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Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

Bhuritt Maswongssa, who serves as the Southern Thailand representative on the Tourism Council of Thailand (TCT), has called for government intervention on banks now calling in business loan repayments, warning that lack of action will send many hotels and other tourism-related businesses into bankruptcy and cause damage that will take the tourism industry years to recover from.

tourismeconomicsCOVID-19
By Tanyaluk Sakoot

Saturday 8 August 2020, 09:00AM


“Today, nearly all hotels on the island have bank loans. There are only a few hotels that do not have loans with the banks. This leaves many businesses on the island exposed to critical risk from not being able to make loan repayments during the current economic situation,” said Mr Bhurritt, who also owns and operates the Patong Resort Hotel as the General Manager.

“Some hotels may still be able to re-negotiate their loans or restructure them if they still have assets that they can use as collateral, but many hotels have been closed for a long time without any form of revenue, so it makes no sense for banks to be foreclosing on unpaid loans and seizing a property that will not make any money,” he added.

“We need the government to make a deal with the banks in order to help hotels and other tourism-related businesses on the island. If this does not happen, many hotels and tourism businesses are likely to go bankrupt,” he warned.

“Worse, once these businesses close permanently, [beyond Phuket] hundreds and thousands of employees will be laid off, and that will aggravate the economy even further,” he said.

Mr Bhuritt also called for serious representation be sent from Bangkok to assess the actual economic impact the COVID crisis is having on Phuket.

“In this situation, we need a proactive person to come to see Phuket as fast as possible,” he added.

Mr Bhurritt warned that lack of government intervention on bank loans could push enough tourism-related businesses into bankruptcy to cause a downward spiral for the industry that would take years to recover from.

His concerns echoed those of TCT President Chairat Trirattanajarasporn, who late last month warned that the industry as at a “tipping point”, with 30% of tourism-related businesses believed to have already “exited the market” in the first half of this year, a trend that could spell heavy long-term damage to the industry as a whole.

Many related businesses were terminating their operations or selling off assets, choosing not to wait for an uncertain recovery, with those most heavily affected being tour operators, bus services with small vehicle fleets, restaurants, souvenir shops and hotels that used to focus on foreign tour groups, especially the Chinese market, Mr Chairat explained.

Phuket Chamber of Commerce (PCC) President Thanusak Phungdet agreed that the industry was now at a critical juncture, especially now with businesses under threat from bank loan repayments.

“The tipping point is all the businesses now facing problems making repayments to banks, because hotels and other businesses simply do not have the money to pay back the loans,” he said.

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“This will of course directly affect all the staff at these businesses who will become unemployed,” he added.

Mr Thansuak also called for a top-level representative from Bangkok to come to Phuket to assess the true situation on the island, someone “who can help us in practical terms”, he said.

“I don’t care who it is, but it must be someone the Prime Minister listens to and trusts,” he said, without acknowledging that Deputy Prime Minister Jurin Laksanawisit was on the island for exactly that purpose less than two weeks ago.

“We also ask that the Bank of Thailand send someone to Phuket along with the CEO of each bank to hear firsthand the problems owners of hotels and other businesses are facing right now,” he added.

“Third, we expect the Centre for COVID-19 Situation Administration [CCSA] to choose Phuket to be the first province to receive tourists from abroad, then the CCSA can use Phuket as the model for other provinces to use in receiving international tourists,” Mr Thanusak said.

Bhummikitti Ruktaengam, President of the Phuket Tourist Association, has already called for Phuket airport to be allowed to receive direct international flights, stating with chartered f lights and private jets, saying the province already has three hotels accredited as “Alternative State Quarantine” (ASQ) venues.

At present, Phuket has three ASQ facilities. Another 16 hotels are awaiting approval.

Mr Bhummikitti said tourists in ASQ will help drive the industry and are likely to stay longer than the 14-day quarantine period, while tourists under travel bubbles may have a shorter length of stay, he told the Bangkok Post.

The province is preparing capacity for up to 20,000 tourists a day with 50 ICU beds equipped for coronavirus cases, he added.

The plan to open the province to chartered flights and become an ASQ destination was discussed with the Phuket Governor Narong Woonciew late last month. The idea of welcoming private jets from Malaysia, Hong Kong and Singapore will be discussed later, he said.

“If Phuket cannot get international flights until the end of the year, then the province will have only B80 billion in tourism inf low, compared with B440bn last year,” Mr Bhummikitti said.

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Kurt | 10 August 2020 - 04:44:23

G-M of Patong Resort Hotel should be more worried about the new opening of 'Four Points by Sheraton' hotel ( another 650 rooms) in  Patong. That is business downward spiraling. All other Officials in this article sell a lot of thinking, hoping, expecting, planning, etc., not based on solid 'New Normal' facts.

Kurt | 09 August 2020 - 09:28:29

... something what never comes back. Tourist industry has to 'sanitize' herself to 'New Normal'. Task for the Government to help in that change of thinking. And of course more industrial diversity on Phuket. Remaining walking on 1 leg only as Phuket did till now has been proven not be the best thing for  'New Normal' future.

Kurt | 09 August 2020 - 09:21:11

Compliment Thailand with containing Covid. Ironically, rules for international tourism are such that they will not come according the 'Old Normal',meaning no economical contributing tourism. Tipping point: Banks noticed that and go in the 'New Normal" mode, while hotels+all other tourist establishments ask for financial support according the 'Old Normal', something what ne...

Kurt | 09 August 2020 - 01:32:26

Infection free certificate 72 hours before flight ( useless), Insurance covering Covid, 2 weeks ASQ lock up at own costs, 'regimental Safe & Sealed inbound plan for B 100, 000 per person. ( for family of 4 is that 400, 000!).  Can keep the hotels closed, than less lost money. Banks not step into this.

CaptainJack69 | 08 August 2020 - 14:06:58

It's worse than that. Banks are not interested in restructuring loans for tourism related borrowers. They can see as clearly as anyone that this situation is not going away and they will never get their money back. Why would a bank be interested in taking possession of a hotel that it knows it wont be able to sell for years if at all?

Shwe | 08 August 2020 - 13:04:37

When are these people going to realize that no one is going to come and spend 14 days of their vacation in a cheap quarantine hotel. Until a working vaccine is available forget international tourism

 

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