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Oakwood sees 5% decline

Bangkok Post Apr 3, 2009

The international serviced-apartment operator Oakwood forecasts a 5-10% fall in occupancy at its properties in Thailand this year but will not cut rents to attract tenants in the downturn.

Peter Lucas, vice-president of operations for Oakwood Asia Pacific, said that the company's two properties in Bangkok had occupancies last year of 90% for Oakwood City Residence Bangkok Narathiwas and 85% for Oakwood Residence Sukhumvit 24.

But both properties dropped below target in the fourth quarter after high occupancy in the first three quarters. Its main goal is to exceed 80% occupancy while focusing on long-stay tenants.

Oakwood will soon start operating Oakwood Residence Thong Lor, with 67 serviced apartments sized from 46 to 183 square metres at introductory rates of between 3,250 and 8,780 baht a night.

The recently built property is owned and was developed by Fifty Five Property Co, owned by a Thai-Indian family in the trading business.

Oakwood has set a conservative target for the new property of 60-65% occupancy this year. Mr Lucas said the company will not use a pricing strategy to raise occupancy but will add more value to the product offering.

"If we maintain the price, though we don't get more occupancy, our management cost will not increase," he said.

But the company has confidence in the appeal of the Thong Lor location to Japanese and European expatriates.

By mid-2009, another international serviced apartment is to be launched in Thong Lor - the 262-unit Somerset Sukhumvit Thong Lo, developed by the owners of the fashion brand Jaspal.

Mr Lucas said Oakwood plans to operate another four properties in Thailand by 2011. Oakwood Residence Garden Tower Bang Na, a renovated building on Bang Na-Trat Km 4, will be launched by August this year.

Three other purpose-built properties will be opened on Sukhumvit 18, on Sukhumvit 24 and in Pattaya.