Innovative strategies by Thailand’s hotel owners to minimize business impact from Covid-19
Some of these strategies may well create new revenue streams in the long run
In light of the recent COVID-19, hotel owners and operators in Thailand have adopted various strategies to limit the business impact from the ongoing pandemic. Whilst several hotels have temporarily shut down operations across Bangkok and beyond, others are exploring new revenue generating strategies.
Generally, the main sources of income for hotels are room accommodation, food and beverage, and meeting or 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 demand for hotels’ restaurants, bars and conferencing facilities.
To protect their employees’ and guests’ health and safety, some local hospitality players such as Minor International, The Erawan Group, Asset World Corporation, Centara Hotels & Resorts and Dusit International have announced temporary closures of their 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 also taken the opportunity to start their planned renovations early or to make certain improvements to their premises.
Despite several announced closures, a vast majority of hotels in Bangkok are still operating and many of them are applying various innovative strategies to generate alternative income in order to manage the challenging market conditions.
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 -- Pullman Bangkok King Power, for example, are offering discounts and promotional takeaway items.
With many business organizations 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 single guest, day-use room package across 10 hotels in Bangkok to guests 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 with the Ministry of Public Health to offer 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/or meal charges. While this can be a lucrative option for some properties, not all hotels that have applied to be quarantine centres have been successful with their enrollment due to 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 to also 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 the current pandemic.