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International Hotel Brands Expand Reach

29 Nov 2017

The downtown Bangkok area has always been a preferred option for hotel developments. In this area alone, hotel supply is growing so rapidly that CBRE Thailand expects the total number of rooms available to increase 20% by 2021.

According to CBRE Research, 45% of the existing hotel supply operates with international brands. The remaining supply comes from local hotel brands and hotels with no brand, which comprising roughly 37% and 18% of the existing supply, respectively.

The growth in supply means that there are more opportunities for local and international hotel management companies as more hotel owners may choose to outsource management of their properties.

The trend has been that international hotel brands tend to dominate the first-class and luxury hotel market in downtown Bangkok where currently 67% of the hotel market supply is managed by international brands. For example, Marriott International Group, which operates hotels such as St. Regis, JW Marriott, and Renaissance, expanded with the opening of Bangkok Marriott Marquis Queen’s Park. Additionally, Hyatt Hotels has also expanded its portfolio, with the recent opening of Park Hyatt in Central Embassy (May 2017) and Hyatt Place on Sukhumvit 24 (October 2017), and Hyatt will soon open Hyatt Regency in 2018.

While international hotels have a greater market share than local brands in the first-class and luxury sector of downtown Bangkok’s hotel market, the story is different when it comes to mid-range hotels, which make up 40% of downtown Bangkok’s hotel supply. In mid-range segment, local hotel brands manage about 43% of the supply compared to the 35% for internationally branded hotels.

International and local hotel management companies are offering a far greater range of brands that extend into the economy sector. Currently, about 20% of hotels in downtown Bangkok are economy hotels, where management is split evenly between owners self-managing, international brands, and local brands. However, about 70% of the new economy hotels under construction in downtown Bangkok will be operated by international hotel brands. For example, SureStay Plus by Best Western and US-hotel chain Travelodge recently expanded to Thailand’s economy hotel market. Best Western will also manage Vib Bangkok Sanampao, which is planned to open in 2018, and Vib Sathorn Hotel which is planned to open in 2019. The InterContinental Hotel Group is also expanding its portfolio of economy hotels with the opening of Holiday Inn Express Bangkok in Soi Soonvijai and in Chinatown in 2018.

As the millennial generation is willing to forgo some luxury and place more emphasis on travelling for new experiences, we are seeing more tourists opting for budget and economy hotels. This millennial trend is pushing international hotel chains in downtown Bangkok’s hotel market to expand beyond the first-class and luxury market and move into the mid-priced and budget hotel segments as well in order to secure a place in the growing market of millennial travellers.

An article written by Chotika Tungsirisurp, Associate Director and Aishwarya Bajaj, Analyst, CBRE Research & Consulting, CBRE Thailand for Bangkok Post dated 29 November 2017.