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Market Research B A N G KO K 4 - & 5 - star hotel M A R K E T B A N G KO K 4 - & 5 - S TA R H OT E L M A R K E T |

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c o l l i e r s i n t e r n at i o n a l

| T H AILAN D

The Knowledge Report B AN G KO K 4 - & 5 - S TA R H OT EL M A R K E T |

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2009

BANGKOK 4- & 5-STAR HOTEL MARKET HIGHLIGHTS Market Indicators 1h 2009 2h 2009F

SUPPLY DEMAND average daily rate occupancy rate

• Thailand’s tourism industry has suffered from a sharp fall in tourist arrivals. Luxury hotels seem to be hit the hardest, with many hotels in Bangkok reporting occupancy of around 40 per cent. • By the end of 1H 2009, the six major areas in Central Bangkok had a total supply of 13,108 keys, with 6,452 keys in the 5-star category and 6,656 keys in the 4-star category. • During 1H 2009, there were approximately 514 keys added in the Bangkok 4- & 5-star hotel sector, of which 236 keys were in the Sukhumvit area, while 278 keys were added in the Other areas. • An additional 10,540 keys in 4- to 5-star hotels from 46 projects are planned to be added to the supply by 2012. • The average length of stay of international visitors in Bangkok hotel accommodation would be estimated to decrease to 1.72 nights in 2009 from 1.8 nights in 2008. • The forecast occupancy rate of Bangkok hotels in 2009 would be around 57.92%. The occupancy rate in the first quarter of 2009 was at 47.3%, with the downturn pronounced in April; thus, the occupancy rate in the second quarter fell to 39.52%. • The average daily room rate (ADR) for the 4- & 5-star hotel segment in the first quarter of 2009 decreased to THB4,080.25 and fell further, by 14.28% quarter-on-quarter, to around THB3,497.73 in Q2

Assuming a peaceful political context, general tourism could begin to recover in three months. We expect the number of bookings to improve in the high season and the country’s tourism situation to pick up in the last quarter of this year.

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• The Bangkok 4- & 5-star hotel market will remain in a difficult situation over the next two years due to current conditions, as well as the sharp increase of new supply expected in 2010. The economic crisis, along with many other negative factors, will dominate the sector in the second half of 2009 and 2010.


The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

BANGKOK 4- & 5-STAR HOTEL MARKET OVERVIEW The first six months of 2009 marked a dramatic slowdown in tourism in Thailand, with a decrease in higher paying long-haul visitors. This in turn triggered rate volatility among upper-scale hotels in Thailand, especially Bangkok. Thailand’s tourism industry is going to great lengths to drum up business that has plunged; however, the number of new hotel developments keeps increasing. Luxury hotels seem to be hit the hardest, with many hotels in Bangkok reporting occupancy of around 40 per cent.

Foreign travellers’ arrivals have fallen 16 per cent so far this year, while hotel occupancy across the country has dropped to 44 per cent, down from 66 per cent last year. Luxury hotels in Bangkok have even lower occupancy rates. Business is normally slower from June till October because of the rainy season.

Supply Trends

Of the six main areas for 4- and 5-star hotels identified on the above map, new supply in 1H 2009 entered the market in two areas:

• Sukhumvit Area

This is the section of Sukhumvit Road between Soi 1 and Soi 39 to the north and Soi 2 and Soi 26 to the south. There was one hotel project added to the supply of this area in the first half of 2009. Table 1 : Supply added in the Sukhumvit area in 1H 2009

Hotel name President Palace Hotel

Location

No. of rooms

Sukhumvit Soi 11

TOTAL Source: Thai Hotels Association (THA),Tourism Authority of Thailand (TAT) & Colliers International Thailand Research

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236 236


The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

• Other Areas

There was only one hotel project added to the supply of this area.

Table 2 : Supply added in the Other areas in 1H 2009

Hotel name Best Western Premier Amaranth Hotel

Location

No. of rooms

Suvarnabhumi Airport

278

TOTAL

278

Source: Thai Hotels Association (THA),Tourism Authority of Thailand (TAT) & Colliers International Thailand Research

Total Current Supply By the end of 1H 2009, the six major areas in Central Bangkok had a total supply of 13,108 keys, with 6,452 keys in the 5-star category and 6,656 keys in the 4-star category. In recent years, Riverside has developed into a strong leisure base, whilst the Central Business District has become more business-oriented, with a larger composition of corporate clients.

Current supply is most concentrated in the Riverside area, followed by Central and Sukhumvit areas. The Riverside area commands about 28 percent of the total supply for 4- and 5-star hotels, followed by the Central area with 24 percent of the total Bangkok supply.

Figure 1 : 4 & 5 star hotel room supply, 1H 2009

Source : THA,TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

During 1H 2009, there were approximately 514 keys added in Bangkok 4- & 5-star hotels, of which 236 were added in the

Sukhumvit area, while 278 keys were added in the Other areas.

Figure 2 : Additional supply of 4- & 5-star hotel rooms by location, 1H 2009

Source : THA,TAT & Colliers International Thailand Research

Future Supply Thailand’s tourism industry is projected to grow in the long term as the country can offer tourists a range of products at cheaper prices than many competing destinations. Many investors are expanding and undergoing investment to tap this potential. The BTS Skytrain operator plans to develop three hotels with combined investments of THB10 billion. Many investors see that this as a good time to enter the property business because the investment cost is cheap compared to levels during boom periods.

most popular area, with the largest proportion of new rooms (3,767 keys) by 2012, followed by the Central area and the Other areas, with 2,316 keys and 1,884 keys, respectively. If all these projects complete, by 2012 the Sukhumvit area will be the area with the highest supply of 4- and 5-star hotels, followed by the Central area. However, it will be challenging for new operators to build market share during these tough times. The newcomers and existing players are all hoping the situation will recover from the second half of 2009.

There will be an additional 10,540 keys of 4- and 5-star hotels from 46 projects added to the supply by 2012. Sukhumvit is the Figure 3 : Future new supply of 4- & 5-star hotel rooms by location, 2H 2009-2012f

Source : THA,TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

By 2010, the majority of the new supply is projected to come on line, with 1,281 keys of 5-star and 3,582 keys of 4-star. However, it is likely that some hotels being developed in Bangkok will postpone their openings due to the economic crisis, which is affecting all hotels in Bangkok and other major destinations. Although Thailand has been a popular tourist destination for a long time, with a very diversified leisure offering, hotel operators

and investors will need to take part in promoting tourism and the economy, not just rely on Government support. Continued investment by operators will help shore up the confidence of local people and foreign tourists.

Figure 4 : Future new supply of 4- & 5-star hotel rooms by year and grade, 2009-2012f

Source : THA,TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

Table 3 : 4- & 5-star hotels scheduled for completion, 2H 2009-2012f

No.

Hotel Name

Location

No. of rooms

Est. Completion

1

Banyan Tree Bangkok Expansion

CBD

80

2009

2

Sofitel Bangkok Sukhumvit

Sukhumvit

345

2009

3

S31

Sukhumvit

150

2009

4

Radisson Hotel Sathorn

Sathorn

436

2009

5

Renaissance Bangkok Ratchaprasong

Central

333

2009

6

The Watt

Sukhumvit

300

2009

7

The 340 keys

Sukhumvit

340

2009

8

Alila Boutique Hotel

Central

62

2010

9

Aloft Bangkok

CBD

130

2010

10

Amari Serenade Hotel (Soi Soonvijai)

Others

128

2010

11

Four points by Sheraton

Others

450

2010

12

Four Wing Residence

Others

450

2010

13

Four points by Sheraton

Sukhumvit

276

2010

14

Holiday Inn Express

Sukhumvit

380

2010

15

M Gallery

Central

NA

2010

16

Novotel Silom

CBD

200

2010

17

Novotel Ploenchit

Central

390

2010

18

Park Plaza Asoke

Sukhumvit

142

2010

19

Sivayathorn

Central

NA

2010

20

Sofitel Veranda

Sathorn

200

2010

21

St Regis Bangkok

Central

198

2010

22

The Regent Bangkok

Sukhumvit

350

2010

23

The Aetas Residence

Central

204

2010

24

The Aetas Lumpini

Sathorn

204

2010

25

The Grand Siamese Hotel

Others

250

2010

26

Aloft Bangkok

Sukhumvit

308

2011

27

Four Points by Sheraton

Sathorn

437

2011

28

Le Meridien Suvarnabhumi Golf Resort & Spa

Others

214

2011

29

Novotel Platinum

Central

283

2011

30

Holiday Inn Express Rama I

Central

300

2011

31

Renaissance Bangkok Sukhumvit Hotel

Sukhumvit

250

2011

32

Radisson Suite Sukhumvit

Sukhumvit

170

2011

33

Siam Kempinski

Central

306

2011

34

W Hotel

Sathorn

403

2011

35

Asiatique Hotel

Riverside

38

2012

36

Asiatique Villa Resort

Riverside

NA

2012

37

Ratchatewi Hotel

Central

NA

2012

38

Planned Project (Charoenkrung Road)

Riverside

100

2012

39

Planned Project (Charoenkrung Road)

Riverside

150

2012

40

Planned Project (Dubai World)

Riverside

195

2012

41

Planned Project

Sukhumvit

414

2012

42

Planned Project (Park Venture)

Central

240

2012

43

A-One Hotel

Others

213

NA

44

Crowne Plaza Sukhumvit

Sukhumvit

342

NA

45

The Siam on The River

Riverside

NA

NA

46

The Bench Hotel Bangkok

Others

179

NA

Total Source : THA,TAT & Colliers International Thailand Research

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10,540


The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

Demand Trends The global slowdown has put the Thai and world tourism industry in the doldrums. Thailand has experienced a big decline in hotel occupancy in many regions and tourist arrivals have fallen sharply. But the economic problems have been exacerbated by Thailand’s political conflicts, which led to the week-long closure of Suvarnabhumi Airport in late November/early December 2008 and the sudden cancellation of an important Asian

Summit Meeting in Pattaya in April. The economic slowdown will prompt companies to cut corporate travel, meetings and incentive expenses. Singapore is likely to draw away conference and meetings business from Thailand for one or two years. While the global swine flu epidemic has also affected tourism, the sector has been harder hit by political turbulence.

International Tourist Arrivals to Thailand Official figures from the Tourism Authority of Thailand (TAT) reveal that the number of international tourist arrivals at Suvarnabhumi International Airport declined by as much as 22% during the first half of 2009, compared with the first half of

2008, from just 4.89 million international travellers in the first half of 2008 to 3.77 million in the first half of 2009.

Figure 5 : International tourist arrivals at suvarnabhumi International Airport, 1H 2007 to 1H 2009

Source : TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

It is estimated that the total number of international tourist arrivals at Bangkok accomodation will be approximately

8,221,664 persons in 2009, representing a 7.6% decrease from 2008.

Figure 6 : International tourist arrivals at suvarnabhumi International Airport, 2005 – 2009f

Source : Thai Hotel Association (THA),Tourism Authority of Thailand (TAT) & Colliers International Thailand Research

From the breakdown of international travellers with accommodation in Bangkok, visitors from East Asia (Japan, China), South Asia (India), Asean (Malaysia, Singapore) and

the Middle East make up the majority of inbound travellers to Thailand. Approximately half of the total came from the Asian region in the first half of 2009.

Figure 7 : International tourist arrivals at Suvarnabhumi international airport by region, 1H 2009

Source : THA,TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

Occupancy and Room Rates Average Length of Stay The average length of stay in Bangkok is estimated to decrease from 1.8 nights per guest in 2008 to 1.72 nights in 2009. Figure 8 : Average length of stay of international tourist arrivals at suvarnabhumi International Airport, 2004-2009f

Source : THA,TAT & Colliers International Thailand Research

Occupancy Rates Due to the global crisis, coupled with the local political instability in Thailand, the average occupancy rate of Bangkok hotels fell to 39.52% in Q2 2009, with the downturn pronounced in the first quarter, when occupancy was only 47.3%. Occupancy rates in the second quarter 2009 deteriorated when a group of demonstrators broke into a summit of Asian leaders in the beach town of Pattaya and later clashed with riot police in Bangkok’s

streets, leaving two dead. It is estimated that the occupancy rate of hotels in the third quarter of 2009 may decrease further, due to the low season and the impact of the swine flu in Thailand. Thus, the estimated occupancy rate of 4- & 5-star hotels in Bangkok will be approximately 57.92%.

Figure 9 : Average occupancy rates for selected 4- and 5-star hotels, 2005 to 2009f

Source : THA,TAT & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

Room Rates The average daily room rate (ADR) for the 4- & 5-star hotel segment in the first quarter of 2009 decreased to THB4,080.25 and fell further, by 14.28% quarter-on-quarter, to around THB3,497.73 in Q2. The successful hotels are those which offer attractive promotions to their potential customers, such as special promotions or rate cuts. One of the most important

factors is to cater to the needs of business travellers, who will be making fewer, shorter and cheaper trips during the slowdown. Hotel operators need to therefore focus on value-for-money packages. Thus, ADR of 2009 is forecast to be at THB4,167.89 per night, representing a 20% decrease from 2008.

Figure 10 : Average daily rates for selected 4- & 5-star hotels, 2005- 2009f

Source : Colliers International Thailand Research

Revenue Per Available Room (RevPAR) Between 2005 and 2008, RevPAR in Bangkok peaked at THB3,744.08 in 2006 but later dropped to THB3,559.92 in 2007 and THB3,386.43 in 2008. RevPAR fell sharply in the first and second quarters of 2009, to THB1,962 and THB1,905,

respectively, due to deeper rate cuts. The RevPAR in 2009 is forecast to be approximately THB 2,320.2, representing a decrease of 31.5% from 2008.

Figure 11 : Revenue per available room for selected 4- and 5-star hotels, 2005- 2009f

Source : Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

Outlook We expect the number of bookings to improve in the high season and the country’s tourism situation to pick up in the last quarter of this year. Assuming a peaceful political context, general tourism could begin to recover in three months, although the lucrative convention and exhibition market would likely take twice as long to revive. Many hotel developers in Thailand have turned for future expansion overseas rather than to the domestic market, where the downturn and the opening of new five-star hotels have triggered heavy competition. Amid the economic slowdown, efficient design management that reduces costs but does not compromise on quality is needed. Many hotels are dealing with the global recession by focusing on hotel renovation. New designs should help to reduce operating costs in the long term. With the support of the government

sector, a new tax incentive for hotel operators is planned in order to help them sustain their cash flow and undertake hotel renovations during this difficult time. The Bangkok 4- & 5-star hotel market will therefore remain in a difficult situation over the next two years due to current conditions, as well as the sharp increase of new supply expected in 2010 and thereafter. The economic crisis, along with many other negative factors, will dominate the sector in the second half of 2009 and 2010.

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

APPENDIX Hotel Locations Bangkok 4 & 5 star hotels can be divided into six areas or pockets of concentration: • The Riverside Area

• Other Areas

This is the area that stretches along both banks of the Chao Phraya River southward just past the Krungthep Bridge and ends at Memorial Bridge. The river area has historically been the site favoured by large established hotels. Recently the area has lost some of its allure because of traffic congestion, flooding and associated difficulties, as well as increased accommodation options elsewhere in the city. Despite this, many of the hotels in the area, such as the Mandarin Oriental, the Peninsula, the Shangri La, Millennium Hilton and Marriott Resort & Spa, have excellent reputations at the top end of the Bangkok market.

Most of the remainder, comprising 2-, 3- and 4-star hotels, are scattered across the city, including Phayathai, Petchaburi, Vibhavadee Rangsit, Ratchadapisek and Rama 9 Roads, Victory Monument, etc. The recent addition of the Pullman Bangkok Kingpower Hotel near the Victory Monument at Rangnam comprises a ‘chic designer’ theme hotel adjacent to the Kingpower duty free shopping complex. The total stock for this area is 993 rooms.

• Central Area The Central area covers areas along Rama I, Phayathai, Rajdamri, Wireless, Ploenchit and Langsuan Roads. This area is again convenient for both business travellers and tourists, because of its proximity to many of the office buildings and local attractions. The Grand Hyatt Erawan, The Intercontinental, Holiday Inn, Four Seasons Hotel, Courtyard by Marriott, and the Conrad, among others, are located in this section of the city. • Sukhumvit Area This is the section of Sukhumvit Road between Soi 1 and Soi 39 to the north and Soi 2 and Soi 26 to the south. This area, popular with expatriates and tourists, spans the Asoke Intersection on the west to the Emporium Mall to the east. Hotels in the vicinity include The Landmark, Grande Sheraton Sukhumvit, Westin Grande Sukhumvit, Milliennium Grand Sukhumvit, Davis Hotel, Majestic Grand, Grand Sofitel Sukhumvit and Carlson’s Park Plaza, to name a few. Recent trends include new budget and boutique hotels, such as Le Fenix and The Dream Hotel. • Central Business District Area (CBD) This is the area that encompasses Surawongse Road and Silom Road. It is an established business location with quick access to Sathorn and Wireless Road CBD corridors, Sukhumvit and the riverside areas. The area has a supply of approximately 2,079 4- to 5-star hotel rooms. The Sofitel Silom, Lebua at State Tower Hotel, Holiday Inn Silom, Dusit Thani and Pan Pacific are located here. • Sathorn Area This is generally a popular business precinct. Hotels in this area include the Banyan Tree and the Metropolitan. The Sukhothai Hotel is an example of a top quality hotel in this area, boasting approximately 210 keys.

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The Knowledge Report | 1st Half | 2009 | Bangkok 4- & 5-Star Hotel Market

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Contact information THAILAND: Patima Jeerapaet Managing Director

Risinee Sarikaputra Director | Research

Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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w w w. c o l l i e r s . c o. t h

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

Bangkok Hotel Market - 1st half 2009  

By the end of 1H 2009, the six major areas in Central Bangkok had a total supply of 13,108 keys, with 6,452 keys in the 5-star category and...