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Bangkok Luxury Hotel Market Improved Slightly in Q4 2009

Bangkok Luxury Hotel MarketView Q4 2009

The hotel sector in Bangkok still faced reduced levels of tourism, down 3.8% Y-o-Y, in 2009. This figure is a marked improvement from the first half of the year with Q1 showing Y-o-Y decline of 13.4% and Q2 down 14.4%. The second half of the year showed a Y-o-Y improvement of 5.3% in Q3 and 18.4% in Q4. Easing political tensions and a slowly improving global economic situation are factors in the improvement. The number of tourists arriving in Thailand from East Asian countries, Thailand’s biggest tourist market, increased 20% Y-o-Y and 11% Q-o-Q. There was further positive news from European tourist arrivals, increasing 17% Y-o-Y and 28%
Q-o-Q.

As a result of improving market conditions, occupancy levels for luxury and first class hotels in Bangkok saw an improvement to 57% in quarter 4, up from 55% the same period last year and 45% in Q3 2009. However, the Average Daily Rate (ADR) showed a slight decrease, down 12.5% from THB 5,322 in Q3 2009 to THB 4,658 in Q4. Revenue Per Available Room (RevPAR) was at a rate of THB 2,677 in Q4, up 13.2% from THB 2,365 in the previous quarter. This was an Y-o-Y decline of 13.8% from THB 3,107 in Q4 2008.

The luxury hotel market improved slightly in Q4 2009. However, the supply of hotels continues to rise. Significant additions to the current hotel stock of 26,775 keys are expected over the next 4 years. There are approximately 581 new keys scheduled to be added to the hotel stock in Q1 2010, with an additional 3,069 keys by the end of 2010. There will be an estimated 9,452 additional keys by the end of 2013, bringing the total to 36,227. This represents a 35% increase on current figures. In addition to increased hotel supply, this sector faces strong competition from service apartments which are often chosen over 5 star hotels as guests can generally get more space at a cheaper price. The supply of serviced apartments is expected to increase by 25% by 2013.

Although occupancy levels and RevPAR have improved in this quarter, the increase in the number of hotel rooms and serviced apartments available in the future will add further strain to Bangkok’s hotel industry.

This is an extract from Bangkok Luxury Hotel MarketView Q4 2009, Visit CBRE Research to download full report.

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