foreign travel and among tourists worldwide has been severely damaged.

Like the Maldives, it may only exist at something like 5% of past year’s level at this time even without the new headwinds caused by the latest virus outbreak.

At the same time, this would be 50 times what Thailand has been receiving and would represent a significant 2 million visitors this year.

Last week, Tourism Minister Phiphat Ratchakitprakarn acknowledged this in an interview when he described the current situation as a ‘drought’ for foreign tourism business operators in Thailand. 

The minister only held our hope for some resumption of international flights in April or possibly some sort of arrangement between Thai and Chinese authorities to offer a badly needed fillip to the industry.

Current spiralling virus outbreak setting all tourism activity back to scratch with its advance

On top of all this, the current, strengthening Covid-19 virus outbreak in Thailand is destroying any claims by the kingdom to be a safe place to visit at this time. Any hope now of portraying Thailand as an ‘oasis’ country free of the disease has been sidelined.

The outbreak has also disrupted bookings for internal flights which had been contributing to a rally in domestic tourism towards the end of the year.

The latest figures from the Covid 19 Situation Administration for Sunday the 3rd January show a daily infection total of 315 cases with 51 provinces now infected by the disease.

The kingdom is still fighting to avoid a full scale national lockdown with heightened figures expected until at least the middle of February.

‘The first priority is to handle the outbreak effectively. If the government cannot curb the ongoing outbreak, we will likely face further troubles,’ warned Mr Thanes.

Hotel industry boss calls for debt moratoriums and staff support payments for tourism businesses

His colleague, Phisut Sae-Khu of the Thai Hotels Association in the Eastern provinces, has cautioned that the country can not afford another full-scale lockdown, something that is not yet being ruled out by the government with senior officials suggesting frankly that it may well be on the cards unless the public fully cooperates to help halt the virus outbreak in its tracks.

Mr Phisut is calling on the government to again instigate measures to halt debt and interest repayments for tourism business operators facing calamity while also providing support to help keep staff employed by tourism industry concerns to the tune of 50%.

Economic think thank boss worries about tourism sector unemployment aggravating an already sky-high household debt to GDP ratio

The calls from the tourism industry leaders in Chonburi and Pattaya are supported by Danucha Pichayanan, the Secretary-General of the government’s influential think tank, the National Economic and Social Development Council.

Mr Danucha says that he worries about the potential for unemployment in the tourism industry sector to hit the economy as it enters into 2021. He is also concerned about the rising levels of household debt which is directly related to the first concern.

He points to the fact that household debt to GDP was last measured at the end of the second quarter at 84% of GDP but that the trend was heading strikingly upwards.

Indeed, an official at the Bank of Thailand warned in recent months that the figure could well have hit 90% by the end of 2020.

Tight liquidity in tourism SMEs that cannot access loans from banks with a tighter credit market

Again linked to this is the third concern on Mr Danucha’s mind and that is the financial state of SME enterprises including many tourism-related businesses such as hotels and entertainment centres.

Currently, many are in a fragile, almost hopeless position with tight liquidity. In addition, the banks, despite government support and guarantee schemes, are reluctant to lend to small business concerns who fall outside the scope of such schemes or in general due to the heightened sense of risk in the economy and particularly this sector. 

‘Unemployment, especially in the tourism sector, is the most worrying area after Thailand saw a new surge of Covid-19 infections. The government needs to continue retaining employment in the tourism sector in 2021,’ Mr Danucha was reported as saying this week.

Export recovery also now depends on Covid-19

In the meantime, the top economist has also indicated the Covid-19 virus in western countries will dominate the kingdom’s export performance in the opening half of 2021. 

He forecast that if the current virus outbreak continues to ravage western countries and key Thai export markets, it will be difficult for Thailand to continue its efforts at recovery led by its export sector. On the other hand, any improvement in the situation would assist the kingdom, going forward, into 2021.

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Further reading:

Strict entry criteria to remain as officials await clarity on the medical status of vaccinated people

Challenge of the virus and closure to tourism leads to major long term changes in the Thai economy

Finance Minister says economy must pivot away from tourism with a switch to S-Curve industries

Steady as she goes economy driven by exports and public investment with a 3.3% growth rate forecast for 2021

Thailand’s tourism boss targets thousands instead of millions as public health is prioritised above all

Thailand unlikely to reopen doors to mass-market tourism before the end of 2021 until after a full vaccination

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