Thailand’s leading resort island Phuket is facing up to the reality that its tourism high season will not see a marked reopening to overseas travellers, following the dismantling of the Phuket Model and refocus by the government on using Bangkok as a single international gateway.
The key tourism indicator for the island is airlift and Phuket International Airport is the gateway for 70-80 per cent of visitors to the destination. According to Airports of Thailand data, 121,530 passengers arrived in the month of September. This equates to just over 4,000 arrivals a day, including local residents and business people. Comparing year-on-year data, 2019’s daily arrivals which included international travellers was five times higher.
C9 Hotelworks managing director Bill Barnett said that “there is a dramatic change in the market mix where the current domestic-led average length of stay for hotels is approximately 1.8 days, while for foreign travellers, it’s more than double this amount. What this means for hotels is severely reduced overall demand across the island’s entire accommodation sector”.
Looking forward to the high season when the numbers spike upwards in the four months of December through March, the high season months last year equated to more than one-third of annual demand. Total domestic and international arrivals at the airport totalled just over 9 million in 2019.
Adding in high season shoulder months into the equation, the stark economic impact of Phuket’s economic seasonality is reflected in the fact that well over half of the island’s tourism arrivals are packed into a six-month period.
Now, nearly two months into that timeframe, what is apparent is it’s virtually impossible to save the high season and hotel owners in 2021 will be forced to contend with historically the lowest trading months of the year by May. Given these grim prospects, C9 Hotelworks is predicting large-scale job losses and business closures, given there is no light at the end of the pandemic-induced tunnel.
“Taking a 360-degree view on the restricted domestic-only demand, you have to take into account that Phuket’s current registered accommodation supply has continued to surge to its present size of 90,267 rooms in 1,773 hotels/tourism establishments,” added Barnett. “Of this supply, upper midscale, upscale, and luxury properties of international standards are approximately 25 per cent of the total rooms.”
Data from STR has Phuket occupancy averaging 10 per cent, with upward spikes on weekends at international standard hotels. Looking into the number though, the reality is domestic travellers are cashing in on cheap deals at upscale and luxury hotels.
Given limited visitor arrivals, the far larger mid and economy tiers where most of the hotel inventory sits, are experiencing even lower occupancy. This domino effect is expected to prevail unabated throughout a sustained downturn and effectively crushes the smaller properties and local tourism businesses.
As Thailand’s government policy has maintained Bangkok as the sole entry point for a limited number of travellers from overseas under the Alternative State Quarantine (ASQ) programme, a number of hotels in all tiers are operating under the scheme. Hotel performance data for Bangkok from STR is reflecting occupancy just above 25 per cent for international standard hotels, though again, in the broader marketplace, demand is at considerably lower levels.
In Phuket, many hotels pinned high-season hope on the now-aborted Phuket Model to allow Special Tourist Visas aimed at long-staying visitors, given the island’s legacy winter ‘snowbird’ market from Northern Europe and Russia.
Putting the ASQ programme at the head of the reopening tourism initiative, 17 Phuket hotels have been approved and 21 applications are under process. Properties who have undertaken both the expense and time in qualifying for the status have been shut out, given the government’s about-face policy of centralising all overseas arrivals into Bangkok.
What is unclear is the logic in policy flip flop on negating the island’s essential tourism lifeline. Using smaller contained resort-focused islands would appear a logical risk mitigation strategy that was echoed in all of the hype over the Phuket Model but after the dust has settled, it ultimately failed to launch.
The time has come that Thailand must gain confidence from international benchmarks, such as the tourism-dependent Maldives. According to data from the nation’s Ministry of Tourism, in October, the destination recorded 21,514 tourist arrivals. This trend is again on the rise in November and looking back, the country has safely managed the reopening of its borders since mid-July. Meanwhile, Singapore is set to start its air travel bubble with Hong Kong from November 22.
Putting Phuket’s economy debacle into perspective, Barnett said “losing this high-season will further intensify the catastrophic impact on the island’s business owners and the livelihoods of the vast majority of residents. Given the sheer size of the hotel inventory, it cannot survive only on domestic visitors, cheaper airfares, or by adding more public holidays. For Phuket, this high season, faced with the prevailing arithmetic, the island can only wait and wonder what comes next.”
Inmarsat’s Passenger Confidence Tracker survey has determined that nine in 10 Asia-Pacific airline passengers will alter their travel habits for the long-term as a result of the pandemic, with half planning to travel less frequently by any means.
The survey, commissioned by Inmarsat and carried out by market research company Yonder. studied 10,000 airline passengers globally, including 2,500 from the Asia-Pacific region.
Ninety-three per cent of survey respondents in Asia-Pacific do not expecting to return to their previous travel routines once the pandemic is over, with 57 per cent describing their behaviour towards the pandemic as ‘highly cautious’, compared to 48 per cent globally.
The pandemic also seems to have sparked a shift in attitudes to travel in Asia, where 49 per cent of respondents expect to travel less by any means and 37 per cent plan to fly less in the future. This sentiment is stronger in India and South Korea, with 58 per cent and 55 per cent surveyed planning to travel less in the future respectively.
Despite this, there are early signs that Asia-Pacific travellers are starting to feel confident about flying again. Passengers in the region are more likely than the global average to have flown since the pandemic began: 41 per cent of Asia-Pacific respondents – and as much as 56 per cent of Indian respondents – have taken at least one flight since the pandemic reached their countries, compared to just 34 per cent globally.
The majority – 60 per cent – of Asia-Pacific passengers surveyed expect to feel fully ready to fly within the next year.
David Coiley, vice president Asia Pacific, Inmarsat Aviation, said: “The Passenger Confidence Tracker reveals that Asian travellers are more confident with the safety of the passenger journey than their counterparts.
This also reflects prevailing conditions in the region, where the spread of Covid-19 has largely abated across most markets, relative to other regions experiencing a resurgent wave of infections and further lockdowns. Given the level of consumer confidence, the outlook of the aviation industry in Asia-Pacific is looking optimistic.”
Coiley pointed to domestic travel recovery in China and India as most telling of the region’s travel confidence.
“In China, we saw domestic passenger volumes for the month of September increase from the same period last year, while domestic travel volumes in India are forecast to recover to pre-Covid levels by the end of the year,” he said.
When asked to rate their confidence around the safety and health precautions currently undertaken across all touchpoints throughout the journey, Asia-Pacific respondents recorded an aggregated score of 6.27 (with 10 being the highest level of confidence), higher than the global average score of 5.55.
The majority also perceive public spaces such as restaurants, cinemas, public transport, and public toilets to be either as risky, or even riskier than, taking a flight.
Asian respondents stated a need for clearer information about border restrictions, standardised practices across all airlines and a consistent worldwide set of safety standards as particular areas for improvement. Furthermore, respondents determined that wearing a face mask both inflight and in airports, and only being allowed to fly after a 48-hour test are the most effective personal safety measures. Only 10 per cent identified a 14-day quarantine as a top factor.
While the majority of Asia-Pacific passengers (65 per cent) surveyed feel satisfied with the aviation industry’s response to the challenges of Covid-19, the study reveals areas of opportunity for airlines to encourage passengers back to the skies.
Almost half (48 per cent ) of Asian respondents believe that reputation is a more significant factor when choosing an airline today than it was pre-pandemic. It has therefore never been more vital for airlines to differentiate and gain a competitive edge. The research highlights that improving inflight experience is one way to achieve this.
From extra legroom (44 per cent) to free baggage (36 per cent), value added services are becoming increasingly important to passengers returning to the skies. Digital solutions are fast-becoming essential to an enjoyable inflight experience, with four in ten respondents agreeing that on-board Wi-Fi matters more today than ever before.
Philip Balaam, president of Inmarsat Aviation, said: “With safety and reputation becoming even more important to today’s flyers, there is a clear need for airlines to differentiate themselves in order to encourage passengers back onto their flights.
“Digitalisation lies at the heart of both; minimising critical touchpoints in the passenger journey to improve confidence, all the while keeping passengers connected and entertained.”