Shorter peak season expected in Phuket

Posted on January 3, 2017

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Phuket is bound to experience a shorter peak season this year due to a change in the market, and it is a matter of concern for hospitality firms when it comes to the low season, says Bill Barnett, managing director of C9 Hotelworks.

“In previous peak seasons, rates or surcharges had benefited many hotels in Phuket, but this year the period will be shorter – in most cases ending after just the first few days of January,” warns Mr Barnett.

“Looking to Chinese New Year and the first quarter in general, trading is looking strong, but three months will not make up an entire year and low seasons are a cause for concern. What is evident, however, is that other Thai beach destinations like Krabi and Khao Lak, as well as some locations in Vietnam, are honing up to take on local destinations in an evolving tourism market, so competition ‘is heating up out there’,” he adds.

According to a survey by C9 Hotelworks, there continue to be many questions on the resort-island about the impact of Thailand’s crackdown on zero-dollar tourism, as the issue affects the hospitality trade on the island.

Feedback on China’s cheap packages resulted in a downturn in the fourth quarter as the rapid collapse in Chinese tour groups forced hotels into other segments, which hit replacement rates.

This new year, however, looks brighter with the new international terminal and renovations to the domestic terminal, which will be completed during the course of the year, with some progress on other infrastructure projects, Mr Barnett said.

Phuket is also expected to see some impressive major new developments, such as the BluPearl mega-retail project and Central’s expansion, moving ahead fast.

In terms of hotel supply, the Tourism Ministry has historically reported on a regular basis on the total number of registered tourism establishments in Phuket.

However, the crackdown on zero-dollar tours and unlicenced hotels has brought the matter under increasing scrutiny, with authorities having recently issued an ultimatum to hotel property owners to register their businesses.

With the ministry having broadened its own data-gathering, the total number of licenced and unlicenced hotel rooms is reported to be 81,727 as of last month.

Most hotels are seeing good numbers in all tiers, although room-rate pressure has steadily increased. January is promising by all reports, but looking further out to February and March many hotels are seeing lower pick-up compared to previous years, he added.

One interesting aspect is how Patong’s oversupply is affecting guest quality, with certain higher-end segments shifting into Kata and Karon.

The increasing supply of budget, economy and mid-scale, off-beach properties in the island’s nightlife capital is becoming a toxic mix for hoteliers, he warned.

“In 2017, we’d expect the southwest coastal hotels in Kata and Karon to improve trading and Patong to experience a possible slide in rates and demand. Chinese, Koreans and the Middle East segments are strong supports for the area,” he said.

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