People walk and shop on the packed Tha Pae Walking Street in Chiang Mai. (Bangkok Post photo)

Chiang Mai's hoteliers are expected to suffer from a low occupancy rate throughout the remainder of the year because of a strong baht, a glut of rooms and the popularity of home-sharing accommodations.

The occupancy rate during July and August fell to 60% from 80% last year. The decline is unusual for Chiang Mai, as this time of year is considered the high season because of school holidays for European and Chinese markets, said La-Iad Bungsrithong, president of the Thai Hotels Association (THA) northern chapter.

Mrs La-Iad said the sturdy baht is pushing long-haul travellers to visit cheaper destinations in Asean, the Middle East and Latin America. Fewer visitors are also expected from the Chinese market during Golden Week, Oct 1-7.

"The occupancy rate fell to 65-70% from 90%, with no chartered flights from the mainland scheduled during this holiday," Mrs La-Iad said. "When the holiday is over, business should be sluggish with an occupancy rate in October of only 60%."

She said the hotel business in Chiang Mai is growing sharply, with some 60,000 rooms at present, up from 50,000 rooms two years earlier.

The uptick could cause an oversupply, Mrs La-Iad said.

The popularity of home-sharing accommodation in northern Thailand has further exacerbated the situation, she said. Hotels in Chiang Mai were also affected by smoke during March and April, keeping tourists away.

Despite all the problematic conditions, Mrs La-Iad hopes the cooler season in the fourth quarter will attract more foreign travellers, especially from locations that provide direct flights to Chiang Mai such as Malaysia, Singapore, Taiwan, Hong Kong, Japan and South Korea, as well as throughout Thailand. Mrs La-Iad expects an occupancy rate of 80%.

This could bring the occupancy rate of Chiang Mai hotels for the entire year to 80%, the same as last year.

In the first eight months of this year, Chiang Mai welcomed 6.38 million tourists, down 2.2% year-on-year, generating 67.4 billion baht in tourism income, edging up 0.9%, according to the Tourism and Sports Ministry.

The THA forecasts a fourth-quarter occupancy rate for hotels in the North of 59-64%, down from 80-90% in the few years before 2018. That year, the fatal boat accident in Phuket pulled down the occupancy rate of hotels in the North to 73% as Chinese tourists stayed away.

This year, Mrs La-Iad expects the rate to drop by 8-10 points from 73% last year.

THA president Supawan Tanomkieatipume said the sluggish global economy is making travellers more price-conscious and leading to shorter stays.