Hotel investment in Thailand is ramping up at the same rate as prior to the pandemic, driven by more hotel conversions and an increase in lending among banks, based on an optimistic tourism industry, according to hospitality consultant C9 Hotelworks.
Bill Barnett, managing director of C9 Hotelworks, said the market and investment sentiment is up and running again, due to more banks lending and businesses seeing tourism as a good investment.
Mr Barnett said that during the second half of 2023, Thai banks granted loans more aggressively to owners and developers in the sector.
This led to more hotel developments in terms of both greenfield projects and conversions.
Hotel owners are looking into converting their properties into branded hotels, upgrading their services to become more premium, and increasing their revenue, he said.
For instance, in Phuket there are currently over 12,000 hotel rooms in the pipeline, mainly developed by Thai investors.
About half of the projects in the province, which were stopped or postponed due to the coronavirus disease, have restarted over the past six months.
"We are seeing projects coming back at the same pace [as 2019's level]," Mr Barnett said.
He said many real estate developers in Thailand are also diversifying their portfolios and mitigating risks by pivoting to investment in hotels, branded residences and mixed-use properties.
Despite fast-growing tourism, Thailand has been hampered by the slow development of public infrastructure, particularly transportation.
This can be seen in Phuket, where the new airport and the Patong tunnel have yet to come to fruition. Other challenges include inflation, high construction costs, and geopolitical tension.
Given the soaring room rates in Thailand and many other countries, Mr Barnett said prices are unlikely to drop to 2019 levels, considering factors such as higher living costs.
He said hotels this year will not focus on increasing their occupancy rates, but would rather manage their expenses and make the bottom line more profitable.
Mr Barnett said he expected the number of international tourists would peak, or reach 2019 levels, by 2025.
Mr Barnett said the tourism industry this year could be described as "cautiously optimistic" as there is room to accelerate major markets such as China, Russia and India, but the market will not return to a large volume as in the past.
C9 Hotelworks, together with industry partners including Intercontinental Hotels and Resorts, STR and Iniala Group, hosted the Thailand Tourism Forum 2024 at the Intercontinental Bangkok on Monday, attracting over 1,000 participants.
The forum emphasised the utilisation of artificial intelligence (AI) in hotels and the rise of lifestyle hotels as customers are expecting more experiences during their stays.