Phuket Hotels Missing Summer Season

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Posted: 10 Aug 2011 | 6:00 am

While July and August are typically high season, this year Australians are continuing to visit in droves given the strength of the Aussie dollar.

But the success story doesn't end there, as Europeans in the midst of traditional holiday time, and the rising tide of regional visitors. Never mind the surge of Singaporeans taking a break for National Day.

Looking at room rates in the market this week on the OTA (online travel agencies) most international managed and even local four star and above properties are north of USD200.

Taking a spin on Phuket's OTA's rates fall short of the mark. For hotels early in the last decade as demand was surging Phuket was able to impose a shoulder or second season during the summer months.

All that has not disappeared and excluding peak periods like Christmas, Chinese New Year etc...we have high and a very long low season.

Many GM's and Director's of Sales and Marketing have raised this with the growing set of influential wholesalers who now dominate the market and the response has been a door in the face.

So the effect in August is that as hotel occupancy has hit good numbers, average room rates remain flat.

Rate management continues to be Phuket's biggest challenge and requires some type of consolidated response by hotels to the market. As it is not the end result remains volume trading at the expense of increasing yields.

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You Revenue Gurus don't understand that the yield on an empty room is ZERO, and this is exactly the result most Phuket hotels have been facing in past low seasons. So lets enjoy our good fortune this low season without worrying and strategizing about juicing out another 10-15% revenue. Most of the customers this low season are last-minute transient bookers arriving on low-cost-carriers who are choosing Phuket because of its good value in off-season rates. If we get too greedy in this period they will book somewhere else last-minute offering better value.

Buick, 11 Aug 2011 | 3:44 pm

Bill, you raise very interesting topic here about Rate management. Where many hotels in today's market feel the pressure of competition, it is rate management or revenue management they should focus on.Too many GM's and Hotel owners have not the right strategy to create their competitive advantage by implementing proper rate management structure. I foresee this trend continue to grow, as OTA markets grow and create a more visible trading ground for the Hotel Guests.

Bas, 11 Aug 2011 | 10:06 am

Nick, please increase that fine to 1.000 Baht! Phuket operators have filled over-capacities with what we call "new markets" at lowest rates. If you increase these rates too fast, these markets collapse. It will take many years to correct this, if it is possible at all. Poor infrastructural and environmental management will remain standard and Asian investors will continue to build even more 3 to 4 star rooms. I think arrival numbers will keep increasing but accelerate all the negative trends and this keep rates low.

Hajo, 11 Aug 2011 | 12:09 am

Bill, so over time, with higher occupancy during our summer season and the continued marketing of Phuket as an annual destination you think rates have the capacity to increase by at least 30, maybe 50%? particularly if hoteliers work more together as an industry, which as you point out is currently lacking.
BTW theres a 100 baht fine for anybody using the words low season!

Nick Anthony, 10 Aug 2011 | 11:42 am