Riding out the storm

Global hospitality businesses are resetting their operations while biting the bullet under the weight of the pandemic. Zeng Xinlan reports from Hong Kong.

Hotels in countries that are particularly reliant on tourism revenue are scrambling to navigate out of the financial storm as inbound travelers dry up. Mass public vaccination programs rolled out around the world may offer a ray of hope, but are hotel operators confident of returning to their heyday?

"The COVID-19 hit last year was unprecedented," said Suphajee Suthumpun, group CEO of Bangkok-based Dusit International, one of Thailand's oldest and biggest multinational hospitality companies. "We've never seen anything like this."

The group lost 1.01 billion baht (US$32.5 million) in 2020 as the pandemic grounded airlines and travelers around the globe. Dusit International, the public brand of Dusit Thani Public Co, operated Bangkok's iconic Dusit Thani Hotel until 2019, when it was demolished to make way for the company's first "branded-residence" complex, scheduled to open in 2024.

Suphajee said that even with the loss, Dusit probably suffered less than some hospitality-focused companies. "Although our loss is quite big, I think we're still better off than the overall industry," she said.

'Worst days over'

The company's panacea includes exercising strict cost control, launching programs to boost revenue and diversifying risk. The measures paid off, with the group's revenue for the whole of last year shrinking by 50 percent compared with an overall 70 percent decline for Thailand's hospitality industry.

Suphajee said she believes the worst days have passed.

"We hit rock bottom last year. Now, with the vaccination programs and concerted efforts in every country, we're confident that tourism will gradually pick up from the third and fourth quarters this year."

However, it'll be a long ride for the industry to return to normal, Suphajee said.

"I don't think we can be back on track this year or next. It'll probably take about three years for the business to hit the same level of 2019. By that time, many businesses could have changed."

Looking at the hospitality landscape in the post-pandemic era, Suphajee sees three main trends that could make waves; the integration of hospitality and wellness, or well-being: the focus on sustainability; and localized and personalized experience.

"The number of tourists might not be the same as that prior to the pandemic, but if we can adapt ourselves to these trends, the impact would be less," she said. "Therefore, we can recover from the revenue standpoint better than waiting for a big return of travelers."

The hotelier said that integrating hotel accommodation with tailor-made services and sustaining them will be the biggest opportunities for the hospitality sector.

"Customers want convenience, personalized experiences and value for money. If we can deliver all these, business will be within our grasp."

Suphajee is worried, though, that a shrinking demand for exhibitions poses a challenge for the hospitality industry as many businesses have opted for online sourcing.

"At least, for the next two to three years, they'll be using a different approach. When they intend to hold exhibitions, they'll probably go for a hybrid online and physical model."

Hurdle of 'travel bubble'

Another challenge is the lack of global standards in travel restrictions as different regulations may be imposed on international travel by various governments.

"Quite a lot of vaccines have been rolled out in many countries. But they aren't really of the same standard," said Suphajee. "It's still a challenge and we need to set certain standards in terms of opening up international travel again."

Setting standards is vital in launching "travel bubbles", she said. "Travel bubbles will be among different countries, and they usually use different vaccines. The issue is whether we can have one standard that's acceptable to all travelers."

The Tourism Authority of Thailand has given the nod to a "travel bubble" program called "Sandbox" to be implemented starting July 1. It will allow tourists from certain countries or cities to enter Thailand without having to be quarantined. Initially, the program will be enacted on the resort island of Phuket, while other key tourism-dependent spots in the country will follow suit, including Chiang Mai, Pattaya, Krabi and Surat Thani province.

Dusit International is set to unveil its first branded-residences development on the site of its first luxury Dusit Thani Hotel in Bangkok, in collaboration with Thai retail giant Central Pattana. The US$1.47 billion, mixed-use project will have residences, hospitality facilities, and office and retail space. The first phase of the international launch of Dusit Central Park was held in Hong Kong by US commercial real-estate services chain CBRE Group.

The project is located on the site of the former Dusit Thani Hotel in Bangkok's financial and commercial district. Dusit Central Park is envisioned as a lifestyle destination for the people of Bangkok, according to the company's website.

Dusit Thani Public Co, branded as Dusit International, was founded in 1948. Its businesses span hotel management, franchising and education. Dusit's portfolio includes 340 properties operating under six brands in 15 countries, including China, where the group currently has 10 hotels, with more than 20 other properties in the pipeline.