Red-shirt protests give Bangkok hotels the blues | STR Global Reports

The ongoing anti-government protests throughout Bangkok, Thailand, by the United Front for Democracy Against Dictatorship, commonly known as the red shirts, are having a significant negative impact on the city’s hotel performance. Daily data from STR Global, the leading provider of market data to the world’s hotel industry, shows the immediate impact while monthly trend data shows a marked resilience by hoteliers in the Thai capital during the last few years.

April daily data performance of occupancy and average daily rate in Bangkok has been a rollercoaster ride. In addition to the influence of national holidays (Easter 2-5 April, and Songkran, the Thai New Year, 13 April) the chart below shows the effects of the protests. A dramatic decline in occupancy was experienced across the city following several disturbance-related fatalities during early April. After a slight rebound, occupancy plummeted again as the foreign offices of several key Thai feeder markets, such as Germany and the U.K., advised against all but essential travel to the market. With the safety of both guests and staff in mind, some international hotels near areas of intense violence closed and have yet to reopen.

These daily performance fluctuations mirror the market’s long-term monthly occupancy trends. Declines in the metric began during 2006 at the onset of military control and bounced around throughout 2007. The 2008 protests were more significant: Unrest during August result in poor September occupancy levels; following the November airport closures, December also suffered with occupancy of only 38.6 percent. The latest protests are a real blow given that occupancy, in the light of the improving global situation, had begun to trend toward historic norms during the end of 2009 and into early 2010.

However, ADR has shown resilience in the face of both fluctuating occupancy and broader ongoing difficulties in the market. April’s ADR of THB3,096 shows a less significant drop from February (THB3,371) and March (THB3,331) than the declines in occupancy, which fell 0.2 percent during April 2010 to 44 percent, compared to relatively strong showings during February (71.4 percent) and March (63.3 percent).

“In spite of violence and significant recent declines in occupancy this past month, Bangkok’s hoteliers have held firm with rates, recognising that price reductions do not stimulate demand that just isn’t there”, said Elizabeth Randall, managing director of STR Global. “Discounting would only double the pain for hotels already suffering from falling occupancies”.