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Thai Hotels Could Raise Room Rates by Up to 20% in the Coming Year

US-based Starwood Hotels and Resorts suggests that Thai hotels could increase their room rates by up to 20% next year, as current prices are lower than their competitors in neighboring countries. Many hotels in the country are planning a 5-10% increase, as rates have been frozen since late 2008 due to domestic political instability and the flood crisis.

Wayne Buckingham, Starwood’s Vice President for Thailand, Cambodia, and Vietnam, said that average hotel room rates in Bangkok are 25-30% lower than in Singapore and Hong Kong. Bangkok hotels could hike their rates by up to 20% if they offer a good product, and even with the increase, Thailand would still be considered good value. Hoteliers have suffered from pricing problems since a room glut in 2006.

Efficient management of room supply is necessary for sustainable growth, and good zoning of new hotel developments in Bangkok should be reviewed. Starwood itself plans to increase the room rates of hotels under its management by a double-digit percentage next year. The impact of the severe flooding will last for the rest of the year, with average occupancy for Starwood-connected hotels at 25-35%, down from 55-56% in normal times.

If the situation improves shortly, foreign tourist arrivals may pick up in the first quarter of the following year, and the market could return to normal in the second quarter. Starwood will add six hotels to its local portfolio by 2014, bringing its total to 6,641 rooms.

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