Market Research

PAT TAYA H OT E L M A R K E T
PATTAYA HOTEL MARKET OVERVIEW | 1 s T H A L f | 2 0 0 9

c o l l i e R s i n T e R n aT i o n a l

| THailanD

The Knowledge Report

PaT TaYa H o T e l M a R K e T | 1 s T H a l F | 2009

PaTTaYa HoTel MaRKeT oVeRVieW

The Pattaya hotel market is still suffering from last Novembers airport closure in Bangkok and from the more recent political unrest in April. Hotel operators are expected to suffer even more following the global economic crisis and panic over the type-A (H1N1) influenza pandemic.
MaRKeT inDicaToRs 1H 2009 2H 2009F

Tourists and investors have chosen to holiday and invest in other countries, as they have lost all confidence in Thailand following the recent fiascos. It is noted that the occupancy rate in Pattaya has dropped sharply due to visitors from key destinations such as China, Russia, Taiwan and Europe avoiding the city in large numbers. However, tourists from India and other neighbouring South East Asian countries continue to arrive in volume. Pattaya has the resilience to bounce back from this downturn, just as it has done so in the past. The city has a good infrastructure which includes several international standard hospitals, schools and golf courses, well renowned sporting and yachting facilities, together with world class shopping, dining and entertainment venues. Pattaya will always pull through a crisis and go on to attract millions of visitors from all over the globe, mainly due to the wide array of attractions and services available to tourists. However, it must not be forgotten that in recent years along with the citys incredible growth has come poor quality zoning and management. Pattaya city desperately needs to address its zoning issues in order to improve upon its current global and domestic image of sleaze and crime, if it wants to attract more sophisticated and affluent visitors. Pattaya has recently welcomed much needed investment from the Thai government to include a boat pier, cultural events, music festivals, motor racing, a convention hall, a new public hospital and low cost housing. These efforts will no doubt bring about optimism in Pattaya once again and we expect to see a growth in visitor numbers towards the end of this year, bringing with it a much needed kick start to the local economy.

sUPPlY DeManD occUPancY RaTe aVeRage DailY RaTe

Pattaya will always pull through a crisis and go on to attract millions of visitors from all over the globe, mainly due to the wide array of attractions and services available to tourists.

It should also be considered that if further political tension and violence reveals itself once more, it has the potential to bring lasting damage not only to Pattaya, but to the entire Thai tourism industry as a whole.

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

sUPPlY TRenDs Hotel Locations Our study focuses on the major areas of hotel accommodation in Pattaya, which can be subdivided into five main areas: 1. North Pattaya is the area to the north of Pattaya Nua. It is divided into a larger northern section that spans the areas to the east of Naklua Beach (the most northern beach). This area is considered a peaceful location, and current developments in the area are Centara Mirage Beach Resort and Holiday Inn Pattaya. 2. Central Pattaya is located alongside the city centre, covering the section of beach from Central Road (Pattaya Klang) south to Pattaya Tai and the entrance to Walking Street. 3. South Pattaya is the area from the border of Central Pattaya to the Bali Hai pier and is adjacent to the core of Pattayas busy nightlife area. This area is popular among Middle Eastern, South Asian and Russian visitors. 4. Pratumnak Hill is the area covering the main thoroughfare connecting Pattaya and Jomtien Beach. 5. Jomtien Beach is about 1 km south of Pratumnak Hill. The area is home to many high-rise condominiums, beachfront hotels, shops and restaurants. The area at the beginning of Jomtien is considered busy, while the area at the end of this beach, called Na Jomtien, is considered peaceful and tranquil. There are many plots of vacant land available at Na Jomtien for future development.

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

There will be approximately 40,076 hotel rooms in Pattaya in all grades by the end of 2009. The number of rooms increased by 4.89% compared to 2008, representing 1,526

rooms by the year end. During the first half of 2009, there were 604 hotel rooms added. It was reported that approximately 893 rooms closed for renovation in 2008.

FigURe 1 : PaTTaYa HoTel RooM sUPPlY, 2009F

Source : Thai Hotels Association (THA),Tourism Authority of Thailand (TAT) & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

During the first half of 2009, there were 39,154 hotel rooms, the majority of hotel rooms (9,622) are located in South Pattaya, followed by Central Pattaya and North Pattaya, with 7,566 and

7,470 rooms, respectively. Due to such completed facilities as shopping malls, international restaurants and beaches, hotel developers are keen to develop properties in the area.

FigURe 2 : PaTTaYa HoTel RooM sUPPlY bY locaTion, 1H 2009

Source : THA,TAT & Colliers International Thailand Research

Future Supply Pattaya is the provinces commercial tourist and residential property investment centre. It is approximately 147 km from Bangkok and is Asias premier beach resort, catering with equal appeal to those in search of a relaxed tropical ambience, which is synonymous with every ingredient needed for a memorable holiday. Theme and amusement parks, offbeat museums and lush botanical gardens offer numerous forms of leisure activities and cultural entertainment for the whole family. In addition to being one of the countrys top water sports destinations, there are over 20 championship-standard golf courses in the area. An additional 1,562 hotel rooms added to the supply between July 2009 and 2011, while a further 500 rooms will be added in 2015.

FigURe 3 : FUTURe neW sUPPlY oF HoTel RooMs, 2H2009-2015F

Source : Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

Table 1 : PaTTaYa HoTels scHeDUleD FoR coMPleTion, 2H2009-2015F

No. 1 2 3 4 5 6

HoTel NaMe centara Mirage beach Resort (sofitel) Holiday inn Pattaya centara Hotels & Resorts (Hilton) MbK Property Development The cove Reflections

locaTioN Wongamart north Pattaya central Pattaya central Pattaya Wongamart Jomtien

No. of RooMs 555 367 340 500 na na

esT. coMPleTioN 2009 2009 2010 2015 na na

Source : Colliers International Thailand Research

DeManD TRenDs The global slowdown has put the tourism industry in Thailand and around the world in the doldrums. Thailand has experienced a large decline in hotel occupancy in many regions and tourist arrivals have fallen sharply. However, the economic problems have been exacerbated by Thailands political conflicts, which led to the week-long closure of Suvarnabhumi Airport in lateNovember/early-December 2008. The economic slowdown will prompt companies to cut corporate travel, meetings and incentive expenses. On the other hand, it is possible that many companies will relocate conferences to this region to benefit from cost savings. We believe that, during these difficult times, many companies will still be proactive in training staff and implementing teambuilding activities as this will be a good opportunity to prepare for the return of stronger revenues and growth cycles. Thus, we see potential for the meetings, incentives, conferences and exhibitions (MICE) sector in the Japanese and other markets where currencies are weak against the US dollar and the Euro.

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

International Tourist Arrivals to accommodation at Pattaya Official figures from the Tourism Authority of Thailand (TAT) reveal that the number of international tourist arrivals to Pattaya declined by as much as 37% in 2008, down from around 5.83 million in 2007 to 3.69 million in 2008. It is forecasted that the international tourists arrivals Pattaya will be decreased by 20% from 2008, to 2.95 million persons.

FigURe 4 : inTeRnaTional ToURisT aRRiVals aT HoTels in PaTTaYa, 2002-2009F

Source : Office of Tourism & Colliers International Thailand Research

From the breakdown of international travelers in accommodation in Pattaya, visitors from East Asia (Japan, China), South Asia (India), South East Asia (Malaysia, Singapore), Europe (Germany,

the UK, France), the USA, Australia and the Middle East made up the majority of inbound travelers to Pattaya. Approximately half of the total came from Europe in 2008.

FigURe 5 : inTeRnaTional ToURisT aRRiVals aT HoTels in PaTTaYa bY Region, 2008

Source : Office of Tourism & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

occUPancY anD RooM RaTes Average Length of Stay The average length of stay in Pattaya decreased from 3.0 nights per guest in 2002 to 2.57 nights in 2004. After a slight revival to 3.09 nights in 2005, the average is forecasted to fall to 2.30 nights in 2009.

FigURe 6 : aVeRage lengTH oF sTaY oF inTeRnaTional ToURisT aRRiVals aT HoTels in PaTTaYa, 2002-2009F

Source : Office of Tourism & Colliers International Thailand Research

Occupancy Rates The average occupancy rate at Pattaya hotels fell to 55.12% in 2008, with the downturn particularly pronounced in the final quarter, when occupancy was only 25%, well below the normal average of 75% in that period. As a result, the average occupancy rate in the hotel sector is forecasted to be 38.6% in 2009.

FigURe 7 : aVeRage occUPancY RaTes FoR PaTTaYa HoTels, 2002-2009F

Source : Office of Tourism & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

Room Rates The Average Daily Rate (ADR) of hotels in Pattaya reveals a big gap. The lowest ADR is less than THB1,000 per night and the highest is over THB4,500 per night. The majority of hotels in Pattaya, approximately 18,336 rooms, have an average ADR less than THB1,000 per night. The ADR of 4-star hotels is the range of THB2,500-3,500 per night, while that of 5-star hotels is higher than THB3,500 per night. Business travelers, especially from the Asia-Pacific region, are more price-conscious than ever before and are spending more prudently. Corporate expenditure, such as on travel and entertainment, is now being scrutinised more closely. During this current situation, many hotel operators are applying priceFigURe 8 : aVeRage DailY RaTes aT PaTTaYa HoTels, 2008

cutting strategies. When operators start to cut prices, it is often difficult to increase the rates back to their prior levels because customers expectations change. The successful and surviving hotels are those that offer attractive promotions to potential customers. Promotions and price cuts are different strategies. One of the most important factors is to cater to the needs of business travelers who will be making fewer, shorter and cheaper trips during the slowdown. Hotel operators should, therefore, focus on value-for-money packages.

Source : Office of Tourism & Colliers International Thailand Research

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The Knowledge Report | 1st Half | 2009 | Pattaya Hotel Market

Outlook: The economic mainstay of Pattaya is tourism and over the past ten years, the number of tourists has jumped sharply from 3.0 to 8.0 million. Pattaya is currently going through difficult times, as are many other markets, and its strength is as a resort city that is able to attract a higher number of tourists than Phuket and Samui combined. If U-Tapao Airport had direct flights from Hong Kong, we would see a huge resurgence in the Pattaya market. Pattaya has the right environment for branded resorts, with the Bang Saray area, located south of Jomtien Beach, ideal for high-end resort developments. In fact, Bang Saray is superior to Phuket because of its proximity to Suvarnabhumi International Airport, yet has similar topography to the southern island, with mountains, beaches and very lush vegetation. Moreover, Pattaya is set to welcome a comprehensive master plan that promises to transform the resort city into an orderly, green and clean destination. Thus, we believe that, in the near future, the number of international visitors to Pattaya could top 12 million. Pattaya also welcomes repeat visitors who oil the engine of the local economy. Notes The hotel rating used in our research is based solely on property rating and achieved rates obtained from market research. The rating system used in our report is not that of Colliers International.

294 oFFices in 61 coUnTRies on 6 conTinenTs Usa 94 canaDa 22 laTin aMeRica 17 asia PaciFic 64 eMea 97 Us$ 1.6 billion in annUal ReVenUe 1.1 billion sqUaRe FeeT UnDeR ManageMenT 12,700 PRoFessionals

conTacT inFoRMaTion
THailanD: Patima Jeerapaet Managing Director colliers international bangkok office: 17/F Ploenchit Center Klongtoey Bangkok 10110 Tel: 662 656 7000 Fax: 662 656 7111 Pattaya office: 492/2 Thappraya Road Nongprue Banglamung Chonburi 20150 Tel: 6638 364 411 Fax: 6638 364 414

Risinee Sarikaputra Director | Research

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