Discount policy cost Phuket hotels 300 millions

Hotels in Phuket, one of the key resorts of Thailand, have missed a total of $ 300 million because of the discount policy, which was carried out in majority of Thailand hotels in 2009 on the recommendations of the government. Unprecedented discounts, which hotels of Phuket were offering their guests during the entire season, were not a sufficiently effective tool for improving profitability of the hotels. Many hotels in Phuket of 3 * class and above have suffered significant losses. However, budget-class hotels have demonstrated a certain success. Such information was presented in the report about the situation on the hotel market of Phuket, prepared by C9 Hotelworks Company. The data, presented in the report by C9 Hotelworks, was obtained by processing information from almost 2.9 million tourists visited Phuket in 2009.

Last year, the cost of rooms at hotels in Phuket was reduced by a total of 20%. Despite the fact that the influx of tourists in Thailand has exceeded the index of 2008 and returned to the 2007 level, low cost of hotel rooms did not allow hotels to reach the pre-crisis level of profitability. According to the report, a massive campaign for attracting tourists to Thailand on discounts proved to be beneficial only for two types of accommodation in Phuket: villas with swimming pools and budget hotels. Occupancy of hotels in Phuket in 2009 was 64%. In 2006-2007, this index was over 70%.

Many hoteliers in Thailand already predict a further deterioration of the situation at the local hotel market, including Phuket destination. Such concerns are connected primarily with the expectations of foreign tourists who from now on will count on the continuation of discount policy, and also with the behavior of travel agencies, who are already using the current conjuncture to exert pressure on hotels in Thailand in order to obtain additional concessions in prices.

However, despite the overall picture of the ongoing crisis, the report's authors do not exaggerate. It is believed that Thailand has overcome the consequences of the governmental crisis that the country experienced in 2008. Therefore a gradual return to the previous indicators is expected in 2010. Hotels in Phuket have not so long ago received an additional stimulus for the restoration from the Government of Thailand, which had provided the administration of the island with a total of 125 million baht for improvement of the infrastructure.