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Bangkok Luxury Hotel – Q 2 2009

Summary
The major talking point in this quarter is the decline in the number of international tourists. Numbers fell 18.6% Q-o-Q and 14.4% Y-o-Y to around 3 million from 3.5 million in Q2 2008. Political instability and the global economic recession continued to be the main factor with the addition of Influenza A (H1N1). This has clearly had a dramatic effect on occupancy rates. Occupancy levels are now at 44%, a 23% drop on figures of 67% from Q2 2008. As a result of poor occupancy levels Average Daily Room Rates (ADR) dropped at upscale hotels from THB 5,992 in Q1 to 5,308 in Q2 a reduction of 11.4% Q-o-Q and down 9% Y-o-Y.

RevPar figures were also down at a rate of 2,277 (THB), a decline of 29.7% Q-o-Q and 45.7% Y-o-Y.
East Asian travelers make up the majority of tourists visiting Thailand, accounting for 52.8% of the total numbers. Q2 2009 has seen a dramatic reduction in the number of visitors from this region. Q2 2009 showed tourism numbers from East Asia at 1,565,892 compared with 2,315,305 in the same period last year, a decline of 32.4%.

There is some encouraging news regarding travel from Europe, with international arrivals from this part of the world faring marginally worse than last year. Q2 2009 figures showed 693,681 visitors against 704,886 for the same period in 2008, a drop of just 1.6% and with the Thai Baht performing strongly especially against the GBP these figures are encouraging.

The luxury hotel market has seen a large drop in demand in Q2 2009 however supply of hotels continues to rise. Current downtown hotel stock is 26,169, however there is set to be significant additions to this over the next 24 months. In 2010 there is an extra 3,123 keys planned, this equates to an increase of 11.3% Y-o-Y. 2011 will follow suit with a further 2,636 keys becoming available showing an increase of 8.6% Y-o-Y. For the rest of 2009, there will be another 1,392 keys to be completed.

The first-class (ADRs of THB 4,500-5,500) and mid-range (ADRs of THB 2,500-4,500) segments are expected to be the major part of supply growth during 2009, with 498 keys and 344 keys respectively.

Outlook
There is some encouraging news regarding travel from Europe with international arrivals from this part of the world faring marginally worse than last year. Q2 2009 figures showed 693,681 visitors against 704,886 for the same period in 2008, a drop of just 1.6%, this said the Airport closure in December 2008 is still fresh in the minds of many and more recently the delicate political situation was again underlined when protestors invaded the Royal Cliff Resort in Pattaya in April forcing the cancellation of the ASEAN summit. The steady stream of bad press has effected tourists’ perception of Thailand.

The remainder of the year is going to be tough for the Thai tourism industry. Supply continues to grow and as yet we have not seen a recovery in visitor arrivals from Asian points of origin.

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