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Political Unrest Damaging Bangkok's Hotel Market

Political Unrest Damaging Bangkok's Hotel Market

According to STR Global, Bangkok's hotel market reported significant performance decreases during the first quarter of 2014, affecting Thailand's overall performance.

In the first quarter, occupancy fell 30.7 percent to 55.2 percent (compared to 79.7 percent in Q1 2013); revenue per available room dropped 31.2 percent to THB1,778.42; and average daily rate fell by 0.6 percent to THB3,221.60. Demand in the market also reported a significant decrease, falling 29.3 percent.

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Elizabeth Winkle

"The hotel industry in Bangkok has taken a hit as a result of the political unrest", said Elizabeth Winkle, managing director of STR Global. "2013 was a good year for hotels in Bangkok; however, 2014 is off to a rough start for the market. In February and March, Bangkok reported the lowest occupancy figures since August 2010. The greatest concern is the uncertainty of how long the conflict will last".

Contrary to Bangkok, major resort locations in Thailand experienced a slight fall in occupancy due to increased rates to compensate for the negative trend. This resulted in a positive RevPAR performance in these markets.

Regional Thailand was the only market in this country that was able to increase occupancy during the first quarter, while ADR slightly declined.

Resort markets, such as Koh Samui and Phuket, traditionally command higher rates than Bangkok. The recent unrest has increased the gap even further. Rates in Koh Samui in Q1 2014 were nearly three times higher than in Bangkok.

Overall, Thailand's performance in Q1 has been dampened by Bangkok, as demand fell 16.6 percent, and the country reported the lowest occupancy levels (65.7 percent) of any first quarter since 2009.

This negative performance is off the back of Thailand's positive performance in 2013, where occupancy (+6.3 percent) and ADR (+6.5 percent) grew almost at the same pace. This resulted in double-digit growth in RevPAR for the third year in a row to THB2,564.59 (+13.2 percent),exceeding pre-recession peaks in this measure for the first time.


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