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ฺBangkok

Mixed Pictures for Hotel Markets in Bangkok and HCMC

Bangkok is likely to handle the growth in new supply better as tourist arrivals are recovering.


Both Bangkok and Ho Chi Minh City (HCMC) will see a significant amount of new hotel supply entering the markets this year. However, Bangkok is likely to handle the growth in new supply better than HCMC as tourist arrivals in Thailand’s capital city are recovering exceedingly strongly. Mr. Andrew Langdon, Executive Vice President of JLL’s Hotels and Hospitality Group, compared prospects in Bangkok and HCMC’s hotel markets.

Bangkok hotel market on a road to recovery

The hotel supply pipeline in Bangkok comprises close to 4,000 keys expected to be operational by the end of 2015. This represents a much faster supply growth when compared to the five-year average of 2,400 rooms between 2010 and 2014, according to JLL’s Hotels and Hospitality Group.

“The amount of new supply planned to enter the Bangkok hotel market this year would be a major worry if the market were in the same situation as in 2014 when the tourism industry was hurt badly by politics,” said Mr. Langdon. 

Bangkok registered 15.5 million international visitor arrivals in 2014, representing an 11.3% decline over 2013. Figures by STR Global show that Bangkok experienced a year-on-year (y-o-y) drop in the average revenue per available room (RevPAR) of 23.3% to USD 97 (THB 3,181) primarily driven by a softening in demand.

However, hotel performance in the city has improved significantly this year in response to a rebound of international visitation. The average hotel occupancy rate across the city rose from 45.3% in the first quarter of 2014 to 77.1% in the first quarter of 2015, allowing RevPAR to grow by 67.4% USD 147 (THB 4,796) over the same period.

“Prospects in the Bangkok hotel market in the remainder of 2015 are very positive as international visitors are coming back. With increased political stability and Bangkok’s strong position as one of the world’s most preferred holiday destinations, we expect the growth in demand for hotel rooms in the capital city to keep pace with new supply coming on stream this year,” said Mr. Langdon.

Continued growth in new supply putting a downward pressure on hotel trading performance in HCMC

The HCMC hotel market has witnessed a softening in trading performance, due mainly to a fast growth in new supply that demand has failed to catch up with. While RevPAR in 2014 saw a 5.2% decline from 2013, figures for the first quarter of 2015 continue to indicate a decline of 2.7% y-o-y to USD 83.

An additional 2,770 new hotel rooms are planned for completion in HCMC by the end of this year and are expected to put a further downward pressure on RevPAR. 

Mr. Langdon commented “While the amount of new supply planned for completion in HCMC this year is a lot less than that planned for Bangkok, the HCMC hotel market is much smaller and thus will face a bigger challenge in handling this new supply.”  

In 2014, international visitor arrivals to the entire country of Vietnam numbered 7.9 million, close to just 50% of the volume received by Bangkok alone. Out of this, HCMC registered 4.4 million arrivals. 

“With a continued growth in the number of international arrivals, we expect lodging demand levels in HCMC to strengthen over the short to medium term. However, fresh supply slated to enter the market may continue to put pressure on trading performance in the near term,” Mr. Langdon concluded.​