Investors snap up Thai hotels

BANGKOK 28 February 2018: Hotel investment transaction volume in Thailand hit an all-time high last year, totalling THB17 billion, led by some high-profile transactions.

Despite high levels of investor interest, transaction volume in 2018 is unlikely to match 2017 as fewer investment grade hotels are up for sale this year, according to property consultancy JLL.

Data from JLL’s Hotels and Hospitality Group shows 12 hotel assets were sold last year with a combined value of THB 17 billion. This was a 70% jump from 2016 and 39.7% higher than the five-year average annual volume recorded between 2012 and 2016 of approximately THB 12.2 billion.

By value, Bangkok dominated the investment activity with six hotel assets sold for almost THB 14 billion, accounting for nearly 80% of the market-wide volume last year.

The six assets included the EDITION hotel at Thailand’s iconic Mahanakorn development, sold to a US private equity fund together with its observation deck; a 34-storey partially completed structure on Sukhumvit 27 sold to Carlton Hotel Group from Singapore; former Premier Inn on Sukhumvit sold to V Hotel Group from Singapore; Somerset Lake Point sold to JR Kyushu from Japan; Swissotel Nai Lert Park sold to Bangkok Dusit Medical Services; and a serviced apartment in Thonglor sold to a private investor.

Some of the major transactions outside Bangkok included Dusit Island Resort Chiang Rai, Pilanta Resort on Phi Phi Island, and Premier Inn Pattaya which was acquired as part of a portfolio by Singapore’s V Hotel Group.

2017 also witnessed an increase in foreign investment accounting for more than 50% of traded value. Buyers from Singapore, Japan and the USA dominated the investment activity.

JLL’s Hotels and Hospitality Group Asia chief executive officer, Mike Batchelor said: “Continued growth in visitor arrivals and healthy hotel trading performance supported by a stable political environment are the driving factors behind strong levels of investment in Thailand’s hotel market.”

According to the Department of Tourism and Sports, Thailand welcomed over 35 million visitor arrivals in 2017, up 8.6% from 2016 and an increase of more than 10 million in the last 3 years alone. The authority also expects 37.6 million visitors in 2018.

“The Department of Tourism and Sports’ forecast is certainly achievable,” says Batchelor. “Bangkok was crowned the most visited city in the world by MasterCard where visitors’ number surpassed the 21 million mark on international tourist arrivals last year.”

He cited improved connectivity as a key theme with the planned and ongoing expansions of airports throughout Thailand, additions of new low–cost carrier flights and a high speed railway to enhance intercity connectivity,” he says.

Several airport expansions that are underway or nearing completion will help increase Thailand’s capacity to accommodate more visitors.

The combined passenger capacity for Don Mueang and Suvarnabhumi will reach 100 million passengers. In 2018, U-Tapao Airport near to Pattaya in Rayong province will see a further expansion coming online.

Khao Lak may see its own airport in future as the potential development of the Phang Nga Airport is under review pending Environmental Impact Assessment (EIA) approval.

“The unprecedented level of activity underlines Thailand as a market with strong investment fundamentals and a positive future outlook, however, with limited availability of investment grade assets on the market, we expect transaction volume in 2018 to taper off somewhat and normalize to around THB 10 billion,” Batchelor concluded.