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year end 2010 | hotel

thailand

Pattaya Hotel Market Report Pattaya Hotel Market Executive Summary Issues relating to Bangkok are a thing of the past as tourists flock once again to Pattaya. Limited new supply over the past few years has allowed for some breathing space for the hotel industry during the difficulties in Thailand since 2006. Around 1,950 rooms were added to supply in all categories for 2010 raising the total number of rooms to 45,600.

market indicators 2009 - 2010 Supply occupancy rates

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The greater range of Mid Scale hotels has allowed the industry to compete on price to a greater extent than Bangkok. However more Upper and Luxury scale hotels are expected to enter the market as the city continues to redefine itself as an international resort with top class facilities. Russians and Chinese are the dominant foreign tourism markets for Pattaya while new growth markets from India, Iran and Vietnam are beginning to emerge.


Pattaya hotel market report | YEAR END 2010 Hotel classification While the Thailand Hotels Association (THA) categorizes hotels with a star rating, many hotels do not abide by star rating. Therefore in this study, Colliers International Thailand have produced a classification based on the quality of the hotel as seen through the eyes of the hotel management companies and on the British Hospitality Association classification. Basic overview of hotel classification Guesthouse – simple accommodation offering limited or no facilities with basic furnishings with sizes ranging from 12 to 18 sq m. Budget – slightly upgraded rooms and facilities from guesthouses although differences can be slight. Economy - comfortable, well equipped accommodation, with an en-suite Bath / shower room. Reception and other staff aim for professional presentation that offers a wide range of straightforward services, including food and drink. Mid Scale - hotels are usually of a size to support higher staffing levels, and a significantly greater quality and range of facilities. Reception and the other public rooms will be more spacious with a number of restaurants. All bedrooms will have fully en suite bathrooms and offer a good standard of comfort and equipment, such as a hair dryer, telephone and toiletries.

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Upper Scale - a degree of luxury as well as quality in the furnishings, decor and equipment, in every area of the hotel. Bedrooms will also usually offer more space and be well designed with co-ordinated furnishings and decor. The en-suite bathrooms will have both bath and fixed shower. It will contain a high enough staff to provide services like concierge and porter service, 24-hour room service, laundry and drycleaning. The restaurants will provide high quality cuisine. Luxury - spacious and luxurious accommodation throughout the hotel, matching the highest international standards. Interior design should impress with its quality and attention to detail, comfort and sophistication. Furnishings should be immaculate. Services should be formal, well supervised and flawless in attention to guests’ needs, without being intrusive. The restaurant will demonstrate a high level of technical aptitude, creating dishes to the highest international standards. Staff will be knowledgeable, helpful, and experienced in all aspects of customer care, combining efficiency with courtesy.


Pattaya hotel market report | YEAR END 2010 Hotel Locations

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Pattaya hotel market report | YEAR END 2010 This study focuses on the major areas of hotel accommodation in Pattaya, which can be subdivided into seven main areas: 1. Wong Amat is the area to the north of Pattaya Nua. It is considered a peaceful, more up-market location and is a relatively new area for major resort development. This area is considered a peaceful location.

5. Pratumnak is the area covering the main thoroughfare connecting Pattaya and Jomtien Beach and the hill overlooking Pattaya bay and Cosy Beach.

2. North Pattaya is the area to the south of Pattaya Nua. It is divided into a larger northern section that spans the areas to the east of Naklua Beach (the most northern beach).

6. Jomtien is about 1 km south of Pratumnak Hill. The area is home to many high-rise condominiums, beachfront hotels, shops and restaurants. The area at the beginning of Jomtien is considered busy, while the area at the end of this beach, bordering Na Jomtien in Sattahip district, is quieter.

3. Central Pattaya is considered the city centre, covering the section of beach from Central Road (Pattaya Klang) to the entrance to Walking Street at South Pattaya Tai road. 4. South Pattaya is the area from the border of Central Pattaya to the Bali Hai pier and Arthachinda road and is adjacent to the core of Pattaya’s busy nightlife area. This area is popular among Middle Eastern, South Asian and Russian visitors.

7. Na Jomtien is south of Jomtien and does not have a beachfront road and is less developed as a result. The main road connection is Sukhumvit road, which is located between 500–1,000 metres from the beach. Note: The report covers areas located on or west of Sukhumvit road.

Historical supply historical supply by year

Source : Colliers International Thailand Research

There are approximately 45,600 hotel rooms in all areas of Pattaya in all grades at the end of H2 2010. The fallout from the Asian Financial Crisis meant only a very modest increase in supply occurred in the first five years of the 2000’s but growth in tourism numbers meant that developers were back on the bandwagon with a surge in supply taking place in 2006 and 2007. However the ongoing political problems in the country and the global economic downtown affected tourism adversely and only a limited supply has come onto the market since then.

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LK group opened three new hotels at the end of the year. Central Pattana opened the Hilton Hotel above the popular Central Festival Pattaya Beach with 340 hotel rooms at the end of 2010.


Pattaya hotel market report | YEAR END 2010 HISTORICAL SUPPLY BY YEAR Supply by location, H2 2010

cumulative supply in Bangkok Source : Colliers International Thailand Research

Pattaya bay accounts for over 56% of all hotel rooms in Pattaya city and these are fairly evenly distributed between the three areas of Pattaya

bay. This area is by far the main centre of tourism in the city with its wide range of shopping and entertainment facilities.

HISTORICAL SUPPLY BY YEAR Supply by location and grade, H2 2010

cumulative supplyThailand in Bangkok Source : Colliers International Research

Pratumnak takes up the lion’s share of Luxury hotel rooms primarily due to the location of the Royal Cliff Resort with over 1,000 rooms. In very general terms the Central and South Pattaya bay areas as well as Jomtien contain a greater proportion of lower end accommodation while

North Pattaya bay, Wongamat and Pratumnak focus more on higher end although the distinctions between each area are not clear cut.

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Pattaya hotel market report | YEAR END 2010 Future Supply Cumulative Future Supply in Pattaya during the year 2011 – 2015 by Year & Grade

Source : Colliers International Thailand Research

Approximately 1,000 rooms of Upper Scale hotels and more than 500 rooms for Luxury grade are scheduled to be completed in 2015, meanwhile just 200 rooms are expected for Mid Scale hotels. Hotel developers are focusing more on the Luxury and Upper Scale end of the market although Pattaya still contains a high proportion of Mid

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Scale and lower grade hotels. Clearly developers are tuning in to Pattaya’s growing reputation as an international resort with higher end facilities, including hotels.


Pattaya hotel market report | YEAR END 2010

Indicated Cumulative Future Supply in Pattaya during the year 2011 – 2015 by Year & Location

Source : Colliers International Thailand Research

Projects that will take place in the next five years are scattered throughout many locations with between 300 – 500 rooms in each location apart from North Pattaya bay. All areas are playing their part in the future of tourism in the city. Local company Petch Property, plans to develop a luxury hotel in the area near The Cove condominium within the next seven years. Major Development also plans to develop a luxury hotel behind Reflection Jomtien Beach Pattaya condominium and MBK Property Development plans the development of an Upper Scale hotel in the Pattaya Bay area in the next five years. Further international brands are also interested in developing hotels in Pattaya, such as Movenpick in Na Jomtien area and local developers. The Thai based Erawan Group PLC will team up with operator Amari Hotels & Resorts to develop a new hotel in the Pattaya bay area. Pattaya Floating Market company are looking to expand their existing tourist attraction into the hospitality business as they plan to develop a hotel in the area of their own floating market which is located outside the area covered in the report.

such as the International Music Fair and the Pattaya marathon have helped to diversify the city and are creating the conditions for further growth in the tourism sector. The MICE industry represents a potential draw card for companies wishing to provide a coastal environment with international facilities. The introduction of Central Festival Pattaya Beach shopping mall in 2009 has started to encourage tourism, especially the domestic variety, as it represents the city’s first modern last scale shopping complex and the largest coastal shopping mall in Asia. This development is likely to pressure other retail locations to upgrade their own malls to compete for custom and this will further enhance Pattaya as a family destination.

Demand Trends The Eastern Seaboard remains the main magnet for industrial development due its proximity to the main port and Bangkok, as well as developed infrastructure and an existing clustering of key industries such as electronics and the automotive industry. The further integration of ASEAN and economic behemoths of China and India pose great opportunities for the region. As Pattaya is by far the preeminent location for commerce and entertainment within the Eastern Seaboard the city will in the future attract greater number of business people to stay thus broadening its base from tourism. More companies are likely to set up office in Pattaya, furthering the growth potential of the city. The development of a more family orientated image coupled with events

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Pattaya hotel market report | YEAR END 2010

International Tourist Arrivals accommodated at Pattaya

Source : Department of Tourism and Colliers International Thailand Remark : E = Estimated by Colliers International Thailand Research

Official figures from the Tourism Authority of Thailand (TAT) reveal that the number of international tourist arrivals to Pattaya declined by as much as 30% in 2008, down from around 5.8 million in 2007 to 3.42 million in 2008. Tourism reached its nadir in H1 2009 with the protests of April 2009 which resulted in the postponement of an ASEAN summit in Pattaya which directly affected the tourism market there. The April and May protests in 2010 were mostly centred in part of Bangkok but overall coverage of the events affected the tourism market

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in Thailand as whole and Pattaya was not spared. For the second half of 2010 the number of visitors coming to Pattaya increased by around 12 – 15% from the first half according to the Department of Tourism. Pattaya has fought back hard to win back tourists to the city and is beginning to succeed.


Pattaya hotel market report | YEAR END 2010 Guest Arrivals at Accommodation Establishments by nationality in Pattaya H2 2010

Source : Department of Tourism and Colliers International Thailand Research

Tourists from Russia still represent the main foreign tourist market in Pattaya and nearly topped 400,000 visitors for H2 2010 . One manifestation of this is the growing number of signs showing р(restaurant) offering menus in Russian as well as advertising all over the city in the cyrillic script. Many are now turning into condominium buyers as discussed in The Pattaya Condominium Market Report H2 2010. Indian

and Middle Eastern visitors represent significant growth markets and are less affected by political disruptions. On top of that these visitors prefer coming to Thailand in the off season summer period due to the scorching hot climate in their own countries at that time of year. This will help boost the hotel market during periods of lower occupancy.

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Pattaya hotel market report | YEAR END 2010

Guest Arrivals at Accommodation establishments by nationality in Pattaya 2007-2010 H2 in main tourism markets

These countries represent the main foreign markets by country and the chart shows how the Russian and Chinese visitors have come to dominate the tourism scene in Pattaya city. However the Korean market

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has fallen dramatically from 2007 to 2009 reflecting safety concerns relating to the whole country.


Pattaya hotel market report | YEAR END 2010 Guest Arrivals at Accommodation establishments by nationality in Pattaya 2007-2010 H2 in mid tier tourism markets

Many European markets have fallen significantly over the years, especially in the UK. This decline is a combination of weaker exchange rates and lingering economic headwinds. The growing income levels of many Vietnamese and future growth could mean this becoming a strong market for Pattaya in the future. Iranians are also a significant growth market

although unfortunately the tourism authorities do not record specific data for this country, although it is believed around 150,000 Iranians visited Thailand as a whole in 2010. The structure of tourism in Pattaya is a very different one from the past.

Average Length of Stay

Source : Tourism Authority of Thailand (TAT), Office of Tourism Development and Colliers International Thailand Research

The average length of stay has gravitated around the three night mark throughout the past ten years except for a brief surge in 2008. A significant proportion of domestic visitors coming to Pattaya reside in

Bangkok or the industrial areas in Chonburi and will often visit Pattaya for weekends only therefore average stays are likely to remain on the low side.

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Pattaya hotel market report | YEAR END 2010 Occupancy and Room Rates Occupancy Rates

Source : Tourism Authority of Thailand (TAT), Office of Tourism Development and Colliers International Thailand Research

Since 2007, average occupancy rates for Pattaya hotels had fallen by over half by 2009. This trend was due to various factors, such as Thailand’s political instability, H1N1 and the global economic slowdown. Weaker currencies in many of Pattaya’s key markets have also played their part. However in 2010 tourism bounced back despite the troubles

Room Rates The Average Daily Rate (ADR) of hotels in Pattaya reveals a big gap. The lowest ADR is less than 1,000 baht per night and the highest is over 4,500 baht per night. The majority of hotels in Pattaya, approximately 18,300 rooms, have an average ADR less than 1,000 baht per night. The ADR of 4-star hotels is in the range of 2,500-3,500 baht per night, while that of 5-star hotels is higher than 3,500 baht per night. Lower end hotels in the range of 500-1,000 baht per night offer very good value compared to similar price range hotels in Bangkok. These no nonsense establishments appeal to a large number of visitors who come to Pattaya. Tourists and business travelers, especially from the Asia-Pacific region, are more price conscious than ever before and are spending more prudently. Corporate expenditure, such as on travel and entertainment, is now being scrutinized more closely. During this current situation, many hotel operators are applying price-cutting strategies. When operators start to cut prices, it is often difficult to increase the rates back to their prior levels because customers’ expectations change. The successful hotels are those that offer attractive promotions to potential customers.

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in Bangkok affecting the country as a whole during April and May and this points to Pattaya’s robustness and bright future as a tourism hotspot.


Pattaya hotel market report | YEAR END 2010 Outlook The economic mainstay of Pattaya is tourism and over the past ten years, the number of tourists has jumped sharply from 3 to 6 million. Pattaya is distancing itself from the sometimes unsettled situation in Bangkok and its strength is as a resort city that is able to attract a higher number of tourists than Phuket and Samui combined. The proximity to Bangkok remains an important demand driver for hotel accommodation as many Bangkokians visit Pattaya as a weekend getaway. The recent completion of highway 7 has reduced travelling times from the cities to within 90 minutes. The proximity to the airport also weighs in Pattaya’s favour with international visitors having the option of avoiding Bangkok and this will continue to propel demand.

The continued development of family entertainment centres and upscale shopping malls will help to underpin the tourism industry and give Bangkokians more excuses to visit and stay in Pattaya. The successes of Ripley’s World of Entertainment, Mini Siam and Mini Europe, Nong Nuch as well as the innovative Flight of the Gibbon point to further growth in family orientated facilities around Pattaya. Russia and China now dominate the tourism market with most European countries failing to catch up. The Vietnamese represent a fast growing segment and with a large population and rapidly growing middle class with discretionary income they could represent a significant player in the coming years. It must be remembered that tourists may eventually lead to residential buyers in the future so developers should always be attuned to the latest trends in tourism.

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Pattaya hotel market report | YEAR END 2010 COLLIERS INTERNATIONAL THAILAND MANAGEMENT TEAM

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COLLIERS INTERNATIONAL Thailand: Bangkok Office 17/F Ploenchit Center, 2 Sukhumvit Road, Klongtoey, Bangkok 10110 Thailand tel +662 656 7000 FAX +662 656 7111 Email info.th@colliers.com Pattaya Office 519/4-5, Pattaya Second Road (Opposite Central Festival Pattaya Beach), Nongprue, Banglamung, Chonburi 20150 tel +6638 427 771 FAX +6638 427 772 Email info.pattaya@colliers.com

RESEARCH Antony Picon | Associate Director Surachet Kongcheep | Senior Manager VALUATION & ADVISORY SERVICES Nicholas Brown | Associate Director Phachsanun Phormthananunta | Associate Director researcher:

researcher:

Thailand Antony Picon Associate Director | Research email antony.picon@colliers.com

Thailand Surachet Kongcheep Senior Manager | Research email surachet.kongcheep@colliers.com

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Pattaya Hotel Market Year End 2010