THA to hotels : “Don’t lower your prices, you’d risk to attract more customers”

Hotels and tour operators have been urged not to offer extra-low room rates and low-priced package tours to foreign agents, because of the possibility of long-term damage to the tourist industry.

Thai Hotels Association (THA) president Prakit Chinamourphong said average hotel-room rates in Bangkok were already lower than those in other major cities in the region. […]

“What we’re considering is how we can prevent hotels and tour operators from offering foreigners further discounts.

They should be trying other strategies instead of cutting prices,” Prakit said, adding that cutting prices would not help operators to survive in the long term and would also damage the overall tourism industry.

A recent report on the Phuket hotel market prepared by local consultancy C9 Hotelworks said discounting by Phuket hotels cost the industry on the island US$300 million (Bt9.92 billion) in room revenue last year. (Nation)

How on earth people can be so blind ? So utterly and convincingly dumb ? Even by thai standards, Prakit is breaking the sound barrier of dirt stupidity.

This man basically is saying : “don’t lower your prices too much… you would risk to attract more customers”.

This man doesn’t understand that hotels are not lowering their rates for pleasure… but because of a very challenging environment !
-a freaking global crisis
-higher competition (tourism is a global market and supply is increasing while demand is shrinking)

Lower solvent demand + higher supply= prices going down.

This rule is so obvious. But still, Prakit doesn’t get it.

Prakit thinks that he’s leading… a cartel. Well, we all know that thai business operators hate competition (tik mak ! too much work !)… But tourism is a global market. Even in Thailand, the smartest and the strongest will reduce their prices. Because they have no choice.

Prakit, being a perfect thai, would like the hotels… instead to increase their prices ! It’s a good old trick business love to do here. Zero imagination. Zero knowledge. Zero talent. Little people mafia-minded. Little crooks.

We are going to rephrase for Prakit : you can say whatever you want, if you continue to build 5 stars “spa” hotels accross Thailand, and if the global crisis continues to deepen then prices will go down. Because all the hotels in the world will compete for less and less tourists.

Lowering prices is only one further step… toward bankruptcy. But it allows a few to survive, while the sheeps, the weakest are slaughtered.

It’s called natural selection. And it’s’ a very healthy mechanism in any free market.

Overcapacity must be destroyed.

And It will.

People like Prakit, like all his westerns peers (AKA the clowns : Bernanke, Trichet, Geitner, Obama, Sarkozy etc.), live in a Lalaland where banks, businesses (and banks and businesses preferably owned by friends of course) are always growing, never failing.

16 Responses to “THA to hotels : “Don’t lower your prices, you’d risk to attract more customers””


  1. 1 bodhisattva 29 January 2010 at 4:27 am

    What can you say?

    Nothing, but then again, this is amazing Thailand for you.

    I know for sure that the hotel occupancy in Phuket, Pattaya and Samui is down below 40% on all the 4-5 star hotels.

    The tourist are half of what where there before and they are spending 40% less pr. person then before.

    What does this mean?

    It means for the the Thai´s in general?
    It means that thousunds of people are turning back up country because there is no work. Thefts, murders and all kinds of scams increase in relation to the desperation that is included in all those changes.

    Tourist are turning up in Cambodia, Philippines and now Sri Lanka and dropping Thailand all together.

    The airport hostage last year with the political instability and 100% increase in corruption (and of course the economic crash worldwide) are just starting to show in Thailand.

    Much worse is to come and even tho the Thai´s can deny facts then the pain of these facts is starting to show big time in Thai society with less tolerance and frustration.

    The Big boy´s who own the 4-5 star resorts and hotels usually find ways to manage the damage on them through increase in other scams and corruption but now they will not because there are so few fools left to take advantage on.

    The average tourist in Thailand is dead poor…and a fool. The other have turned to more stable and friendly areas, for example Cambodia.

  2. 2 Bob 29 January 2010 at 7:27 am

    “The airport hostage last year…..”

    Dude we are in 2010 now, the airport closure was in 2008!

  3. 3 carl 29 January 2010 at 8:42 am

    A comment from Accor (nation multimedia):
    “The group has refrained from entering into price wars, because the long-term effects of this will often outweigh the short-term drops in trading. Instead, selective regional sales have been conducted to stimulate business needs,” he said.

    If someone believes in recovery you have to think like that !

  4. 4 E. Spitzer 29 January 2010 at 11:03 am

    Obviously the hotels need to follow the methods of the Phuket Tuk Tuk co-operative (aka mafia) and keep hotels rates high and beat up any hotel owners or tourist who tries to discount.

    If all Phuket hotels charged a minimum of 5000 Baht a night (plus mandatory 1200 Baht hotel transfer fee), then everyone would make money and better yet with the 10% occupancy rate that would follow Thai employees would have less to do and their happiness quotient would go up, increasing the Kingdom’s Gross Happiness Index.

    Win-Win

    If this doesn’t work, and not enough money is being brought in, then more hotel need to be build (and more Tuk Tuks bought).

  5. 5 Lloyd 29 January 2010 at 11:38 am

    The following quote is from Bangornrat Shinaprayoon, director of the TAT’s South Region 4 office in Phuket, as quoted in the Phuket Gazette.

    http://www.phuketgazette.net/news/detail.asp?id=8290

    “As for the current tourism picture, Mrs Bangornrat said current hotel occupancy rates on the island are in the 70%-80% range on average, but advance bookings at resorts in March are currently only about 30% to 40%.”

    Having been in Phuket for the past 6 months I would say that Khun Bangornrat spends far too much time in her airconditioned office and needs to get out and ask the “average” business person for their opinions.

  6. 6 Leosia 29 January 2010 at 12:35 pm

    Normal market forces don’t seem to apply in Thailand, which I guess is why it’s so dangerous to invest here. The same situation you described is true of the stagnant rental market for condos and apartments in Bangkok. Thai owners are maintaining their high prices despite very low occupation levels for the following reason: if they lower their monthly rental values they will not recover the money they have lost while the property has been empty!

    Thai landlords are happier to have empty apartments and office space than trying to be a little more competitive.

  7. 7 Bedwyr 29 January 2010 at 12:55 pm

    Yeah, but a trip down the wat for a bit of the old tamboon, that’ll fixer ‘er up.

    Sometimes you can’t believe yer luck, some,times you just can’t believe yer ears.

    Amazing Thailand right enough.

  8. 8 ThaiCrisis 29 January 2010 at 2:16 pm

    E. Spitzer, you have perfectly summarized the situation and the logic at work over there !

  9. 9 ThaiCrisis 29 January 2010 at 2:17 pm

    Ah ah ah ah “selective regional sales”. I love it.
    Easy to decipher : “WE CUT OUR PRICES WHERE WE… HAD TO”.

    Market. The only true (and reliable) deity. 😉

  10. 10 Pricilla 29 January 2010 at 6:13 pm

    Tourism in Thailand suffers the same fate in many ways that the economies of most countries face…namely inept management pandering to losers who contribute nothing. Unfortunately with bone ignorant populations electing bone ignorant politicians the outcome is quite predictable. The problem with booms (e.g. Thai tourism in the past) is that it hides all the inefficiencies and problems as everyone is making money regardless of the mistakes. In Thailand’s case the pissed off visitors were being constantly replaced by newbies so no one cared about the rip-offs, murders etc. A slow down of course then exposes the problems, but the ignorant want to keep to their past inefficient practices as it is all they know.

    Some good comments here, I would add that Thailand needs to honestly evaluate where the market is going, identify problems that are creating leakage to surrounding markets and then create a policy to address these and create an enthusiasm for tourists to come here…will never happen of course. Price is one of many things, the idiot from THA is shooting blanks, he has no idea what is going on just wants to protect margins of businesses with few customers and justify his job. There again neither does the government, so in all likelihood tourism industry will finally shoot itself in the foot, numbers will continue to drop and nothing will change. Probably in the end just blame it on the farang.

  11. 11 fall 29 January 2010 at 6:24 pm

    The THA should follow what South Korean are doing, subsidize their travel agent.
    Basically, Korean own travel agency in Thailand get subsidy from government and able to lower their package price.
    Judging from the influx of their tourist from Thailand, it work!

    selective regional sales
    And how the f*** is that different from a price war? May be a price skirmish?

    @E. Spitzer

    LOL, game theory with a mafia twist.

  12. 12 Insanity 30 January 2010 at 5:26 pm

    Another stupid unenforceable worthless statement from TAT which further damages Thailand’s already tarnished reputation as a vacation destination. No hotel proprietor will, or should, listen to such garbage unless they want to be out of business soon.

    Instead TAT should concentrate on creating a fair and balanced hotel rate for all tourists that is not based on the color of your skin or passport cover!

  13. 13 Lord HaHA 30 January 2010 at 6:02 pm

    Here’s a good site for TAT promote:

    http://www.bangkokscams.com/

    The site states:
    The intention of this website is not to put Thailand in a bad light (IT DOES :)). All countries have scammers (TRUE BUT THAILAND HAS CONSIDERABLE MORE THAN ANYWARE ELSE). However, we are concerned that a small minority (REPLACE BY LARGE MAJORITY)of Thai people (and some foreigners) who are giving Thailand a bad name. If (THERE IS NO “IF,” YOU WILL BE SCAMMED) you have been scammed while on holiday in Thailand then please report this scam so that others can learn from your experience. (BUT DON’T BOTHER REPORTING IT TO THE POLICE AS THEY ARE THE BIGGEST SCAMMERS OF ALL)

  14. 14 Tum Yum 31 January 2010 at 8:14 am

    Foreigners are the only ones doing anything to protect fellow travelers to Thailand.
    Thai authorities try to cover this stuff up instead of warning tourists.
    Now, with travelers able to make trip reports on the web and fellow travelers researching their destination, Thailand is learning the hard way. YOU CANNOT ABUSE OR DISRESPECT YOUR VISITORS.

    Here is a very comprehensive listing of scams facing visitors to the Land of Scum.

    http://www.skyscrapercity.com/showthread.php?t=676476

    Photos of Thai Police scamming tourists>http://www.skyscrapercity.com/showthread.php?t=676476

  15. 15 Lothar 31 January 2010 at 2:35 pm

    Well i think that Prakit has indeed a point. If the occupany rate is really in the 30-40% range then it can be became a bloodbath among the Hotels pretty fast.

    The problem is – and thats why it is a total helpless attempt – that this bad situation is already going on for to long. The financial reserves for many companies have perished in the last one and a half year of low season.

    Now keep in mind that the typical thai brain does not like conflicts and tries to make compromisses as much as possible (unless they are confronting a foreigner or lower class thai). Prakit is giving the perfect advise.

    But it will not happen. When you are dying the survival instinct starts to take over. And i think we all agree that the crisis is not over soon. With an overcapacity of 30-50% the consequences are clear. The international Hotels will just do what they have too.

    By the way, the airline prices are fantastic at the moment. I got flight offers to Jamaika and Dominican Republic for 230€, Egypt 90€, Maledives 120€!!, Tanzania (Killimanscharo) 220€, Katmandu 330€ – all are return flights from Frankfurt/Germany including all taxes and kerosin addons.

    So what was the argument to go back to Thailand again and again?

  16. 16 George P Tuckeer 1 February 2010 at 8:42 am

    Unlike a shirt, one cannot sell today’s hotel room tomorrow. A hotel room is a perishable commodity. Every 24 hours, hotels throw out rooms that weren’t sold. So it makes sense to sell it at any price.


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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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