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Room rates poised to spike 20%

Thai hotels could raise their room rates by up to 20% next year as current prices are lower than their competitors in neighboring countries, says the US-based Starwood Hotels and Resorts.

Many in the country have plan a 5-10% increase, as rates have been frozen since late 2008 due first to domestic political instability and then the flood crisis.

“Average hotel room rates in Bangkok are lower than in Singapore and Hong Kong by 25-30%. In the past few years, many Bangkok hotels have maintained their rates, while some even slashed prices to attract foreign tourists to survive the bad times,” said Wayne Buckingham, the company’s vice-president for Thailand, Cambodia and Vietnam.

However, Bangkok hotels could hike their rates by as much as 20% if they offer a good product, he said, adding that even with the increase Thailand would remain good value.

Mr Buckingham said hoteliers have suffered pricing problems ever since a room glut in 2006.

The Bangkok sector peaked in 2006. Since late 2008, the political turmoil and most recently the flood crisis has damaged the hotel industry.

Mr Buckingham said these events will drag down the new upturn cycle, which normally lasts 5-7 years.

Therefore, efficient management of room supply is necessary, and good zoning of new hotel developments in Bangkok should be reviewed for sustainable growth.

Starwood itself plans to increase the room rates of hotels under its management by a double-digit percentage next year.

The impact from the severe flooding will last for the rest of this year. Average occupancy for Starwood-connected hotels this month is now only 25-35%, down from 55-56% in normal times.

“Nevertheless, Thailand remains a very competitive market. If the situation improves shortly, then foreign tourist arrivals will pick up in the first quarter of next year, and definitely the market will return to normal in the second quarter,” said Mr Buckingham.

He said the massive floods cost Starwood in Thailand more than 1,000 room nights, while political issues may return as a key concern next year.

Starwood will add six hotels to its local portfolio by 2014 _ Le Meridien Suvarnabhumi (220 rooms), Aloft Bangkok-Sukhumvit 11 (297 rooms), Vana Belle Samui Resort & Spa (79 rooms), W Bangkok (414 rooms), Four Points by Sheraton Phuket in Patong (290 rooms) and Aloft Phuket in Patong (300 rooms) _ bringing its total to 6,641 rooms.

Source: Bangkok Post

ThaiVest Editorial Team

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