year end 2010 | hotel

thailand

Pattaya Hotel Market

Report

Pattaya Hotel Market

Executive Summary
Issues relating to Bangkok are a thing of the past as tourists flock once again to Pattaya.

Limited new supply over the past few years has allowed for some breathing space for the hotel
industry during the difficulties in Thailand since 2006. Around 1,950 rooms were added to supply
in all categories for 2010 raising the total number of rooms to 45,600.

The greater range of Mid Scale hotels has allowed the industry to compete on price to a greater
market indicators extent than Bangkok. However more Upper and Luxury scale hotels are expected to enter the
market as the city continues to redefine itself as an international resort with top class facilities.
2009 - 2010

Russians and Chinese are the dominant foreign tourism markets for Pattaya while new growth
Supply
markets from India, Iran and Vietnam are beginning to emerge.
occupancy

rates

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Pattaya hotel market report | YEAR END 2010

Hotel classification

While the Thailand Hotels Association (THA) categorizes hotels with a
star rating, many hotels do not abide by star rating. Therefore in this
study, Colliers International Thailand have produced a classification
based on the quality of the hotel as seen through the eyes of the hotel
management companies and on the British Hospitality Association
classification.
Basic overview of hotel classification
Guesthouse – simple accommodation offering limited or no facilities
with basic furnishings with sizes ranging from 12 to 18 sq m.
Budget – slightly upgraded rooms and facilities from guesthouses
although differences can be slight.
Economy - comfortable, well equipped accommodation, with an en-suite
Bath / shower room. Reception and other staff aim for professional
presentation that offers a wide range of straightforward services,
including food and drink.
Upper Scale - a degree of luxury as well as quality in the furnishings,
decor and equipment, in every area of the hotel. Bedrooms will also
usually offer more space and be well designed with co-ordinated
furnishings and decor. The en-suite bathrooms will have both bath and
fixed shower. It will contain a high enough staff to provide services like
concierge and porter service, 24-hour room service, laundry and dry-
cleaning. The restaurants will provide high quality cuisine.
Luxury - spacious and luxurious accommodation throughout the hotel,
matching the highest international standards. Interior design should
impress with its quality and attention to detail, comfort and sophistication.
Furnishings should be immaculate. Services should be formal, well
supervised and flawless in attention to guests’ needs, without being
intrusive. The restaurant will demonstrate a high level of technical
aptitude, creating dishes to the highest international standards. Staff will
be knowledgeable, helpful, and experienced in all aspects of customer
care, combining efficiency with courtesy.

Mid Scale - hotels are usually of a size to support higher staffing levels,
and a significantly greater quality and range of facilities. Reception and
the other public rooms will be more spacious with a number of
restaurants. All bedrooms will have fully en suite bathrooms and offer a
good standard of comfort and equipment, such as a hair dryer, telephone
and toiletries.

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Hotel Locations

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This study focuses on the major areas of hotel accommodation in Pattaya, which can be subdivided into seven main areas:

1. Wong Amat is the area to the north of Pattaya Nua. It is considered
a peaceful, more up-market location and is a relatively new area for
major resort development. This area is considered a peaceful location.
2. North Pattaya is the area to the south of Pattaya Nua. It is divided
into a larger northern section that spans the areas to the east of Naklua
Beach (the most northern beach).
5. Pratumnak is the area covering the main thoroughfare connecting
Pattaya and Jomtien Beach and the hill overlooking Pattaya bay and
Cosy Beach.
6. Jomtien is about 1 km south of Pratumnak Hill. The area is home to
many high-rise condominiums, beachfront hotels, shops and restaurants.
The area at the beginning of Jomtien is considered busy, while the area
at the end of this beach, bordering Na Jomtien in Sattahip district, is
quieter.

3. Central Pattaya is considered the city centre, covering the section
of beach from Central Road (Pattaya Klang) to the entrance to Walking
Street at South Pattaya Tai road.
4. South Pattaya is the area from the border of Central Pattaya to the
Bali Hai pier and Arthachinda road and is adjacent to the core of Pattaya’s
busy nightlife area. This area is popular among Middle Eastern, South
Asian and Russian visitors.
7. Na Jomtien is south of Jomtien and does not have a beachfront
road and is less developed as a result. The main road connection is
Sukhumvit road, which is located between 500–1,000 metres from the
beach.
Note: The report covers areas located on or west of Sukhumvit road.

Historical supply

historical supply by year

Source : Colliers International Thailand Research

There are approximately 45,600 hotel rooms in all areas of Pattaya in all LK group opened three new hotels at the end of the year. Central Pattana
grades at the end of H2 2010. The fallout from the Asian Financial Crisis opened the Hilton Hotel above the popular Central Festival Pattaya Beach
meant only a very modest increase in supply occurred in the first five with 340 hotel rooms at the end of 2010.
years of the 2000’s but growth in tourism numbers meant that developers
were back on the bandwagon with a surge in supply taking place in 2006
and 2007. However the ongoing political problems in the country and the
global economic downtown affected tourism adversely and only a limited
supply has come onto the market since then.

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HISTORICAL SUPPLY BY YEAR

Supply by location, H2 2010

cumulative supply in Bangkok

Source : Colliers International Thailand Research

Pattaya bay accounts for over 56% of all hotel rooms in Pattaya city and bay. This area is by far the main centre of tourism in the city with its
these are fairly evenly distributed between the three areas of Pattaya wide range of shopping and entertainment facilities.

HISTORICAL SUPPLY BY YEAR

Supply by location and grade, H2 2010

cumulative
Source supplyThailand
: Colliers International in Bangkok
Research

Pratumnak takes up the lion’s share of Luxury hotel rooms primarily due North Pattaya bay, Wongamat and Pratumnak focus more on higher end
to the location of the Royal Cliff Resort with over 1,000 rooms. In very although the distinctions between each area are not clear cut.
general terms the Central and South Pattaya bay areas as well as
Jomtien contain a greater proportion of lower end accommodation while

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Future Supply

Cumulative Future Supply in Pattaya during the year 2011 – 2015 by Year & Grade

Source : Colliers International Thailand Research

Approximately 1,000 rooms of Upper Scale hotels and more than 500 Scale and lower grade hotels. Clearly developers are tuning in to Pattaya’s
rooms for Luxury grade are scheduled to be completed in 2015, growing reputation as an international resort with higher end facilities,
meanwhile just 200 rooms are expected for Mid Scale hotels. including hotels.

Hotel developers are focusing more on the Luxury and Upper Scale end
of the market although Pattaya still contains a high proportion of Mid

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Indicated Cumulative Future Supply in Pattaya during the year 2011 – 2015 by Year & Location

Source : Colliers International Thailand Research

Projects that will take place in the next five years are scattered throughout
many locations with between 300 – 500 rooms in each location apart
from North Pattaya bay. All areas are playing their part in the future of
tourism in the city.
Local company Petch Property, plans to develop a luxury hotel in the
area near The Cove condominium within the next seven years. Major
Development also plans to develop a luxury hotel behind Reflection
Jomtien Beach Pattaya condominium and MBK Property Development
plans the development of an Upper Scale hotel in the Pattaya Bay area
in the next five years. Further international brands are also interested in
developing hotels in Pattaya, such as Movenpick in Na Jomtien area and
local developers. The Thai based Erawan Group PLC will team up with
operator Amari Hotels & Resorts to develop a new hotel in the Pattaya
bay area. Pattaya Floating Market company are looking to expand their
existing tourist attraction into the hospitality business as they plan to
develop a hotel in the area of their own floating market which is located
outside the area covered in the report.
such as the International Music Fair and the Pattaya marathon have
helped to diversify the city and are creating the conditions for further
growth in the tourism sector. The MICE industry represents a potential
draw card for companies wishing to provide a coastal environment with
international facilities.
The introduction of Central Festival Pattaya Beach shopping mall in
2009 has started to encourage tourism, especially the domestic variety,
as it represents the city’s first modern last scale shopping complex and
the largest coastal shopping mall in Asia. This development is likely to
pressure other retail locations to upgrade their own malls to compete for
custom and this will further enhance Pattaya as a family destination.

Demand Trends

The Eastern Seaboard remains the main magnet for industrial

development due its proximity to the main port and Bangkok, as well as
developed infrastructure and an existing clustering of key industries
such as electronics and the automotive industry. The further integration
of ASEAN and economic behemoths of China and India pose great
opportunities for the region. As Pattaya is by far the preeminent location
for commerce and entertainment within the Eastern Seaboard the city
will in the future attract greater number of business people to stay thus
broadening its base from tourism. More companies are likely to set up
office in Pattaya, furthering the growth potential of the city.
The development of a more family orientated image coupled with events

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International Tourist Arrivals accommodated at Pattaya

Source : Department of Tourism and Colliers International Thailand

Remark : E = Estimated by Colliers International Thailand Research

Official figures from the Tourism Authority of Thailand (TAT) reveal that
the number of international tourist arrivals to Pattaya declined by as
much as 30% in 2008, down from around 5.8 million in 2007 to 3.42
million in 2008. Tourism reached its nadir in H1 2009 with the protests
of April 2009 which resulted in the postponement of an ASEAN summit
in Pattaya which directly affected the tourism market there.
in Thailand as whole and Pattaya was not spared. For the second half of
2010 the number of visitors coming to Pattaya increased by around 12
– 15% from the first half according to the Department of Tourism. Pattaya
has fought back hard to win back tourists to the city and is beginning to
succeed.

The April and May protests in 2010 were mostly centred in part of
Bangkok but overall coverage of the events affected the tourism market

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Guest Arrivals at Accommodation Establishments by nationality in Pattaya H2 2010

Source : Department of Tourism and Colliers International Thailand Research

Tourists from Russia still represent the main foreign tourist market in
Pattaya and nearly topped 400,000 visitors for H2 2010 . One
manifestation of this is the growing number of signs showing р(restaurant)
offering menus in Russian as well as advertising all over the city in the
cyrillic script. Many are now turning into condominium buyers as
discussed in The Pattaya Condominium Market Report H2 2010. Indian
and Middle Eastern visitors represent significant growth markets and
are less affected by political disruptions. On top of that these visitors
prefer coming to Thailand in the off season summer period due to the
scorching hot climate in their own countries at that time of year. This will
help boost the hotel market during periods of lower occupancy.

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Guest Arrivals at Accommodation establishments by nationality in Pattaya 2007-2010 H2 in main tourism markets

These countries represent the main foreign markets by country and the has fallen dramatically from 2007 to 2009 reflecting safety concerns
chart shows how the Russian and Chinese visitors have come to relating to the whole country.
dominate the tourism scene in Pattaya city. However the Korean market

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Guest Arrivals at Accommodation establishments by nationality in Pattaya 2007-2010 H2 in mid tier tourism markets

Many European markets have fallen significantly over the years, especially
in the UK. This decline is a combination of weaker exchange rates and
lingering economic headwinds. The growing income levels of many
Vietnamese and future growth could mean this becoming a strong market
for Pattaya in the future. Iranians are also a significant growth market
although unfortunately the tourism authorities do not record specific
data for this country, although it is believed around 150,000 Iranians
visited Thailand as a whole in 2010. The structure of tourism in Pattaya
is a very different one from the past.

Average Length of Stay

Source : Tourism Authority of Thailand (TAT), Office of Tourism Development and Colliers International Thailand Research

The average length of stay has gravitated around the three night mark Bangkok or the industrial areas in Chonburi and will often visit Pattaya
throughout the past ten years except for a brief surge in 2008. A for weekends only therefore average stays are likely to remain on the low
significant proportion of domestic visitors coming to Pattaya reside in side.

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Occupancy and Room Rates

Occupancy Rates

Source : Tourism Authority of Thailand (TAT), Office of Tourism Development and Colliers International Thailand Research

Since 2007, average occupancy rates for Pattaya hotels had fallen by
over half by 2009. This trend was due to various factors, such as
Thailand’s political instability, H1N1 and the global economic slowdown.
Weaker currencies in many of Pattaya’s key markets have also played
their part. However in 2010 tourism bounced back despite the troubles
in Bangkok affecting the country as a whole during April and May and
this points to Pattaya’s robustness and bright future as a tourism
hotspot.

Room Rates

The Average Daily Rate (ADR) of hotels in Pattaya reveals a big gap. The
lowest ADR is less than 1,000 baht per night and the highest is over
4,500 baht per night. The majority of hotels in Pattaya, approximately
18,300 rooms, have an average ADR less than 1,000 baht per night. The
ADR of 4-star hotels is in the range of 2,500-3,500 baht per night, while
that of 5-star hotels is higher than 3,500 baht per night. Lower end
hotels in the range of 500-1,000 baht per night offer very good value
compared to similar price range hotels in Bangkok. These no nonsense
establishments appeal to a large number of visitors who come to
Pattaya.

Tourists and business travelers, especially from the Asia-Pacific region,

are more price conscious than ever before and are spending more
prudently. Corporate expenditure, such as on travel and entertainment,
is now being scrutinized more closely. During this current situation,
many hotel operators are applying price-cutting strategies. When
operators start to cut prices, it is often difficult to increase the rates back
to their prior levels because customers’ expectations change. The
successful hotels are those that offer attractive promotions to potential
customers.

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Outlook The continued development of family entertainment centres and upscale

shopping malls will help to underpin the tourism industry and give
Bangkokians more excuses to visit and stay in Pattaya. The successes of
The economic mainstay of Pattaya is tourism and over the past ten years,
Ripley’s World of Entertainment, Mini Siam and Mini Europe, Nong Nuch
the number of tourists has jumped sharply from 3 to 6 million. Pattaya is
as well as the innovative Flight of the Gibbon point to further growth in
distancing itself from the sometimes unsettled situation in Bangkok and
family orientated facilities around Pattaya.
its strength is as a resort city that is able to attract a higher number of
tourists than Phuket and Samui combined.
Russia and China now dominate the tourism market with most European
countries failing to catch up. The Vietnamese represent a fast growing
The proximity to Bangkok remains an important demand driver for hotel
segment and with a large population and rapidly growing middle class
accommodation as many Bangkokians visit Pattaya as a weekend
with discretionary income they could represent a significant player in the
getaway. The recent completion of highway 7 has reduced travelling
coming years. It must be remembered that tourists may eventually lead
times from the cities to within 90 minutes. The proximity to the airport
to residential buyers in the future so developers should always be
also weighs in Pattaya’s favour with international visitors having the
attuned to the latest trends in tourism.
option of avoiding Bangkok and this will continue to propel demand.

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