Bangkok, Thailand, Offers Vacation Value in 2010

Hotel inventory glut keeps prices down

By: By Fred Gebhart

The Siam Kempinski Hotel Bangkok is one of many new hotels to open this year. // © Siam Kempinski Hotel Bangkok 2010

The Siam Kempinski Hotel Bangkok is one of many new hotels to open this year. // © Siam Kempinski Hotel Bangkok 2010

Clients who enjoy good value and low prices are finding plenty to like about Bangkok, Thailand, this winter. Given the country’s recent bouts of political turmoil in 2008, the worldwide economic problems in 2009 and a looming increase in hotel inventory, hotel rates have been pushed to their lowest levels in years. Going into 2010, such reduced pricing should hold steady at these low levels for months as additional new properties open.

“The fact is that the first half of 2010 will still be as hard as 2009,” said Chris Bailey, Centara Hotels & Resorts senior vice president for sales and marketing. “I don’t see a real change until at least the third quarter of 2010.”

Why the gloomy forecast? Along with continuing economic uncertainty, you should also consider these three names: Renaissance, Kempinski and St. Regis.

The Renaissance Bangkok Ratchaprasong Hotel opened in January with 275 rooms and 58 suites on Ploenchit Road. The Siam Kempinski Hotel Bangkok is scheduled to open in the second quarter of this year with 303 rooms, including 42 suites, as well as 98 serviced residences near the Siam Paragon retail complex. The St. Regis Bangkok is slated to open in October with 227 rooms on Rajadamri Road.

The new rooms couldn’t come at a worse time for local hoteliers. Average daily rates in late 2009 were anywhere from 30 to 50 percent below the already depressed rates seen at the end of 2008. While there were no significant additions to hotel inventory in Bangkok during 2009, occupancy hovered in the 40 to 60 percent range, a 25 percent drop below normal. Advance reservations remained low for the high season that began in October, with only occasional sold-out nights.

Five-star rooms in Bangkok were selling for an average of $150 last August and are predicted to fall even further according to industry consultants Jones Lang Lasalle Hotels (JLLH). Four-star hotel room rates had hit $80 and were still falling. During the holiday season, five-star properties were pitching holiday specials at just over $100 right up to the Monday before Christmas.

“It will destroy the market,” said Incentive House Travel conference and events manager for Les Alford, speaking at Incentive Travel & Convention Meetings Asia in Bangkok last fall. “When demand returns, it will be hard for hotels to bring up rates to the regular level.”

Bangkok hoteliers aren’t looking for a quick turnaround.

“Our leisure market is mostly walk-ins,” said Four Seasons Hotel Bangkok sales manager Mytas Jiwalai. “I’ve seen a sharply decreased number of enquiries from the U.S. The recession has hurt our U.S. market in a dramatic way.”

Jiwalai said Bangkok is likely to remain a buyer’s market well into 2010, and he’s looking on the bright side. JLLH predicted that occupancy will remain in the 50 to 60 percent range into 2011. The firm also said that more than 7,100 international standard hotel rooms are slated to come on line by the end of 2011, equating to an 11.2 percent increase in the Bangkok room supply — great news for leisure travel.

“Most of the new supply is in two- to four-star hotels, not the luxury end, so we won’t be hit as hard as some properties,” said Sebastian Tan, regional sales director for InterContinental Hotels Group in Bangkok. “But there are some amazing values to be had, especially in properties that have recently upgraded. No one is boosting prices no matter how much they have invested.”

InterContinental is trimming rates to meet market demand despite having just completed a major renovation of guestrooms and public areas.

Mandarin Oriental, Bangkok recently finished a two-year, $10 million renovation of its River Wing and launched a similar refurbishment for its Garden Wing, which should be completed in 2011. Mandarin Oriental, Bangkok’s resident manager Paul Jackson said the property is spending 30 percent of revenues on renovations but is holding the price line.

“The renovations are not meant to raise the room rates, but rather to give customers the best service and also keep pace with technology, which is changing very quickly,” Jackson said.

InterContinental Bangkok

Mandarin Oriental, Bangkok

Renaissance Bangkok Ratchaprasong Hotel

Siam Kempinski Hotel Bangkok

The St. Regis Bangkok