Why the shift from hotels?

Feb 7, 2017 | Emerging Trends

Pattaya has seen some big changes in recent years. There has been a significant shift away from single, middle to old age men staying for three or four months at a time, and it now moves towards families coming for just a couple of weeks. Everyone is always welcome, but the demographics of visitors has changed quite notably and the city now has more short-term visitors rather than the longer guests.

So, what has this meant for the property market and the hotels? There has been an increase in demand for properties that are aimed more at families so rooms that have more than one bedroom and perhaps access to a kitchen. The upmarket hotels, although having these types of room tend to charge rates that are out of reach for many families who are staying for two weeks. Condos that had been bought for investment purposes in the past tended to be studios or one bedroom and although coming complete with a kitchen are not ideal for families.

Why the shift from hotels
Why the shift from hotels

 

This has meant that new properties need to be built so as to cater for this shift in demand. This obviously requires significant investment on the part of the developers who will naturally be looking to recoup their investment as quickly as possible. The way to achieve this is without doubt by selling units so there needs to be some sort of incentive to encourage people to buy these units. Investors, in a similar manner to the developers want reassurance that this is a long-term shift and that there will be demand for these types of property for years rather than months.

In order to satisfy all groups; developers, investors and of course the tourists they have had to come together. The developers need to build what the tourists want, this means that they need reassurances from tour operators that they will be able to guarantee visitor numbers. Investors want the same reassurances so if developers can agree long-term deals with the tour operators and be guaranteed returns they are satisfied. So, for both of these parties to get what they want, the tourists need to continue coming to Pattaya therefore they in turn also want reassurances that the types of properties that they want will be available. Once all this is put together, there is something to work to.

This whole process is something that has been carried out by one local developer, the New Nordic Group. They have been offering rental guarantees to investors for around a decade. They build units that are for investment purposes and these units are then rented to tour operators. The investors get a guaranteed 10% p.a. return that is available for between five and twenty years, the developer sells their units and the tourists get the type of unit that they desire.

This is a well-established policy that the group has adopted and has proved hugely successful with many existing investors returning again and again to buy more properties from New Nordic. This type of accommodation is exactly what the market demands so it is proving to satisfy all requirements and further cement the shift away from hotels.

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