It was like a shot heard around the world – or at least ricocheting loudly through Thailand. On March 23, William Heinecke, founder and chairman of Minor International, announced that he would close his hotels in Bangkok in the face of a fast-spreading coronavirus crisis. And he urged authorities to act forcefully to contain it.
Heinecke is a self-made billionaire entrepreneur behind the biggest hotel chain in the country, with homegrown brand Anantara and Four Seasons resorts that regularly rank on the global best lists. A smattering of other Bangkok hotels followed, and another 100 properties on the resort island of Phuket are planning to follow suit.
Contributed by Ron Gluckman
Thailand had already acted to close bars, restaurants, massage parlors and sports facilities. As hotspots for COVID-19 spread around the globe, Heinecke – an American raised in Thailand, and a Thai citizen, feared that his adopted homeland needed more urgent action.
“We believe that strong short-terms measures are the best way to address this and avoid large-scale job losses and disruption,” he said.
As Heinecke shut his hotels in late March, Thailand did seem to be reaching, as he said, “a tipping point.” Thailand was the first country outside China to record a virus case, in January, when the global pandemic was still considered an outbreak confined to China. Yet, as the virus spread around the globe, Thailand remained relatively unscathed. Even as the virus surged across Southeast Asia, Thailand’s death count remained comparatively low – still in single digits at the end of March.
“We’re in the next phase, of hotels closing, at least temporarily,” said Bill Barnett, managing director of hospitality consultancy firm C9 Hotelworks.” He predicted a wave of closures after the government’s expected declaration of “force majeure,” which eases liability in the event of catastrophes. This would shift some of the burden of employee payments to social security, and facilitate less painful shutdowns.
Already, the Phuket Hotels Association is preparing for the closure of 100 hotels on the island, which saw its land bridge closed on March 29; flights are set for suspension in April.
Thailand was particularly at risk as so much of its tourism banked on mainland Chinese, who accounted for over a quarter of the 40 million visitors in 2019. Beijing banned outbound group tours in late January, as part of efforts to contain the coronavirus. Overall arrivals dropped about 43% in February, compared to the same month in 2019, but arrivals from China plunged 85%. Tourism accounts for about 10% of Thailand’s overall GDP.
The decline only accelerated in March, as increasingly restrictive steps were taken to address the spread of the virus and the collapse of tourism. Airlines limited, then ended service, and Thailand issued strict conditions on visitation, eventually closing borders to outsiders. Bangkok hotel occupancy, which hovered above 50 percent at the beginning of March, plunged to unheard of levels of 15-20 percent, according to data firm STR.
The big questions are how, and when this ends. Barnett discounts comparisons to previous downturns, like SARS in 2003. “This is totally different. Then, you had a bottom, and Phuket came right back. But nobody knows how this will go. If it ends soon, then we are in summer, and most visitors come when it’s cold elsewhere, like in Europe.”
Barnett worries that even the most optimistic upturn would be in the end of 2020, when Thailand moves back into its traditional high season, meaning a full year would be lost.
He predicted most hotels would hang on, and shutting temporarily would help stem costs. Many are pushing for government help, and some hoteliers are renegotiating with lenders, said Kongsak Khoopongsakorn, president of the southern chapter of the Thai Hotels Association.
Heinecke, whose hotels, restaurants and retail operations employ 37,500 workers in Thailand, remains steadfastly optimistic. “This is a major challenge,” he said. “But Thailand has always persevered, and I’m confident we will again.”