Thailand’s hotel operators collectively held their breath at the end of September, waiting to see whether the change of government that month was going to cut into their businesses on the eve of the busiest time of the year.

Immediately after the coup, some hoteliers reported losses of millions of baht as tourists cancelled bookings and guests already in the country cut short their stay.

As the weeks went by and it became clear that Thailand was well on the way to a smooth transition, relief became palpable.

Most hotels reported anecdotally that November, traditionally the busiest months of the year, was back to business as usual.

Thai hotels have time and again proved their resilience, regardless of the doomsayers who say there are too many rooms for the industry to sustain. The sector had already shown strong recovery from the dark days after the tsunami and that continued through this year. Many in the affected areas had started the year with occupancy rates as low as 15%. However, by the beginning of 2006 the overall occupancy rate for the industry was around 65% and continues to hover around that level.

The aftermath of the tsunami is still being felt, with a big transfer of business from coastal resorts to Bangkok and other inland destinations creating a somewhat more balanced distribution of hotel room availability which should help the country's overall tourism development in the long run.

The south has also seen a steady recovery with hotels rebuilding and occupancy rates rising. Brands such as Accor, Sheraton, Hilton, Marriott, Crowne Plaza and Le Meridien are all expanding vigorously in Phuket, Pattaya, Hua Hin/Cha-am, Samui, Krabi, Phangnga and other resorts.

In Krabi, more than 1,000 upmarket rooms are due to open in the next two years by companies including Central Hotels and Resorts and Hilton Hotels International. A number of investors have shown interest in Ko Lanta, a relatively new tourist destination in Krabi province. The investors include the Dusit Hotels Group, the Central Hotels Group, The Grand Hotel Group and Thai Nakorn Pattana.

Another growth area is Ko Chang in the east, where the room count has overtaken 7,000 with upmarket developers such as Dusit Hotels and Resorts and Shangri-La.

Pattaya, where perhaps the most significant new arrival has been the Sheraton Pattaya, has continued its renaissance, remaining particularly popular with eastern European and Russian visitors. Now, with the opening of Suvarnabhumi Airport, the beach community is preparing to test the assumptions that the new airport, with its direct links to Pattaya, would lead to a new boom in visitor arrivals.

In June this year, Accor announced three new hotel projects in Thailand – in Bangkok, Pattaya and Chumphon – together with the launch of its All Seasons brand to further strengthen its position in the kingdom.

The 260-room All Seasons Pattaya, between Beach Road and Second Road, will be Accor's third hotel in the city but the first All Seasons in Thailand.

While some analysts suggest the resort city with about 9,000 registered rooms may be approaching over-supply, THA says that occupancy there remains high at 80-90% in the high season and 60% in the low season.

Hotel construction is booming in the ancient northern capital of Chiang Mai, with some six new luxury hotels and two new holiday resorts opening this year under brands including Le Meridien, Conrad, Hilton and Shangri-La.

In all, some 1,222 new rooms have been added.

THA also reports an injection of foreign investment into old Thai hotels. The THA says that this is because refurbishing them is more cost-effective than building new properties.

Some 80% of Thailand's five-star hotels were under the management of foreign investors and the THA says it is likely more Thai hotels will fall under foreign control.

THA President Chanin Donavanik says investors are interested in four- and five-star hotels in Thailand's top tourist destinations, such as Bangkok, Pattaya, Chiang Mai, Ko Samui and Hua Hin.

A prime example is the Millennium Hilton, which was taken over by Singaporean firm City Development Ltd, and opened this year with a refurbishment that makes the most of its riverside site.

Local operators are finding it harder to compete. Reports suggest that as many as 20 hotels, mostly in major tourist destinations such as Pattaya, Chiang Mai, Phuket and Krabi, have been put up for sale.

According to THA, Pattaya properties for sale include the Baiyoke Pattaya Hotel, which has 136 rooms, the Montien Hotel Pattaya, with 350 rooms, the 248-room Day Night Pattaya, the 350-room Jomtien Holiday Hotel, the 50-rai Ko Kood Resort and a 157-room hotel in Na Kluea.

Suvarnabhumi Airport has also caught the attention of the hotel industry, with about 2,000 rooms expected to open at hotels in and around the new airport.

Local operators, including Central Hotels and Resorts, Amari Hotel Group, Four Wings Hotel and Miracle Grand Convention Hotel, are investing near the new airport.

Overall in Thailand, it has been a good year of growth, although it had its ups and downs. It was good to see Phuket coming back, although there was a slowdown in the middle of this year. The outlook for 2007 is strong. Areas like Khao Lak and Krabi still suffered from lower occupancies and rate pressure but there are positive signs in the high season that these destinations will continue to improve in 2007. Ko Samui continues to be a booming destination with growing demand and an increase in the supply of upscale hotel products. Bangkok showed good growth but leisure and meetings hotels suffered somewhat post-coup, particularly from key destinations in Asia, such as Japan and key MICE feeder markets. Looking forward to 2007, Starwood sees double digit revenue growth in most of the key areas. In Bangkok the bulk of new hotel supply will be online by the end of 2007/beginning of 2008 where over 3,500 rooms will be added to the market. This will put pressure on rate growth from 2008 but demand is still expected to take up the additional capacity and the outlook is positive as Bangkok is considered a premium tourist hub. The stability of the political situation will be a key factor in supporting this outlook. Wayne Buckingham Vice President & Area Managing Director (Thailand) Starwood Hotels Group

The business situation before the coup We had an excellent start for the year 2006 whereby our revenue per average room (RevPar) had increased 25% for year-to-date 19 September 2006 compared to the same period last year. The MICE and catering businesses have been the key drivers of the business growth followed by Corporate and Leisure markets. Although there was a political demonstration in the month of March and April that slightly affected the occupancy, the business has bounced back very quickly afterwards. The business situation after the coup The coup primarily affected our MICE business. Although most of the conference organisers expressed confidence of a quick political restoration and said they would still like to move forward with their events, in the end they were forced to cancel because some of their important speakers or delegates decided not to come if it was held in Thailand. We did everything we could to secure this business by rallying our sales force worldwide to speak with the clients and invite them for a fully paid trip to Bangkok to gain first-hand experience about the situation before making final decision. Some worked out well and pursued their events but others didn't. Most Bangkok hotels experienced a big hit in October, the first full month after the coup. However, this quickly rebounded in November and December, the busiest peak season month. Most five-star hotels expect to come close to the same level as last year. Outlook for 2007 Although the political situation has stabilised, the impact will still be felt until the first quarter of 2007. Regional business travel has bounced back pretty quickly, especially in the MICE market, followed by Corporate and Leisure. The long haul market out of US, Australia and Western Europe will take longer to come back but we expect pent-up demand to peak by third quarter of 2007. Overall, if there are no more surprises, we are still optimistic to achieve double-digit growth of the RevPar in 2007. Richard Greaves General Manager Grand Hyatt Erawan Bangkok