Hua Hin, a seaside resort community on the Gulf of Thailand, is seeing a resurgence in luxury hotel development. In a new report, advisory firm Horwath HTL examined what is driving development and the challenges facing developers in the area.
The report suggests Hua Hin’s top-tier hotel market is "slowly coming out of stagnancy" and improved market sentiment and a moderate supply pipeline are improving the area's prospects for growth. International brands are already opening in Hua Hin, including Marriott, Holiday Inn and Avani. Infrastructure improvements are also making it easier for visitors to arrive and get around, including an airport upgrade for international commercial flights, a high-speed rail between Bangkok and Hua Hin, a double-track railway upgrade, a new highway from Nakhon Pathom and the Southern Economic Corridor (SEC) development. The Santorini Park, the Vana Nava Water Jungle, Plearnwarn and the Cicada Market also are attracting visitors.
At the same time, the long-term vision of the Thai Riviera and potential resurgence of new hotel developments and alternative accommodations is "uncertain," the report found. While demand is gradually building, the Hua Hin top-tier hotel market has faced a challenge of low barriers of entry. A recent surge in hotel supply and new condominiums for short-term rental has aggravated competition and caused market occupancy and rate to reach a standstill, according to the report.
Over the next three to five years, the market is expecting an interim break from upscale development activities and should benefit from a performance upturn. Should the optimism attract landlords to advance proposed and new projects, the situation will need to be reassessed whether demand can keep supply in check.
With limited supply entering the top-tier market in the coming years, Horwath expects demand growth for Hua Hin to moderate compared to the rush of openings over the past five years. Occupancy is likely to gradually rise to the low-70-percent range in the next five years (reasonable for a weekend destination, Horwath argued) but the top beachfront hotels could see occupancies in the mid-80s.