Why developers can’t resist the lure of hotel branding in Thailand

Property developers across Thailand are experiencing a magnetic attraction for hotel branded residences in order to spur price premium points and buyer demand. Currently there are 29 new hotel residence projects countrywide with nearly 90 percent of these located in resort areas.

New research by consulting group C9 Hotelworks has pinpointed that the top 3 locations for completed and pipeline projects in their Southeast Asia Hotel Residences Market Trends report are Phuket (26 properties), Pattaya (10 properties) and Bangkok (9 properties).

Viewing how Thailand ranks in terms of competitiveness in the sector, with 41 completed projects to date, which accounts for 41 percent of the regions supply that stands at over 21,000 hotel residence units. Indonesia follows, whilst the rising star is Vietnam with Danang featured as a favoured developer’s marketplace.

In Thailand, Phuket with 13 completed projects and another 13 in the works has a longstanding legacy of hospitality-led residences in such well-known ultra-luxury resorts as Amanpuri, Banyan Tree and Sri Panwa. Though over the past few years Bangkok’s Chao Phraya River with marquee branded projects affiliated to the likes of global icons Four Seasons and Mandarin Oriental have pushed prices though the glass ceiling to an average of more than THB315,000 per square meter, while the national average selling price in the sector is just over THB101,000.

Commenting on the connection to brands and pricing premiums, C9 Hotelworks managing director Bill Barnett (pictured) said “our research in all the markets in the country show a demonstrated brand premium between 15-20 percent. Taking a close look at existing supply – 92 percent of the supply are brand affiliated and we expect this preference by developers and property buyers to continue.”

Branding, and its relationship to real estate, is not solely in the hotel domain. Thai-based Onxy Hospitality recent entered into an operating agreement with the international design group Yoo which was founded by Philippe Starck and John Hitchcox to run their branded properties. And despite the presence of the legacy global hotel brands which appear in C9’s data across Southeast Asia, a number of Thai brands and hotel management groups, such as BHM Asia, Dusit Thani, Minor and Onyx, are well placed for success.

Barnett notes “an increasing number of mixed-use projects that feature both hospitality and residential elements and hotel operators who want to drive expansion can’t ignore the strategic benefit of offering developers a holistic management and brand solution.”

Download and read full report here.

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