Thai Hotels Shift to Luxury Focus, Knight Frank Report Shows

Knight Frank Thailand released its latest Hotel Market Research report on August 18, 2024, indicating that Thailand's hotel market is shifting from competing on occupancy volume to competing on revenue quality and the ability to generate additional value from tourists. This transformation is particularly evident in Bangkok and Phuket, where new supply is clearly targeting the luxury and upscale hotel segments.

Bangkok is set to add approximately 17,590 rooms, representing 16.7% of current operating stock. Of the new hotels under development, about 80% are in the luxury and upscale categories. In 2025 alone, approximately 7,635 new rooms are scheduled to open, continuing the focus on upper-market segments. As of mid-2024, Bangkok had a total of 105,038 hotel rooms, with approximately 65% in the luxury and upscale groups.

Phuket shows a similar trend, with 47,195 total rooms at mid-2024, of which about 58% are luxury and upscale. Of the new rooms scheduled to enter the market between 2024 and 2026, approximately 89% fall into the luxury and upscale categories.

Despite the shift toward luxury hotels, the market faces challenges. Bangkok luxury hotels saw average daily rates increase by only 0.6% year-on-year to 7,010 baht, while upscale hotels experienced a 4.4% decline to 4,197 baht. Price pressure stems from increased branded hotel supply and consumers' ability to easily compare rates online. Phuket has maintained pricing better overall, with market ADR up 5.3% to 7,117 baht despite occupancy declining 3.2 percentage points.

Hotel operators are diversifying revenue streams beyond room rates, including food and beverage, wellness, events, lifestyle experiences, and branded residences within resort projects to enhance profitability and project viability. However, being in the upper-market segment does not guarantee sustained high returns.