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C9 Hotelworks Releases Mid-Year Phuket Update

Author: Bill Barnett. Category: Hotels. Posted: 1st Aug 2013

Asia's surging China syndrome is reshaping the Phuket tourism market with one in four international visitors now coming from the Mainland. According to new data released by consulting firm C9 Hotelworks in the first half of 2013 the resort island attracted nearly half a million Chinese travelers.

Turning back the calendar as recently as 2007 and the number was just under 40,000, with airlift is a key catalyst with surging numbers of direct flights between Phuket and Mainland cities, which now stands at 22 versus only seven only five years ago.

As Thailand's booming travel sector witnessed 12.7 million overseas arrivals for the period January through June, China alone excluding the SAR has claimed 18% of the total market.

Speaking about the dramatic game changing playing field for Phuket's tourism industry for the first time travelers from legacy markets such as Western Europe no longer rank in the Top 5 arrivals. What has replaced them are Asian regional travelers and the emerging Russian segment.

We are forecasting a record high three million international visitors for the full year 2013 with the duo of China and Russia boosting 44% of the total overseas volume at the end of June. The mantra of demand is clearly Thailand's strategic location in the sweet spot "window" of six hours and under airline travel time.

While there have been concerns voiced by the local travel industry over low-end mass tourism, hotel trading figures remain strong. C9's report shows that mid-year Phuket market wide occupancy stood at 76%, which is the highest level since 2008. More importantly average rates year-on-year rose by 7% for the same period.

We got inside the numbers and spoke to hoteliers regarding the trend of Eastern European tourists upgrading room categories or using higher rated hotels, which is on the way up. This is apparent in the performance of the upscale tier and beach specific west coast locations where room rates have ticked higher.

One by-product of the Asian economic influence noted by C9 is a series of new hotel branded residence real estate projects which have tapped into the Thai domestic and regional buying pool. Properties that in the past attracted end users are now focusing on investment buyers. Though a sign of the times is unit downsizing and lower price points, which in the branded condominium/apartment segment averages just over USD4,300 per square meter.

While mounting concerns that growing over-capacity at the gateway Phuket International Airport could derail the island's current spate of success, its important to point out that progress on the upgrading of the airport is now in full swing and is scheduled to complete by 2015.

With so much of the demand coming from Russia and China, the airport has been managing traffic by shifting scheduled and charter flights to off-peak hours, thus deflecting what very well could be a head on collision. As to what the future holds, forget the West Side story, today it's all about the economic power of the East.

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