No end in sight to city hotel expansion
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Bangkok's hotel market will get fiercer with the openings of more properties that will increase rooms to 42,000 by 2015, says real-estate agency CB Richard Ellis.
Hotel supply in Bangkok grew 12.1 per cent year on year with the completion of six hotels in the first half of this year, according to CBRE Thailand’s latest survey.
Downtown Bangkok now has 37,500 hotel rooms and can expect 4,400 more by 2015, bringing the total up by 11.9 per cent to almost 42,000.
Almost all of the new hotels are high-rises. The most popular area for hotel development remains Ploenchit/Sukhumvit, with 65 per cent of the total supply and four out of the six new hotels, followed by Silom/Sathorn with 21 per cent and riverside with 14 per cent.
About 2,250 rooms will be completed in the second half of this year, comprising luxury rooms 13 per cent, first-class rooms 8 per cent, mid-range rooms 46 per cent and economy rooms 33 per cent.
The competition due to openings is still high, although the supply trend this year is encouraging for the industry with the number of construction permits plunging over the past two years.
“The big challenge for hotel owners is to raise room rates, which have not grown significantly for the last five years. The second half of 2013 may finally see growth in visitor arrivals outpacing new supply, allowing owners to raise rates,” James Pitchon, executive director and head of CBRE Research and Consulting in Thailand, said yesterday.
There is a significant opportunity for economy hotels in the country. The increase in visitor arrivals in Bangkok has largely been driven by the Asian feeder market, and many Asian visitors prefer a budget hotel.
Visitors want consistency in quality as well as value for money. And there are a limited number of players with branded products in this market.
Many operators have plans to open budget hotels in Bangkok. Central Plaza Hotel, which is known as a high-end operator under the brand Centara, has jumped into this segment and introduced its economy brand COSI.
Erawan Group, a listed hotel developer, has also introduced its budget brand Hop Inn, targeting to open 30 Hop Inn hotels in the country.
