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The First Sign of Recovery for the Hospitality Industry

August 07, 2020
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After months of staying home, pent-up domestic demand for travel that exploded after the easing of restrictions became the first sign of recovery for Thailand’s hospitality industry following the COVID-19 outbreak.

During the lockdowns, the farthest places you could visit were nearby supermarkets or small grocery stores located next to your residence. Overseas trips were cancelled without any idea about where to go and when to plan the next one. Thus, short domestic trips are the only possibilities to let off some steam.

Domestic flights resumed operations in 15 provinces after a couple of months long suspension, but operations are still kept under minimum routes. According to the Ministry of Tourism and Sports, Thailand had an overall average of 18.9 million domestic travellers per month in 2019. This year, domestic travel in the first five months declined by 55% compared to last year, especially in April when activities came to a complete halt due to the country being under lockdown.

However, since easing of lockdown measures, there was a good sign of domestic demand with a significant increase of 339% month-on-month from 130,235 travellers in April to 571,946 travellers in May. Destinations within driving distance such as Pattaya, Bangsaen and Hua Hin will attract more tourists than Phuket and those further south where most tourists will have to fly in.

In the third quarter, we could see a similar trend going forward as hotels offer special rates and packages along with the government sponsored ‘We Travel Together’ campaign and extra holidays. The upward trend of domestic travel will begin with destinations that are within driving distances but will further expand to long-haul distances once travellers are confident that it is safe to travel.

The challenge is that no one really knows how long the COVID-19 pandemic will last, and how long hoteliers will have to rely on domestic travellers. It is important, at least in the short run, for hotels to sustain local guests.

Attractive pricing is a factor but in an age where unique experiences and social media exposure are crucial, “Instagrammable” moments could be the key to draw in local demand.

The good news is that Thailand has been viewed as one of the “COVID-champion” countries as it took us only around four weeks to flatten the curve and contain local transmission which will increase confidence for tourists to come to Thailand.

While it is the first sign of recovery for the hospitality industry that we have seen in months, it will be interesting to see if this pent-up demand will only be a temporary boost in the market and slowly dwindle together with spending power as financial burden increases.

It is obvious, looking at the amount of supply we have in the market, that domestic demand alone will not be able to feed the market in the long run.

An article written by Pawika Thienwongpetch, an Analyst at Research and Consulting, CBRE Thailand for Bangkok Post dated 7 August 2020.

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