Phuket, Koh Samui too dependent on mass tourism?

Negative trend to hold back performance in peak season

Resort destinations Phuket and Koh Samui have been significantly impacted by this year’s political instability in Thailand, and the market is becoming increasingly vulnerable to its dependence on mass tourism, new research by C9 Hotelworks reveals.

Performance in Phuket and Koh Samui was relatively strong for most of the first half of 2014 – street protests and travel advisories severely dampened business in Bangkok. But the resorts 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 updates, said the situation improved after the curfew was lifted. However, the negative trend will hold back performance throughout the peak season, resulting in a static year for both resorts.

Thailand is exposed to further vulnerabilities from its dependence on mass tourism, especially in Phuket where Chinese and Russian visitors accounted for 47% of international arrivals from January to June, rising 6% and 14%, respectively. Domestic crises can also be exacerbated by external factors, such as Russia’s conflict with Ukraine and rising oil prices.

“Thailand has gone well past the vanishing point on mass tourism. There are simply too many hotel beds to fill and mouths to feed. There is no turning back,” Barnett said.

“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.”

Hotel occupancy in Phuket fell four percentage points to 72% in H1 2014 and average daily rates declined from last year’s US$165 to $159. There are 4,582 new rooms in 23 hotels in the pipeline up until 2016. In the Koh Samui market, the development pipeline will see three hotels open by the end of 2016, adding 203 rooms.

TTG Asia

[pictured: Patong Beach, Phuket; photo courtesy TravelPhotos24.com]

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