Increased Investment in Hotels!
Thailand is experiencing something of a growth period currently and indeed to hotel sector seems to be one area that is booming. In the first half of 2017, direct investment in this sector reached a whopping THB10.7 billion. According to JLL Hotels and Hospitality Group, it appears that the majority of this came from large deals to buy five major hotels in Bangkok and Pattaya.
As if these figures weren’t impressive enough, the performance is further illustrated by the fact that this figure is 11.45% greater than the full-year investment in the sector in 2016. With hoteliers looking to invest in Thailand in 2017, the total volume by the end of the year is expected to exceed THB14 billion.
Mike Bachelor, head of investment sales Asia for JLL was keen to stress that the recent investment came from both domestic and regional investors. Notably, the Carlton Group and Hotel 81, both Singaporean companies had made large acquisitions in Thailand in the last twelve months.
Whilst other economies in Southeast Asia have stuttered over the last 12 months, Thailand experienced growth of 3.2%, up from 2.9% the previous year. The booming tourist industry, which saw 32.6 million arrivals into the Kingdom in 2016 leaves hotel chains in little doubt that Thailand is ripe for the picking.
This is illustrated by the fact that JLL facilitated Hotel 81’s acquisition of the Premier Inn portfolio, a well-known global brand, who have two hotels in in Bangkok and Pattaya. This is this particular company’s first venture into the Thai market and is definitely considerable with a total key count of 388. Obviously looking to strengthen their newly found presence in the market, Hotel 81 immediately appointed Travelodge to manage the properties on their behalf.
The purchase was definitely significant and a further feather in Thailand’s hat as it is the first time Hotel 81 have venture out of their own domestic market – a market (Singapore) in which they are the major hotel owner. Impressively, the seller was the UK’s largest hotel owner Whitbread so quite clearly Hotel 81 can see the opportunities that are available in Thailand.
The move by Hotel 81 was preceded by the Carlton Hotel Group of Singapore’s purchase of an unfinished project on the Sukhumvit Road in Bangkok a month earlier. The deal, thought to be THB2.4 billion, is the largest that has been publicly announced in Thailand will see the 342-room property completed in 2019. Not surprisingly following such a large investment, the hotel is expected to carry the Carlton name.
Karan Khanijou, a senior vice-president of JLL said of the deal: “Given that no hotels of a significant size have been traded on the main Sukhumvit Road, this deal has also set a new benchmark price.” With prices soaring, many hotel chains are looking for investment themselves offering rental guarantee concepts to individual investors that have proved extremely attractive in locations such as Pattaya and Phuket.
Further deals have also taken place in the first half of 2017 such as the Bangkok Edition Boutique Hotel and Swissotel Nai Lert Park in Bangkok, the latter taking place in 2016 although the transaction was only announced this year.
Sales have certainly not been limited to just Bangkok and Pattaya. Other major destinations such as Phuket, Samui, Sri Racha and Chiang Rai have also witnessed hospitality assets purchased, believed to be in the region of THB9.6 billion in 2016.
Based on an article in the Bangkok Post: http://www.bangkokpost.com/business/news/1294306/buyers-spend-b10-7bn-on-thai-hotels-in-first-half