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Hotel sector continues to suffer from a reduction in tourism levels

Bangkok Luxury Hotel MarketView Q3 09

The hotel sector is still faced with reduced levels of tourism. Latest figures show that tourist numbers dropped 4.1% Y-o-Y. This is however a marketed improvement on figures from the first half of the year with Q1 showing a Y-o-Y decline of 17.9% and Q2 down 18.5%. Easing political tensions and a slowly improving global economic situation are factors in the improvement. As a result of the slowing decline, occupancy levels showed a slight improvement Q-o-Q, increasing to 45% from 44% in Q2, however still down 25.2% Y-o-Y. The Average Daily Rate (ADR) of upscale and luxury hotels also showed a slight increase, up 0.3% to THB 5,322 from THB 5,308 in Q2. Revenue per Available Room (RevPAR) was at a rate of THB 2,365 in Q3 up 3.9% to THB 2,277 from the previous quarter. Figures on a Y-o-Y basis were less favorable, showing a decline of 35.6% from THB 3,674 in Q3 2008.

Tourists arriving at Bangkok’s Suvarnabhumi International Airport from East Asian countries, Thailand’s largest tourist market dropped 10.1% Y-o-Y, however we are seeing signs of recovery as September recorded a 23.1% increase in in tourists from East Asian countries. There was further positive news from European arrivals at Suvarnabhumi Airport which increased 6.7% Y-o-Y from 654,134 in Q3 2008 to 689,353 in Q3 2009.

The luxury hotel market remained flat in Q2 2009 however the supply of hotels continues to rise. Current downtown hotel stock is 26,249, however there is set to be significant additions to this over the next 2 years. The remainder of 2009 will see an extra 895 keys, in 2010 there is an extra 3,980 keys planned, which equates to an increase of 14.7% Y-o-Y. 2011 will follow suit with a further 3,087 keys becoming available which is an increase of 9.9% Y-o-Y. At the end of 2011 we project that there will be 34,211 keys, a 30% increase on current supply.


Although the luxury hotel market is struggling to keep up with 2008 levels we have seen some improvements when compared to the previous quarter. Tourist figures at Suvarnabhumi and Don Muang airports have seen a marked improvement in passenger numbers, an increase of 8.8% when compared to Q2, up to 7,319,598 from 6,727,274. Occupancy levels have also increased slightly after a large drop in Q2. The major hurdle for the Luxury hotel market is going to be the increase in supply of rooms that will come to the market in the next few years. By the end of 2011 we project that there will be an additional 7,962 rooms which is a 30% increase on current supply.

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