GHN Market Report: Bangkok

Bangkok: Hotels (Summary)• Foreign tourist arrivals over the second half of 2014 improved and are expected to

continue recovering this year should martial law be lifted• Hotel trading performance suffered a decline in RevPAR driven by a drop in occupancy

due to political instability• We expect hotel market performance to rebound as political tensions ease and Bangkok

tourism shows its resilience once again

Key Demand Drivers and TrendsInternational tourist arrivals to Bangkok declined for the first time since 2009 due to the political demonstrations across the city followed by a military coup. Visitor arrivals declined 11.3% year-on-year in 2014 to 15.5 million. Nevertheless, it must be noted that the decline rate in international arrivals softened in Q4 2014 compared to the previous three quarters, signalling a bounce back. Between 2010 through 2013, Bangkok witnessed a strong growth in international visitation rates.

Mainland China is the biggest source market to Bangkok, followed by Japan, India and Russia. It must be noted that each of the top ten largest inbound markets witnessed a decline in the number of visitor arrivals during 2014 with Indian visitors decreasing the most (19.6%), while visitors from the UK declined the least (1.1%). The primary purpose of visit for majority of tourists to Bangkok is leisure, followed by businesses and MICE (meeting, incentive, convention and events).

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Frank SorgiovanniHead of Research Asia PacificJLL

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SupplyNew room supply in Bangkok declined in 2014 compared to the past few years. We anticipate the uncertainty caused by the political situation to be a key factor behind many hoteliers postponing opening dates. However lodging supply is expected to increase significantly over the next three years. Majority of the upcoming supply is expected to be from the upscale segment (40.5%) followed by the midscale (37.0%) and luxury segments (22.4%). Sukhumvit remains the most prominent location for new hotel developments during this period.

Notable hotel openings in 2014 included the Radisson Blu Plaza Hotel (4 Star), Le Meridien Suvarnabhumi Golf Resort and Spa and Holiday Inn Express Sathorn (3 Star).

Hotel Trading PerformanceOccupancy started to decline in 2006; declining from 78.5% in 2006 to a record low of 51.8% in 2010. This can mainly be attributed to the coup which occurred in 2006, the Suvarnabhumi International Airport closure in 2008, the global financial crisis and political demonstrations in 2009 and early 2010, which adversely affected visitor arrivals to Bangkok. Strong increase in room supply also had an adverse effect on occupancy. Average daily rate (ADR) has been under pressure since 2008, declining from THB 3,096 in 2008 to THB 2,504 in 2010. In 2011, occupancy rebounded as well as ADR. RevPAR increased by 5.4% from THB 2,504 to THB 2,638.

During 2014, occupancy decreased 19.2% to 54.6% compared to 67.6% in 2013. ADR has moderately improved by 0.8% to THB 5,790 in comparison to 2013. As a result, RevPAR declined 18.4% to THB 3,169, down from THB 3,882 in 2013, largely driven by a fall in occupancy.

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12-Month OutlookBangkok saw some respite in international visitor arrivals towards the end of 2014 as the political situation stabilised indicating a recovery. Backed by a growth in visitation, we expect the lodging demand forecast to recover strongly in 2015. In the medium term, we expect market performance to rebound as political tensions ease and Bangkok tourism shows its resilience once again.

Notable Transactions• Four Points By Sheraton Bangkok, Sukhumvit 15 (268 Rooms)• Oakwood Apartments Trilliant Sukhumvit 18 Bangkok 2014 (129 Rooms)• Citrus 22 Bangkok (90 Rooms)

Source: AOT, JLL

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Source: Department of Tourism, JLL

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1,250

2,500

3,750

5,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Major New Hotel Supply to Bangkok Nu

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Luxury Upscale Midscale 2-star Completed Supply

Source: JLL

JLL is a member of GlobalHotelNetwork.com and GHN's Investment Committee.

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