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1 Mar 2016


Hotel Industry to Grow 4.7-6.0% in 2016 – Focus on Upcountry, Challenges Loom (Current Issue No. 2707 Full Ed.)

Large hotel operators are focusing more on upcountry markets wherein larger investments in both major and smaller provinces may lead to growth within the industry this year. Despite that, challenges do exist. In smaller provinces where tourist numbers and room tariff are predictably lower, operators will face a tough task of raising occupancy levels and room rates. Meanwhile, fewer travelers will be expected in major provinces since they are more willing to wander off the beaten track into quieter destinations. But the development of special economic zones near borders implies that there will be future opportunities for hotels given Thai and foreign business travelers there.
This year may not be that tough for luxury hotels that will probably maintain their market competitiveness, given earnings from F&B as well as event hosting, e.g., conferences and seminars, that can help improve their performance. For mid-range and budget hotels, the fray could be fiercer, with their chance to raise room rates being limited. To cap it all, some larger hotels have branched out into lower segments, hurting small local hotels forced to engage in price wars.
KResearch forecasts that the hotel industry will expand 4.7-6.0 percent YoY in 2016, with total investments of around THB537-544 billion, versus 2015's THB513 billion. Key players driving growth within the industry would be the larger hotels whose recognized brands have resulted in their ability to maintain the occupancy levels and room rates.

In coping with future challenges, hotels may need to consider reducing their reliance on online travel agents while finding the means to maximize access to potential guests. We deem that it is crucial for hotels to further modify their rates to match specific sales channels and balance revenues from different sources. They should also put more emphasis on advance bookings to be able to project more accurate income and mitigate business risk.

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