Smaller hotels struggling to cope with increasing costs

[buksida]

Despite the upcoming lower power tariff, midscale and small hotels are still facing a surge in expenses due to high interest rates, while their rate of revenue growth lags behind those of five-star properties.

Suksit Suvunditkul, president of the southern chapter of the Thai Hotels Association (THA), said the lowering of the power tariff to 4.45 baht per unit in September would help ease hotels' expenses, but the rate remains high for small and medium-sized operators as their revenue has not yet seen a strong recovery.

Mr Suksit said the power tariff has been one of the major expenses for hotels, representing around 10% of their income. A suitable rate for hotels to bear this cost should be below 4 baht per unit, given that hotels have not had many guests due to low season, while the overall number of arrivals remains a far cry from the levels recorded in 2019.

The mid-scale hotels that usually rely on tour groups are suffering more than other hotels, as this type of tourist, especially those hailing from China, have yet to return to the high levels seen before the pandemic.

"Only 20% of hotels nationwide, mostly five-star properties, are able to cope with the high expenses by raising their average room rate. Some of them successfully increased the room rate to higher than that of 2019. However, the remaining 80%, most of them four-star properties or below, still have to charge a low rate to customers," Mr Suksit said.

Mr Suksit said hotel operators are also worried about the minimum wage increase proposed by certain political parties since it would add a burden to their operational costs.

https://www.bangkokpost.com/business/ge ... sing-costs

You know the answer ... hike the room rates. But with so many 2-3 star rooms empty and fewer tourists to fill them, it'll be a tough call. Fortunately, our go-to hotel in Hua Hin has been the same price for years, maybe that is about to change.

[Big Boy]

I was looking at a couple of mid-scale hotels for a bit of an adventure back in April. They had already significantly hiked prices, which scared me right off. From what I could see, most of tourist Thailand had jumped on the price hike band wagon.

I've no idea if they are still asking stupid prices, because I've started looking elsewhere.

[kwajdiver]

There is another factor, IMHO, that is hurting small hotels and that is the pool villa hotel. Several houses in our area have now been converted into pool villa hotels. These are two bedroom/two bathroom homes with a small pool, and it is my understanding that they are exempt from hotel licensing requirements, and this probably reduces their costs to operate.

Over the past holiday weekend these pool villas would usually each have 3-4 cars/trucks/SUVs parked at them every night. Besides the noise and other problems, it looks to me like they are taking business away from licensed hotels….

[buksida]

I think these are known as party houses, popular with the Bangkok weekend crowd. Yes, they've become a scourge in towns such as Hua Hin and must be hurting the smaller hotels (and the ears of their neighbours!)

[Benroon]

I think these are known as party houses, popular with the Bangkok weekend crowd. Yes, they've become a scourge in towns such as Hua Hin and must be hurting the smaller hotels (and the ears of their neighbours!)

I thought party houses were outlawed?

[caller]

I thought party houses were outlawed?

Loads available online

[Benroon]

Apparently they're outlawed for condos but pool villas ok - could always call the police and test it I guess.

[kwajdiver]

When these hotels/party houses first started appearing, neighbors and us talked with the police. The police said there is nothing they can do - because no license is required - until 10:00 pm, and then that involves a noise complaint.

After 10 you can call, and then it is wait and see if someone shows up. Also, even if they show up, a few minutes after they leave the noise may return…...

[migrant]

Our moo baan is owned by all the residents as such we voted, and made a rule, no party houses. Across soi 6 though there is one that regularly blasts music, Luckily we are at the far end and are not bothered

[STEVE G]

There are, or were, several of those party houses around our area in Nong Khon but it seems to be an idea that died with Covid because I've never seen anyone use them since.
There is a regulation in Thailand that says you can't rent a property for less than one month that is supposed to protect the hotel industry but it never gets enforced.

[kwajdiver]

Based on the research we did, below is a summary of what we found – were told.

The Hotel Act states that any residential premises open to the public for rent with no more than four rooms on all floors in aggregate whether in a single building or several buildings and with a total service capacity of 20 guests, operating as a small business which provides an additional source of income for the owners is exempt from the requirement of obtaining a Hotel License.

And that, home and villa owners argue that A Hotel Act Ministerial Regulation states that houses or villas with less than 4 rooms, and a capacity of 20 people or less are exempt from the Hotel Act and are not considered a hotel.

Apparently, condominiums may have more protection against short-term rentals.

In May of 2018, a court in Hua Hin charged two condominium owners with renting out their condos on a daily and weekly basis. The offenders were both made to pay a fine of 10,000-15,000 THB for their infringements.

[Benroon]

Our moo baan is owned by all the residents as such we voted, and made a rule, no party houses. Across soi 6 though there is one that regularly blasts music, Luckily we are at the far end and are not bothered

I'm intrigued by this, if someone bought a house in your area, what makes them conform to a vote from people he doesn't know or care about? A privately bought house is a private house or did you register this vote in some official way?

[buksida]

No surprises here ...

Tourism sector demands more help
The sluggish economies in China and Japan as well as an unequal tourism recovery that favours large operators are seen as the the most critical challenges for the new government by tourism operators.

A survey conducted last month by the Thai Hotels Association (THA) and the Bank of Thailand found 29% of hotels rated three stars or less suffered a severe impact from interest rate hikes and might need debt restructuring.

The Tourism Council of Thailand (TCT) predicted a similar trend for the third quarter as 34% remain uncertain about the tourism outlook and 19% believe they will earn less this quarter than the previous one.

Chamnan Srisawat, president of the TCT, said solving unequal business opportunities for small and medium-sized enterprises (SMEs) remains a tremendous challenge for the new government.

"After Covid-19, a K-shaped recovery has been apparent as the rich got richer, while SMEs, which account for 34% of tourism enterprises, severely struggled to maintain their businesses," said Mr Chamnan.

https://www.bangkokpost.com/business/ge ... -more-help