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Slump in Tourism Industry Forces at Least 22 Bangkok, Thailand Hotels Up For Sale

By Kanana Katharangsiporn, Bangkok Post, ThailandMcClatchy-Tribune Regional News

Sep. 7, 2009--The slump in Thailand's tourism industry has resulted in at least 22 hotels in Bangkok worth a combined 17 billion baht being offered for sale, according to Patima Jeerapaet, managing director of the property consultant Colliers International Thailand.

One of the properties on the block is valued at around 3 billion baht while the average price is 800 million. Sizes and locations vary but include some in the inner city and by the Chao Phraya River.

Mr Patima said the asking prices that used to be higher than market values were now climbing down closer to what buyers were offering, but few deals have been sealed.

"Actually, there are many buyers hunting for hotels to take over but most of them are trying to bargain the prices in light of the economic downturn," he said.

Hotel owners are unable to reduce the prices as much as buyers have asked, as they have debts to repay and expect satisfactory returns.

Mr Patima said most property deals completed in the second quarter were office buildings, condominiums and serviced apartments.

Major transactions totalled five projects with a total sales value of 2.08 billion baht.

He said many hoteliers wanted to sell because occupancy had slipped below the levels they needed to stay liquid and service loans.

Some banks needed to get involved in dealing with new investors to buy the hotels the banks had financed, he added.

"Some hotel owners have not even paid the hotel licence and management fees and needed to withdraw their international hotel brands. Some have not only hotel businesses but other businesses to maintain instead."

Mr Patima said Thai investors had strong potential to make acquisitions. Some of them, liquor tycoon Charoen Sirivadhanabhakdi in particular, continued investing in hotels overseas. Such investors looked for reasonable prices and were less concerned about the brand of the management group.

"Some well-known hotels that have collected know-how from international chains can set up their own brands and make them well-established and acknowledged. They plan to branch out to overseas destinations," said Mr Patima, mentioning Anantara owned by SET-listed Minor International as an example.

"This will become a new trend in the Thai hotel industry."

Meanwhile, Thai hoteliers who are building their own brands have potential to sell the brands internationally and have funds to invest overseas. They include Dusit Group which is now in many countries, Central Group's Centara and the Charanachitta family's Amari.

Many other Thai hotel brands have improved their reputation in recent years. They include Furama, owned by the Thai-Indian Chansrichavala family's Unico group; Lub-d Bangkok Hostel owned by Narai Hotel; S15 Sukhumvit Hotel and S31 Sukhumvit Hotel, owned by Peep Inn Group, said Mr Patima.

Properties in neighbouring countries also have some appeal. Thai Nakorn Pattana Co, the producer of Tiffy brand paracetamol, has invested in developing a hotel and golf course, the Sofitel Phokeethra Royal Angkor Golf & Spa Resort in Siem Reap, Cambodia. It also plans to open the Sofitel Phnom Penh Phokeethra in May 2010.

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To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2009, Bangkok Post, Thailand

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