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Phuket tourist arrivals in 2010 hit new highs at 3.5 million

PHUKET: Phuket tourist arrivals saw a 22% increase to 3.5 million in 2010 compared to the previous year, the highest record ever, according to 2010 Phuket Hotel Market Update, the latest market research report by consultancy firm C9 Hotelworks released on Tuesday, Jan 25.

Managing director Bill Barnett said both Russia and China emerged as star performers, with charter and direct flight capacity fast tracking growth.

"The departure of legacy geographic markets has come at a cost with shrinking average room rates. While new replacement players have become dynamic revenue sources, the shift in arrival markets continues to baffle hotel strategy sessions into how to capture these new revenue sources," he said.

There was a 3.2% increase in new hotel openings in Phuket last year, or 1,389 keys, in addition to Phuket's existing 43,036 rooms registered in accommodation establishments.

"Patong is experiencing wildfire growth, and a transforming change is underway for the central entertainment district where projections show more than 50% of new hotel supply will be massed over the next five years. This evolution will see a destination emerging within a destination for the growing price sensitive mass tourism market," Barnett said.

He added that Thai developers increasingly dominate the overall hospitality investment horizon mainly in the mid-market segment, contributing 77% of new projects in the pipeline.

The year ahead is expected to see a record number of hotel transactions, supported by economic recovery from financial crisis and existing owners deciding to liquidate aging assets versus costly renovations.

According to the report, umbrella future development for Phuket sees 5,749 more rooms, representing a 12.9% increase to existing supply. Delayed openings from 2010 pushed into 2011, of which 723 keys will contribute to total of 1,472 rooms entering supply this year.

However, Barnett said it's not all blue sky for Phuket's future: "Supply outpaced demand for the first time in a decade which undermines market stability. Key storylines for the year will be hotel transactions and increasingly vocal Phuket business owners and residents asking the poignant question — is more better?"
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