Bangkok's upmarket hotels heading for 30-per-cent vacancies

Oct 30, 2007, 8:57 GMT

Bangkok - Bangkok's luxury hotels are facing a 30-per-cent vacancy rate this year as a result of political uncertainties, a strong baht and a weak economy, an international property consultant predicted Tuesday.

'We expect that overall occupancy rates for Bangkok's four- and five-star hotels will only be 70 per cent in 2007 compared to 75 per cent in 2006,' said Navaphol Viriyakunkit, head of research at CB Richard Ellis Thailand.

CB Richard Ellis blamed the hotel occupancy decline on political uncertainties; New Year's Eve bombings in Bangkok last year, which killed two people and have yet to be solved; and a weak economy.

Despite the slowdown, the average room rate in Bangkok's finest hotels has risen 2 per cent this year in baht terms and more than 10 per cent in dollar terms because of the depreciation of the greenback against the local currency.

CP Richard Ellis predicted that the average room rate at Bangkok's luxury hotels was likely to hit 170 dollars per night at the end of 2007 compared with 158 dollars at present, primarily because of the dollar's ongoing slide.

Hotel prospects for 2008 looked worse because of a looming glut in the market.

The property consultant projected that more than 2,000 new four- and five-star hotel rooms would be completed in Bangkok in 2008, raising the supply by 24 per cent from 2007.

Thailand's tourist arrivals in 2007 have been disappointing. During the first eight months of this year, 9.59 million tourists visited the kingdom, up 2.3 per cent from the same period in 2006 but well below the more than 10-per-cent increase registered in 2006.

European arrivals grew by 14.3 per cent in the first six months of 2007. East Asian arrivals were down by 3.9 per cent, and South Asian visitors increased by 10.5 per cent over the same period last year.

The number of Russian tourists increased to 139,000 in the first six months, a 51-per-cent increase year-on-year, while arrivals from India reached 265,000 visitors, an increase of 14 per cent. Middle East arrivals were also up 20 per cent on a year-on-year basis.

But from January through June, arrivals from Thailand's traditionally strong markets dropped: 12 per cent from Malaysia, 7 per cent from Japan and 18 per cent from China.