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The Outer Limits

Category: , Posted:04 Feb 2011 | 06:00 am

Despite all the colour-inspired political activity of last year, Phuket has managed to score a tourism smash hit. It achieved its best year ever for arrivals.
With more than 3.5 million incoming passengers, the airport has taken on the air of the mass crush of frenetic shoppers crowding the Mahboonkrong centre in the late afternoon. The din has risen to a decided roar.
So here we go at full throttle, with China and Russia headlining destination Phuket's shifting sands, morphing from a mouse out for a day at the beach to the dawn of a new age with a lionised urban-resort model. Somewhere in the back room a bookkeeper, jittery after too many caffeine energy drinks, is racking up multiples that continue to hit dizzying heights.
The veiled pipeline of new hotel projects now comprises 26 properties destined to offer 5,749 new keys. The sign of the times is that 77 per cent of them are being undertaken by domestic developers.
Fifty-six per cent of the new product will attempt to metropolitanise the entertainment district of Patong. Within five years, as Phuket's registered accommodation supply hits 50,000 rooms, it is forecast that no less than half of that inventory will be clustered into Patong.
The island's international airport, which has an existing official capacity of 6.5 million passengers, went over 7 million last year. By 2013, ongoing expansion will boost its capacity to 12.5 million. There could be a party spoiler in the interim, illustrated by the chasm between the greyhound surge of new hotels and delays in Government-sponsored transportation infrastructure.
Another key indicator of airport inadequacy is skyrocketing growth in charter flights. Compounded annual growth of 49 per cent over the past three years has kept the shuffling immigration queues growing longer and longer.
So, yes. Greater Phuket's true tale is one of the miracle of flight and pumped up airlift. Inside the numbers, however, hotel supply versus demand shows that for the first time in a decade, supply rose faster than demand – and that creates some cause for alarm.
While long-standing legacy markets have shrunk, so has the average length of stay. In broad terms, this stood at 6 to 6.5 days in the middle of last decade. It has now edged down to 5 to 5.5 days and is expected to drop even lower. Dynamic short-haul regional markets – while they produce numbers – demand considerably shorter holidays.
Price resistance, with the baht appreciating against major currencies, has seen increasing numbers pushed into nearby Khao Lak and Krabi. Although they come in through Phuket International Airport, they head straight over the Sarasin Bridge in short order.
Changes in exchange rates that make Thailand increasingly expensive look set to create a conundrum in the race to feed the hungry beast of empty beds. However, it can be argued that Bali – the region's other leading resort destination – is also seeing high demand push up prices there.
The truth of the matter is that travel wholesalers have always largely controlled the fate and fortune of the island's tourism market. These include organizations that concentrate on long-haul markets as well as Thai-based consolidators who provide ground handling and tour logistics.
Despite all the hoopla about travel agents or tour companies becoming extinct with the rise of the Internet, a new resurgence has them now leading the pack of significant producers of heads in beds. An easy explanation of this is the shift to growth markets where volume travel is being embraced.
As in politics, the West's cartel of influence is rapidly shrinking at the moment and hotels have rapidly turned their attention to tourist-fishing expeditions, looking for the big catches. It's now a matter of minnows versus marlins, as numbers have come to satisfy a hunger that once was sated on leaner premium cuts.
While the world spins at speeds that often seem out of control, hoteliers continue to reel under the influence of external events. They skip a beat here and there, and longingly recall the old days of more predictable trading cycles.
Phuket's journey in testing the outer limits of tourism remains a fluid trip. Inevitably, it will be dragged, kicking and screaming all the way, along the seemingly mandated movement to a mass model. As more and more residents shriek a denial of the principle that more is better, the horror of empty beds will inevitably bring harsh realities into play.

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