KOH SAMUI HOTEL MARKET Phattarachai Taweewong Research | Associate Director| Thailand 2H 2019 (+66) 86 546 3683 [email protected]

KOH SAMUI HOTEL MARKET Phattarachai Taweewong Research | Associate Director| Thailand 2H 2019 (+66) 86 546 3683 Phattarachai.Taweewong@Colliers.Com

COLLIERS QUARTERLYHALF YEAR HOTELHOTEL || BANGKOKKOH SAMUI | H2| 2H 2018 2019 | JANUARY 2020

2020-2022 Summary & 2019 Average per year

Recommendations Throughout the year 2019, there are 2.3 million tourists, Waras Dechgitvigrom estimated that the number of tourists for the whole year -9.5% +8.7% Research | Manager| Thailand will decrease by around 200,000 people, as well as the (+66) 82 398 6893 spending power that will decrease by about 20%, which [email protected] "Since the number of foreign tourists Demand shows signs of a recession. The strong Baht currency also 2,300,000 2,500,000 visiting Thailand in 2019 has decreased, has an effect on the tourism sector in Koh Samui. affecting the tourism business in Koh Samui, both in terms of room rates and occupancy. The operators have reduced +3.2pp room rates in order to be able to compete At the end of Q3 2019, the cumulative supply of hotels with competitors. The overall average in Koh Samui was approximately 23,387 rooms from which increased by 729 rooms, or about 3.2% y-o-y. occupancy rate has also decreased, Supply 23,387 1,000 reflecting the slowdown in the tourism market in Koh Samui in the past year. In addition, with the supply of more than 2020-2022 23,000 rooms and more than 1,500 rooms 2019 Average per year under construction, Koh Samui is in demand of more tourists in the future." At the end of Q3 2019, the average occupancy rate of -14.0pp +5.0pp all Upper Scale hotels in the Koh Samui was approximately 65%, which decreaased from the Occupancy average occupancy rate in 2018 at around 14%. 65% 70%

0% -2.20% The average daily room rate for all Upper Scale hotels in the Koh Samui at the end of Q3 2019 was approximately THB4,720, which was 2.2% lower y-o-y. It is predicted THB 4,720 Rent that by 2020, the average daily room rate for all Upper THB 4,720 Scale hotels in Koh Samui will remain stable. COLLIERS HALF YEAR RESIDENTIALHOTEL | KOH | CHASAMUI AM, | 2HHUA 2019 HIN |AND JANUARY PRANBURI 2020 | H2 2018

Number of arrivals at Koh Samui International Number of arrivals at Koh Samui International Airport as of 2H 2019

Airport Numbers of Arrivals

Samui International Airport is the main gateway to travel to Koh Samui. The tourism 1,600,000 businesses in Koh Samui have benefited from the increasing number of international flights and the growing number of partner airlines traveling to Koh Samui International Airport. As the number of international arrivals continues to increase in 2017, the number 1,200,000 of tourists continues to increase and grow by about 15% in 2018 as well as the increase in flights at Surat Thani Airport which can be another intermediary to connect travel to Samui. 800,000

From the figures, it was found that during the past 9 months of 2019, there were more than 975,568 foreign tourists visiting Koh Samui both domestically and internationally, 400,000 divided into 542,523 domestic tourists and 433,405 foreign tourists. During August is still the month with the most tourists visiting Koh Samui in the last 9 months, about 139,386 people. Like in 2018, the number of arrivals increased during the season to reflect market 0 changes of tourists in the region. 2013 2014 2015 2016 2017 2018 Q3 2019

For the development of the hotel business in the future, it will still focus on the luxury Source: Research, Colliers International Thailand hotels, with a total of approximately15 hotels under construction. As well as the growth trend in the hotel business market in Thailand, which is mostly in collaboration with international hotel brand partners.

The Tourism Demand indicator The number of passengers have been up to 0.975 million people for this year at Koh Samui International Airport as of September 2019, representing a decrease over 10.33% y-o-y.

Number of flights arriving at Koh Samui Airport, Jan - Sep 2019, monthly classified

Flight Jan Feb Mar Apr May June July Aug Sep

Type 1: Cressna 10 12 12 8 10 6 5 9 6

Type 2: Dash 7 6 4 4 1 5 2 0 5 0

Type 3: ATR 482 448 376 321 277 274 340 445 253

Type 4: Boeing, Airbus 861 864 873 874 810 776 933 955 797

Total 1,359 1,328 1,265 1,204 1,102 1,058 1,278 1,414 1,056

Source: Samui Airport Leasehold Property Fund and Colliers International Thailand

As of Q3 2019, there were more than 11,044 flights landed at Koh Samui International Airport, although this has decreased by 580 flights or 4.98% y-o-y of the total of approximately 11,644 flights. However, considering the numbers of tourists, it will be found that although the flight has decreased, the number of tourists has increased by 4.9% y-o-y.

Number of passengers departing from Samui Airport

Passenger Jan Feb Mar Apr May June July Aug Sep type

Domestic 71,737 74,301 66,870 61,351 45,615 43,228 57,648 78,053 43,720

International 47,667 53,990 56,009 48,310 39,537 39,039 49,420 61,333 37,740

Total 119,404 128,291 122,879 109,661 85,152 82,267 107,068 139,386 81,460

Source: Samui Airport Leasehold Property Fund and Colliers International Thailand

And from the number of passengers departing from Samui Airport, it was found that at the end of Q3 2019, there were approximately 975,568 passengers departing from Samui Airport, categorised as approximately domestic passengers 542,523 people, accounting for 55.6% of all passengers departing from Samui International Airport. down from the previous period by about 11.92% and there were approximately 433,405 international passengers, representing 44.4%, down from the same period last year by about 81.9%. If comparing the number of passengers leaving the airport, a total of 975,568 people at the end of Q3 2019 with the same period of the previous year showed that the number was reduced to 112,473 people from 2018 at approximately 1,088,041 people or 10.33% decrease and decreased from the same period in 2017 at approximately 1,037,156 people or equivalent to 5.93%.

From the figures, it was found that during the past 9 months of 2019, there were more than 975,568 foreign tourists visiting Koh Samui both domestically and internationally, divided into 542,523 domestic tourists and 433,405 foreign tourists. During August is still the month with the most tourists visiting Koh Samui in the last 9 months, about 139,386 people. Like in 2018, the number of arrivals increased during the season to reflect market changes of tourists in the region.

Top 5 tourists staying in hotels in Koh Samui Top 5 tourists staying in hotels in Koh Samui, classified by nationalities, as of 2H 2019 The top 5 foreign tourists visiting Koh Samui during the first 3 quarters of the year 2019 were 392,095 tourists from Germany, followed by 334,099 Numbers of tourists staying in hotels in Koh Samui classified by nationalities tourists from China, 245,987 tourists from Eastern Europe, 197,772 tourists 400,000 from Australia and 155,359 tourists from England and other national tourists such as Russia and Korea. The number of Thai tourists increased to 15% y-o-y, rose from about 10% of the total number of tourists arriving in 300,000 Koh Samui. While the number of foreign tourists was up to 85%, but due to the global tourism competition, Chinese tourist market slows down due to 200,000 the strength of Thai Baht, resulting in the tourism market in Koh Samui to decline slightly. From the situation of the Thai baht appreciation at about 100,000 THB30 per US dollar, it is affecting tourism, especially foreigners who travel to Koh Samui. According to the forecast throughout the year 2019, there 0 are 2.3 million tourists. It has been forecasted that the whole year will Germany China East Europe Australia England decrease by around 200,000 people, including the spending power will decrease by about 20% which makes the signs of the economy deteriorate. Source: Research, Colliers International Thailand

An overview of Hotel Market Room supply in Koh Samui classified by year as of 3Q 2019

Room supply in Koh Samui classified by year Number of Keys

The number of rooms in Koh Samui in year 2012 was 19,857 rooms and stable at 20,519 25,000 rooms between 2013-2014 due to operators not being confident with the political situation in the country. In 2015, the number of guest rooms increased to 21,587 rooms and decreased 22,000 to 21,429 rooms due to the closure and undergoing maintenance for some hotels. However, since 2019, supply has been steadily increasing, especially in the 4-5 star hotel market in Koh 19,000 Samui and tend to continuously rise from both domestic and foreign investors. 16,000 At the end of Q3 2019, the cumulative supply of hotels in Koh Samui has approximately been 23,387 rooms, of which an increase of 729 rooms, or about 3.2% y-o-y. from 2012, there were 13,000 4,500 of the number of room supply of 4 -5 star hotels in Koh Samui in the Maenam Beach, Bophut Beach, Choeng Mod Beach, Chaweng Beach and Chaweng Noi Beach and 10,000 continuously increased to 5,000 rooms in 2018. In 2019, it was found that the supply 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019 increased up to more than 300 rooms. From the research by Colliers International Thailand , it is predicted that by the year 2020 7– 203 , most of the 4-5 star hotels in Koh Samui will be Source: Research, Colliers International Thailand located in Bo Phut Beach, Choeng Mon Beach and Chaweng Beach, which are popular for foreigners to visit as they are in a close proximity to Samui International Airport and the pier that connects to Koh Phangan.

The list of interesting newly launched hotels in Koh Samui in 2019 are as follows.

Hotel Name Location Keys

New Nordics Koh Samui Lamai Resort Lamai 109

New Nordics Koh Samui Lamai Hotel Lamai 14

Sala Chaweng Roadside Chaweng 89

Melia Koh Samui Choengmon 210

Source: Research, Colliers International Thailand

Average occupancy rate as of Q3 2019 Average occupancy rate as of Q3 2019

As of Q3 2019, the average occupancy rate of all Upper Scale hotels in the Koh Samui stood at 90% approximately 65%, which decreased from the average occupancy rate in 2018 at around 14%. It was found that in 2019, during January – February, the hotel business in Koh Samui was quite active with foreign tourists coming into Thailand as it was the high season period. 80% The average occupancy rate of the Upper Scale hotels in the two months rose above 85% and began to decline in the Q2 and began to improve again in late Q3 and started to slow down 70% again during October-November and began to improve in December, resulting in an overall average occupancy rate of the hotel in the Upper Scale in all location to be approximately 60% 65%, which decreased from the previous year. 50% Average occupancy rate of 4-5 star hotels in Koh Samui in Maenam area continuously Occupancy Rate (%) increased since 2012 at the rate of 60% to more than 80% in 2018 and 2019. It decreased 40% again due to Thai economy and the economic downturn and the number of foreign tourists visiting the area decreased. 30% The Research Team from Colliers International Thailand estimates that the average occupancy 2015 2016 2017 2018 Q3 2019 rate of 4-5 star hotels in Koh Samui is likely to increase slightly by about 2% - 3% in 2020 if the Source: Research, Colliers International Thailand tourism stimulus plan of The public and private sectors are able to attract more tourists to enter Koh Samui. For 2019, the Tourism Authority of Thailand has plans to stimulate tourism From the development plans of the public and private sectors in various tourism associations in the area by bringing domestic tourists to fill during the low season of Surat Thani province, it has jointly developed and promoted the tourism market, resulting through the support of special events such as events and concerts as well Surat Thani Province to have the third largest tourism revenue in the southern region in 2019, as promoting the tourist market from a short distance with direct flights to lower than Phuket and Krabi. The main income and number of tourists come from Koh Samui. Koh Samui. However with the current situation about the Thai Baht appreciation and the oversupply of hotel rooms, it is causing some operators to be affected.

The problem with Koh Samui tourism in 2019 was that the problem of tourists continuing to decline. Both the strengthening of the Thai Baht currency factor has affected the decision to travel to Koh Samui. In addition, with the current situation of Koh Samui having more than 23,000 guest rooms, Koh Samui is in demand of a large number of tourists. The factor that has helped increase the number of tourists staying in Koh Samui is to increase the access to Koh Samui by creating a bridge between Koh Samui and the mainland in order to increase the opportunity to compete. Also, the establishment of a tourism bank to ensure sustainable tourism development.

Room Rates Average daily room rate for all Upper Scale hotels in Koh Samui as of Q3 2019 Average daily room rate for all Upper Scale hotels in Koh Samui

6,000

From the data, it was found that the average daily room rate for all Upper Scale hotels in the Koh Samui area as of Q3 2019 was approximately 5,000 THB4,720, which was 2.2% decrease y-o-y. It is predicted that by 2020, the 4,000 average daily room rates of all Upper Scale hotels in the Koh Samui area will remain the same as in 2019, as operators do not have a confidence to raise 3,000 prices during the high tourist season. The rates during the high season are almost 3 times higher than in the low season, but in 2019, room rates could 2,000 only be adjusted twice. Tourists began to change from staying in hotels to accommodations, such as pool villas for rent both forshort-term and long- 1,000 term. The villas for rent have become another major competitor of the hotel Average room daily rate (THB) business in Koh Samui in 2019. 0 2015 2016 2017 2018 Q3 2019

The average room rates for 4-5 star hotels in Koh Samui are in Maenam Source: Research, Colliers International Thailand Beach, Bophut Beach, Choeng Mon Beach, Chaweng Beach and Chaweng Noi Beach at THB4,500 - THB5,000 per night in 2019. The room rates in 2014 - 2015 was seen as the lowest due to the political unrest in the country. however, it was able to recover in 2016- 2018, with the average room rate increasing by about 2% - 4% per year.

Research team at Colliers International Thailand estimates that the average room rates of 4-5 star hotels in Koh Samui in Maenam Beach, Choeng Mon Beach, Chaweng Beach and Chaweng Noi Beach are likely to increase by around 3% - 5% in 2020 and in the future.

List of hotels that are currently under construction in Koh Samui

Plot Site Opening Hotel Name Developer Location Operated Brand Keys (Rai) Date Chateau Dale Samui Chateau Dale Samui Bophut Chateau Dale 143 4-3-40 Q2 2020 Co.,Ltd Grand Asset Hotel and Hyatt regency Koh samui Bophut Hyatt regency 139 6-2-50 Q1 2020 Property PLC. KS Reosrt and Spa SO SOFITEL SAMUI Choengmon accorhotels 120 5-3-16.4 Q4 2020 Co.,Ltd Thai Gloden Sea Thai Gloden Sea Resort Borphut K T Property Co.,Ltd Borphut 87 21-3-65.1 Q2 2020 Resort The prime hotel Mr. Chalanan Choengmon The prime 105 4-2-50 Q4 2020 Holiday Inn Express Samui Chaweng The Platinum Group Chaweng Holiday Inn Express 202 6-2-46 2020 Holiday Inn Resort Samui Bophut The Platinum Group Bophut Holiday Inn 150 3-2-80 2020 Baan Talay Beach Hotel BSKP Co.,lTd Bophut Baan Talay Beach 120 4-2-30 2020 U SAMUI N/A Bophut U SAMUI 49 4-2-50 2020 Choengmon Real estate Choengmon Choengmon Beachfront Resort Choengmon 138 18-1-97 2021 Co.,Ltd Beachfront Resort Talingngam Panga Beach Resort Mr. Thanawut Sukkasem Panga Beach Resort 63 5-0-85.4 2021 beach MooKhoSuratthaniPatta A Samui @ Chaweng A Samui @ Chaweng Beach Chaweng 40 6-2-40 2021 na Co.,Ltd Beach Hufnagel Samui Nautilus Samui Bophut Hufnagel Samui 68 1-3-79.1 2021 Beach Republic Samui Beach Republic Beach Republic Samui Lamai 63 5-3-20 2021 Co.,Ltd Samui Thana Creative Life Co., Mercure Hotels Samui Chaweng Beach Chaweng Mercure 81 3-0-44.5 2021 Ltd Mr. Chalearmpol Ketum Resort Samui Chaweng Ketum Resort Samui 10 2-2-15 2021 Pongchababnapa

Source: Research, Colliers International Thailand

Trend

Tourism income as of Q3 2019 was worth THB30,000 million, slightly decreased from the same period of the previous year. In which, foreign tourists accounted for more than 85%, a decrease of approximately 5% y-o-y.

• Most Chinese tourists still spend their time at hotels in Koh Samui, with an average of 5 nights staying. On the other hand, foreign tourists, in general, spend an average of 5.40 times per day in Koh Samui, while Thai tourists spend around 3.2 days per visit.

• Bangkok Airways invested more than THB692 million to improve and increase the competitiveness of passenger support which is currently in the process of environmental approval.

• Overall, the hotel market in Koh Samui in 2019 was slow due to the number of tourists, especially foreign tourists. Combined with the condition of the supply of more than 23,000 rooms, which, if unable to attract more tourists to come in to travel, there may be a risk of oversupply in the hotel market in Koh Samui in the future.

• Real estate in the area, especially villas with guaranteed return have become another option for tourists with a relatively high competition for the local hotel market in 2019.

• The private sector in Koh Samui urges the government to build a bridge between Koh Samui and the large land plan to open the way to Koh Samui and increase the number of neighboring islands. The bridge will result the ease to travel to Koh Samui, Koh Phangan and Koh Tao.

10 Primary Authors: For further information, please contact:

Phattarachai Taweewong Barny Swainson Associate Director | Research | Thailand Senior Director | Capital Markets & Investment Services | Thailand +66 86 546 3683 +66 62 445 0040 [email protected] [email protected]

Contributors: Wasan Rattanakijjanukul Associate Director | Capital Markets and Investment Services | Thailand Ratchaphum Jongpakdee +66 81 443 2048 Deputy Managing Director | Thailand [email protected] +66 63 878 3322 [email protected] Napaswan Chotephard Senior Manager | Residential Sales & Leasing | Thailand +66 85 902 7463 [email protected]

Sorravich Siriwattanapornchai Senior Manager | Industrial Services | Thailand +66 83 077 6445 [email protected]

Hathairat Yoorod Senior Manager | Office Services | Thailand +66 89 919 1923 [email protected]

About Colliers International Group Inc. Colliers International (NASDAQ, TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning approximately 40% of our equity, have delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management. For the latest news from Colliers, visit our website or follow us on

Copyright © 2020 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.