Hooked On Asia

Marble Temple, Bangkok

There is no doubt about it, with air fares and hotel prices falling, now is a good time to travel to Asia (or anywhere actually). According to Hotel dot com’s latest Hotel Price Index (HPI) hotel rates in Asia fell by 2% in the last quarter of 2008 compared with the same period in 2007. Although this was a lot less than the global average of 12%, it is the first quarterly drop recorded for Asia since the HPI began in 2004.

According to the report, by the end of last year Bangkok was one of the best-value cities in the world: you could find a 4/5 star hotel in the city from between £75 and £100 per room per night.

I feel certain that rates will have fallen even further since then but I wonder just how low they will go. Traditionally, for most of the region, May and June are low-season months and this is the period when rates bottom out: it will be interesting to see what that means this year.

Given the Global Financial Crisis, it could be that the trough lasts for a much longer period but personally I have my doubts that it will.

Firstly, although traveller numbers are down, they have not dried up completely, and there are markets that will still travel. The Middle East is probably among the strongest and that is certainly where a number of airlines are putting their money, and resources. Emirates, for example, recently announced that it is moving its double-decker A380 from the New York route to Dubai/Bangkok (effective 01 June). Incidentally that means travellers from the UK can now fly the A380 all the way to Bangkok, via Dubai of course.

Looking further east, although China’s economy is suffering as much if not more than most, on 31 March Shenzhen Airlines will be launching a thrice weekly service between the Chinese city of Shenzhen and Bangkok. One assumes the airline has done its homework and there will be people on these Boeing 737s.

My second reason for suspecting that rates will not drop too far is simple economics. No company can operate at below cost for very long before going bust. So, just as airlines are mothballing their aircraft in Mojave Airport in southern California, it would not surprise me if hotels are mothballing rooms.

In summary then, I expect there will be some superb deals around for May and June with promotional offers continuing periodically throughout the rest of the year right up until around 15 December. Then, if anyone is going to make some money this year, it will be during the Christmas/New Year peak.

Next year is of course impossible to call but my guess is supply and demand will balance out and rates will stabilize. What do you think?