A small insight in the world of pain the tourism sector is currently encountering.
"Thousands of hotels in Thailand are crying foul after TUI Group, a global tourism business based in Europe, submitted letters asking to delay repayment on debt that has grown to 2 billion baht (USD 62m)."
"The vast majority were asked to accept 25% of debt within 10 days after signing a new contract, while the remaining debt will be paid when TUI's business is back to normal."
TUI is a gorilla in the world of package tourism. Hotel operators rely on payment of high season invoices (including Jan-Mar) to allow them to get through the low season. The impact of Covid-19 makes this cash flow crucial. Payment of 25% with the balance payable at some point in the future will be of little comfort to hotel operators trying to deal with their own creditors and employees.
The difficulty for hotel operators is that, by not agreeing to TUI's terms, they risk being frozen out of future package deals when tourism recovers. The article hints that the dispute may be escalated to a government-to-government level.
Expect the other large tourism players to be taking a similar stance.
May 2020
© PELEN 2020
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