Report: Bangkok luxury hotels face price war

BANGKOK’s luxury hotels have been seeing signs of recovery in the first three months of the year after a problematic 2010. But growing supply will continue to fuel the ongoing price war, according to Colliers International Thailand’s market report Q1/2011.

Hotels in the luxury segment saw occupancy rates increase to more than 70 per cent in the first quarter, compared to the mid-60 per cent figure in the same period last year, and the mid-50 per cent figure in the fourth quarter of 2010.

In contrast, their average daily rate (ADR) fell 16 per cent to just above 4,000 baht (US$133) from more than 5,000 baht in the first quarter of 2010, and about 5,000 baht in the fourth quarter of 2010 due to competition from upper-scale hotels, where ADR in the first quarter of this year remained stable year-on-year in the mid-3,000 baht range.

Meanwhile, their revenue-per-available-room (RevPar), which dropped significantly in the second quarter of last year during Bangkok’s political turbulence, improved quarter-on-quarter, as Thailand gradually regained traveller’s confidence through to the first quarter of this year.

“The concern now is that the industry may be in the beginning of a rate reduction spiral, especially with the expected future growth in supply in the luxury sector. Hotels in this sector already are highly competitive when compared to other cities in the region,” according to the report.

Colliers further stated that Bangkok’s current inventory of 15,100 rooms in the luxury hotel segment is slated to expand by 1,400 new rooms this year and another 6,000 rooms in the next two years.

Bangkok has a total of 698 hotels and 102,483 rooms, according to the Thai Hotels Association. At least 12 hotels and 2,362 rooms are set to open this year, with another eight hotels and 1,929 rooms to be added next year.

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