HVS COVID-19 Sentiment Survey: The Impact on the Bangkok Hotel Industry
By Daniel J. Voellm, MRICS, Managing Partner at HVS Hong Kong and Pawinee Chaisiriroj, Senior Manager at HVS Bangkok and Apichaya Wongsuwan, Analyst with HVS
The survey discusses COVID-19 pandemic and its unprecedented impact on the Bangkok hotel market. On a property level, the survey focuses on hoteliers' point of view on contingency measures, business strategies, signs of recovery, and comparison between pre- and post-COVID-19. The survey was distributed to participants on 15 April 2020 and the data collection period was available through 30 April 2020.
Survey Overview: Contingency Measures, Signs of Recovery, and Market Outlook
- The level of effectiveness for each contingency measure
- Other contingency measures being undertaken
- Contingency measures being undertaken from the Corporate Office to support Hotel Owners
- The period of implementing the contingency measures
- F&B business models to support local resident demand
- Staycation business model (*staycation: local resident demand)
- An indication of signs of recovery
- A recovery period by each market segment
- A recovery period by each source market
- The market's dynamic between pre- and post-COVID-19
- Over 70% of the sample hotels are located in Middle Sukhumvit, Siam-Chidlom-Ploenchit, and Silom-Sathorn areas.
- There are a number of contingency measures being undertaken to control operating cost at a property level. The contingency measures are planned for an average of 4.5 months.
- 21% of corporate offices offer to defer management/license fee payments.
- Respondents have difficulties ascertaining clear signs of a recovery.
34% expect full recovery
could take more than a year.
- The short-haul market is expected to recover in less than a year and the domestic market to recover in 1-2 months.
- There is an expected shift in the market post-COVID 19 with regards to the overall performance and market segmentation. Almost 90% believe the industry will employ less full-time staffs to be cost-efficient.
Respondents by its Opening Status
The fully open and partially open properties record a reduction in the number of staff by approximately 10% during this period. The properties that are temporarily suspending operations are expected to close on an average for approximately 1.7 months.
Respondents by Hotel Positioning
Approximately 70% of the properties in the survey sample are in the upper-upscale and upper-midscale positionings.
Respondents by Location
Over 70% of the sample hotels are located in Middle Sukhumvit, Siam-Chidlom-Ploenchit, and Silom-Sathorn areas.
What is the level of effectiveness for each measure?
There are a number of contingency measures being undertaken to control operating cost at a property level. The contingency measures are planned for an average of 4.5 months. The freeze of new hiring is expected to be the most effective measure. Optimize labour planning by cross-training staffs to carry out other duties and responsibilities. This also includes paid leave, leave without pay, voluntarily non-paid leave, furlough, and voluntarily non-paid leave. Reduce staff training is also deemed effective as it may help short-term endurance but should not be done at the expense of thriving excellent services in the longer-term.
What are the measures undertaken by the corporate office to help hotel owners?
The common themes are deferring renovations and product improvement plans (PIPs) that would initially be due. Other measures include waiving furniture, fixtures and equipment (FF&E) reserve payments and providing FF&E reserve funds to cover operating expenses. 21% of corporate offices offer to defer management/license fee payments.
Does your property implement any new F&B business models to support local resident demand?
Approximately half of the properties that are fully open and partially open extend their F&B offerings by mainly providing delivery service or takeaway to service customers.
Does your property witness an increase in a Staycation business over this period?
A quarter of the properties witness an increase in a Staycation business, which ranges between two to 50 room nights per week.
Signs of Recovery & Market Outlook
Which of the following would indicate a sign of recovery?
Respondents have difficulties ascertaining clear signs of a recovery. Split opinions about the relevance of a daily decrease in the number of new cases can be observed among the hoteliers. Although over 33% believes that it is the first sign of a recovery, 34% seems to believe otherwise. 40% of the respondents considers an official announcement from the WHO to be the final sign of recovery, while only 6% is convinced it is first. Most hoteliers are expecting business to bounce back before the official announcement.
How many months do you expect each market segmentation require to cover?
Partial Recovery is defined as the market is 50% recovered. Full Recovery is defined as the market is 100% recovered. 34% expect full recovery could take more than a year. Corporate demand is expected to be the segment to partially recover the fastest in less than six months. A 50% recovery to come as early as 1-2 months. Leisure demand is expected to partially recover faster than Leisure Group segment, but both are moving toward full recovery at a similar pace. MICE is expected to be the last to recover in the long term. The respondents anticipate that MICE demand will take more than six months to partially recover.
How many months do you expect each source market to recover?
The short haul market is expected to recover in less than a year. The Domestic market is expected to be the first to recover within between one to two months, followed by short haul markets including China and India. The majority of source markets is likely to recover in between three to four months, with an exception for North America and Europe, which are likely to recover by mid 2021.
Assuming that the market will be recovered by Q2 2021, how would the market perform in comparison to the pre-Covid-19 period?
There is an expected shift in the market post-COVID-19 with regards to the overall performance and market segmentation. Most hoteliers generally agree that the market will witness a lower average rate and attain lower occupancy level. With the uncertainty in the market, 56% expect that the industry will experience less supply growth, 14% thinks otherwise.