Tourism industry rebound fuels investment in Thailand's hotel sector
New hotels strategically located in popular tourist destinations such as Phuket, Bangkok, Chiang Mai, Samui
The resurgence of Thailand's tourism industry has ignited significant interest from foreign investors in the country’s hotel sector.
According to a recent report by Colliers International Thailand, 12 hotel deals worth a combined 16 billion baht have been closed this year.
Pattarachai Taweewong, director of research and communications at Colliers International Thailand, noted that these hotels are strategically located in popular tourist destinations such as Phuket, Bangkok, Chiang Mai and Koh Samui.
“We estimate that the total turnover for the year will reach 18 billion baht, the highest in the past five years,” he said.
The surge in hotel investment is directly linked to the rebound of Thailand’s tourism industry after the Covid-19 pandemic. In the first three quarters of 2024, the country welcomed more than 26.08 million foreign tourists, a 30.08% increase compared with the previous year.
Key source markets include China, Malaysia, India, South Korea, Russia, Laos, Taiwan, Vietnam, Japan and the United States.
“The Thai hotel market continues to attract significant attention from both domestic and foreign investors, especially large operators. They are actively seeking well-priced hotels in prime locations such as Bangkok, Phuket, Samui, Pattaya and Chiang Mai for renovation and rebranding,” Pattarachai said.
The increased demand from tourists has led to a significant uptick in hotel occupancy rates. Nationwide, the average occupancy rate has risen to 73.61%, a 4.32% increase year on year. Some hotels have even reported occupancy rates exceeding 80%, driven by strong demand from Indian, Malaysian, Chinese, South Korean and Russian tourists.
Investors are primarily targeting hotels that meet specific criteria:
- Yield: A minimum yield of 6% per annum.
- Age: Between 10 and 15 years old.
- Room count: More than 150 rooms.
These factors are crucial, as investors often need to allocate significant capital for renovations and rebranding, or partner with established hotel chains to enhance the property's value.
Over the past decade, the total transaction value of Thai hotels has reached 120.904 billion baht, averaging 12.09 billion baht per year. In 2017 and 2018, the annual transaction value exceeded 20 billion baht, reflecting the strong growth in tourism during those years.
As Thailand continues to be a popular tourist destination, the outlook for the country’s hotel sector remains positive, with continued interest from both domestic and foreign investors.
