Thonglor, Bangkok Serviced Apartment Market Review July 2018
More branded serviced apartment operators to enter expat-oriented Thonglor market Demand shifts to short-stay due to surging leisure market and lagging number of Japanese expatriates
Expatriates in Bangkok Million
“For at least a decade, Thonglor has been known to be Bangkok’s trendiest neighborhood. However, what really makes the area unique is the perfect combination of urban peace and chic nightlife, which is not commonly found in Sathorn or Asoke. Thonglor today though is an expat-oriented district in contrast with the past when it was Japanesecentric. Thus, the demand of serviced apartments has been driven by expatriates, the majority of which are Asian. Japanese residents once accounted for 90% of the market while their share today has reduced to 65% according to our market research. Many serviced apartments, therefore, have adjusted their business model and designs to short/leisurestay transient focused guests versus the traditional Japanese long-stay business client.
Trends
%
2.50
80
2.00
40
1.50
0
1.00
-40
0.50
-80
0.00
-120 2009
2010
2011
2012
2013
2014
2015
2016
2017
Bangkok
Thailand
Bangkok Growth
Thailand Growth
Source: Department of Employment and C9 Hotelworks Market Research
Two notable projects in the pipeline to keep an eye on are Ascott Thonglor and StayBridge Suites. With a total of 753 units entering the market, competition is ramping up. Moving forward, we expect a slower growth in supply of serviced apartments challenged by a scarcity of land and higher development costs.” Bill Barnett, Managing Director, C9 Hotelworks
Forward Outlook
•
Besides Japanese, other key long-term sources are Europe and Singapore, while short-stay guests are from South Korea and China.
•
Upscale condominium projects are becoming serviced apartments’ major competitors by offering lower rates in prime locations via Airbnb.
•
Despite a 2.2% drop in occupancy, serviced apartment average rates bumped up 3.8% in 2017 and rose another 1.2% in Q1 2018.
•
More independent serviced apartments are expected to use affiliate with international operators as competition intensifies.
•
Thonglor remains a preferable location for expatriate families with children who seek quality of life, with many renowned international schools and hospitals in the area.
•
With a significant number of large stand-alone houses and land belonging to high-net-worth individuals, rising acquisition costs and barriers to entry may push development to other areas.
DEMAND & SUPPLY Bangkok Expatriates Number of Work Permits
%
500,000
90
400,000
60 30
300,000
0 200,000
-30
100,000
-60
-
Positive trend is seen in number of Bangkok expatriates since 2013, with fiveyear CAGR recorded at 22%
-90 2009
2010
2011
2012
2013
2014
Bangkok
2015
2016
2017
Growth
Source: Department of Employment and C9 Hotelworks Market Research
Key Geographic Source Markets Number of Work Permits
%
16,000
12
12,000
8
8,000
4
4,000
0
0
-4 Japan
China
Philippines
2016
India
2017
Number of Japanese expatriates slowly grew at 0.3% in 2017, while Indian expatriates surged by 8%
U.K. Growth
Source: Department of Employment and C9 Hotelworks Market Research
Bangkok Serviced Apartment Cumulative Supply Number of Units
%
25,000
25
20,000
20
15,000
15
10,000
10
5,000
5
0
0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F Total Supply
Total Growth Source: C9 Hotelworks Market Research
2
C9 Thonglor Serviced Apartment Market Review: July 2018
Serviced apartment supply in Bangkok expected to grow gradually on rising leisure market
MARKET OVERVIEW Performance Comparison In THB
Thonglor’s serviced apartment occupancy remains well over 80%
4,000
% 90
3,000
88
2,000
86
1,000
84
0
82 FY2016
FY2017 ADR
Q1 2018
RevPAR
Occupancy Source: C9 Hotelworks Market Research
Market Segmentation %
Short-stay ratio increased to 62% while longstays dropped dramatically to 38% in 2017
80 60 40 20 0 2016
2017 Short-stay
Long-stay Source: C9 Hotelworks Market Research
Nationality Mix
Asian market is dominant with Japanese guests ranking first with 65% share
8%
Asia
5%
11%
Europe
76%
North America Others Source: C9 Hotelworks Market Research
Pipeline There are three confirmed properties or 1,053 units in the area’s pipeline, with all being branded. Name
Location
Keys
Opening Date
Ascott Thonglor Bangkok
Sukhumvit 59
450
2021
Hotel Nikko Bangkok
Thonglor Soi 1
300
Q4 2018
StayBridge Suites Bangkok Thonglor
Thonglor Soi 5
303
Q4 2019 Source: C9 Hotelworks Market Research
C9 Thonglor Serviced Apartment Market Review: July 2018
3
About C9 Hotelworks C9 Hotelworks is an internationally recognized consulting firm with extensive experience in the Asia Pacific region. Its core business focus includes: • • •
Hotel and Resort Development Asset Management / Ownership Representation Project Feasibility and Analysis
Key competencies include international hotel operator search, selection and contract negotiation, mixed use hotel and residential planning and operation reviews. A wide range of both institutional and private developers and a comprehensive portfolio of completed projects give C9 the skill set and background to focus on key issues, evaluate complex ones and assist clients in achieving solid results. Based in Phuket, Thailand and led by Managing Director Bill Barnett, who has 30 years of experience in Asia Pacific, the firm is well positioned to serve an increasing demanding marketplace.
C9 Hotelworks Company Limited 9 Lagoon Road, Cherngtalay, Thalang, Phuket, 83110, Thailand
T: +66 (0)76 325 345 www.c9hotelworks.com info@c9hotelworks.com