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Political unrest hits Thai industry hard

  Data from STR Global has highlighted the plight of local markets in Thailand and has put the effect of the country’s recent political disruption into a regional context.The ongoing political unrest in Bangkok has severely affected the country’s hospitality industry, which already has to deal with worsening global economic conditions, and now concerns of a possible swine flu pandemic.

Over the five months from November 2008 to March 2009, the four Thai markets tracked by STR Global have reported monthly declines of more than 30% in revenue per available room (RevPAR) against the comparable period the previous year.

The falls in RevPAR were driven by declining occupancy levels that were not matched by similar declines in average room rates.

“It is reassuring to see that average room rates declined significantly less than occupancy, and RevPAR should be able to start improving as soon as occupancy and travel demand recovers,” said Singapore-based Jonas Ogren, area director Asia for STR Global.

The market reaction has been swift. Demand in Bangkok in the middle of April has rapidly fallen by more than half of that of the previous year, down to as little as 33% on certain days.


Despite such low occupancies, hoteliers are holding their rates as best they can with year on year declines of 4% and an average rate of THB 3,323 for the first three weeks of April.

The result of this relative firmness in rate is that the city’s RevPAR decline remains similar to that for the November-to-March period.

However, taking a longer-term perspective data from STR Global shows that Thailand has been underperforming the southeast Asian market as a whole since September 2006, the time of the most recent official military coup.  The percentage change in year-on-year RevPAR for Thailand has been consistently worse than that for the region since then.

“These are challenging times for Thailand’s hotel market, and this is reflected in the volatility of actual RevPAR in U.S.-dollar terms for the country compared with southeast Asia,” said Ogren of the RevPAR range (lowest to highest) of US$71.79 for Thailand and US$23.75 for southeast Asia during 2008.