Hotels rates – fall, rise, USD or THB?
The burst of hotel openings raises the question of
whether already rock-bottom room rates can fall
Travel companies – especially from
Europe – have been putting rate pressure on Thai
succumbing to the
pressure just to
earned per room
has taken a hit in
some quarters, but
not all hoteliers
believe the falling
rate trend will
Pacific Hotels and
Bangkok Wayne Buckingham believes the
business outlook is better for hotels.
"Hotel rates will generally be going up,
despite the increase in supply," said Mr
"Through July, the Bangkok market
has only seen a small increase in rates, but we
expect business yields to improve.
"Year-on-year July (for Phuket), the rates
In 2008, we believe that with
demand continuing to grow strongly, the rates will
grow by at least 5%.
Key to this is the return in
flight capacity for scheduled and charter flights.
Limited air access has also raised demand
questions on Koh Samui, but Mr Buckingham said
a significant increase in the five-star market would
help drive rates.
He sees Chiang Mai and Chiang Rai as
"More international hotels coming in will
help to build the destination up.
We are looking at
an increase in hotel rates, however this will be
primarily driven by the meeting and incentive markets and is limited by seasonality,"
Mr Buckingham said.
The 1997 economic crisis triggered hotels to
switch their quotes from the sinking Thai baht to
the more stable dollar, but the situation has turned
"As the US dollar has been steadily
decreasing we have seen the majority of five-star
hotels converting to the Thai baht.
It will probably
stay like this for the next three to five years,"
Mr Buckingham said.
Bangkok hotel supply continues to grow
Halfway into 2007, Bangkok's hotel room capacity
had reached 62,200, while the average
occupancy rate dropped to 60-70% from 73-75%
in 2006, according to Tourism Authority of
Thailand (TAT) and Thailand Hotels Association
Some blame the tumble on political
"There was an affect across the market,"
said Minor Hotels, Resorts and Spas chief
operating officer Michael Sagild.
that fell away through the December booking
window because of the New Year's Eve bombs
was impacted in March.
This hasn't stopped nine four- to five-star
properties from launching this year and four more
coming on line in 2008 to add some 5,000 rooms.
Rather it appears the situation was heading
THA chairman Chanin Donavanik
"Bangkok's hotel business is growing on
both sides, both demand and supply.
existing increment of the hotel room supply, I don't
think this will create any oversupply problem for
Bangkok," he said.
Neither do the familiar names opening
The talk of the town is the
505-room Centara Grand attached to the new
Bangkok Convention Centre at Central World.
Around the corner at Siam Paragon, Kempinski at
Siam is bringing the brand back to Bangkok with a
450-room five star property.
On Sukhumvit Road, the IHG Group is
opening a 400-room Crowne Plaza later this
year, and The Regent is returning to Bangkok
with a 28-storey tower combining a hotel and
Sukhumvit by Sofitel will
have 241 rooms operating later this year, and a
Best Western recently broke ground on the busy
"Rates will generally be
going up despite the
increase in supply."
Starwood Asia Pacific
Hotels and Resorts
Cambodia and managing
director Royal Orchid
Sheraton Hotel and
International gateway to the region
Southern Thai beach resorts continue to present a
hotbed of accommodation activity, with Phuket,
Koh Samui, Khao Lak and Krabi combining to turn
the key on over 30 new resorts through 2010.
Tourism Authority of Thailand (TAT) and
Thailand Hotels Association (THA) statistics show
99,000 rooms in the south as of June, with an
average occupancy rate of 50-55%, a significant
jump over last year's 35-45%, which reflects fallout
from the tsunami.
THA chairman Chanin Donavanik said
demand for hotels in Phuket could be even higher
with increased air access.
"Room expansion is adequate, and the
infrastructure is growing along with the room
The only negative factor is the Phuket
airport cannot accommodate enough demand and
expansion is urgently needed," he said.
Air transport is also an obstacle on the other
side of the peninsula.
"Koh Samui faces limited air access and an
oversupply of rooms, both of which influence
demand," Mr Chanin said.
"Oversupply in Samui
will surely go on for the next few years, and the
limitation of air access will make the problem
Koh Samui has 13 properties coming on line
and 16 are joining Phuket's ranks.
opening two Mercure hotels and a Sofitel in
Phuket in 2008, while competitor Starwood is
launching the St Regis, Vana Belle and W Retreat
brands on Koh Samui.
The Banyan Tree, InterContinental and Dusit
Thani are building on Koh Samui, and competing
brands Hilton, Raffles, Six Senses and Centara are
opening new properties in Phuket.
stands alone as the only brand to expand into both.
The north to benefit from
Northern Thailand houses about half as many
rooms as the south at 48,000, and their average
occupancy rate is dipping below 50% in 2007
compared to a more robust 2006 when the figure
The north has become increasingly
competitive, like Hua Hin and Cha-am, with
continued entry of new local boutique hotels and
reputable international hotel chain operators
between late 2006 and going into 2008.
More international chains will up the
intensity of competition in the north as well.
Seven five-star properties will sweep into
Chiang Mai over the next three years.
boutique range, the Panviman Chiang Mai Spa
Resort will open 35 villas and rooms in November.
The 74-room Sofitel Riverside Chiang Mai
began welcoming guests to its Ping River location
in April, and the 281-room Shangri-La along with
the 300-room Pan Pacific are slated for a Q4
Early next year, the Le Meridien Chiang Mai
will unlock 384 rooms near the Night Bazaar and a
Banyan Tree is in the pipeline for 2009.
In 2010, a
620-room Park Hyatt is slated to commence
operation in Mae Jo.
Upmarket private luxury
Boutique accommodation, pool villas and spas are
currently the rage, but will the trend continue?
Phuket-based managing director of
C9Hotelworks Bill Barnett said pool villas
remained the most desired item for consumers in
the upper tier of resorts.
"It's the privacy, pampering and getting away
from it all that tops the list," he said.
"With pool villas it's a positioning for guests
who don't want welcome drinks, buffets or the
They want in-villa dining, spa
treatments… it's an escape from a hectic work
Phuket has been the front-runner in this
segment with the Amanpuri and Banyan Tree
leading the way, Mr Barnett said.
"For boutique chains, we've seen success by
projects such as Phuket Pavilions, Aleenta, and
now Per Aquum," Mr Barnett added.
"For those with spending power, small is
better, personal is better… these types of people
are attracted to the smaller, more upmarket,
personalised experience and recognition.
Spas are now mandatory in hotels,
according Mr Barnett.
"In the future, points of
differentiation will matter, and trends such as detox
seem to be gathering momentum."