Thailand welcomed 17.5 million foreign visitors during the first half of 2024, according to the country’s Ministry of Tourism & Sports, and hotel firms such as Hilton are taking notice.
After several years of slump, that inbound tourism number is approaching its pre-pandemic heights of 40 million visitors a year. Thirty-six million international guests are forecast to visit Thailand this year.
Alexandra Murray, Hilton’s area vice president and regional head of Southeast Asia, said the surge in both international and domestic travel is propelling hotel demand.
She said that this summer, Hilton opened the Hilton Garden Inn Rayong, its first property in Rayong, and the Hilton Garden Inn Bangkok Riverside.
With these openings, she added, Hilton's Thailand portfolio has become its largest in the region with 15 properties across five brands: Waldorf Astoria, Conrad, Hilton, DoubleTree by Hilton and Hilton Garden Inn.
Thailand has always been a popular destination in the region and one of the most popular destinations in the world, but a return of pre-COVID-19 demand is allowing hotel firms to take a fresh look at opportunities.
“Thailand is a priority market for our growth in Southeast Asia,” said Maria Ariizumi, Hilton’s vice president of development in Southeast Asia.
“Investor and developer confidence remains high, bolstered by a robust tourism rebound and favorable economic conditions,” she said, adding that despite some quarterly fluctuations, Bangkok’s hotel performance remained strong.
Phuket, a popular coastal resort destination, also experienced impressive growth in the first half of this year, Ariizumi said.
Alan Watts, Hilton’s president of Asia-Pacific, said during the company’s second-quarter earnings results that the company opened 36 hotels in Asia-Pacific, which upped the total of Hilton hotels in the region to 837 at an average occupancy of 69.5%.
He said the focus is to have more than 1,000 trading hotels in the region by 2025.
Franchise forward
Thailand is playing a big part in Hilton’s expansion, Murray said.
“Eighty-six properties in Southeast Asia are under development, with 21 of these in Thailand," she said.
Among them is the debut of a new lifestyle brand, with the KROMO Bangkok, Curio Collection by Hilton, which is due to open in April 2025.
“Our brand-led strategy is exemplified by the growth of our focused-service brands, such as Hilton Garden Inn, which is ideally positioned to capture the rising interest and demand for upscale brands in Thailand,” Ariizumi said.
Bill Barnett, managing director of business advisory C9 Hotelworks, said Hilton’s expansion in Thailand is happening across other global hotel brands, from luxury to budget and midscale.
“They’ve got luxury, also lower-end development [Hilton] Garden Inn, and Hampton Inn as well,” he said.
As Hilton’s presence in Southeast Asia swells, Barnett said a current notable change is the move to franchising.
“I think Hilton has recognized that many Thai hotels want to start franchising [or] convert management agreements to franchises," he said. "Post-COVID, most hotels in the U.S. and Europe have franchised. Asia was slower to take this up, but now they have learned to manage their own hotels."
He added Hilton is moving quickly to "qualify a number of third-party management companies for owners."
“Hilton has a big tool kit with many brands that they can franchise, so it’s the right brands, the right time,” he said.
The Hilton Garden Inn brand in particular “represents an efficient operational model with high return-on-investment potential” for owners, Ariizumi said.
With more than 90% of Hilton properties in the Americas being franchised, the model has always been central to the firm’s global growth, she said.
“We see significant potential for expanding this platform in Thailand. … This enthusiasm reflects a broader trend across Southeast Asia, where markets are maturing,” she said.
In September 2023, Canadian investment and asset-management firm TriO Capital, part of the Ovolo Group, acquired the Hilton Garden Inn Phuket Bang Tao, Phuket.
TriO’s managing director Tim Alpe said through its first Thailand investment his firm wants to “capitalize on the resurgence in visitor numbers and future growth” in Phuket and particularly in Bang Tao, a resort on the island’s northwest coast, where there’s “a gap in accommodation offerings.”
Under the franchise agreement, Alpe said a design and development plan for the new 177-room property will tap into that opportunity by early 2025.
Bang Tao is one of Thailand’s promising submarkets, according to JLL Thailand’s Paul Chakkrit Chakrabandhu Na Ayudhya, who helped broker the deal.
The destination’s four-mile-long beach area “has consistently been one of the most sought-after hotel investment destinations in Phuket, yet the supply of investable hotels is very limited,” he said.
There is also an increase in price-sensitive travelers to the region, but Barnett said luxury still represents a big opportunity.
Hilton’s “LXR and Waldorf are the two brands to watch at the luxury level," Barnett said. "There’s already a pretty big brand penetration in certain markets — Bangkok, Phuket and Pattaya. As these destinations grow, we’re starting to see micro markets emerging with similar brands, so not just one brand, one location, but different ones catering to different needs.”
Murray said Hilton also will focus on expanding existing luxury brands “in other key destinations in Thailand beyond Bangkok, given [the brands’] established presence and operational flexibility.”
Hilton is not discounting debuting brands in Thailand to meet “increasing interest from owners in the luxury and luxury-lifestyle segment.”