Decreasing Base Fees and Tiered Incentive Fees Emerge as Significant Trends
In a recent presentation at the Thailand Tourism Forum 2025, JLL executives highlighted pivotal shifts in hotel management agreements (HMAs) in the Asia-Pacific region, with decreasing base fees and the adoption of tiered incentive fees being the most significant changes.
Sharing findings from JLL’s annual survey covering 145 HMAs in Asia Pacific based on signings between 2018 and 2023, conducted in collaboration with Baker McKenzie, Rathawat Kuvijitrsuwan, senior vice president, advisory & asset management – Asia at JLL, said: “One of the most significant observations was the decreasing base fees across the market, with the incentive fee structure moving toward a tiered model rather than being fixed.“
Furthermore, Rathawat emphasised the growing importance of sales and marketing fees. In a notable shift, the proportion of sales and marketing fees calculated based on total revenue above three per cent rose sharply – from no charge a decade ago to 22 per cent.
Other key trends include “key money” being included in contracts for upscale segments and above, as well as the rise of alternative operating models.
“We’re seeing growing traction for white label operators, and growth in direct franchise and potential ‘manchise.’ (We’re) watching how the larger operators address this shift,” he stated.
Sustainability has also become a dominant theme, with Rathawat pointing out that “as sustainability becomes increasingly legislated and embedded, owners and operators may look to align further in HMAs on sustainability.”
Thailand Hotel Investment Landscape Breaks Records
Orn Yomchinda, senior vice president of investment sales – Asia, focused on Thailand’s hotel investment landscape, noting a record-breaking 21.4 billion baht (US$618.5 million) in transactions in 2024 averaging 1.4 billion baht per deal across 19 properties, 15 transactions, and over 4300 hotel keys. This translates into 263 per cent year-on-year growth compared to 2023.
“We have broken many records. Key transactions included the sale of major assets like the Ascott portfolio at around 1,800 rooms, and (Thailand’s) largest standalone asset ever sold, valued at five billion baht,” she stated, referring to the sale of the Hyatt Regency Bangkok Sukhumvit in November 2024, which was the equivalent of US$155 million at the time.
She pointed to the increasing popularity of leasehold transactions, particularly in Bangkok, as the market matures.
Yomchinda said that despite a narrowing yield spread, Thailand overall remains an attractive destination for investors due to the country’s strategic location.
Looking forward, she predicted continued but slightly less active investment in 2025, where the evolving HMA landscape is expected to prioritise opportunistic and value-added deals, with Bangkok, Phuket and Samui remaining the top destinations for Thailand.
“This year, we’re probably looking at 13 billion Thai baht in transactions, which is 10 to 15 per cent above the 10-year average,” she concluded.
