InvestMaN takes our readers to get to know more about hotel business – the most worrying business right now since the beginning of COVID-19 pandemic, as reported by source – Bangkok Biz
Thailand is one of the most famous destinations for international tourists. It is therefore not surprising that Thailand relies so heavily on the tourism industry to drive the country. As a result, the country is extremely affected by the epidemic.
Occupancy rate has fallen drastically as international travelling continues to be restricted. Revenue from providing catering venues for banquets and conferences is a lost cause, in contrast to the relatively high operation cost of running a hotel business.
Colliers International Thailand has revealed the results of the hotel business survey regarding the effects of hotel operation which includes the adapting of strategies in order to see the businesses through the time of hardship.
- Temporarily shut down or closed permanently
- Renting units as state quarantine facilities
- Monthly rent similarly to service apartment
When talking about Thailand’s tourism & hospitality industry, people often think of the popular attractions such as beaches and mountains, while overlooking Bangkok implicitly. Hence, InvestMaN would like to bring your attention to hotels specifically located in Bangkok which are facing an even bigger crisis than anywhere else in the country.
The most obvious difference is the target group of customers/guests. Hotels & resorts located in famous tourist destinations down south welcome the mixed proportion of foreign and Thai tourists. Government loosening the lock down and encouraging locals to travel in the country does help hotel business at tourist attractions to stay afloat. The same thing cannot be said for hotels in Bangkok, particularly, luxury tiers which tend to rely almost entirely on foreign/international guests regardless of the pandemic situation. As a result, we have already witnessed the closure of several hotels in the capital.
Appraisers’ view also asserts that the impact of COVID-19 is a temporary transformational uncertainty. Therefore, we make little emphasis on the situation as a factor which could drive down price. Nevertheless, the selling price may be lower due to the owner’s willingness to liquidate. An opportunity is there for investors in this period. However, factors affecting the long-term change may be in terms of investors who have to accept lower yields than they used to be. As according to the formula V = I / R, if the value does not decrease much, income is less. Therefore, the rate of return has to be reduced accordingly.
Prospec Appraisal provides consultation regarding hotel business operators who are consolidating assets for accounting purposes or planning to acquire or liquidate business. We also provide appraisal/valuation services for hotels and other types of businesses.
Thanks to the news source: Bangkok Biz
