Bangkok: Thailand's Dusit Group hotel chain opened a new luxury property in the Maldives this month that promises it a much sunnier future than any of their hotels at home. “Our hotel in the Maldives will get an average of 1,000 dollars a night, which is five times the room rate of five-star hotels in Phuket,” said Chanin Donavanik, chief executive of Dusit International, which runs 16 properties in Thailand and six abroad. The group's flagship Dusit Thani Hotel, a Bangkok landmark for the past four decades, is offering standard rooms for just 125 dollars a night including breakfast. “Bangkok is by far the cheapest hotel destination in Asia. I think we are 25 percent the price of a room in Hong Kong, one-third the price in Singapore and at least 50 percent everywhere else,” said Chanin, whose mother Chanut Piyaoui launched the Dusit group in 1948 with the opening of the Princess Hotel. Back in those days, the hotel business was considered a rather low-class occupation in Thailand, Chanut will tell you. But any stigma there might have been has disappeared, and investing in hotels is now quite the done thing. The kingdom is suffering from a hotel glut, which explains why room rates are so cheap. “There seem to be an endless number of hotels coming on the market here, not just in Bangkok but in Pattaya and Phuket as well,” said Mike Batchelor, Jones Lang LaSalle Property Consultants Ltd's managing director for investment sales in Asia. His firm estimates that by 2014, some 12,000 new hotel rooms will be added to Bangkok's existing supply of 50,000. In Phuket, 6,000 rooms are in the pipeline on the resort island, which already boasts 43,500 rooms. Pattaya offers 60,000 hotel rooms, ranging from 10-dollar holes in the wall to luxury suites, with more on the horizon. One reason for the building frenzy is the remarkable resilience of Thailand's tourism industry. Despite the past six years of political unrest and recent floods, tourist arrivals have grown steadily, hitting 19 million in 2011, up 22 percent year-on-year. “If you look at the profile of the investors building all these new rooms, it's predominantly Thai capital,” Batchelor said. Thai investors take a longer-term view on hotel properties than their Western counterparts, seeing them more as a means of enhancing the real estate rather than as cash cows, he said. Most hotels are built on properties that have been in families for generations, so the initial investment cost is not huge. Then there is the prestige factor. “My mother has been in this business for 63 years, and I think the prestige might have started with her,” Chanin said. His mother Chanut, arguably Thailand's first professional hotelier, bears the title of “Khunying,” an honorific bestowed by the royal family for good deeds done for the country. And there are very few Thais who sell their properties. Thai investors see hotels as long-term, prestigious investments and fear losing face if they are forced to sell. There are also Thai-Chinese cultural beliefs involved. “Chinese custom says when the father gives us something, we must keep it,” said Surachai Tansirichaiya, owner of the budget-class Miami Hotel. “Making money or losing money, we must keep it all our lives, and when I die my son must also keep it.” With few old properties for sale, and plenty of new ones being built, even Thai investors are looking abroad for opportunities. “We have no choice but to look overseas,” Chanin said. Industry sources say the hotel glut is likely to remain for the next 3-5 years, guaranteeing cheap room rates, unless the government does something similar to the Indonesian island of Bali where authorities have banned new hotel construction at popular beaches. “Clearly the solution to oversupply would be a three-year moratorium on all new hotel investments in Thailand,” Batchelor said. “Then the problem would be solved.” But Thai governments have a tendency to avoid tough decisions, and even when laws and regulations are issued they are rarely enforced. Consequently, the country is likely to be a cheap destination for years to come, which is good for the consumer but not necessarily good for the tourism industry. “We are selling ourselves cheaply, because there is no one managing this problem,” Chanin said. “We don't want to end up like southern Spain.” BM ShortURL: http://goo.gl/DxXPe Tags: Bangkok, Hotels, Thailand, Tourism Section: East Asia, Travel
