RATES
Hotels rates – fall, rise, USD or THB?

The burst of hotel openings raises the question of whether already rock-bottom room rates can fall any further.

Travel companies – especially from Europe – have been putting rate pressure on Thai hoteliers, with some hotels succumbing to the pressure just to maintain occupancy rates.

Revenue earned per room has taken a hit in some quarters, but not all hoteliers believe the falling rate trend will continue.

Starwood Asia Pacific Hotels and Resorts regional vice president Thailand, Vietnam, Cambodia and managing director Royal Orchid Sheraton Hotel And Towers 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 Buckingham.

"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 increased 1. 5%.

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 developing destinations.

"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 180 degrees.

"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
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 (THA) statistics.

Some blame the tumble on political instability.

"There was an affect across the market," said Minor Hotels, Resorts and Spas chief operating officer Michael Sagild.

"The business 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 towards oversupply.

THA chairman Chanin Donavanik disagrees.

"Bangkok's hotel business is growing on both sides, both demand and supply.

With the 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 sizeable properties.

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 serviced apartments.

Sukhumvit by Sofitel will have 241 rooms operating later this year, and a Best Western recently broke ground on the busy strip.

SOUTH
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 supply.

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 worse.

" Koh Samui has 13 properties coming on line and 16 are joining Phuket's ranks.

Accor is 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.

Park Hyatt stands alone as the only brand to expand into both.

NORTHERN GATEWAY
The north to benefit from upmarket brands

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 ran 55-60%.

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.

In the 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 launch.

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.

SOUTHERN GATEWAY
Upmarket private luxury demand expands

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 mass market.

They want in-villa dining, spa treatments… it's an escape from a hectic work schedule.

" 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."