Thai hotel room rates expected to rise this year

Thai hotel room rates expected to rise this year
A hotel room at The Siam in Bangkok, Thailand.

Although Asia-Pacific markets will receive more international visitors this year, hotel room rates in cities in Thailand and China are expected to show the lowest growth among major cities in Asia because of having more hotel developments in the pipeline.

Previndran Singhe, chief executive officer of Zerin Properties, a hotel investment consultancy based in Malaysia, said at the "Asia Pacific Hotel Investment Conference" in Bangkok yesterday that room rates in the Asia-Pacific region as a whole were expected to grow by 2.7 per cent this year.

This strong growth follows record-high occupancy rates in 2013, driven by demand from both leisure and business travel activity throughout the region.

He said such markets as Sydney, Hong Kong, Singapore and Tokyo were currently experiencing occupancy rates above 80 per cent.

Bangkok so far is running lower occupancy rates than other major cities, but is still an attractive destination for both investors and tourists, he added.

Room rates at hotels in Thailand are expected to increase by 0.7 per cent this year, well below the Philippines' projected growth of 3.1 per cent.

Indonesia's room rates, meanwhile, are forecast to increase by 7.8 per cent, as hoteliers continue to gain pricing power on the heels of extraordinary demand in those countries, said Singhe.

Property consultancy Jones Lang LaSalle reported that the average room rate at hotels in Thailand last year was Bt3,100 (S$123), down 23 per cent from 2013. However, the rate picked up to Bt4,700 in the first quarter this year, after a military coup cleared Bangkok of political chaos and later lifted martial law.

"Thailand is a huge market for tourism. More tourists will attract more investors," Singhe said.

Hotel prices in China began to cool last year and Zerin Properties expects relatively flat price growth of 0.1 per cent this year, driven by lower levels of demand coupled with extraordinary growth in supply.

The hotel pipeline remains full and it will be imperative to watch how the supply-demand dynamics play out as development continues, Singhe said.

"Relatively strong price growth at 3.6 per cent is expected in Australia, driven by rising demand in Sydney, Melbourne and Darwin," he said.

India is also expected to experience hotel-price growth for the first time in several years, driven by higher levels of business confidence after this year's elections. The consultancy expects that room rates throughout the region will increase in both the mid-scale and upscale segments, with estimated growth of 2.6-3.1 per cent.

Challenges for organisations in the Asia-Pacific region include low compliance with travel-management policies and difficulty tracking spend because of multi-channel bookings, Singhe said.

Meanwhile, hotel prices in Japan will remain stable, with only a 1-per-cent gain in 2015. Rate increases may begin towards the end of the year, as hoteliers will likely try to pass on a portion of new consumption taxes imposed by the government on travellers.

According to Zerin Properties' CEO, international tourist arrivals reported by destinations around the world reached 1.138 billion in 2014, a 4.7-per-cent increase over the previous year.

By region, the Americas grew by 7 per cent and Asia-Pacific improved 5 per cent, while Europe was up by 4 per cent, the Middle East increased by the same amount, and Africa by 2 per cent.

By sub-region, North America rose 8 per cent, followed by Northeast Asia, South Asia, Southern and Mediterranean Europe, Northern Europe and the Caribbean - all increasing by 7 per cent.

Meanwhile, international tourism receipts increased by 4 per cent last year to reach a record US$1.245 trillion (S$1.6 trillion).

All regions recorded growth, with Asia-Pacific taking a 30-per-cent share of the receipts, with US$377 billion.

The United Nations World Tourism Organisation forecasts that international tourist arrivals will grow globally by between 3 and 4 per cent this year.

By region, growth is expected to be strongest in the Americas and in Asia-Pacific at 4-5 per cent, somewhat more moderate in Europe with 3-4 per cent, Africa with 3-5 per cent, and the Middle East with 2-5 per cent.

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