The Effect of Flooding on Thailand’s Hotel Industry
In the past year, Thailand has suffered major flooding that has been extensive enough to cause a negative impact on numerous industries in the country. Among them are the electronics factories and hotels, which thrive on the country’s rich tourist industry. The immediate effect of the flooding can be seen from damage to many buildings; however, the secondary impact on the tourist and hotel industries results from visitors being dissuaded from taking holidays there.
A substantial fall in hotel occupancy levels has been observed in Thailand following the plains flooding that occurred during the 2011 monsoon season. The floods affected a large area in the Mekong River basin and Chao Phraya areas, which include Bangkok and associated neighbourhoods. Bangkok, the country’s capital, is also the largest urbanised area in the country and a hub for visiting tourists and international business people. As a direct result of the inundation, significant damage was caused to vital infrastructure in these important areas, leading to a fall in the number of visitors that came to the region. With this reduced flow of visitors, the tourist industry suffered and hotels experienced a significant fall in occupancy rates. Travel companies and hotels in the central plains areas and Bangkok, where the flooding was most severe, suffered the greatest losses during the incident.
Confidence in the country’s tourism industry, as reflected by its travel agencies, has suffered a decline since the flooding; in fact the tourism confidence index for Thailand dropped from 100 to 97 between October and December of last year. In comparison, the same confidence index had reached a high of 134 in the period immediately prior to the flooding, indicating that it was this event that led to significant falls in confidence. The December rating of 97 is an average of many areas in Thailand and those closest to the region devastated by flooding tended to have the lowest ratings, with areas further away, in the south and east, having the highest ratings.
The Marriott Hotel group has experienced significant losses in Thailand following the flooding disaster. The international hotel chain lost management contracts to four hotels in Thailand, they were being run by the Marriott Hotel Group under their Courtyard brand. The four establishments to leave Marriott’s management are the Courtyards at Patong beach, Kamala Beach, Surin Beach, and Cha Am Beach. Of these four, the Cha Am and Patong are also being put up for sale by the owning group. The loss of the management contract by Marriott is said to be by mutual agreement. It is likely that the company has made the decision due to the negative impact on tourism resulting from the floods.
The floods of 2011 have, without a doubt, had a hand in reducing the popularity of Thailand as a tourist destination in recent months, however it should be noted that the occupancy rates for 2011 still exceeded those for 2010, when political turmoil in the country dissuaded many would-be visitors.