• Medium-sized hotels in Thailand were in the worst of pandemics.
  • Currently, 5-star hotels are reducing prices to 4-star levels to attract travelers.
  • In other words, even during the recovery period, the recovery of midscale properties cannot be expected.

The 5-star Village Coconut Island Beach Resort is located on a private beach in Phuket Island, Thailand. In online reviews, guests praise the location and its staff. There are two swimming pools, a spa, and a “very good” rating from about 1,500 visitors. And now that price has dropped from $ 336 a night before the pandemic to $ 186 a night.

It is not an outlier. Top-level hotels across Thailand advertise similar price cuts. Wyndham Sea Pearl Resort (5-star, private balcony, wine cellar) has been reduced from $ 268 to $ 123 per night. Dymond Cliff Resort and Spa (5 stars, 20 acres, 3 bars) has reduced the price per night from $ 368 to $ 118.

Due to such price cuts, Thailand relax That border limit. But what they are doing is eating up the market share of middle-class hotels. Consider Holiday Inn Resort Phuket, a four-star hotel that currently has a “great” rating of $ 134 per night, or the Four Points by Sheraton and its $ 149 night price tag without discounts.

At such a price, why would everyone pay more or the same amount for a hotel with a lower rating?

The middle is falling

A January 2021 Statista survey examined the impact of pandemics on Thai hotels in four categories: budget, medium-sized, luxury, and luxury. This survey surveyed hotels in 20 Thai states, including Bangkok, Phuket and Chiang Mai.

After all, only 2.5% of luxury hotels in Thailand were severely affected by the pandemic. By comparison, 29.4% of medium-sized hotels (highest in the group) were seriously affected.

Now as Thailand Welcome visitorsPart of the hospitality industry, but not all Recovery mode — And medium-sized establishments are falling on the other side of the curve again. In addition to the fact that five-star hotels are raising prices to compete with the prices of four-star hotels, the opposition to four-star hotels is that stagnant demand leaves some people on vacation. It’s driving you to spend more.

Bill Barnett, Founder and CEO of Phuket-based hospitality consultancy C9 Hotelworks, told insiders:

Aerial view of buildings lined with coves and beaches

4-star hotels are rapidly losing their position in the market.

LILLIAN SUWAN RUMPHA / Contributor / Getty Images

Barnett added that the list of things that are working for 4-star hotels is longer than the list of things that are currently working for them.

“They are indistinguishable,” Burnett said of a four-star hotel. “They aren’t sitting in prime locations and not on the beach front, so people are saying,’Why do you want to stay there?'”

It also comes down to the number of rooms. A quick search on Booking.com shows that one of Thailand’s top tourist destinations, Phuket, has nearly six times as many medium-sized hotels as luxury hotels. “They have too many rooms,” Burnett said of the middle class.

Domino effect

The sharp drop in hotel prices in Thailand is due to the sharp rise in hotel prices in the United States. The current average hotel price in the United States is about $ 147 per person. Washington post, Quoted from travel research company STR. That’s $ 42 higher than last year and $ 15 higher than 2020.

But bad news for hotels may be good news for travelers.

“It’s a strange phenomenon,” Burnett said. “When a 5 star becomes a 4 star price, people will say,’Why do you need to book a 4 star?'” “

This proved to be the case for Lauren Wedge and its partners, who are experts in logistics and imports from the United Kingdom.

The pair recently traveled to Phuket for a friend’s wedding and stayed at Amari Phuket, a 5-star beachfront resort.

“Amari was able to enjoy uninterrupted sea views because the balcony overlooks a small beach,” she currently booked for a stay at a luxury resort for $ 247 per night. Said their decision. “It also had quite a few available.”

“My partner has never actually experienced a five-star hotel, so I was really impressed with the whole experience,” she continued.

“During the vacation we spend with a couple, we tend to stay in small, medium-sized hotels with few facilities or rent an apartment. Therefore, this is a new experience for us as a couple and a mistake. It wasn’t our experience. Repeat after a great experience in Amari, “Wedge added.

Barnett was frank about the market implications of a five-star hotel continuing to adopt a four-star price.

“Domino,” he said. “The people in the middle with the most hotel rooms are messed up.”