Hotel market in Bangkok offers favourable conditions for further growth
The hotel sector in Bangkok continued to show positive growth thanks to domestic political stability and a strong increase in the number of international tourist arrivals. The number of international tourists arriving in Thailand hit a record high of 29.88 million in 2015, increasing by 20.44 percent y-o-y. The number of international tourist arrivals is expected to go further, ranging from 32.54 to 34.02 million in 2016, or an increase of 7.96 percent to 13.04 percent y-o-y. The tourism industry will remain a key driver for economic growth for Thailand.
International tourist arrivals to Thailand
Hotel supply trends
The supply of new hotels in the Bangkok has regained momentum in recent years. The total supply at the end of 2015 accounted for 75,112 rooms, representing an increase of 2.2 percent y-o-y. There were a total of 1,606 rooms new rooms introduced to the market in 2015. It is anticipated that the total supply of hotel rooms will continue to grow in the next two years. The total supply for Bangkok hotels is projected to increase to 79,736 rooms by the end of 2018, with 4,624 new rooms expected to be added to the market in Bangkok.
Average occupancy rates
The average occupancy rate for all grades of hotels in Bangkok has recovered gradually as tourist’s confidence has returned, following the political instability in 2014. The average occupancy rate for the whole of 2015 was at 76.33 percent, an increase of 8.83 percentage points from the previous year.
The Average Daily Room Rates (ADR) of all hotel grades in 2015 stayed at THB 3,287, representing a 4.3 percent growth on y-o-y basis. As a direct result of improving occupancy levels, the revenue per available room rate (RevPAR) for all grades increased to THB 2,509 per night, up by 17.9 percent y-o-y. It is anticipated that the ADR’s of hotels in Bangkok will slowly increase over the next 24 months. The expected growth in occupancy rate will drive the RevPAR of many hotels into a positive area.
Overall, DTZ Thailand believes that the hotel market in Bangkok offers favourable conditions for further opportunities for growth, based upon improving domestic political conditions and related to the increasing numbers of foreign tourists that are expected in the country in the short term. This optimism is dulled by the current global economic conditions, which could impact upon the levels of potential growth in the hotel industry in Bangkok. Hotel supply will continue to grow, especially for the mid-range and first class hotels. It is also anticipated that the ADR will continue to rise over the next few years. RevPAR in the near term will show an upward trend, as a result from an expected increase in occupancy levels in the light of growing hotel demand.
Written by David George, director of business space, valuation, consulting & research, DTZ
