As Phuket’s hotel industry inches closer to breaking point, industry leaders are urging the government to throw a lifeline to the beleaguered sector in hopes of tiding it through the high season.
The call comes as Thailand’s controversial Phuket Model international travel reopening scheme runs into a roadblock due to a new virus case. Meanwhile, hotels in Thailand’s leading resort island struggle to sustain operating viability based on domestic tourism.
New research by C9 Hotelworks points to Covid-19’s crippling implications on Phuket, with airport arrivals plunging, the Phuket Model stuttering and 50,000 jobs expected to be lost if there are no overseas visitors this year; Phuket Town in Thailand pictured
According to the Airports of Thailand, passenger arrivals at the aviation gateway have plunged 65 per cent year-on-year from January through July of this year.
What remains clear is that the 86,000 rooms in Phuket’s registered accommodation establishments cannot realistically break-even or even be cash-flow positive with only domestic demand. This realistically could set the scene for 50,000 job losses in the hotel sector this year if there’s no support forthcoming or international visitors are not allowed in.
One of the green shoots is the Alternative Local State Quarantine (ALSQ) programme, with over 60 island properties applying. While this programme is meant to emulate the ASQ programme in Bangkok, given there are no direct flights to Phuket, the government needs wider support of a return of international travellers at a local level and implement inter-ministerial coordination before it could materialise. But this may take months.
Anthony Lark, president of the Phuket Hotels Association that represents 78 hotels in Phuket, said: “The math simply doesn’t work with single-digit occupancies being reported. No amount of induced local demand can prevent the dramatic continued loss of jobs and rapidly eroding financial crisis for owners and operators. We strongly advocate a safe, pragmatic, and strategic reopening for foreign travellers.”
With tourism being the lead economic indicator in Phuket, data newly released by hospitality consulting group C9 Hotelworks reveals the Covid-19 impact on the hotel development pipeline with 69 per cent of hotels now being delayed or put on hold.
Looking at the economic consequences, at the end of 2019, there were 1,758 licensed accommodation establishments on the island and today incoming projects stand at 58 hotels, representing a 19 per cent rise in supply with 16,476 additional rooms planned.
C9 Hotelworks managing director Bill Barnett said: “Thailand’s failure to relaunch overseas tourism creates a dangerously perilous scenario for Phuket’s hospitality industry. The domino financial impact is not only on hotels and the expanded tourism sector, but it suffocates the development pipeline. This will negatively trigger the erosion of jobs in construction, real estate, retail and ultimately be manifested in consumer credit defaults. The situation is bad, and likely to get worse, as operating hotels (which) remain incur losses day in and day out.”
In terms of updating the Phuket hotel situation on the ground, there continues to be much controversy and a lack of national and local consensus over the proposed Safe and Sealed sandbox long-stay programme. While a stark warning was issued last week by the Bank of Thailand (BoT) over the potential disruption to the heavily tourism-dependent country, the fate of Phuket’s coming high season remains very challenged.
Citing a way forward, C9’s Bill Barnett said: “Any reopening plan must not only be well planned but has to win the hearts and minds of the Thai people to see any chance of success. While the island may hold the keys to the Kingdom in leading a restoration of tourism, the more critical issue is how hotels can fight for their lives in the current state of limbo.”
Speaking about Phuket’s current situation, Anthony Lark added: “Firstly, greater proactive dialogue between the public and private sector has to be undertaken. We can’t simply say we are now in unknown territory forever. Steps must be taken and a single voice formed.
“Secondly, the BoT has to look at interim measures to assist hotels with short-term operating bridge loans to weather the storm and retain jobs. Tourism is a human endeavour, and without protecting and nurturing our Thai workforce, there will be no recovery.”
As Phuket’s hotel industry inches closer to breaking point, industry leaders are urging the government to throw a lifeline to the beleaguered sector in hopes of tiding it through the high season.
The call comes as Thailand’s controversial Phuket Model international travel reopening scheme runs into a roadblock due to a new virus case. Meanwhile, hotels in Thailand’s leading resort island struggle to sustain operating viability based on domestic tourism.
According to the Airports of Thailand, passenger arrivals at the aviation gateway have plunged 65 per cent year-on-year from January through July of this year.
What remains clear is that the 86,000 rooms in Phuket’s registered accommodation establishments cannot realistically break-even or even be cash-flow positive with only domestic demand. This realistically could set the scene for 50,000 job losses in the hotel sector this year if there’s no support forthcoming or international visitors are not allowed in.
One of the green shoots is the Alternative Local State Quarantine (ALSQ) programme, with over 60 island properties applying. While this programme is meant to emulate the ASQ programme in Bangkok, given there are no direct flights to Phuket, the government needs wider support of a return of international travellers at a local level and implement inter-ministerial coordination before it could materialise. But this may take months.
Anthony Lark, president of the Phuket Hotels Association that represents 78 hotels in Phuket, said: “The math simply doesn’t work with single-digit occupancies being reported. No amount of induced local demand can prevent the dramatic continued loss of jobs and rapidly eroding financial crisis for owners and operators. We strongly advocate a safe, pragmatic, and strategic reopening for foreign travellers.”
With tourism being the lead economic indicator in Phuket, data newly released by hospitality consulting group C9 Hotelworks reveals the Covid-19 impact on the hotel development pipeline with 69 per cent of hotels now being delayed or put on hold.
Looking at the economic consequences, at the end of 2019, there were 1,758 licensed accommodation establishments on the island and today incoming projects stand at 58 hotels, representing a 19 per cent rise in supply with 16,476 additional rooms planned.
C9 Hotelworks managing director Bill Barnett said: “Thailand’s failure to relaunch overseas tourism creates a dangerously perilous scenario for Phuket’s hospitality industry. The domino financial impact is not only on hotels and the expanded tourism sector, but it suffocates the development pipeline. This will negatively trigger the erosion of jobs in construction, real estate, retail and ultimately be manifested in consumer credit defaults. The situation is bad, and likely to get worse, as operating hotels (which) remain incur losses day in and day out.”
In terms of updating the Phuket hotel situation on the ground, there continues to be much controversy and a lack of national and local consensus over the proposed Safe and Sealed sandbox long-stay programme. While a stark warning was issued last week by the Bank of Thailand (BoT) over the potential disruption to the heavily tourism-dependent country, the fate of Phuket’s coming high season remains very challenged.
Citing a way forward, C9’s Bill Barnett said: “Any reopening plan must not only be well planned but has to win the hearts and minds of the Thai people to see any chance of success. While the island may hold the keys to the Kingdom in leading a restoration of tourism, the more critical issue is how hotels can fight for their lives in the current state of limbo.”
Speaking about Phuket’s current situation, Anthony Lark added: “Firstly, greater proactive dialogue between the public and private sector has to be undertaken. We can’t simply say we are now in unknown territory forever. Steps must be taken and a single voice formed.
“Secondly, the BoT has to look at interim measures to assist hotels with short-term operating bridge loans to weather the storm and retain jobs. Tourism is a human endeavour, and without protecting and nurturing our Thai workforce, there will be no recovery.”