Chiang Mai

Hotel Market Update

March 2017

Low-cost carriers push total airport arrivals to

Chiang Mai past 4.5 million threshold
Thai travelers made up 71% of Thai Provincial Airport Passenger Arrivals
hotel demand last year Number of Passengers
8,000,000
Chiang Mai trails only Phuket in airport traffic
7,000,000
compared to other Thai destinations outside of
6,000,000
Bangkok. In 2016, it hosted a total of 4,664,938
5,000,000
inbound passengers which highlighted year-on-year
growth of 13%. The uptrend in airlift has been 4,000,000
stimulated by international demand, which showed 3,000,000
a compound annual growth rate of 44% for the past 2,000,000
five years. This segment began to surge in 2011, 1,000,000
with traction coming from Greater China. A strong 0
2012 2013 2014 2015 2016
shift in overseas source markets was due to media
exposures in 2012, which popularized the Chiang Mai Phuket Krabi Surat Thani
destination amongst Chinese visitors due to the
Source: Chiang Mai Provincial Office and C9 Hotelworks Market Research
success of the Lost in Thailand film.
We foresee solid demand from the broader market,
Although domestic arrivals expanded at a more with LCCs expected to add new routes to the
moderate pace with CAGR averaging 18% from destination. As we move through early 2017, the
2012 to 2016, the sector featured 439,561 impact of Thailands crackdown on zero-baht
incremental travelers last year. This is largely Chinese tours is expected to ease and foreign
attributed to the increase of low-cost carriers, which arrivals normalize.
added a total of 903 flights during the year. Bill Barnett, Managing Director, C9 Hotelworks

Trends Forward Outlook

Thailands Ministry of Tourism and Sports Plans for the upgrading of Chiang Mai
estimated total tourist arrivals grew 3.65% last International Airport includes runway expansion
year, with strong domestic uplift offset by a and terminal extension, which will increase total
slight contraction in foreign travelers. capacity to 20 million passengers by 2030.

In 2016, Hong Kong, Shanghai, Chongqing and An intercity motorway project connecting Chiang
Chengdu were amongst the top feeder cities Mai to Chiang Rai is currently under review by
from Greater China, with 5,346 direct flights the Highway Department, with a potential
routed between the region and Chiang Mai. commencement by 2020.

Hotel average daily rate market-wide increased Increasing flights from domestic airports and new
to THB3,385 according to STR, as occupancy was international routes will enhance Chiang Mai as a
slightly down due zero-baht tourism crackdown. leading gateway for the Mekong region.
 TOURISM
Airline Indicators
In 2016, a total of 4,664,938 passengers arrived at Chiang Mai International Airport, 77% of
which were from domestic routes and 23% from international flights.

Chiang Mai Airport Domestic & International Arrivals

Number of Passengers Number of Flights
400,000 3,000
350,000 2,500
300,000
250,000 2,000
200,000 1,500
150,000 1,000
100,000
50,000 500
0 0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2016 Domestic Arrivals 2016 International Arrivals
2016 Domestic Flights 2016 International Flights
Source: Airports of Thailand and C9 Hotelworks Market Research

Top 5 Key Geographic Source Market Trend

Number of Passengers
700,000
600,000 Top 5 overseas
500,000 source markets
400,000
accounted for
300,000
200,000
78% of total
100,000 arrivals last
0 year
Mainland China Malaysia South Korea Hong Kong United States
2014 2015 2016
Source: Chiang Mai Airport Immigration and C9 Hotelworks Market Research

Airport Arrivals and Inbound Flights from Greater China

Number of Passengers Number of Flights

1,200,000 10,000 Arrivals from

1,000,000 8,000 Greater China
800,000
6,000 saw the highest
600,000
4,000
growth in 2013
400,000 by 235% due to
2,000
200,000
impact of
0 0
2012 2013 2014 2015 2016
Chinese film
Arrivals from Greater China Total International Arrivals Lost in Thailand
Inbound Flights from Greater China Total International Inbound Flights
Source: Airports of Thailand and C9 Hotelworks Market Research

2 C9 Hotel Market Update: March 2017

 HOTEL OVERVIEW
Hotel Performance
Performance Comparison 2016 vs. 2015
In THB %
4,000 77
RevPAR 3,500 76
increased to 3,000 76
75
THB2,502 2,500
75
2,000
despite lower 1,500
74
74
occupancy 1,000 73
due to a 6% 500 73
uplift in ADR 0 72
2016 2015
RevPAR ADR Occupancy

Source: STR

Hotel Supply
Currently, Chiang Mai has a total of 33,593 keys in 831 registered and unregistered tourist
accommodation establishments. An additional 524 keys are expected to come on stream by
2019, with the majority of pipeline properties concentrated in the Old City catchment area.
Hotel Supply Growth
In THB %

Room inventory 40,000 10

per hotel is 30,000

5
scaling down 0
20,000
with trend -5
towards 10,000
-10
boutique hotels 0 -15
and hostels 2012 2013 2014 2015 2016

Total Keys Growth Rate

Source: Thailand Ministry of Tourism and Sports

Hotel Name Location Keys Opening Date

Suriwongse Hotel Chiang Mai Changklan Road 36* 2018

X2 Chiang Mai Riverside Charoen Rat Road 33 Nov-17

Shama Chiang Mai Huaykaew Road 45 Apr-17

Icon Park Hotel Manee Nopparat Road 60 Nov-17

U Nimman Chiang Mai Nimmanhaemin Road 150 Mar-17

Dusit Princess / Dusit Residence Nimmanhaemin Road 200 2019

*Additional keys for existing hotel Source: C9 Hotelworks Market Research

C9 Hotel Market Update: March 2017 3

Chiang Mais Tourism:
A 10 Year Perspective (2007-2016)
10 Year Growth in Domestic and International Passenger Arrivals
Number of Passengers %
Between 2008-09, international
4,200,000 tourism dropped temporarily 80
3,600,000 due to political issues 60
3,000,000 40
2,400,000
20
1,800,000
1,200,000 0
600,000 -20
0 -40
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Domestic Arrivals International Arrivals
Domestic Arrivals Growth Rate International Arrivals Growth Rate

Passenger Arrivals on Full Service Carriers vs. LCCs

Over the past 10 years,

total passenger
38% Full Service
Carriers arrivals to Chiang Mai
have increased by
62% Low-Cost nearly
Carriers

Data as of FY2016
3X
Top 5 Markets at Tourist Accommodation Establishments
CAGR from 2007 to
2015 2007
2016 for hotel
room supply 1. Thailand 1. Thailand

averaged 5% 2. Mainland China 2. Malaysia

while airport 3. Japan 3. France

arrivals grew by 4. United States 4. Germany

12% per year 5. France 5. United States

Source: Thailand Ministry of Tourism and Sports, Airports of Thailand and C9 Hotelworks Market Research