STR: Domestic travel key for GDP
Countries with a substantial domestic travel engine will be able to increase GDP figures and combat jobless rates better than those with more limited domestic demand reliant on inbound tourism, says STR, a hospitality market analyst.
As nobody knows when the pandemic will end, the situation is precarious, with tourism restarting with the local market, driven by weekend business, often in mid- to upscale hotels, STR said. This is already visible in China and should manifest in South Korea at some point, said Jesper Palmqvist, area director of Asia-Pacific for STR.
He said travel restrictions could delay the international market well beyond the end of the crisis. Even though Thailand historically rebounds relatively fast, this challenge is thornier than most, affecting the whole world. This means the country cannot depend on inbound arrivals returning automatically, Mr Palmqvist said.
“Over the long term, Thailand will remain one of the most popular destinations for global travellers, but the delays after this crisis will in some part be driven by incumbent travel restrictions and a tendency for people to travel more domestically,” he said.
Thailand needs to inspire locals to travel domestically, both leisure and corporate, as quickly and efficiently as possible once regular business is restored, Mr Palmqvist said.
He said high unemployment will tighten personal spending, while prolonged travel restrictions after the pandemic may offset the pent-up demand for travel after months in isolation.
Business travel tends to be more sensitive as executives in global firms might not allow corporate and transient travel, which could put staff at the risk of being infected.
“It remains difficult to see if in the long term there will be any major changes to travel patterns,” Mr Palmqvist said. “Particularly when factoring in if any companies in the entire supply chain will fold as a result of the crisis.”
He said that as of yesterday indicators clearly show a negative outlook for some companies to able to function long-term.
According to STR, global hotel performance, including in Thailand, has declined gradually every week during the first quarter.
The average occupancy of hotels in Thailand in March was 29.1%, down 62.6% from the same period last year, and the average daily rate (ADR) stood at 3,060.60 baht per room, a decrease of 14.2%.
The first quarter saw the occupancy rate in Thailand at 55.2%, down 32.3% from last year, and ADR closed at 3,849.20 baht, a 4.8% dip.
Mr Palmqvist said there are projects that will have had to come to a temporary halt in the short term. There are many factors that can
influence construction delays, ranging from cash flow prudence to logistical challenges.
“This trend only quite recently kicked in for this region,” he said. “We will monitor the impact and change in the next couple of months.”