Siam@Siam expands to Pattaya

Posted on June 25, 2012

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Siam@Siam will expand its hotel portfolio to include a second fully owned property in Pattaya due to open in February 2013 at an estimated build cost of Bt1 billion.

The group already owns the 203-room Siam@Siam Design Hotel and Spa in Bangkok, while it manages the 83-room Crown Lanta on Lanta Island in Krabi province. The group also manages a second hotel in Bangkok, the 200-room Mode Sathorn due to open this September.

In Pattaya, the 25-floor hotel located of Pattaya Sai 2 Road near Central Festival will have 268 rooms of around 34 sq m each. Its signature feature will be a roof-top infinity swimming pool offering views of Pattaya bay.

Commenting on the group’s expansion plans managing director, Kla Kitchakarn, said there were compelling reasons to open a property at the eastern seaboard resort.

“Most of the properties in Pattaya are competing for price in the two and three-star category,” he said. “There is room for four-star hotels due to the resort’s location close to Bangkok and the costs are not that high. Pattaya has reinvented itself with a much wider market base.”

He estimates the hotel will break even if it achieves 70% occupancy and its downtown location should appeal to Russian and Asian travellers. The market mix will even out at a 50-50 ratio between domestic and international bookings.

Siam@Siam Pattaya will have the same pop art design adopted by the Bangkok property.

In addition to owning a hotel in Bangkok and Pattaya, the group manages two other properties Crown Lanta and Mode Sathorn. Expansion to other resorts in Thailand such as Khao Lak, Hua Hin, Samui and Phuket are identified in the company’s 10-year business plan that targets at least three new properties under its management with an estimated 600 rooms.

Khao Lak is the most likely prospect for expansion, although in the group’s earlier press statements identified Phuket.

“It is the most difficult market today due to very high investment costs to acquire land on Phuket,” Mr Kla explained.

“We are also interested in managing hotels in neighbouring countries,” he added during a press briefing over the weekend at Crown Lanta.

“Mekong region countries are interesting and possibly Myanmar and Vietnam stand out as the most likely targets for long-term expansion.”

Siam@Siam in Bangkok is the group’s revenue leader with earnings of around Bt315 million a year, a performance that was down on earlier forecasts due to politically-related violence in the Thai capital between 2008 and 2010. Its average room rate, however, has improved from Bt2,790 in 2010 to Bt3,000 and occupancy improved from 69% to around 80% over the first quarter of this year.

The 83-room Crown Lanta, in Krabi province, closed 2011 with an average occupancy of 45% and earnings of Bt53 million. Revenue should reach Bt70 million this year. Average room rate is Bt3,000.

“We are not the price leader on Lanta island, we follow the five-star Pimalai Resort, which sets the benchmark,” said Mr Kla who insisted hotels on the island would not engage in a price war even in the low-season when occupancy drops substantially.

“Room demand and supply are not quite in balance, but most of the price competition is at the low-end of the market.”

Usually packed out during the months of November through to March with European guests, tourism to Lanta Islands drops off dramatically by late April and remains that way until the end of the rainy season in October. All told the island has 2,300 rooms mainly in small hotels and guest houses.

Crown Lanta’s current emphasis is on selling combination holidays that offer two nights in Bangkok with two or three nights on Lanta Island.

Scandinavian tourists remain the top visitors even during the rainy season, driven by long-stay bookings from families.

The resort’s sales team is concentrating on three niche markets offering low-season packages for honeymooners from Asia with an emphasis on the South Korean market, training and seminar business from Malaysia and Singapore and family travel.

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