Bangkok 4&5 Star Hotel Market Q4-2008

Market Research B A N G KO K 4 & 5 star hotel M A R K E T BANGKOK 4 & 5 STAR HOTEL MARKET HIGHLIGHTS | 4 th q u arter | 2 0 0 8

c o l l i e r s i n t e r n at i o n a l

| T H AILAN D

The Knowledge Report B AN G KO K 4 & 5 s ta r h o t e l M A R K E T |

4 th Q u a rt e r

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2008

BANGKOK 4 & 5 STAR HOTEL MARKET OVERVIEW Total Current Supply By the end of 2008, the six major areas in Central Bangkok had a total supply of 12,483 keys with 6,063 keys in the 5 star category and 6,420 keys in the 4 star category. Current supply is most concentrated in the Riverside area, followed by Central and Sukhumvit areas. The Riverside area commands about 29

percent of the total supply for 4 and 5 star hotels, followed by the Central area with 25 percent of the total Bangkok supply.

Figure 1 : 4 & 5 star hotel room supply, Q4 2008

Source : THA,TAT & Colliers International Thailand Research

www.colliers.co.th

The Knowledge Report | 4th Quarter | 2008 | Bangkok 4 & 5 Star Hotel Market

Future Supply There will be an additional 10,815 keys of 4-5 star hotel from 47 projects added in the supply by 2012. Sukhumvit is the most popular area with the largest proportion of new rooms (3,767

keys) by 2012, followed by the Central area and the other areas, with 2,316 keys and 2,162 keys, respectively.

Figure 2 : Future new supply of 4 & 5 star hotel rooms by location, 2009-2012f

Source : THA,TAT & Colliers International Thailand Research

Demand Trends International Tourist Arrivals to Thailand Official figures from the Tourism Authority of Thailand (TAT) reveal that the number of international tourist arrivals to Bangkok hotels declined by as much as 26% in the last two years from

around 10.7 million hotel guests in 2006 to nearly 7.9 million in 2008.

Occupancy and Room Rates Occupancy Rates The average occupancy rate of Bangkok hotels fell 6.4%yearon-year to 64.36% in 2008, with the downturn pronounced in the final quarter when occupancy was only 55%, well below the normal average of 80% in that period. In December, cancellations for advance bookings in the first quarter of 2009 was over 20,000 rooms. As a result, it is forecast that the average occupancy rate

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of the hotel sector in the first half of 2009 will fall by 20%-30%, compared with the first half of 2008, especially for those hotels focused on the leisure market. Occupancy at business hotels will also decrease, but less severely.

The Knowledge Report | 4th Quarter | 2008 | Bangkok 4 & 5 Star Hotel Market

Figure 3 : Average occupancy rates for selected 4 and 5 star hotels, 2005 to 2008

Source : Colliers International Thailand Research

The average daily room rate (ADR) for the 4 & 5 Star hotel segment in 2008 rose by 4.3% from THB 5,010.43 in 2007 to THB 5,229.52 in 2008. The increase of ADR in 2008 was due

to the business in Bangkok performing reasonably well for three consecutive quarters, with the drop focused in the last quarter.

Revenue Per Available Room (RevPAR) Between 2005 and 2008, RevPAR in Bangkok peaked at THB 3,744.08 in 2006 but has since dropped to THB 3,559.92 in 2007 and THB 3,386.43 in 2008. The RevPAR fall in 2008 occurred

in the last quarter which is normally the high season for the Bangkok tourism industry.

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The Knowledge Report | 4th Quarter | 2008 | Bangkok 4 & 5 Star Hotel Market

Outlook: Despite challenging economic conditions, there will be some potential markets for tourism in Thailand, although as the economic crisis spreads, it remains to be seen which markets will prove resilient sources of demand. However, major markets, such as the UK and several other long-haul sources, are most likely to see a continuing low level of tourist arrivals. Moreover, although hotel rates in Bangkok are not considered expensive on a comparative basis, tour groups will be focusing more on cost and 3-star alternatives.

The Bangkok 4 & 5 star hotel market will therefore remain in a difficult situation over the next two years due to current conditions as well as the sharp increase of new supply expected in 2010. The economic crisis along with many other negative factors will dominate the sector in 2009 and 2010.

293 offices in 61 countries on 6 continents USA 99 Canada 19 Latin America 18 Asia Pacific 62 EMEA 95 US$ 2 billion in annual revenue 868 million square feet under management 11,048 Professionals

In this period, the trend appears brighter for budget hotels as executives and tourists search out cheaper options able to offer the minimum level of service required from a low-cost alternative.

Contact information THAILAND: Patima Jeerapaet Managing Director

Risinee Sarikaputra Director | Research

Colliers International 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111

This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

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This report and other research materials may be found on our website at www.colliers.co.th Questions related to information herein should be directed to the Research Department at the number indicated above. This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.