First signs of recovery for hospitality firms

After months of staying home, Thai consumers’ pent-up demand for travel exploded after the easing of restrictions, the first sign of recovery for the hospitality industry following the Covid-19 outbreak.

During the lockdowns, the farthest most people could travel was to nearby supermarkets or small grocery stores located next to their residences. Even now, with overseas trips still off the table for the most part, short domestic trips are the only possibilities to let off some steam.

Domestic flights resumed operation in May on a handful of routes and with extensive safety protocols, and have been gradually expanding in line with growing demand. The country has not recorded a locally transmitted case of Covid-19 since May 24, and people are growing more confident about resuming some normal activities.

Domestic trips in Thailand averaged 18.9 million per month in 2019, according to the Tourism and Sports Ministry. This year domestic travel in the first five months declined by 55% from the same period a year earlier, especially in April when most activities came to a complete halt.

However, since the easing of lockdown measures, there have been encouraging signs of domestic demand, with reported growth of 339% to 571,946 travellers in May, from 130,235 in April. Destinations within driving distance of Bangkok, such as Pattaya, Bang Saen and Hua Hin, will attract more tourists than Phuket and more distant spots to which most tourists will choose to fly.

In the third quarter, we could see an improving trend as hotels offer special rates and packages along with the government-sponsored “We Travel Together” campaign and extra holidays. The upward trend will be most visible for destinations within driving distance of the capital, but will expand to long-haul trips once consumers are confident that it is safe to travel.

The challenge is no one really knows how long the Covid-19 pandemic will last, and how long hoteliers will have to rely on domestic travellers for all their revenue.

Attractive pricing to pull in local guests will be a factor, but in an age where unique experiences and social media exposure are crucial, “Instagrammable” moments could be another key to promote local demand.

The good news is Thailand has been viewed as one of the “Covid champion” countries, as it took us only around four weeks to flatten the curve and contain local transmission, which will increase confidence among tourists once international leisure travel resumes.

While we are still seeing only the first signs of recovery for the hospitality industry, it will be interesting to see if this pent-up demand will provide only a temporary boost to the market. There is concern that demand could slowly dwindle together with spending power as the financial burden on many consumers increases.

The supply in the market means domestic demand alone cannot sustain the market in the long run.

Original Post: Bangkok Post

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