Battered by Covid-19, hospitality operators scour revenue strategies
In light of the recent Covid-19 crisis, hotel owners and operators in Thailand have adopted various strategies to limit the business impact from the ongoing pandemic, according to property consultancy JLL.
Whilst a number of hotels have temporarily shut operations across Bangkok and beyond, others are exploring new revenue generating strategies.
Pitinut Pupatwibul Robbins, senior vice president of strategic advisory, JLL’s Hotels & Hospitality Group, says: “Generally, the main sources of income for hotels are room accommodation, food and beverage, and meeting/event facilities, but these three revenue channels have been affected by the pandemic. Whilst demand for room accommodation has dropped sharply following the tourism slump, the nationwide adoption of social distancing practices has eliminated demand for hotels’ restaurants, bars and conferencing facilities.”
In an effort to protect their employees’ and guests’ health and safety, some local hospitality players such as Minor International, The Erawan Group, Asset World Corporation, Centara Hotels & Resorts and Dusit International have announced temporary closures of their hotels.
“Apart from safety reasons, a temporary closure during a time when demand is low means that hotels can find some savings from a reduction in operating expenses, such as payroll, utilities and non-essential maintenance costs. Some properties have taken the opportunity to start their planned renovations early or to make certain improvements to their premises,” says Alex Sigeda, vice president of asset management at JLL’s Hotels & Hospitality Group.
Despite a number of announced closures, a vast majority of hotels in Bangkok is still operating and many of them are applying various strategies to generate alternative income. “We’re starting to see a number of hotel owners becoming more creative when it comes to revenue generation, particularly given the challenging market conditions,” Sigeda adds.
Some hotel chains, such as Centara Hotels & Resorts, Dusit International and Chatrium Hotels & Residences, have opened a food delivery service where customers can order meals from their respective hotels via food delivery platforms such as LineMan, GrabFood and Foodpanda. Other hotels are offering discounts on their food menus -- Pullman Bangkok King Power, for example, offers discounts and promotional takeaway items.
With many business organisations closing their corporate offices and having their teams work remotely, some hotels have started to offer work-from-hotel day-use packages at exceptional rates for people looking for spacious and quiet working arrangements closer to home. A good example is AccorHotels, which is offering a single guest, day-use room package across 10 hotels in Bangkok to guests who need a private office space for the day.
A few examples of other hotels offering similar packages are Pullman Bangkok King Power, Kokotel Sukhumvit 50 Bangkok and T2 Residence Sathorn. Room rates vary from Bt450 to Bt4,500 per day, depending on hotel positioning, room types and package inclusions.
Several hotels have applied to be Covid-19 designated “hospitels”, serving non-critical patients. Due to a comprehensive set of criteria by the Ministry of Public Health, only a few hotels have been successful with their application; the two pilot hotels are Princeton Hotel Bangkok and The Palazzo Hotel Bangkok. These "hospitels" will cooperate closely with nearby hospitals and will be compensated directly by the Thai government.
A number of hotels have also applied with the Ministry of Public Health to offer self-quarantine facilities for high-risk individuals who are vulnerable to Covid-19, most of whom are Thais returning from overseas. Hotels serving as self-quarantine centres gain revenue from admission and/or meal charges. While this can be a lucrative option for some properties, not all hotels that have applied to be quarantine centres have been successful with their enrolment due to comprehensive qualification requirements. Even if a hotel is qualified to become a quarantine centre, the owners may still face certain resistance from the nearby community.
With many countries temporarily closing their borders to international travel as part of their enhanced travel restrictions, hotel properties are extending special offers and long-stay promotions to visitors who are unable to return to their home countries. Serviced apartments are particularly well positioned to cater to this segment, as they are well equipped to cater to long-stay travellers, with guestrooms offering ample space, in-room kitchenettes and laundry facilities, among other amenities.
As the hospitality industry continues to bear the brunt of the current economic environment, hotel owners and operators are looking for creative ways not only to offset their basic operating costs, but also to make a positive contribution to the government’s containment and recovery efforts.
“Whilst many of these alternative income-generating strategies still need to be tested, those that work may very well create new revenue streams for properties in the long run, long after these difficult times,” Pupatwibul Robbins says.
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