Thailand’s Hotel Investment Market Stabilizes After 2024 Surge
Thailand’s hotel investment sector is returning to a more typical pace following a record-breaking 2024. According to global real estate firm JLL, total hotel transaction volume is expected to reach 13 billion Thai baht (approximately $385 million) in 2025 — a 40% decline from 2024’s peak, which was driven by a wave of delayed deals following the pandemic.
In a report released Thursday, JLL noted that investors are now targeting fewer, but higher-value acquisitions. The average deal size is projected to rise to THB 1.8 billion ($53.2 million) in 2025 — significantly above the 10-year average of THB 1 billion ($29.5 million).
Single-asset transactions are expected to remain the dominant form of investment, continuing the trend set by landmark deals such as the 2024 sale of the 273-room Hyatt Regency Bangkok Sukhumvit — the largest single-hotel transaction in Thai history.
Key Factors Driving Hotel Investment
Despite concerns about a slowing tourism recovery, Thailand remains an appealing destination for hotel investors. The Tourism Authority of Thailand recently indicated it may revise its 2025 forecast for international arrivals to 35 million — still below the 2019 peak of 40 million.
Nonetheless, JLL remains optimistic. The firm sees continued demand from group and mass-market travelers, particularly from countries like Australia, as a key support for the sector.
Several other factors are expected to drive investment:
– Interest Rates and Yield Spread: Stable or declining interest rates in 2025 are likely to support deal activity. Thailand continues to offer one of the few positive yield spreads in Asia, making it attractive to investors even in a high-interest-rate environment.
– Luxury Segment Strength: High-end hotels are projected to see steady occupancy and gradual increases in average daily rates. Meanwhile, economy and mid-tier properties may also benefit from rising occupancy and room rates, potentially narrowing the performance gap with upscale hotels.
– Geographic Diversification: While Bangkok, Phuket, and Samui will remain top investment destinations, interest is expected to expand to emerging markets across Thailand. The government is promoting the development of new tourism hotspots, inspired by the success of destinations like Cancun in Mexico.
Bangkok is still expected to dominate, accounting for nearly 60% of total hotel transaction volume in 2025.
Evolving Financing Environment
The financing landscape for Thai hotel investments is also shifting:
– Broader Access to Capital: Investors are increasingly open to leasehold properties, a departure from the pre-pandemic preference for freehold deals. This shift is supported by the rise of alternative lenders and non-bank financial institutions offering more flexible — though often higher-cost — financing options.
– Sustainable Financing on the Rise: Thai and international banks are expanding their offerings of green loans and sustainability-linked loans. These financing tools, which tie interest rates to environmental performance metrics, are expected to attract new investors focused on ESG (environmental, social, and governance) priorities.
As Thailand’s hotel investment market settles into a more measured rhythm, the focus is shifting from volume to value — with larger deals, strategic diversification, and innovative financing shaping the next phase of growth.
Source: skift.com