Phuket’s hotel sector takes a hit from 2014’s market volatility

PERFORMANCE in Phuket’s hotel market declined across the board last year as a direct result of the May coup d’etat and an overreliance on mass tourism, new research reveals.

The Phuket 2014 Hotel Market Update report from C9 Hotelworks, released this month, shows year-on-year hotel performance in Thailand’s second largest destination after Bangkok dropped in all sectors.

Occupancy contracted by six percentage points, spurring a nine per cent contraction in RevPAR, while average room rates fell by just one per cent.

Nevertheless, the fact that the destination was able to recycle demand during the last four months of the year was hailed as a “silent victory” by Bill Barnett, the report’s author and managing director of C9 Hotelworks.

He told TTG Asia e-Daily: “Phuket, much like Bali, punched the ticket and took the ride on mass tourism…it’s impractical to believe that the trend of sustained growth could continue unabated.”

Meanwhile, the Tourism Council of Thailand projected last year that Thailand could see annual arrivals surge to 40 million, up from about 25 million, within 2018. Such growth would necessitate dependence on volatile mass markets, something which played a factor in Phuket’s poor performance last year when the Russian market collapsed, warned Barnett.

Last year, growth from Phuket’s top two source markets of China and Russia fell from respective four-year averages of 53 per cent and 39 per cent to a yearly rise of just six per cent and four per cent.

Barnett said that geopolitical issues are creating region-wide volatility and that “the toxic triple threat of currency depreciation, travel warnings and the diminishment of resource driven economies has to take a toll on travel”.

“You cannot bury your head in the sand and say, ‘China will save us’, given that every other challenged tourism market in Asia is doing the same thing. Let’s not forget China is vulnerable to broader issues.”

Arrivals from Taiwan plummeted 56 per cent last year, as did the Norway, South Korea and India markets. But Phuket saw growth from lucrative source markets such as Hong Kong (20 per cent), the UK (17 per cent), Japan (nine per cent) and Singapore (five per cent).