Rebound seen in hotel occupancy

Economy April 25, 2014 00:00

By The Nation

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Demand for Bangkok hotel rooms is expected to rebound this quarter as the state of emergency has been lifted, although last quarter witnessed a drop, according to Jones Lang LaSalle (Thailand).

Andrew Langdon, executive vice president of the hotels and hospitality group, said yesterday that the political unrest that escalated in November and the introduction of the state of emergency in January have negatively affected international arrivals.

This has created a demand shortfall in the hotel market as reflected in the drop in occupancies.

However, there is good news in the first-quarter hotel trading figures with the average daily rate increasing 1.2-5.4 per cent across all segments.

According to the Tourism Department, international visitors increased 20.1 per cent last year to a record 17.5 million but fell by 15 per cent last quarter from the first quarter of 2013. The decline has had an immediate impact on all hotel segments.

The five-star segment was hit hardest with occupancy falling from 75.2 per cent in year-to-date March 2013 to 45.2 per cent in year-to-date March 2014. Though the average daily rate (ADR) rose by 5.4 per cent, average revenue per available room (RevPAR) declined by 36.6 per cent due to lower occupancy rates.

In the four-star segment, while ADR in year-to-date March 2014 improved by 1.2 per cent from the same period in 2013, occupancies fell from 80.8 per cent to 54 per cent, resulting in a 32.4-per-cent decline in RevPAR.

In year-to-date March, the three-star segment saw an ADR advancement of 1.6 per cent from year-to-date March 2013. However, with occupancies falling from 81.3 per cent to 55.3 per cent, RevPAR declined by 30.9 per cent.

No official update has been made available since the state of emergency was lifted on March 19, but the consensus is that the cancellation should help restore demand in the hotel market.

Hotel supply planned for completion this year is also low compared to previous years and should not have any significant effect on occupancy.

Bangkok hosts about 100,000 hotel rooms and 2,200 more are planned for completion this year, compared to the past four years when an average of 3,700 rooms were added to the market per year.

It is hard to predict where the hotel market will be heading in the rest of the year, as it relies to some extent on the political situation, which remains uncertain.

But experience from a series of crises in the past decade shows that the market is resilient and recovers very quickly, thanks to the capital’s position as one the world’s most popular holiday destinations, he added.