Upscale properties will soon feel pinch

Written by changthai11 on Saturday, October 11th, 2008

HOTELS

Bangkok luxury hotels will be affected by the global economic slowdown, local political problems, and a market oversupply in the second half of this year and next year, says the property agency Knight Frank Chartered (Thailand). The negative signs began appearing early this year. In the first half of the year, for example, international passenger arrivals at Suvarnabhumi Airport totalled 8.3 million, increasing only 1.2% over the second half of 2007. The figures reflected a small increase in business and individual travel, said Knight Frank.

As well, the company said, the oversupply in four- and five-star hotel rooms was becoming an issue.

In the first half, Centara Grand at CentralWorld introduced 505 new rooms into the Bangkok hotel market, bringing five-star supply to 7,574 rooms, up 7.1% over the second half of 2007. In the four-star market, total supply remained unchanged at 12,083 rooms.

Knight Frank also said world economic problems were affecting the tourism industry by cutting business travel and meetings in the first half of this year.

The occupancy rate of five-star hotels in Bangkok averaged 70.8% during the first half, down 1.9 percentage points from the second half of last year. Four-star occupancy was down 2.4 points to 70.2% in the same period.

Knight Frank estimates that 1,060 new rooms will enter the market in the second half of this year. Total new supply of four- and five-star hotels to be opened between 2009 and 2011 is estimated at 3,555 rooms. The new supply will result in even tighter competition.

Average room rates for four- and five-star hotels are currently 3,425 and 5,618 baht per night respectively, up slightly from the second half of last year.