Irish Doomsday Hotel Oversupply Offers Thailand Lessons

Posted: 28 Nov 2009 | 7:32 am

A new report coordinated by the Irish Hotels Federation has recommended the closure of 25% or 15,000 of the countries hotel rooms due to a staggering oversupply situation. Back of an economic boom situation during much of this decade which featured significant tax breaks for developers, the end result is project's which are not economically realistic nor can they sustain the high debt ratios from over leveraging.

With current market wide occupancies in the mid 50% region, the industry is at great peril unless some dramatic reforms are adopted. The legacy of easy financing has resulted in many properties now operating with negative equity, meaning the value of the property is less then the debt owed on it.

Certainly this lesson is one that can easily be applied across the board in many counties in Asia including Thailand where banks continue to fund new hotel projects in market which are well past saturation and over the next decade the possibility of oversupply is a real and present danger to the overall health of hotel grade assets.

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