Oversupply of hotels in
northern Thailand
Unemployment looming
By Jon Fernquest 
In
boom
times
northern Thailand over-responded and built too many hotels for
the tourists, both foreign and domestic,
who flock
to northern Thailand during certain festive
times of the year. Now the supply of hotel rooms far outstrips the number of tourists visiting northern Thailand.
In bad times this may mean mass layoffs.
Are government bailout funds really a long-term solution to this problem?
Hotels in North face severe glut
Up to 6,000 jobs may go after SongkranBy CHADAMAS CHINMANEEVONG
1/04/09
Hotels in the North saw their occupancy rates plummet to 55% in the first quarter of this year and more than 6,000 layoffs are expected after the Songkran festival. The mounting problems faced by hotels in the region, particularly those in Chiang Mai, stem from the economic recession and oversupply, said Kanong Suvannavisutr, president of the Thai Hotels Association Northern Chapter.
a
glut - oversupply, too much of something so that it cannot
all be used (See
glossary)
unemployment - the percentage of people in a country who are without work but available for work and currently seeking work (See Wikipedia)
looming - a threatening and worrying situation seems likely to happen soon
boom times - when business is very good and everyone is making a lot of money
over-responded - did too much (reacted too much to the good situation)
domestic - within the country (Thai tourists)
flock - when a large number of people go to a place because it is interesting or pleasant
festive - exciting and colourful because of a celebration or holiday
X far outstrips Y - X becomes much larger or more important than Y
layoffs - when people lose their job because of a decline in business and lack of work for them (not their fault)
mass layoffs - layoffs of large numbers of people
bailout - government money given to help a company and prevent it from failing
funds - money made available for a special purpose
occupancy - when someone uses real estate (for fixed period of time)
a vacancy - a room, office, or space available to rent in a building
occupancy rates - the percentage of a building that is being rented
plummet - fall quickly by a large amount
mounting problems - increasing problems
problems faced by Y - problems that Y has to deal with and solve
X stems from Y - X is caused by Y, Y causes X
oversupply - supply of the good is greater than demand forcing down prices (or eventually causing exit from market)
unemployment - the percentage of people in a country who are without work but available for work and currently seeking work (See Wikipedia)
looming - a threatening and worrying situation seems likely to happen soon
boom times - when business is very good and everyone is making a lot of money
over-responded - did too much (reacted too much to the good situation)
domestic - within the country (Thai tourists)
flock - when a large number of people go to a place because it is interesting or pleasant
festive - exciting and colourful because of a celebration or holiday
X far outstrips Y - X becomes much larger or more important than Y
layoffs - when people lose their job because of a decline in business and lack of work for them (not their fault)
mass layoffs - layoffs of large numbers of people
bailout - government money given to help a company and prevent it from failing
funds - money made available for a special purpose
occupancy - when someone uses real estate (for fixed period of time)
a vacancy - a room, office, or space available to rent in a building
occupancy rates - the percentage of a building that is being rented
plummet - fall quickly by a large amount
mounting problems - increasing problems
problems faced by Y - problems that Y has to deal with and solve
X stems from Y - X is caused by Y, Y causes X
oversupply - supply of the good is greater than demand forcing down prices (or eventually causing exit from market)
''I can say that the average hotel occupancy in the North is the lowest when compared to other regions. Several hotel executives in Chiang Mai saw their salaries cut and most staff will eventually accept the leave-without-pay option,'' he said.
Layoffs of at least 20% of the 26,000 people in the region's hotels are likely after the Thai New Year celebration.
average hotel occupancy -
the typical or normal percentage of rooms in a hotel being used over a
period of time (note: can move up and down too, so need to know
variance or standard deviation)
leave-without-pay option - when the management tells workers to go home, they will call them when there is work again
leave-without-pay option - when the management tells workers to go home, they will call them when there is work again
Initially, many hotel operators had pinned their hopes on Songkran but advance reservations are only 50-55%, compared to 70-80% last year...
''Hotel room rates are very cheap. The rate for five-star hotels is 3,900 baht including breakfast, per room per night, four-star 1,200 baht, and three-star 900 baht,'' he said.
The association estimated that there are now 31,000 hotel rooms in Chiang Mai and the number will continue to increase because a lot of small hotels, with 40-80 rooms, are under construction, exacerbating the glut.
pinned their hopes on Y - feel
that event Y might help save them
advance reservations - when tourists make arrangements to stay at a hotel weeks or months before they travel
exacerbating the glut - making the glut worse
advance reservations - when tourists make arrangements to stay at a hotel weeks or months before they travel
exacerbating the glut - making the glut worse
Prakit Chinamourphong, the THA president, said the association would work with the Federation of Thai Tourism Associations (Fetta) to organise the Fetta Grand Sale in August. More than 2,000 booths including hotels, airlines, travel agents, and car rental firms, will join the fair and they will offer more than 50% discounts.
The THA expects that the event will help tourism operators in all regions sell their products amid the slowdown.
As well, Mr Prakit said the association would ask the government to provide more financial assistance to help big hotels with assets worth more than 200 million baht. The government recently approved a two-billion-baht fund for small and mid-sized hotels with assets below 200 million baht. To date, 49 hotels have applied for soft loans worth 1.021 billion baht.
Mr Prakit expected that if the government approved an additional fund for big hotels, more than 100 operators with nearly 10 billion baht in assets would apply for aid.
''If the government turns down the fund request for big hotels, we will see more layoffs because they have hired a lot of workers,'' he noted.
tourism operators - businesses
that provide tourism services like guided tours or package deals (also
possibly hotels)
soft loans - loans with easy conditions (low interest or long pay back period, or period where payments don't have to be made)
turn down a request - say no to request, deny the request, not give the people what they asked for
turns down the fund request - the government turns down the big hotels' request for aid
soft loans - loans with easy conditions (low interest or long pay back period, or period where payments don't have to be made)
turn down a request - say no to request, deny the request, not give the people what they asked for
turns down the fund request - the government turns down the big hotels' request for aid
(Source: Bangkok Post, business,01/04/09, Hotels in North face severe glut, CHADAMAS CHINMANEEVONG, link)
