Thailand’s investment hotel market is returning back to normality after the post-pandemic boom last year. Hotel brokerage JLL projects that total deal volume will reach 13 billion Thai baht ($385 million) in 2025 — about 40% below 2024’s record from a one-time rush of delayed deals.
A JLL report Investors are now focusing on smaller but more significant acquisitions, according to a report released Thursday.
In 2025, the average deal size will be THB1.8 billion (about $53.2 million). This is 80% higher than THB1bn ($29.5m), the 10-year average.
JLL is of the opinion that single-asset transaction will remain the norm in the future, especially after notable deals like the 272-room Hotel. Hyatt Regency Bangkok SukhumvitIn 2024, this transaction was the largest hotel deal ever in Thailand.
Hotel Investing: The Key Drivers
Thailand’s tourism revival is losing steam, and this has led to growing concern. The Tourism Authority of Thailand announced earlier this month that it was concerned about the slowdown in Thailand’s tourism recovery. may lower The forecast for 2025 international arrivals to 35 millionThe peak in 2019 is estimated to be around 40 million.
Thailand is still a strong market for hotel investment. JLL is confident that Thailand will continue to benefit from the pent-up demands of group travelers and mass tourists, particularly from markets such as Australia.
This article highlights several key drivers.
Deal flow should be aided by interest rates remaining stable or declining. JLL believes the lower interest rate in Thailand in 2025 coupled with the positive sentiment that continues to exist in the tourism industry will support more investment. This investment should be done in a way that is more focused and strategic than the boom in investment in 2024.
The report states that “in an environment of high inflation and interest rates, Thailand stands out as one the few Asian nations offering a positive spread over borrowing costs.”
Investment growth is driven by luxury demand. In 2025, it is expected that the occupancy rate of upper-tier hotels will stabilize and grow gradually.
The performance gap between economy and mid-tier hotels could be narrowed if the inbound tourist industry recovers to expectations.
Diversification geographical expected. The report predicts that interest will spread to other markets in Thailand this year, even though the capital, Phuket, and Samui remain the top investment destinations. The Thai government has expressed interest in supporting potential new tourism hotspotsSimilar to how Mexico invented Cancun As a resort city.
Bangkok will continue its dominance of the national transaction market this year, as it accounts for almost 60% of total volume.
Financing Landscape Evolves
Capital access:. The increased availability of non-traditional financing has led to more Thai hotel leases. Investors’ willingness to look at leasehold property in 2024 has increased, partly due to new financing options available through next-generation firms.
JLL reported that non-bank financial institutions such as leasing companies and specialized lending firms are gaining share of the market by offering more flexible financing options for smaller or unique project, even if they charge higher interest rates.
More and more people are looking for sustainable financing options. Major Thai banks and international lenders now offer so-called green loans specifically for financing environmentally friendly hotel projects, as well as sustainability-linked loans with interest rates tied to predetermined sustainability performance targets. JLL believes that the new financing will help to attract new players into the market.
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