(Bloomberg) -- A landmark Bangkok luxury hotel is being reshaped by intense competition in a city where posh rooms can sell for as little as $100 per night.
The Dusit Thani Bangkok hotel will close next month for a $1.1 billion redevelopment, and when it re-emerges, it will have office, retail and residential space -- and about half the number of rooms it has now.
"We got a lot of complaints about tearing down our iconic hotel, but it's necessary," Dusit Thani Pcl Chief Financial Officer Narongchai Wongthanavimok, said in an interview. "We really can't compete with other luxury hotels given the intense competition in this industry."
Bangkok, the world's most-visited city, is replete with plush hotels dueling for customers, which can push the cost of five-star luxury down to as little as $100 per night. Developers in the capital are increasingly turning to mixed-use projects to hedge such risks and maximize real-estate returns.
In the long term, Dusit Thani plans to expand overseas revenue and is looking for opportunities to purchase hotels in Europe, Narongchai said.
The redevelopment project is a joint venture with Central Pattana Pcl, which took a near 23 percent stake in Dusit Thani in May. The Bangkok hotel dates back to the 1970s, when it was in the vanguard for luxury before the city became a tourist mecca.
A rally in Dusit Thani's shares triggered by the Central Pattana investment fizzled this year, as fewer Chinese arrivals led to slower tourism growth.
To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net
To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Katrina Nicholas
©2018 Bloomberg L.P.
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