Pattaya’s sunny side: Hotel industry shines amid European gloom
Despite Europe’s deteriorating economic forecast, Pattaya’s hotel industry remains robust, backed primarily by Asian and domestic tourists, says the Managing Director of LH Mall and Hotel (LHMH). Pattaya, traditionally known for its nightlife, has successfully rebranded itself as a family and business-friendly destination.
As the European Commission revises the Eurozone’s growth outlook and Germany faces a potential recession this year, LHMH managing director Kitti Worrabanpott, suggests that hotels focusing on the European market may feel the impact more significantly.
In contrast, LHMH’s customer base is predominantly from Asia. The company currently operates two hotels in Pattaya and four in Bangkok under the Grande Centre Point brand.
LHMH’s latest venture, the Grande Centre Point Space Pattaya, which started operations in August 2022, reported an occupancy rate surpassing 90% in the first half of 2023. Initially, the target demographic was domestic guests, however, foreign guests now constitute 60% of the clientele. The primary foreign visitors are from China, Hong Kong, Japan, other Southeast Asian countries, and the Middle East.
Kitti highlighted that 80% of foreign guests at LHMH’s Bangkok properties were from the Asia-Pacific region, predominantly visiting for business or leisure due to Thailand’s proximity.
Even with China’s economic slowdown, Kitti maintains that the Grande Centre Point would continue to profit from the luxury and upscale segment, particularly unaffected by economic downturns. Chinese nationals, he noted, were the biggest spenders within this group.
The planned introduction of a visa-free scheme within this year by the Thai government is expected to boost overall tourism by simplifying travel procedures, making Thailand an even more attractive destination.
Investment plans are also underway for the LH Hotel Leasehold Real Estate Investment Trust (LHHOTEL), which aims to invest in the leasehold rights of two Grande Centre Point properties in Pattaya. The total investment does not exceed 9.8 billion baht, with plans to borrow no more than 4.5 billion baht from financial institutions. This move is expected to diversify the company’s portfolio, adding to its three existing assets in Bangkok.
Despite the pandemic, the three hotels in Bangkok have managed to surpass the average daily rate of 2019 by 20% during the first half of this year. Monrat Phadungsit, president of Land and Houses Fund Management, and the manager of LHHOTEL, claimed the dividend yield gap for REIT, compared to 10-year government bonds, currently stands at an appealing 4.8%, reported Bangkok Post.
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