Five-star Bangkok hotels' occupancy down 33% in first half: report

However, the fall in average room rates appeared to have eased when compared to the decreases of 20 per cent and more witnessed in Hong Kong, Singapore, Beijing and Shanghai, according to Jones Lang LaSalle Hotels' latest Hotel Market Intelligence series, which focuses on the Bangkok hotel and tourism market.

Rate pressure is being placed across all hotel segments and in particular properties with larger room inventory. Hotels in Bangkok are reporting performance levels last seen in 1996 and 1997, and the situation is being echoed by other hotel markets in Asia.

"The combination of the ongoing domestic political uncertainty, the strengthening baht and the global economic deterioration has contributed to the 21.2-per-cent year-on-year decline in Bangkok's international visitor arrivals," said Andrew Langdon, senior vice president of Jones Lang LaSalle Hotels in Thailand.

"We expect Bangkok's hotel and tourism industry to remain extremely challenging in the short term, as global as well as Asian hotel markets weather through the prevailing global financial storm. In the medium to long term, we remain positive on Bangkok's hotel and tourism outlook.

"Occupancy in the four- and five-star hotel segments is forecast to stay in the low-50-per-cent to low-60-per-cent range respectively over the next two years, with recovery in occupancy subject entirely to growing levels of visitor demand in order to absorb new hotel supply," he said.

During 2009-2011, 7,154 international flagged hotel rooms are expected to come onto the market, representing an 11.2-per-cent increase in supply. Of this number, 50.7 per cent is in the four-star segment and the rest evenly split between the three- and five-star categories.

Mike Batchelor, managing director for Investment Sales, Jones Lang LaSalle Hotels, said: "The current investment climate in Thailand remains subdued, as banks are reluctant to place pressure on mortgages that are in default. Hotel financing from Thai banks remains challenging, with stricter lending criteria being implemented.

"In contrast, we are witnessing a number of Thai groups over the past 12 months invest in hotel properties outside of Thailand at attractive prices. We expect to see this trend continue in the second half of the year."