Mr. Carlos Martinez, Director of Research and Consulting, Knight Frank Thailand said that following the continued easing of travel restrictions around the world, the number of inbound foreign arrivals to Bangkok fell from just over 160,000 to around 2.2 million year-on-year, and hence an increase in demand for hotel accommodation in the first half of 2022. This is a considerable improvement and could represent the start of a much-needed rebound in overseas visitor numbers back to pre-pandemic levels. However, the number of international arrivals is still only 12% of that before Covid. For most of 2020 and 2021, international arrivals to Thailand have been largely non-existent except for returning residents and essential travellers.
In March 2022, the Thai government announced a four-phase plan to fully reopen its borders in July, with entertainment venues and tourist attractions allowed to lift pandemic-related restrictions. As a next step, it is expected that the Thai government will declare Covid-19 as an endemic disease as soon as the number of daily infections stabilizes, vaccination coverage is high and disease symptoms are no longer present. it does not matter.
Chinese tourists accounted for about one in three foreign tourists during the pre-pandemic period. As such, hoteliers are concerned about the absence of tourists from China due to mobility restrictions imposed by the Chinese government, as many parts of the country battle outbreaks of the Omicron variant.
As of 1H 2022, 39% of total international visitors were from East Asia, led by visitors from Malaysia and Singapore. European visitors made up 30%, mainly from the UK, Germany, France and Russia. Indian visitors accounted for 11%.
SUPPLY AND DEMAND
The performance of luxury hotels in Bangkok improved significantly in the first half of 2022 with an average occupancy rate of 33%, +13pp yoy, likely thanks to partially relaxed restrictions on international travel. The occupancy rate gradually increased from a low of 26% in January 2022 to just over 40% in May and June 2022. The effect of the low season in the last months of the first half was offset by the easing of travel restrictions. from May 2022 with the removal of mandatory PCR testing, quarantine-free travel as well as reduced health insurance coverage for vaccinated travellers, resulting in a steady growth in hotel occupancy.
The Average Daily Rate (ADR) also increased by +11% year on year to 3,410 baht, due to an improvement in the number of foreign arrivals, indicating a turning point in the market.
The total number of luxury hotel rooms increased slightly to 20,709 with the addition of 154 keys in 2022. New hotel openings were the Standard by Sansiri hotel in the Mahanakhon building (154 rooms) in the luxury segment, and the Eastin Grand Phayathai (394 rooms), The Quart Ruamrudee (150 rooms) and X2 Vibe Bangkok Udomsuk (150 rooms) in the upscale segment.
The main concentration of rooms is in the Early Sukhumvit area with 34%, followed by the Lumpini area (24%), the Riverside area (17%) and the Silom/Sathorn area (15%).
Thailand has slowly reopened to international visitors since November 2021, after around two years. Yet the number of foreign arrivals has not increased rapidly due to complex and costly travel requirements such as mandatory quarantine, insurance and PCR testing.
As of 1H 2022, despite the increase in foreign visitors year-on-year, it was only 12% of pre-pandemic levels, nevertheless expected to accelerate in the second half with the start of the fourth and the final phase of the country’s so-called “post-pandemic” reopening, allowing tourists to enter Thailand without restriction regardless of their vaccination status, ending stringent two-year border controls introduced to contain the pandemic. Therefore, we expect a sustained increase in international arrivals supported by the government’s commitment to accelerate tourism and the recovery of the hospitality industry with an expansion of travel with more flights. The gradual recovery in hotel revenue per available room (RevPar) will likely be driven by ADR, with higher but still weak occupancy levels.
The lack of outbound Chinese travelers, the main market feeder before the pandemic, due to travel restrictions imposed by China, will likely continue to disrupt the tourism industry in Bangkok and other destinations in Thailand this year. . Thus, domestic tourism will continue to play an important role as it has during the pandemic.
The growing number of foreign arrivals in the first half of the year and the full reopening for foreign travelers in July 2022 suggest the beginning of the recovery of the tourism market, however, the road to the recovery of the tourism industry may bump up against more obstacles such as new variants or epidemics, or the effects of the Russian-Ukrainian war on oil prices which could affect ticket prices, depressing the resumption of international travel.
The short-term recovery is likely to be driven by leisure tourists, followed by business and MICE groups, benefiting resorts with growing guest numbers relative to business hotels.
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