Published on : Wednesday, April 27, 2022
Thai hotels are spending big on upgrades and new resorts despite fallout from the war in Ukraine making it unlikely that global tourism will recover from its COVID-triggered swoon this year, analysts say.
They have set aside billions of dollars to increase the number of rooms in famous beach towns and hip mountain regions, in Thailand and elsewhere, as they pin their hopes on the hospitality industry defying the analysts and beginning a gradual rebound sometime this year.
Central Group, a leading Thai retail and accommodations giant, has earmarked 20 billion baht ($588 million), for investment purposes during the next five years.
The company, which operates hotels and resorts under the Centara brand, intends to have 200 hotels at home and abroad by 2026, up from the current 88.
On Friday, the company announced that it has partnered with Austrian real estate company Signa to develop a 58,000-sq.-meter mixed-use project in Vienna that is due to open in 2023.
Central also plans to open its first hotel in the Japanese city of Osaka, a gateway to the tourist hot spots of Kyoto, Nara and Hiroshima. It is slated to open in July 2023.
In 2019, the group reopened a luxury department store in Turin, Italy, that expects demand to pick up during the coming years as international tourism returns to normal.
Central Group CEO Tos Chirathivat said that the revenue from operations abroad is expected to grow materially in the next five years with the new projects in the pipeline. He also added that revenue from overseas operations, primarily in Vietnam, Europe and the Maldives, contributed around 30% of annual total revenue in 2021.
At home, Centara has new luxury hotels planned for the famous island of Samui, the Isan cities of Ubon Ratchathani and Nakhon Ratchasima as well as Bangkok; they are scheduled to open next year and in 2024.
Minor International, another leading Thai hotel operator, has set aside 6.4 billion baht to use this year in sprucing up its domestic offerings and in investing in new properties abroad.
In 2022, the company said it would rev up plans to open and operate 100 new hotels in China to diversify its sources of growth. It also said it was expecting a global tourism rebound to deliver a net profit this year. Last year, it lost 9.3 billion baht.
In addition, it said it was planning to switch from investing in and building its own hotels to taking on contracted operations and licensing its brands.
Chaiyapat Paitoon, Minor’s vice president of strategic planning, earlier this year said the company’s expectations are for tourism to start returning to where it was before 2020, when COVID began its global spread.
He also expects the company’s performance to gradually improve, particularly in Thailand, where the government last week announced it would make it easier for foreign tourists to visit and freely move around upon arrival.
Starting Friday, vaccinated international arrivals will not have to take and pass a PCR test or stay in quarantine upon landing in the country. Neither will they have to present proof they are free of COVID before boarding their plane to Thailand.
The decision to make it easier for vaccinated tourists to enter the nation leaves it more vulnerable to outbreaks, but analysts say the relaxed entry procedures are unlikely to help the country’s important hospitality industry rapidly recover.
They point to soaring fuel prices and other consequences of Russia’s war in Ukraine that are keeping would-be travelers at home.
The U.N. World Tourism Organization agrees. It says the war is impairing confidence in the sector and could slow its recovery despite moves to ease travel restrictions.
The UNWTO’s latest forecast is for the war to knock $14 billion off global tourism revenue for 2022.
TMBThanachart Bank’s ttb analytics says the relaxed entry rules will help Thailand attract only a “limited” number of international arrivals this year.
The Chinese have not yet come as China is still struggling through new rounds of the pandemic.
Chinese made up around 30% of the 39 million international tourists who jetted to Thailand in 2019.
Ttb analytics expects around 3 million foreign tourists to come to Thailand this year. It also projects an average hotel occupancy rate of 23.8%, up from 19.8% in 2021. The average occupancy rate for 2019 was 80%.
The think tank’s foreign arrivals estimate is well below the Tourism Authority of Thailand’s. The TAT is expecting 5.6 million foreign tourists this year; it also sees them generating around 1 trillion baht in revenue.
A tourism recovery is crucial for Thailand as the sector and related commerce was contributing roughly 20% of the country’s gross domestic product before the pandemic.
Tags: COVID-19 pandemic, Tourism Authority of Thailand (TAT), U.N. World Tourism Organization (UNWTO)
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