Hotel markets buoyant amid tourism growth
Thailand's major hotel markets saw robust investment activity in 2012. With strong income growth potential due to continued recovery of the country's tourism market, hotel investment in Thailand is expected to stay buoyant this year, according to the latest research entitled "Spotlight on Thailand - Hotel Investment Market" by Jones Lang LaSalle's Hotels and Hospitality Group.
Mike Batchelor, managing director, Investment Sales Asia, Jones Lang LaSalle's Hotel and Hospitality Group, said that 2012 was an exceedingly strong year for hotel investment in Thailand's key hotels markets, including Phuket and Bangkok. Phuket, in particular, saw four major hotel transactions of more than Bt1 billion each.
According to the Tourism Authority of Thailand (TAT), the number of visitors to Thailand increased from 14.6 million in 2009 to 19.1 million in 2011. The year 2012 showed a 16 per cent growth over 2011 with 22.3 million arrivals. The TAT has forecast total visitor arrivals of 24.5 million for 2013, a 23.5 per cent growth over 2012. Overall, Thailand's 14-year compounded annual growth rate (CAGR 1998-2012) is at a healthy 7.7 per cent. In line with the growth in the number of international visitors, Thailand's major hotel markets reported a solid performance in 2012.
Last year, the Phuket hotel market enjoyed an average daily rate of Bt3,902 and an average occupancy rate of 72.4 per cent, propelling the revenue per available room to Bt2,824, a 10.1-per-cent increase from 2011.
The Bangkok hotel market was hit hard by the great floods in 2011 that resulted in widespread cancellations. However, the market recovered quickly in 2012, with the revenue per available room of three-star, four-star and five-star hotels showing an increase of 11.6 per cent, 20.7 per cent and 22.6 per cent, respectively. The five-star sector, which was the best performer across all hotel segments in 2012, recorded an average daily rate of Bt4,956 and an average occupancy rate of 68.5 per cent.
An estimated 8,000 rooms across all hotel segments in Bangkok that are in the future pipeline between 2013 and 2015 may limit further growth of revenue per available room in the short term. However, given the rate of land price appreciation, hotel projects will become harder to get off the ground, with a slower rate of new room supply potentially assisting in a market recovery in the medium term.
"We expect 2013 to be another strong year for hotel investment in Thailand, based on several major deals that are now under negotiation in the country's major hotel markets of Phuket, Bangkok, Pattaya, Samui and Chiang Mai. Jones Lang LaSalle is currently marketing two additional properties in Phuket in the midscale and upscale segments, one of which is eligible for a BOI incentive, allowing for a majority foreign ownership," said Batchelor.