Thai hotel sector sees pre-pandemic level investment surge
Thailand’s hotel sector is undergoing a resurgence in investment mirroring pre-pandemic levels, with the boost being propelled by an increase in hotel conversions and an uptick in bank lending, because of a hopeful tourism market. The information is according to C9 Hotelworks, a hospitality consultancy firm.
The firm’s managing director, Bill Barnett, reported an upbeat market and investment sentiment, thanking the increased lending by banks and the businesses’ renewed faith in the tourism sector’s profitability.
“Throughout the latter half of 2023, Thai banks reportedly expanded their lending to the sector’s owners and developers. This, in turn, sparked a rise in hotel developments, both in the form of new projects and property conversions.”
Barnett reveals that hotel owners are currently exploring the possibility of rebranding their properties, enhancing their services for a more premium feel, and heightening their revenue.
Phuket, for example, has over 12,000 hotel rooms in the development pipeline, primarily backed by Thai investors. Nearly half of the projects in the province that were previously halted or postponed due to Covid-19 have resumed in the last six months, reported Bangkok Post.
Barnett also noted that several Thai real estate developers are diversifying their portfolios and reducing risks by shifting their investments towards hotels, branded residences, and mixed-use properties.
However, despite the rapid growth of tourism, Thailand’s progress has been slowed by the underdevelopment of public infrastructure, particularly in transportation. This is evident in Phuket, where both a new airport and the Patong tunnel are still under construction. Other obstacles include inflation, high construction costs, and geopolitical tension.
Considering the escalating room rates in Thailand and numerous other countries, Barnett predicts that prices are unlikely to fall back to 2019 levels due to factors such as the increased cost of living.
Rather than focusing on boosting their occupancy rates in the current year, Barnett suggests that hotels will likely concentrate on expense management and enhancing their bottom-line profitability.
By 2025, Barnett anticipates that the number of international tourists will match or even surpass 2019 figures.
He described the tourism industry’s current outlook as cautiously optimistic. While there is potential to accelerate major markets like China, Russia, and India, he cautioned that the market will not revert to previous high volumes.
On Monday, January 15, C9 Hotelworks, in conjunction with industry partners including Intercontinental Hotels and Resorts, STR and Iniala Group, held the Thailand Tourism Forum 2024 at the Intercontinental Bangkok. The forum, which drew over 1,000 attendees, highlighted the adoption of artificial intelligence in hotels and the emergence of lifestyle hotels in response to customers’ growing demand for experiential stays.
In related news, in an exclusive interview, the Thai Hotel Association President expressed optimism about Thailand’s tourism recovery, foreseeing a remarkable comeback by the latter half of 2024. Learn more about the industry’s positive trajectory.
