Can Patong Reinvent Itself?

Everyone has an opinion on Patong. Either they love it or hate it, but there never seems to be a lack sentiment when the subject comes up. No matter what you think of the place, no one can deny Patong's significance to the tourism economy and its role as the meeting point for island visitors. Strategically, it remains a hub where north and south, east and west collide.

After the tsunami, the area started making noises about rejuvenation and was marked by overseas investment into projects, such as the impressive renovation of the Holiday Inn and the financial rehabilitation of Jungceylon. Local firms were active; Burasari acquired the Comfort Inn and expanded its well-regarded brand. However, other projects did not move ahead, such as the Sofitel, located on one of the area's most prime pieces of real estate at the north end of the bay.

In 2007, the pace of internationally branded hotels opening has been accelerating. There will be more than 1,500 chain-operated rooms coming on line in the next year, ranging from the Millennium at Jungceylon (436 rooms), Mercure (249 rooms) and Ibis (250 rooms).Perhaps the most watched new project is the Park Hyatt Phuket, at Emerald Bay to the south of Patong. This stunning piece of property was controlled for years by Taiwan's Evergreen group and was sold to Thai and Hong Kong interests. The question on everyone's lips has been, "Is Patong ready for a high-end luxury resort? This will be a key indicator if the market can evolve to serve the upper-echelon segment.

Transactions remain a barometer of a healthy property market, and there have been two of note lately. First is Destination Properties' acquisition of the Grand Tropicana (400 rooms), which is understood to be under renovation and will be branded for the coming high season. As an aside, this is the latest move for Gary Murray's group, which bought the Felix Hotel in Karon and renovated and flagged it as a Ramada, along with Kamala Bay Terrace opening next year as an Alila.While more recently acquired, the Surin Beach Resort and Kamala Bay Garden Resort are currently under renovation and to be internationally managed. Also of note was the sale of the boutique Baan Yin Dee project to a company controlled by a Singapore-listed firm, which recently bought Bintan Lagoon Resorts.

Support facilities, such as dining and shopping attractions, are a key component of the development of any market and certainly Jungceylon is well-placed to capture traffic from most hotels on the island. One key multi-outlet under development within the project is Singapore's Indochine groups tiered entertainment venue bringing a variety of eating, drinking and lifestyle offerings. At the Sky Inn, the 9th Floor restaurant with its impressive refurbishment attracts tourists and locals alike, and the regional Coyote bar and restaurant at the front of BanThai is adding to the list of chains with outlets in Bangkok that now are see Phuket as a "must have" location.

The rate of property development in Patong has lapsed during the past five years, meaning there is a good amount of catch-up required. For years dominated by lower-end products, Patong now has a few notable projects raising the bar, such as BYD Lofts and L'Orchidee's ocean-view villas.Many industry watchers are waiting to see if, and at what level, a mixed-use residential or villa component will be offered at the Park Hyatt project. Ultimately, given the limited amount of developable land, it appears that Patong's future depends on either bringing down older structures, developing more dense projects or renovating existing products.

From a long-term perspective, and given the number of high-rise buildings already in the area, perhaps one option would be to zone certain areas of Patong to allow new high-rise developments, taking a similar road of development as more sophisticated destinations, such as Waikiki. Once there is no more undeveloped land available, either redevelopment needs to be done or else there will be a geographical shift to areas such as Mai Khao.

With Patong virtually bursting at the seams, Kalim looks poised to be a major area of activity over the next few years. Bart Duykers of Villa Santi recently said that both the boutique resort and its signature outlet Gaya with enviable sunset views of the bay will open by this coming high season. The multi-million-dollar Djinnah Santi project is under construction and sales are moving, showing there is a market in that location for a 60- to 100-million-baht property. To be sited on the hills opposite is the Miora Resort, planned to be an all-suite internationally managed hotel, as well as an up-market dining/bar complex next to Baan Chai Lei.

Patong will remain a source of conversation for a very long time, be it good, bad or whatever else. From a tourism and property perspective, the current trend towards upgrading and branding of products, new developments and certainly the scale of international investment is positive.

Downstream, zoning and regulating growth are going to be paramount to reinventing the destination.