Thai room rates expected to rise this year

[webfact]

Thai room rates expected to rise this year
SUCHAT SRITAMA
THE NATION

BANGKOK: -- 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, 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 (Bt41.8 trillion).

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

Source: http://www.nationmultimedia.com/business/Thai-room-rates-expected-to-rise-this-year-30260561.html


-- The Nation 2015-05-21

[Somtamnication]

Why? How? Are USA's rendition programs increasing?

[shirtless]

There is no logic to this very optimistic thread thailand is already over supplied

[Chupup]

Occupancy DOWN put room rates up = Thai logic

[trogers]

Simple Econs 101. Demand exceed supply and prices rise, and vice versa.

[alfalfa19]

Another great update from the DOB or Department of Buffoonery.

[rijit]

Simple Econs 101. Demand exceed supply and prices rise, and vice versa.

yeah tradional western way but the thais seem to look at it their costs are still the same but less people/customers to cover them means to keep profits the same prices go up,, can see where they are coming from. Our way is to assume that lower prices attract more custom? In reality does that totally work ? And if not in the mean time still incur loss's, Never really been convinced by that. Their way their known customer base at least keeps profit. Edited May 21, 2015 by rijit

[keestha]

"average room rate at hotels in Thailand last year was Bt3,100, down 23 per cent from 2013. However, the rate picked up to Bt4,700 in the first quarter this year,"

Would be nice if they could clarify what were the criteria to select hotels to determine this average rate. And, what rate, package deal rate, rack rate or what?

Guess a realistic average, counting both where Tom Cruise would be staying and the Thailand on 1000 Baht per day backpacker dig, you would end up way lower.

[jackanapes]

in Thailand we have a building boom at the present time we have an abundance of hotels guest houses and condos in order to encourage people to fill these establishments especially hotels and guesthouses one must apply a fair rate raising room rates is not the answer .

[trogers]

in Thailand we have a building boom at the present time we have an abundance of hotels guest houses and condos in order to encourage people to fill these establishments especially hotels and guesthouses one must apply a fair rate raising room rates is not the answer .

They have to raise room rates across the board. Strike while the iron is hot!

The lag time of the economic downturn in China would catch up by end of the year, and there is still no signs of light through the economics bleakness in the West.

[madmitch]

"average room rate at hotels in Thailand last year was Bt3,100, down 23 per cent from 2013. However, the rate picked up to Bt4,700 in the first quarter this year,"

Would be nice if they could clarify what were the criteria to select hotels to determine this average rate. And, what rate, package deal rate, rack rate or what?

Guess a realistic average, counting both where Tom Cruise would be staying and the Thailand on 1000 Baht per day backpacker dig, you would end up way lower.

Agree. I'd guess they are members of the Thai Hotel Association and probably rack rates that they supply and not the ridiculously low rates offered to, for example, Chinese tour groups.

Also the rate increase to 4700 baht; any surprise considering that covers high season only against the whole of 2013, low, high and mid-seasons.

These tourism organisations just manipulate statistics to tell you what they want their superiors and the press to hear.

[siam2007]

I do only partially agree with the THE NATION's article and what those hospitality experts say.

room rates won't go up, or maybe only in the absolute peak season, which is Chinese New Year nowadays even more than XMas / Western new year.

Room rates in Thailand in the high season are NOT low, compared to some other countries in South-east-Asia, yet the difference between peak season and low season can be huge - discounts of up to 80% in low season are not unusual (Phuket, Khao Lak). The Thai Baht has been extremely strong in the past 1-2 years, and started to be on the decline only very recently, so I doubt the Thai hoteliers will raise rates a lot. They have to win back customers from countries such as Russia, or western Europe, who suffered a lot from poor economy and their own weak currency. While the number of tourists from China will continue to rise, these people always stay in specific tour-group hotels, often huge hotels far away from the main drag and not attracting a lot of guests from other countries.

Other countries are strong competitors, offering even cheaper prices. Bali for example - you can get a near 4-star room for as low as 600 Baht and a 3-star room for 450 Baht in the low season. new budget hotels with good standards pop-up virtually every week, catering for the growing number of no-frills-Airlines customers and offering surprisingly good standards.

Cambodia and Vietnam offer very competitive rates, even though infrastructure in many cases still leaves a lot to be desired. Philippines - well that's a different story. there have been few hotel developments in the past 15-20 years, that started to change only very recently. Philippines has always been South-east-Asia's country with the worst value-for-money ratio. Old rooms with mattresses as thin as a newspaper, low standards, miserable food, but very high prices. Demand is on the rise though, and even with a couple of new hotel projects in secondary Cities such as Cebu City or Davao, the prices are still very high for what you get. If one wants to get the best value for money, I suggest going to laid-back Khao Lak in low season (which is NOW). no Chinese tour groups, very few guests in general, and room rates so low you almost won't believe it. Just make sure you can entertain yourself as it is really veeeeeeery quiet now ;-)

[catweazle]

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

Ignorance is definitively not bliss in his case... To attract investors, not more tourists are needed, but groundbreaking new laws for foreign investors allowing them to actually own and control their investment to 100%. Since this is a pipe dream, there will be stagnation.

How can there be progress if millions of cheap Charly freeloader tourists from China flood the country, while the western tourists who liked to happily spend their Euros and dollars here stay away flocking into other, more attractive destinations where staff is better educated and actually values the visiting tourist and treats him accordingly?

Perhaps I am missing something and Mr. Singhe is expecting visitors from outer space?

Edited May 21, 2015 by catweazle

[Thai at Heart]

Just as well the baht devalued to provide better value for tourists.....

[metisdead]

A troll post using inappropriate language has been removed as well as a reply.

[rametindallas]

Simple Econs 101. Demand exceed supply and prices rise, and vice versa.

yeah tradional western way but the thais seem to look at it their costs are still the same but less people/customers to cover them means to keep profits the same prices go up,, can see where they are coming from. Our way is to assume that lower prices attract more custom? In reality does that totally work ? And if not in the mean time still incur loss's, Never really been convinced by that. Their way their known customer base at least keeps profit.

Not to be contrarian, but Thailand's room rates are a bargain on an international scale. To drop one's price shows either desperation for business or lowered quality. For what Europeans pay for medium quality rooms in Europe, they can get a Deluxe (or better) room in Thailand. There are so many choices, Thailand being a prime tourist destination, that people are wary of getting something too cheap.

In my own business, when I began, my customers kept asking why I was so cheap. (I'm from a rural area and didn't know market prices) I raised my prices by 50% and doubled the number of customers. I have since doubled that price and have more customers than I want. That makes me exclusive and even more sought after. It is all and illusion as I provided the same great service at a third the price when I began but couldn't get enough customers.

All marketing is based on the illusion of value; otherwise no one would ever pay thousands of dollars a night to sleep in some hotel's bed that hundreds of other people have slept in already. Also, people on holiday tend to spend much more freely than they do when not on holiday. I think room-rates are a non-factor for a great majority of tourists from the Western, more affluent nations. Maybe Chinese tourists are more price sensitive so they get group rates to keep overall costs down. BTW, room rates, like most things in Thailand, are highly negotiable.

[wileycoyote]

This would be absolutely daft at this time !

[elgordo38]

"average room rate at hotels in Thailand last year was Bt3,100, down 23 per cent from 2013. However, the rate picked up to Bt4,700 in the first quarter this year,"

Would be nice if they could clarify what were the criteria to select hotels to determine this average rate. And, what rate, package deal rate, rack rate or what?

Guess a realistic average, counting both where Tom Cruise would be staying and the Thailand on 1000 Baht per day backpacker dig, you would end up way lower.

Governments can massage figures numbers to make them read whatever they want. Governments worldwide have been doing this for years. Look at inflation figures in the west. Inflation is way more than the measly 1.7% pension increase the government gave us pensioners. Its all a sham and more governments are gravitating toward doing this. I have long ago given up on trusting governments. Each individual elected is in the game to benefit himself.

[FangFerang]

Occupancy DOWN put room rates up = Thai logic

Beat me to it!

[Nobb]

Raising the price for Thai rooms does not make sense. Thai baht is weakening, tourism is down, exports are down. Surely raising the price of Thai rooms will not help the tourist trade!

[Johnny S]

They can raise the room rates as much as they like - value of a most hotels in Thailand is not high ... after we visited Vietnam last year the wife wants to go back on next holiday - "no Holiday in thai" she say

Better beaches, food and hotels + you are in fact treated as persons that spend good Money and not like some sh1t under their shoe like many Places here ...

[DM07]

Raising the price for Thai rooms does not make sense. Thai baht is weakening, tourism is down, exports are down. Surely raising the price of Thai rooms will not help the tourist trade!

I work in tourism: Thailand + Tourism + Logic = nothing, because these 3 together and combined do simply not exist!

[rijit]

Best read some of the other posts before you judge.