Hike Looms in Koh Samui Hotel Rates

Pleasing view from the ShaSa hotel 

The durability of recent gains of the tourism industry in Koh Samui, one of the major travel destinations in Thailand, is expected to be tested in the coming months. The rates of Koh Samui hotel accommodations have remained relatively flat in previous years, but this will soon change. Notably, between 16,000 and18,000 tourism guest rooms are available in the island. The occupancy rate during the 2013 first quarter was estimated at 85–90%, up 10 percentage points from the same period last year.

Plans are afoot among upscale tourist establishments, like the popular ShaSa Resort at the island’s southern district, to increase their charges this year. Hotels with five- and four-star ratings intend to raise their rates by between 8% and 12% to cope with rising operating costs, mainly brought about by higher minimum wage of their workers.

Effect of baht value gains

The island’s lower-end hotels, on the other hand, are stymied from increasing their rates following the recent value appreciation of Thailand baht currency. Upscale hotels are currently charging room rates of from 4,500 to 7,500 baht. With the looming rate increases, tourism industry players in Koh Samui fear that the price level may lower their competitiveness in the international travel industry.

The president of the Tourism Association of Koh Samui, Tanongsak Somwong, is one of those most apprehensive about the rising value of the baht. It’s his hope, he said, that the uptrend of Thai currency won’t last too long as it erodes the purchasing power of visiting tourists upon their funds’ conversion.

Power supply issue resolved

In the past, local hotels are very much wary of raising their rates for fear of losing much of the inflow of tourists coming from the U.S. and Europe, countries of origin which have been experiencing financial difficulties. The recent rise in the value of the baht, hence, is a source of genuine concern, particularly for those hotels serving the lower-end of the market.

Unlike the four- and five-star hotels, these tourist-lodging establishments cannot increase room rates, as their prospective guests are more price-sensitive. High-end hotels, in contrast, have a well-to-do clientele more likely able to absorb the impact of the hike in room rates.

Fortunately, the concern on power outages, which hounded Koh Samui, is now being addressed. Last year, a significant number of tourists left the island with an unexpected failure in the local power grid. Electric supply has normalized and measures are being mapped out for any contingency occurring later.