Phuket’s hotels struggle despite record arrivals in 2010

PASSENGER arrivals to Phuket reached a new high of 3.5 million last year – a 22 per cent growth over 2009 – but room supply outpaced demand for the first time in a decade, resulting in a slide in rates as hoteliers battled to retain occupancy.

According to C9 Hotelworks’ latest market research report on Phuket, Russia and China emerged as the major drivers of growth due to burgeoning charter and direct flight capacity.

Figures for 2010 showed a 44 per cent increase in Asian travellers from the previous year, while overall European visitors dropped by one per cent. This translated into a decline in average length of stay, noted the report.

C9 Hotelworks managing director Bill Barnett said: “The departure of legacy geographic markets has come at a cost with shrinking average room rates.”

Keen competition last year also exercised further downward pressure on room rates, as supply growth edged higher by 17 per cent, outstripping demand growth of eight per cent. Market-wide occupancy increased by four per cent, but was offset by a three per cent fall in room rates.

Phuket has a total pipeline of 5,749 keys, representing a 12.9 per cent increase in existing supply.

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