Accor predicts surge in hotel conversions in Thailand post-pandemic
A surge in hotel conversions is expected in the post-pandemic hospitality sector, according to Accor, an international hotel chain. This trend is in response to stricter lending rules from financial institutions and a slowdown in the construction of new establishments.
Andrew Langdon, Accor’s Chief Development Officer for Asia, detailed how the current supply of new hotels is slow and concentrated among a few major conglomerates across Asia. Small family companies, which typically account for the majority of hotel developers, are struggling to secure financing, especially in the past two to three years.
Langdon explained that only large conglomerates with strong cash flow and established relationships with banks are likely to receive financing. Hence, international hotel operators are turning to conversion strategies to supplement the slowdown in new hotel construction.
Accor has received a record number of inquiries this year from independent Thai hotel owners about franchising, rebranding, or conversion. Langdon attributes this trend to guests’ preference for branded hotels that guarantee quality, a shift triggered by the pandemic.
In Thailand, branded properties have significantly outperformed non-branded properties, with a notable increase in revenue per available room (RevPar). This trend is unprecedented in the Thai market, according to Langdon.
Interest rates have had little impact on hotel development in Asia. Langdon explains that most hotel owners and developers in Asia are high-net-worth or family groups who are less influenced by interest rates, unlike their Western counterparts, who include more rate-sensitive institutional investors, reported Bangkok Post.
Accor’s brand
Accor’s expansion strategy in Asia involves rolling out franchises in Thailand with premium, mid-scale, and economy brands such as Novotel, Mercure, Ibis, and the Handwritten Collection, a new soft brand in Asia. The franchise model allows owners to operate hotels themselves while enjoying the benefits of Accor’s brand, distribution, and marketing power.
Accor recently launched two hotels in Asia under the Handwritten Collection: the Andaman Beach Hotel Phuket in November and the Hotel Faber Park Singapore, slated to open in the fourth quarter.
Langdon highlighted the growing demand for boutique hotels over larger ones, suggesting the Handwritten Collection is well-suited to this market, especially for conversion opportunities. The model is projected to increase revenue by at least 20% for independent hotel owners.
Accor aims to expand the Handwritten Collection brand to 250 properties globally by 2030. The company operates 396 hotels with 89,000 rooms across 14 Asian countries, excluding China. Its brands include 73 hotels with 17,000 rooms in Thailand.
Despite lower occupancy rates than in 2019, Accor’s RevPar this year has exceeded its 2019 level, driven mainly by higher room rates. The chain has 168 hotels with over 42,000 rooms in the pipeline in Asia.
