Cash-starved tourism operator unable to pay Thai hotels

Hotels in Thailand are suffering another blow from the coronavirus crisis as Europe-based TUI Group, one of the largest multinational tourism businesses globally, submitted letters asking to delay repayment on debt from advance hotel bookings that has already grown to two billion baht ($62.5 million).

TUI is among the top three tour operators in Thailand and usually brings in significant numbers of tourists from Germany, Scandinavia, the UK and many other European countries. There are at least 2,000 hotels in Thailand which have booking partnerships with TUI.

The Germany-headquartered tourism group said it is facing a financial shortfall because of the coronavirus pandemic and is currently unable to pay out money it already collected from customers for bookings between January to March. Hotels usually receive payment within 30 to 60 days after guests check out.

Twelve Thai tourism associations are now preparing to file a complaint with government agencies by next week to ask for help in managing a fair negotiation. Most hotels that partner with TUI received the letter, which asks hotels to sign a new contract deferring payment for an indefinite period. The hotels see it as unfair treatment.

Hotels short of cash flow could cut staff

“We understand tour operators have troubles because of the pandemic, but forcing us to comply with this new contract will rub salt in our wounds as we have also suspended operations,” Bhummikitti Ruktaengam, president of the Phuket Tourist Association, told the Bangkok Post.

The vast majority of hotels were asked to accept 25 per cent of the outstanding payments within ten days after signing a new contract, while the remaining debt will be paid “when business is back to normal,” TUI suggested.

However, hotel operators say that they will have to cut staff if payments are delayed further, possibly until next year. They acknowledge that TUI is a prominent partner for hotels, but the new conditions were “too harsh to be accepted as hotels need to survive too.”

They propose to make such a deal about deferred payments was only acceptable if there was a clear timeline that allows hotels to manage cash flow.

Hotels in Thailand are suffering another blow from the coronavirus crisis as Europe-based TUI Group, one of the largest multinational tourism businesses globally, submitted letters asking to delay repayment on debt from advance hotel bookings that has already grown to two billion baht ($62.5 million). TUI is among the top three tour operators in Thailand and usually brings in significant numbers of tourists from Germany, Scandinavia, the UK and many other European countries. There are at least 2,000 hotels in Thailand which have booking partnerships with TUI. The Germany-headquartered tourism group said it is facing a financial shortfall because of...

Hotels in Thailand are suffering another blow from the coronavirus crisis as Europe-based TUI Group, one of the largest multinational tourism businesses globally, submitted letters asking to delay repayment on debt from advance hotel bookings that has already grown to two billion baht ($62.5 million).

TUI is among the top three tour operators in Thailand and usually brings in significant numbers of tourists from Germany, Scandinavia, the UK and many other European countries. There are at least 2,000 hotels in Thailand which have booking partnerships with TUI.

The Germany-headquartered tourism group said it is facing a financial shortfall because of the coronavirus pandemic and is currently unable to pay out money it already collected from customers for bookings between January to March. Hotels usually receive payment within 30 to 60 days after guests check out.

Twelve Thai tourism associations are now preparing to file a complaint with government agencies by next week to ask for help in managing a fair negotiation. Most hotels that partner with TUI received the letter, which asks hotels to sign a new contract deferring payment for an indefinite period. The hotels see it as unfair treatment.

Hotels short of cash flow could cut staff

“We understand tour operators have troubles because of the pandemic, but forcing us to comply with this new contract will rub salt in our wounds as we have also suspended operations,” Bhummikitti Ruktaengam, president of the Phuket Tourist Association, told the Bangkok Post.

The vast majority of hotels were asked to accept 25 per cent of the outstanding payments within ten days after signing a new contract, while the remaining debt will be paid “when business is back to normal,” TUI suggested.

However, hotel operators say that they will have to cut staff if payments are delayed further, possibly until next year. They acknowledge that TUI is a prominent partner for hotels, but the new conditions were “too harsh to be accepted as hotels need to survive too.”

They propose to make such a deal about deferred payments was only acceptable if there was a clear timeline that allows hotels to manage cash flow.

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