The impact of COVID-19 has severely affected Thai tourism, especially the foreign tourist market, which has been at 'zero' since April after the government imposed strict lockdown measures, prohibiting commercial flights in and out of the country in an effort to control the outbreak.

This has directly impacted tourism operators, whose revenues have plummeted almost overnight, leading many to bear unbearable burdens and ultimately decide to shut down operations and lay off employees. Those who continue must tighten their belts and control expenses to keep their businesses afloat.

While foreign tourists are still unable to enter the country, everyone has had to refocus on the domestic market, with the emphasis on “Thai Travel Thai”. Currently, there are signs of improvement as Thai people are packing their bags to travel domestically, although most are still opting for short trips that can be reached by car.

The government is making every effort to assist struggling operators, providing soft loans to improve liquidity, restructure debts, and offer debt moratoriums for businesses. Meanwhile, the Cabinet has approved a budget of 22.4 billion baht to revive tourism through two main projects:

The “Travel for Happiness” project aims to reward frontline personnel dealing with COVID-19, including village health volunteers (VHVs) and health promotion hospital staff (HPH). The government will support training and seminar expenses through domestic travel companies, providing 2,000 baht per person.

 

Additionally, the “We Travel Together” project will subsidize accommodation costs at a rate of 40%, up to 3,000 baht per room per night, for a maximum of 5 rooms or 5 nights, totaling 5 million rights. It also includes meal/travel vouchers of up to 900 baht per day. Furthermore, participants can receive a refund of up to 1,000 baht for flight tickets, with room bookings having been open since July 18.

Despite being over a month since the launch, the response has not been as lively as expected, with only about 690,000 room bookings made from the total quota of 5 million rights, and less than 4,000 flight ticket refunds requested from a quota of 2 million rights.

This has prompted the Economic Situation Administration Center (ESAC) to prepare proposals for the Cabinet meeting tomorrow (August 25), initially suggesting an extension of the “We Travel Together” project rights by increasing accommodation rights from 5 days or 5 rooms to 10 days or 10 rooms, and raising flight ticket refunds to 2,000 baht.

Ultimately, it remains to be seen whether the Cabinet will approve any additional measures. If the ESAC's proposals are followed, they may not be very enticing, as the accommodation discount remains the same despite the increased number of days. Additionally, there is not much time left to utilize the rights, approximately 2 months, as they will end in October. It is uncertain whether the Cabinet will extend the measures as suggested by the private sector to allow rights to be used until the end of the year.

While the measures announced seem like good news for operators, especially hotels and airlines, which will see increased revenues to help sustain their businesses, the response has not been overwhelmingly positive. Thus, it is not surprising that stock prices in this sector have barely moved, even with the government's plans to expand rights.

Looking at room booking figures, Central Plaza Hotel Public Company Limited (CENTEL) has reopened about 70% of its hotels, with approximately 14,500 room bookings from the “We Travel Together” project, generating around 30 million baht in revenue.

Meanwhile, Erawan Group Public Company Limited (ERW), which has nearly 100% of its services back online, has similar room bookings of about 17,000 nights, also generating around 30 million baht in revenue. Although this is not significant compared to normal times, it is certainly better than having no income at all, as was the case during the months of closure. This indicates that the situation is improving, and the lowest point in Q2 has passed; the performance in the second half of the year is expected to recover from the first half.

When comparing hotel companies, those with food business revenues, such as Minor International Public Company Limited (MINT) and CENTEL, appear to have a slight advantage over 100% hotel businesses like ERW, as the food sector is recovering faster than the hotel sector.

However, overall, this year is unlikely to be a good year for hotel stocks due to significant losses in performance. Various analysts are still cautious about this sector, as the situation remains unstable. However, it is believed that if more Thais travel and no new outbreaks occur, along with the development of effective vaccines, the spotlight will surely return to this sector.

SOURCE : www.bangkokbiznews.com