Thailand: Cancelled conferences hit hotel income

• Mar 04, 2020

Hotels are bracing to lose another major source of revenue as companies opt to make announcements online or through video conferencing to avoid contact with the coronavirus, rather than the typical method of pricey hotel press conferences.

Major companies like Advanced Info Service (AIS), Lazada, Allianz Ayudhya Assurance and Kasikornbank are opting for teleconference calls with reporters and the public, instead of face-to-face meetings.

With dozens of press conferences per company per year, hotels are losing big on event revenue.

Hotel meeting space bookings in March fell to 40% occupancy from 60% in February and 80% in January.

Revenue from food and drinks that comes mainly from group meetings using convention halls and meeting facilities accounts for 30-40% of the total revenue of a hotel, said Ronnachit Mahattanapreut, senior vice-president for finance and administration at Central Plaza Hotel.

He said Centara Grand at CentralWorld — the flagship convention hotel for the group — has witnessed a 30% drop in revenue since the start of the year, the result of group meeting cancellations and low occupancy rates.

“Many international Mice (meetings, incentives, conferences, exhibitions) events have been cancelled since the outbreak, while domestic Mice events are worried about group gatherings and are avoiding the risk by cancelling and postponing meetings,” Mr Ronnachit said.

He said the situation will not get better any time soon, at least until June.

Centara Group has 76 hotels in Thailand and the Maldives. It anticipates revenue per available room this year diving 10-15% because of weaker average occupancy and lower average room rates.

Erawan Group Plc, which owns the Grand Hyatt Erawan and JW Marriott Hotel Bangkok, is also seeing weaker occupancy in meeting spaces and guest rooms, said Woramon Inkatanuvat, the company’s executive vice-president and chief financial officer.

“We’ve seen cancellations of international meetings since the outbreak but still have some bookings from local organisations on hand, even though it’s weaker than the normal situation,” she said.

Normally, revenue from rooms and food and drinks at luxury hotels adds up to 50% of the total. Out of total food and drink revenue, 70% is from banquets and 30% from outlets in the hotel. The latter are still operating as usual despite fewer guests.

The average occupancy of the two luxury hotels has dropped to 40%, prompting management to more tightly control operating costs through measures such as saving energy and asking employees to take annual leave.

AIS, Kasikornbank, Allianz Ayudhya and Lazada are among the large companies embracing online broadcasting for communication with targeted audiences this month.

“The outbreak has forced businesses to communicate via video conferencing and live broadcasts to offset face-to-face communication at this time,” said Pratthana Leelapanang, chief consumer business officer at AIS.

AIS has used video conferencing in its business meetings since last month and decided to leverage Facebook Live for interactions with the media during its 5G network expansion, Mr Pratthana said.

“The live broadcasts might draw less engagement than the traditional press conferences, but the recent event suggested the results are above expectations with more questions from the press,” he said.

The event lasted only 20 minutes, compared with normal press conferences that last about an hour, Mr Pratthana said.

He said the outbreak could trigger further adoption of immersive technology for live broadcasts driven by AIS’s 5G network, such as 360-degree view cameras, 3D holograms and virtual reality.

“All of these can serve business meetings and conferences, even in classrooms,” he said.

Source: https://www.bangkokpost.com/business/1871014/cancelled-conferences-hit-hotel-income