2015: Recovery for Bangkok’s hotels

BANGKOK  Due to increased political stability, the outlook for Bangkok’s hotel market in 2015 is positive, despite a new set of challenges that Thailand’s tourism industry is facing, this year, according to JLL, a professional services firm specialising in real estate.
JLL forecasts a positive outlook despite a new set of challenges.
While there are a number of factors that may have negative effects on Thailand’s tourism industry this year, JLL executive vice president of hotels and hospitality group, Andrew Langdon expected the fundamentals in the Bangkok hotel market to remain strong enough to tackle these challenges.
“On the demand side, the financial crisis in Russia and a dim economic outlook in the Eurozone are posing threats to Thailand’s tourism industry.”
inside no 5The stronger Thai baht against the euro and Russian ruble will definitely have negative impact on the number of tourists from these two markets, particularly Russia, which has been one of Bangkok’s top five source markets.
However, as the political situation in Thailand has stabilised, tourists from other top source markets such as China, Japan, India and South Korea will recover strongly and should be able to offset the lower number of tourists from Russia and Europe.
“On the supply side, there are 4,000 new hotel rooms scheduled for completion in 2015, which is much higher than in 2014. However, the good news is that the number of international visitor arrivals to Bangkok is expected to recover this year. If the number of arrivals grows by only 5% from 2014, there should be enough demand to absorb new hotel supply coming on stream this year. We believe the 5% growth is a fairly conservative projection,” said Langdon.
“If there is no major surprise, the Bangkok hotel market should see an improvement in both occupancy and revenues this year,” Langdon noted.
A considerable decline of international visitor arrivals to Bangkok had a severe impact on the city’s hotel market in 2014.
But the severity was less than many had anticipated with year-round hotel occupancy across the city averaging above 50%, JLL noted in its latest market assessment.
inside no 5.1Statistics from the Department of Tourism showed international visitor arrivals to Bangkok declined by 11.3% from 17.5 million in 2013 to 15.5 million in 2014 due to the political turbulence in the first half of 2014.
The city’s hotels saw a sharp drop in the average occupancy rate from 74.3% in 2013 to 57.8% in 2014, according to STR Global.
Langdon commented: “The declines in both international visitor arrivals and hotel occupancy in 2014 were significant, but not as significant as many had expected, given the political demonstrations that continued from late 2013, followed by the coup in May 2014.”
“The increased political stability in the second half of 2014 coupled with Bangkok’s established position as one of the world’s most preferred travel destinations helped prevent the city’s hotel industry from crashing last year. A slow growth of new room supply in 2014 also helped buoy occupancy rates,” Langdon explained.
According to JLL, 1,100 new hotel rooms were added to Bangkok across different segments last year, compared to the five-year average growth of 2,700 rooms between 2010 and 2014.
In addition, the majority of new room supply was concentrated in the midscale segment, including the two Holiday Inn Express hotels in Sathorn and in Sukhumvit 11, which were well in line with the growing demand in the segment. New room supply from 2016 to 2018 is expected to total approximately 3,700 new rooms.

sourced:ttrweekly.com