RESORT destinations Phuket and Koh Samui have been not been spared by this year’s political instability, and the market is becoming increasingly vulnerable to its dependence on mass tourism, new research from C9 Hotelworks reveals.
Performance in Phuket and Koh Samui had been relatively strong for most of 1H2014 – while street protests and travel advisories severely dampened business in Bangkok – but took a hit from the ensuing coup, curfews and imposition of martial law.
Bill Barnett, managing director of C9 Hotelworks and author of both the Samui and Phuket market updates, told TTG Asia e-Daily that the situation started to improve after the curfew was lifted. However, the negative trend will clip performance throughout peak season, resulting in a relatively static year for both markets.
Thailand is exposed to further vulnerabilities from its dependence on mass tourism, especially in Phuket where Chinese and Russian visitors accounted for 47 per cent of international arrivals from January to June, rising six per cent and 14 per cent year-on-year, respectively.
The effects of domestic crises can also be exacerbated by external factors such as Russia’s conflict with Ukraine and rising oil prices, he said.
“Thailand has gone well past the vanishing point on mass tourism; there are simply too many hotels beds to fill and mouths to feed,” said Barnett.
“This is not the worst thing in the world as the country’s location and appeal are undeniable. What’s concerning is segmentation becoming too narrow. This is the most present trading danger today.”
C9 Hotelworks’ research shows hotel occupancy in Phuket fell four percentage points to 72 per cent in 1H2014, while average daily rates (ADR) declined from last year’s US$165 to US$159.
Passenger arrivals through the airport were up 13 per cent during the period with 5,810 flights. The proportion of direct international flights rose to 55 per cent, up from 38 per cent in the first six months of 2013.
The top three source markets are China (29 per cent), Russia (19 per cent) and Australia (seven per cent).
There are 4,582 new rooms in 23 hotels in the pipeline, 40 of which are tabled to come online next year with another 22 per cent in 2016.
The Koh Samui market was more diverse, led by for the first time by Russia (12 per cent), followed by Thailand (12 per cent) and Germany (11 per cent). Market-wide occupancy was down three percentage points at 70 per cent though ADR rose US$8 to US$162 when compared to the same period the year before.
The island’s development pipeline will see three hotels open from now until the end of 2016, adding 203 keys.
