hmsthailand.com

It is no secret, and currently happening in the whole Hospitality world, management take overs. As more properties getting into financial problems to create a return, they are focusing on the help of the bigger brand to help them out.

In the past 4 months, Phuket has seen changes in management in many sectors. As there is a current oversupply in the property sector, owners are sometimes desperate on the look out for the right firm, or in some occasions,  just any firm. As these hotel management firm rely on growth to cover their costs, deals are being closed in a very quick pace.

Most recently La Tour company took over another property, that of Grove Gardens, which has increased the total presence in Phuket with 3 properties. Selecting the firm is a delegate job. Most owners might choose based on popularity or brand awareness in the industry. Often forgotten is the success rate of these management firms in the Revpar contribution. Comparing your future management partners by Revpar succession rate, is an easy differntiator of success.

Second choice the owner have to make is the cost of this transition. It’s is by far more expensive then hiring the right management team. You will buy into a brand, which is the far most highest fee you will have to pay (a cut on your profit). To line up your property with this Branded firm, requires additional funding to set all your FF&E to its standards. Adding all these cost up together you might have to ask your self if a management firm is THE SOLUTION.

But as an owner you never ever have to forget that these firms have to take care more then one property. In some of these cases these are properties owned by private equity firms or investors, which are driven on result. We see the trend happening in the world of the OTA’s, the more commission you pay, the more interesting you will become to them. But how much they are really care about your investment and your profit? The incentive structure should be clearly examined as you as an owner have not created a charity fund.

The success factor is the profitability of the branded management firm, which can be checked based on Revpar. Revenue management is the very basic you have to ask yourself in such a choice, “what is my future management partner doing in the field of Revenue management?”.

New Year , a new start, where will we go in the Hotel Business? Forecasting is much more difficult nowadays. Lowering demands will drive hoteliers to sell lower then they intend to do.  Revpar Guru believes that 2010 will show some recovery which is mainly driver by innovators willing to change their market perspective. We have to find more efficient ways to create the results we are looking for.

Looking at the results in the last quarter is not a real prediction of what will come ahead of us. The Phuket market of hotels experiencing the High and peak season in these months, and the battle starts after April when the low season is there again. We have to be cautious about our projections of this challenging year.

The return will happen slowly, we cannot expect that a market is only and purely driven by price, it is also the location. Many locations in the world nowadays are boosting their marketing budget to create awareness, which can result in less tourism for this year in Thailand.  Therefore we have to be careful with what we have and try get the most out of the market we have. Repeating clients are very important for your survival, once more.  This also counts for the faces of the resort, try to maintain those who have created recognition to your company and for which people will return.

Lowering the staffing costs, it will create room for efficient systems to do their job. The hotel industry is a mainly service orientated and people orientated business.  Specific adjustments in your system needs, or software upgrades, makes your business run far more efficient and hence, improve your revpar on short term and long term. Automation in order to push your revpar seems to be far most interesting then investing in advanced cash register system which doesn’t contribute to your revpar.

In the 2009 we have sliced the rates in half and offered tremendous discounts in order to maintain a healthy occupancy. Most businesses sliced their revpar with double digit numbers. In 2010 we need to preserve a healthy Revpar growth while the occupancies seems to get back in return.

As said earlier investments must be made which contribute on Revpar in order to justify future investments of the Capex budgetplan. The life line to success is to listen to your customers needs. Improvements need to be made in a cautious way while will creates incremental revenue in 2 to 5 years time.

With  an overwhelming growth factor in 2008 and early 2009, Phuket has seen a rapid increase of hotel rooms. This supply, or rather over supply, creates a disturbed market situation, where arrivals haven’t climbed that steep.  This trend will slow down in 2010 as many projects facing financial stress to complete their projects in their proposed time frame.  The competition will be in 2010 still fierce and hard to tackle as every property has their investors to please.

These effects as mentioned above creates a fierce market situation with continuous rate changes due to the OTA market presence. Changing the rates to too low rates can end up leaving money on the table. Intelligent systems which monitor the market and its supply, as well as your own supply, can manage this for you.  In real time, this system can adjust  allotments and prices to optimize your occupancy and Revpar levels. To survive nowadays market in 2010, technology is the way to control your revenue.

While the TAT was very optimistic in October about the target set up 14 Million arrival for Thailand this year, the ATTA is a bit more conservative. There can be seen a positive growth and the earlier mention 20% drop will not be achieved.

According to the ATTA (Association of Thai Travel Agents) the arrivals target of foreign visitors will remain on 11.5 Million visitors, still less then the expectations by the Ministry of Tourism. For the first 10 months of this year we have seen a drop of 10% compared to the same period last year. The big losses have been made in the beginning of the year as September and October show a growth rate of 16% and 10% respectively.

It is too early to speak about a recovery, but the number show that Thailand is still a favored destination, despite the crisis. The combined effort of airliners and hotels to adapt their rates definitely paid off. Markets as Germany and UK are still traveling, their decline is very small. The main Asian markets as Japan, China and South Korea dropped by 18% to 40%. We have seen the biggest growth for India, 5.5% up.

The figures which have been analyzed are from January 1st till October 31st, still much can happen as the high and peak season are not included.