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Thirty New Hotels in “Phuket 2.0” Development Pipeline

Category: , Posted:27 Dec 2008 | 12:00 pm

Despite a global financial recession and recent political unrest, investment in the Phuket tourism industry continues to forge ahead. From 2009 until 2011, at least thirty new hotels and 4,918 rooms are due to enter the market. The island currently has close to 40,000 registered "tourism accommodation units," rooms in establishments ranging in scale from small guest houses and bungalows to hotels, resorts and luxury properties.
Of the existing inventory about 25%, or 10,000 units, are of international rated standard. Thus, the new units look to add over 50% new inventory within a fairly short time frame because of these units 47% are upscale and luxury hotels. The rest are classified as midscale (41%), budget/economy (9%), with 3% extended-stay accommodations, such as villas and condos. Over the next two years, 2009 is set to have the largest surge in new supply, with 38% or 1,850 new rooms expected to open.
Reflecting at year end, 2008 saw the opening of many important, new properties. These include the Minor Groups Anantara Resort, adjacent to the JW Marriott and designed by design guru Bill Bensley. Joining the Courtyard Phuket in Surin are two other properties operated by Marriott in Kamala and Patong, all developed by Thailand's Destination Properties. The inclusion of the Hard Rock Café at the Patong Marriott marks an exciting fusion of entertainment in a traditional hotel setting.
Over the last year Phang Nga bay has seen two impressive new entries with the Six Senses Hideaway on Koh Yao Noi and Six Senses Destination Spa on Koh Naka Yai, proving that Phuket's east coast is a burgeoning hotel destination.Another significant trend has been the increase in the number of Thai entities, both publicly listed firms and private individuals, developing new hotels. Much of this can be attributed to the domestic liquidity situation and the greater availability of credit.
Branding of hotels is also on the rise, with 27 of the 30 prospective hotels to be operated by international or domestic chains. In past economic downturns, branded hotels have outperformed independent properties. This fact has been acknowledged by investors, though certainly there are exceptions – such as the notable successes of young entrepreneurs driving projects such as Sri Panwa, Aleenta, The Sarojin, and Burasari.
Looking to the future, the Mai Khao beach area seems to be approaching critical mass. Thai group Seacon's Renaissance and Bangkok's Narai Hotel group are opening a second Holiday Inn in Phuket. West Sands Resort is joining hands with Hawaii's Outrigger brand, plus building a high-quality water park, to emerge as a serious competitor to the long-established Laguna Resort in Bangtao.
In Kamala, a trio of properties is joining millionaires' mile. Alan Zeman's Andara Resort Residences, Cape Sienna's hotel and oceanfront villas and Destination properties Marriott at Kamala Cove have all reached advanced stages of construction. Patong, Phuket's most famous destination, is bursting at the seams and new projects are spilling over into the Kalim area.
A bright new entry for 2009 is the Thai owned boutique B-Lay Tong, which is aiming to co-inhabit the niche that Twin Palms has garnered further north. Hong Kong's rapidly expanding Langham Hotel International has combined with prominent architect Clint Nagata of the Blink Design Group to commence development of an upscale pool-villa resort with captivating west coast views. Finally, the nearby Wyndham looks to tap into the growing vacation ownership market currently dominated by Marriott, Laguna and Absolute.
Just over the hill going into Karon, the Centara Grand looks to be replicating its successful formula in Krabi by developing an oceanfront offering in a pristine small bay. Further south, the island's second Ibis budget hotel will take up residence in Kata.
Last year the purchase of a villa by Formula One superstar Kimi Raikkonen generated overseas media attention and the addition of Hawaii's Outrigger management company has added glitz and glamor to Rawai's Serenity Terraces. Moving further up the coast, branded giants Regent, Sheraton and Radisson all look add new properties.
The successful Twin Palms management team, led by Olivier Gibaud, will be offering high end residences for rent as hotel units. This looks to be a growing trend with Bangtao's Palm Beach Club and Kamala's Andara also looking to tap into this unique hotel market. As we move into a new decade of Phuket tourism, condominiums and villas are poised to be direct competitors of mainstream hotels and will look to offer niche products as holiday alternatives.

Despite the numerous new developments, some projects have encountered difficulties. The Four Season's slated for Rawai faces an uncertain future due to the bankruptcy of Lehman Brothers. No announcement has been made on a Park Hyatt project and while Royal Phuket Marina look to move forward with their upscale condominium hotel, it remains in the planning process.
The entire development pipeline appears to be full of challenges and exciting prospects. The majority of Phuket's 2.0 developments appear to be stimulating additions to Asia's premier resort destination. With supply on the rise, demand will increase due to the emergence of additional recognized international brands. However, the island's long-term tourism infrastructure development and overseas promotion remain keys in keeping pace.
As Phuket 2.0 emerges from a past where Amanpuri and more recent rival Triasara have battled for top billing in the luxury market, in the coming years three new entries look set to challenge. The Yamu dream team of Philippe Starck and Jean Michel Gathy, Dubai's Jumeirah Hotel Group and Taj Exotica from Thailand's own Lek Bunnag will look to attract new jet-setting visitors and create enviable world class destinations.

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