BANGKOK, 17 April 2020 – In light of the recent Covid-19 pandemic, hotel owners and operators in Thailand have adopted various strategies to limit the business impact.
Whilst some hotels have temporarily shut down operations across Bangkok, and beyond, others are exploring new revenue-generating strategies, according to observations by property consultancy JLL.
JLL’s Hotels & Hospitality Group senior vice president of strategic advisory, Pitinut Pupatwibul Robbin said: “Generally, the main sources of income for hotels are room accommodation, food and beverage, and meeting/event facilities, but these three revenue channels have been affected by the pandemic. Whilst demand for room accommodation has dropped sharply following the tourism slump, the nation-wide adoption of social distancing practices has eliminated the demand for hotels’ restaurants, bars and conference facilities.”
In an effort to protect their employees’ and guests’ health and safety, some local hospitality players such as Minor International, Erawan Group, Asset World Corporation, Centara Hotels & Resorts and Dusit International have temporarily closed hotels.
“Apart from safety reasons, a temporary closure during the time when demand is low means that hotels can find some savings from a reduction in operating expenses, such as payroll, utilities and non-essential maintenance costs. Some properties have taken the opportunity to start their planned renovations early or to make certain improvements to their premises,” said JLL Hotels & Hospitality Group vice president of Asset Management Alex Sigeda.
Despite closures, the majority of hotels in Bangkok are still operating, and many of them are applying various strategies to generate alternative income.
“We’re starting to see hotel owners becoming more creative when it comes to revenue generation, particularly given the challenging market conditions,” said Sigeda.
Some hotel chains, such as Centara Hotels & Resorts, Dusit International and Chatrium Hotels & Residences, have opened a food delivery service where customers can order meals from their respective hotels via food delivery platforms such as LineMan, GrabFood and Foodpanda. Other hotels are offering discounts on their food menus.
With many business organisations closing their corporate offices and having their teams work remotely, some hotels have started to offer work-from-hotel day-use packages at exceptional rates for people looking for spacious and quiet working arrangements closer to home.
A good example is AccorHotels, that is offering a day-use room package across 10 hotels in Bangkok for residents who need a private office space for the day. A few examples of other hotels offering similar packages are Pullman Bangkok King Power, Kokotel Sukhumvit 50 Bangkok and T2 Residence Sathorn. Room rates vary from THB450 to THB4,500 per day, depending on hotel positioning, room types and package inclusions.
Several hotels have applied to be Covid-19 designated ‘hospitels’, serving non-critical patients. Due to a comprehensive set of criteria by the Ministry of Public Health, as of this writing, only a few hotels have been successful with their application, with two pilot hotels namely Princeton Hotel Bangkok and The Palazzo Hotel Bangkok. These ‘hospitels’ will cooperate closely with nearby hospitals and will be compensated directly by the Thai government.
A number of hotels have also applied to join the Ministry of Public Health scheme that offers self-quarantine facilities for high-risk individuals who are vulnerable to Covid-19, most of whom are Thais returning from overseas.
Hotels serving as self-quarantine centres gain revenue from admission and meal charges. While this can be a lucrative option for some properties, not all hotels that have applied to be quarantine centres were successful due to the comprehensive qualification requirements. Even if a hotel is qualified to become a quarantine centre, the owners may still face certain resistance from the nearby community.
With many countries temporarily closing their borders to international travel as part of their enhanced travel restrictions, hotel properties are extending special offers and long-stay promotions to visitors who are unable to return to their home countries.
Serviced apartments are particularly well-positioned to cater to this segment, as they are well equipped to cater to long-stay travellers, with guestrooms offering ample space, in-room kitchenettes and laundry facilities, among other amenities.
As the hospitality industry continues to bear the brunt of the current economic environment, hotel owners and operators are looking for creative ways not only to offset their basic operating costs but also to make a positive contribution to the government’s containment and recovery efforts.
“Whilst many of these alternative income-generating strategies still need to be tested, those that work may very well create new revenue streams for properties in the long run, long after these difficult times,” Pupatwibul Robbins concluded.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that specialises in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with nearly 300 corporate offices, operations in over 80 countries. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.
