Chiang Mai needs to diversify to fill hotel rooms: C9

After seeing record arrivals in 2018, Chiang Mai is now grappling with a 5.1% drop in market-wide hotel occupancy for the first five months of 2019, compared with the same period last year, according to hospitality data provider STR.

The comparison between 2018, when the gateway airport surpassed a record-high five million passenger arrivals, and now in 2019 as haze and air pollution strongly impacted tourism, “are reminders how fragile travellers shifting appetites can be”, said C9 Hotelworks in its newly released Chiang Mai Hotel Market Update.

Night Bazaar Road in Chiang Mai, with the Royal Lanna Hotel Chiang Mai in the background

International arrivals increased by more than 17% in 2018 on the back of increasing flight connections. Taiwan was one notable growth market, as the number of Taiwanese passengers rose from 2,773 in 1H2018 to 30,660 in 1H2018 with the launch of direct daily flights AirAsia and Eva Air.

Although hotel supply increased by 33% in 2018, both occupancy and ADR were fairly stable with RevPAR standing at 2,417 baht (US$78).

There are five hotels in the pipeline with the majority in the upscale tier and most with brand affiliations, as owners look for a competitive edge. The recent opening of the Novotel Nimman Journeyhub is one example of a Bangkok developer looking to diversify into more affordable hotel assets outside of Thailand’s capital.

However, with 2019 expected to bring challenging trading conditions for hotels and tourism across the board, the total hotel supply of 48,000 keys makes it necessary for Chiang Mai to step outside its boutique image and find ways to fill rooms with more mainstream offerings, C9 recommended.

C9’s research also highlighted Chiang Mai’s mounting reliance on the mainland Chinese sector – which is in the midst of a slowdown – as a cause for concern. In 1H2018, China was the number one international source market, holding a 14% share in hotel guests.

Moving past pollution, Chinacation and over-development issues in the longer term, the bigger issue is how will Chiang Mai evolve from a headlong dive into a far bigger tourism pool and still retain the destination’s long-lasting image as a cultural icon.

Read the complete C9 Hotelworks full Chiang Mai Hotel Market Update here.

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