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Creating differentiation in a crowded market

The early part of the 2000s saw the Thai Tourism department embark on an aggressive tourism campaign to raise awareness of Thailand as a destination.

As in many tourism-dependent countries, Thailand’s hotel market has been hit hard by the COVID-19 pandemic. The phenomenal growth seen in tourism and hotel supply since the early 2000’s was stopped firmly in its tracks when the pandemic hit in 2020. And although green shoots of recovery are beginning to emerge, with much uncertainty around travel restrictions still in the air, and the all-important Chinese market remaining closed to travel, hotels are being forced to look to new and innovative ways to capture share in a highly competitive market. Here we explore the three phases of Thai tourism over the last 20 years, and with signs of recovery emerging, uncover how hoteliers can look to differentiate themselves and capture all important market share. 

Phase 1 – Autopilot Growth

The early part of the 2000s saw the Thai Tourism department embark on an aggressive tourism campaign to raise awareness of Thailand as a destination. A phase of unprecedented levels of inbound tourism followed, which lasted until 2019. This period of  ‘AutoPilot Growth’ saw a buoyant market where inbound tourism surpassed all expectations and hoteliers could fill their hotels with relatively little effort. Arrivals into the country increased by over 140% between 2010 and 2019 from 16 million to 39.8 million. In Bangkok alone, the approximate number of operational hotel rooms increased from 120k to 170k. This phenomenal growth was driven from many markets including Europe and Russia, but the most rapid growth coming from China and India. 

China and India are especially interesting with similar factors driving interest over the last 20 years in Thailand as a holiday destination. With significant annual growth in GDP in both countries since 2000, came the rise of the new middle classes. Newly created office jobs in the cities saw large migration from the countryside as people looked at white-collar jobs as alternatives to working on the family farm. As horizons expanded, so did the desire to travel. Thailand was the ideal travel destination for those seeking their first overseas trip from both of these countries. Geographically, it wasn’t far away for the first-time holiday maker. Culturally it wasn’t too dissimilar from their home countries. This accessibility and familiarity, coupled with the obvious benefits Thailand as a destination brings, such as the stunning beaches, natural beauty, and welcome and hospitality offered by the locals, meant it was the ideal holiday choice. The Thai tourism market boomed.

How did the industry react? Faced with such a flourishing inbound market, hoteliers could fill rooms with little effort and for many, complacency started to set in. With the average room rate consistently growing, occupancy comfortably sitting at 75-80% and inbound visitors growing year on year, the focus tended to be on investment in new properties rather than development in existing hotel stock, leading to huge growth in available hotel rooms. 

Phase 2 – The Pandemic

As the pandemic hit the global tourism industry like a steam train in early 2020, we entered a new phase for hoteliers. In 2021, Thailand saw just 400,000 arrivals into the country and many of which were Thai nationals returning home. Between 2019 and 2020, inbound tourism fell by an unthinkable 99%. Having been so buoyant and so comfortable for so many years, hoteliers found themselves within weeks with empty hotels, no revenue, and large aggressive loans that needed repaying. For the best part of 2 years, the outlook for Thai hoteliers looked very bleak.

Phase 3 – Recovery Phase

With the first half of 2022 behind us, we are now starting to see a brighter picture.  The Tourism Authority of Thailand has set a target of 7-10 million international tourists for this year, with tourism revenue generation of 1.5 trillion Baht, so the signs are encouraging. But with inbound arrivals still predicted to be less than a quarter of 2019 figures, there is a long way to go. Key factors impeding full recovery remain. China remains closed, and added to the mix is the war in Ukraine which is impacting the Russian inbound market. The biggest obstacle to recovery however is the level of uncertainty that remains around travel into Thailand. With rules of entry and visa requirements constantly changing, even the best laid travel plans are subject to change and with over 200,000 operational hotel rooms in Bangkok alone, hotels find themselves having to actively compete for the same guests.

While its’ a challenging time for all, hoteliers have to for the first time in many years, look to new innovative ways to steal market share. The ones who prosper will be those that challenge the old ways of doing things, and think outside the box. Recovery will be fuelled by new ways of doing things. Here we look at three ways hoteliers can react to the market and changing guest demands as they look to differentiate themselves from their competitors.

Enable ‘ownership of the guest experience’

Today’s traveller wants flexibility in all aspects of their travel arrangements knowing they can make amends easily and without being penalised. Given the uncertainly around entry rules and regulations, knowing bookings can be easily amended without being subjected to exorbitant charges is key and something hoteliers need to build in to their terms and conditions to drive market share. And as the demand for experiential travel increases, travellers are increasingly looking for more than just a room. With so many hotels competing for the same guest, hotels that provide innovative and exciting options for guests to easily build bespoke packages and add on tours and experiences, will add a point of differentiation from competitors and appeal to increasing desire for something more than ‘just a room.’

Streamline staff workloads

Although Thailand has historically been protected from staffing issues, the pandemic has altered the labour landscape and many hotel staff, faced with little work, have returned to their homeland and lower costs of living.  While we are seeing recovery in the market, an important constituent of hospitality wages has been the 10% service charge added to guest bills and split amongst the hotel staff. With guests, and therefore revenue, a fraction of pre pandemic levels, take home wages for hotel staff have taken a severe hit, so when coupled with record inflation levels, a staffing crisis has hit the industry. 

Given this labour shortage, hoteliers need to look to new and innovative ways to build efficiencies into their operations so they can provide superior guest experiences despite staff shortages. It’s time to harness the power of technology to bring automation to highly manual and repetitive processes, therefore streamlining workflows, allowing resources to focus on guest engagement.  

More sophisticated rate management

Faced with an intensely competitive marketplace, hoteliers need to pay particular attention to their rate setting and ongoing rate management if they are to build market share and optimise revenues. Setting static rates that fail to respond quickly to changes in occupancy and lead times runs the risk of rendering yourselves uncompetitive and losing valuable bookings. The implementation of a Channel Manager to support the automatic update of rates across all distribution channels subject to pre-set rules and conditions can prove an invaluable investment to support your revenue management strategy. 

To find out how Guestline’s suite of products can support your recovery plan, come and meet us at the upcoming Food and Hospitality Thailand Exhibition, Queen Sirikit National Convention Centre, Bangkok on 21-24 September. More details HERE



Business Development Director, APAC, - Guestline | Website | + Articles

Tharin is the Business Development Director, APAC for the global hospitality technology company, Guestline. With an extensive background in hospitality, Tharin has many years of experience in both technology and the hospitality industry.