
Market Report
Market Report: Hua Hin Top-Tier Hotels
Hua Hin, a tranquil beach destination on the west coast of Thailand, has evolved from a quiet fishing village into a popular weekend getaway for Bangkok residents and expat retirees.
The market for top-tier hotels in Hua Hin is slowly recovering from stagnation, driven by improved market sentiment and a moderate supply pipeline. However, long-term uncertainty remains due to the Thai Riviera project and potential new hotel developments.
Market Overview
Historical Context:
- Hua Hin’s growth was catalysed by the Thai royal family building summer palaces in the 1920s.
- The destination has maintained a family-friendly and corporate executive-friendly profile due to controlled night entertainment.
Urbanization and Infrastructure Development:
- Over the past decade, Hua Hin has seen the emergence of international branded hotels like Marriott, Holiday Inn, and Avani+.
- New attractions include Santorini Park, Vana Nava Water Jungle, Plearnwarn, and Cicada Market.
- Major infrastructure projects include:
- Upgrade of Hua Hin Airport for international flights.
- High-speed rail between Bangkok and Hua Hin.
- Double-track railway upgrade.
- New highway from Nakhon Pathom.
- Southern Economic Corridor (SEC) development.
Challenges:
- The market faces low barriers to entry, leading to increased competition from new hotels and condominiums for short-term rental.
- Weekday performance relies heavily on international visitors and domestic MICE business, hampered by limited direct air access and competition from other Thai beach resorts.
Visitor Demographics and Trends
Domestic vs. International Visitors:
- Domestic visitors dominate the market, accounting for 73% of total arrivals in 2017.
- Lack of an international airport limits international arrivals compared to destinations like Phuket and Koh Samui.
Growth in Guest Arrivals:
- Guest arrivals grew at a compound annual growth rate (CAAG) of 9% between 2013 and 2017, driven by new attractions and hotel opening offers.
- Notable growth in 2017 (24%) after a dip in 2016 due to the passing of the late King and a bomb explosion incident.
Average Length of Stay (ALOS) and Spending:
- ALOS for both domestic and international visitors declined over the past five years.
- Domestic visitors spent an average of THB 2,519 per day in 2017, growing at a CAAG of 4%.
- International spending fluctuated, peaking at THB 4,885 per day in 2016 before dropping to THB 3,658 in 2017.
Seasonality:
- Stable seasonality from January to August.
- Drop in guest arrivals in September due to higher rainfall.
- Peak periods from November to February and in October during Chinese Golden Week and local school holidays.
Hotel Performance Metrics
Occupancy and ADR Trends:
- Occupancy increased steadily, though new hotel supply caused a marginal decline in 2018.
- ADR saw slight growth at a CAAG of 0.5%.
- Top-tier market experienced a 1 percentage point decline in occupancy over five years.
Top-Tier Hotel Segments:
- Above THB 4,000: 5-star international branded beachfront properties showed upward trends in occupancy and ADR.
- Occupancy: Slight increase to 81% in 2018.
- ADR: Increased at a CAAG of 1.5%.
- RevPAR: CAAG of 2.3%.
- THB 2,000 – 4,000: 4-star hotels and 5-star properties in peripheral locations faced declines in occupancy and ADR.
- Occupancy: Stabilized at 62%.
- ADR: Decreased at a CAAG of -0.5%.
- RevPAR: Negative CAAG of -1.5%.
Market Segmentation
Demand Segmentation:
- Direct FIT: Largest segment, driven by international hotel chains’ global distribution systems and loyalty programs.
- Wholesale FIT: Important for filling weekday occupancy, particularly from long-haul visitors.
- OTA: Fastest-growing segment, essential for managing inventory and seasonal bookings.
- MICE and Corporate: Vital for weekday occupancy, popular for off-site meetings and incentive trips from Bangkok-based companies.
- Leisure Group: Mostly Asian tour groups and Indian weddings, which are significant revenue generators.
Nationality Mix:
- Dominated by domestic travellers, followed by visitors from China and India.
- Mainland China is the fastest-growing market, significantly contributing to demand.
Future Supply and Performance Outlook
Upcoming Supply:
- Limited new supply expected in the near to medium term, with the U Hua Hin project featuring 132 rooms and villas.
- Potential projects by major developers could materialize with improved market sentiment.
Performance Forecast:
- Occupancy: Expected to gradually rise to the low 70% range over the next five years.
- ADR: Projected to grow faster in line with inflation due to fewer new hotel developments and improved market sentiment.
Factors Influencing Future Performance:
- Positive: Well-positioned destination, planned infrastructure improvements, moderate supply growth, government tourism support.
- Negative: Uncertainties in air connectivity, weekday-weekend demand disparity, competition from other destinations, less desirable beach quality.
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