March 27, 2012--An imbalance between the supply of hotel rooms and the number of tourists visiting Koh Samui has triggered a price war on the island, particularly in the small and medium-sized hotel market.

Hotel competition is getting fierce in Koh Samui, with some operators offering free nights to attract guests, said the Tourism Association of Koh Samui.

Vorasit Pongkumpunt, vice-president of Nora Group, the operator of three hotels on the island, said the average hotel room rate on Koh Samui has dropped by 15% since last year, and several hotels are now offering buy-one-night-get-one-free or buy-two-nights-get-one-free deals.

Small and medium-sized hotels currently account for 80% of total hotels operating on Koh Samui, and many of them are struggling to stay afloat and repay loans. Commercial banks are reluctant to extend loans for new developments outside the Chaweng area.

There were 448 hotels on Koh Samui last year with 17,204 rooms.

It is estimated that about 513 new rooms are in the pipeline, 313 of which are due for completion this year.

Bannasat Ruangjan, president of the Tourism Association of Koh Samui, said that too few air connections and relatively expensive airfares are the key obstacles.

"The problem is not tourist demand, but the limited number of flights and the costly fares," he said. "This results in an imbalance between hotel supply and the number of tourists."

Mr Bannasat said the association expects tourist arrivals will grow by 10% this year to 935,000.

Following talks with local hoteliers, he said the ideal number of tourists is 5,000 per day, or 1.8 million per year. This level of traffic would ensure balance in the Koh Samui market.

"The problem is the number of arrivals is fewer than 3,000 a day during the low season and 5,000 visitors a day during high season," he said. "Estimated seats available to Koh Samui are 3,600 per day. If we can increase seats during the peak season, it will help to raise the average occupancy rate to 50% from about 40% now," he said.

High-end Koh Samui property occupancies and rates are rising, reported the 2011 Hotel Market Update. The report, written by Phuket-based hospitality consultancy C9 Hotelworks, said that upscale hotel room rates rose 16% last year.

It added that a number of high-profile internationally-branded hotels have opened on the island and are having an impact on trading patterns.

The report said visitors from China, Korea and Japan account for 63% of total Asian hotel guests. Germany remained the top overall source of guests, at 14% of the total. The UK accounted for 8% of visitors to Koh Samui.

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(c)2012 the Bangkok Post (Bangkok, Thailand)

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