Phuket’s tourism industry is undergoing an ongoing rebound, with last year’s airport passenger arrivals edging towards pre-pandemic figures according to C9 Hotelwork’s Phuket Hotel Market Update 2024. While hitting 7 million, it was still short of the 9 million mark set in 2019. This year the trend is continuing with 1.62 million arrivals to date in February, compared to 1.77 million recorded in the same period of 2019.
The Chinese market is slowly recuperating, with last year’s figures at 650,000, still a stark contrast to the 2 million arrivals pre-pandemic. Nonetheless, the introduction of visa exemptions for Chinese and increasing flight connectivity is anticipated to bolster these numbers.
Regional Southeast Asian markets are outperforming previous records, with Singapore’s arrival numbers doubling and Malaysia experiencing a 67% boost. These statistics underscore the potential of short-haul tourism in a world adjusting to post-pandemic travel norms.
Hotel metrics mirror this positive trajectory, with hotel occupancies soaring to nearly 78% in 2023. The Average Daily Rate (ADR) has reached a new historical peak, climbing 43% from the previous year. This uptick is attributed not only to returning tourists but also to Phuket’s ability to attract a higher-spending demographic.
The hotel sector’s development pipeline has slowed but is highlighted by 19 projects with 3,719 keys market, among which 3 properties are hotel conversion with 821 keys. Branded properties represent 91% of the pipeline. Based on C9’s market research incoming supply has been reduced by over 50%, as Phuket’s real estate market has seen land cost skyrocket, an overheated property sector, and a proliferation of branded residences. Many hotel owners and developers have shifted focus from greenfield projects to conversions and repositioning via renovations.
To download C9 Hotelworks Phuket Hotel Market Update 2024 CLICK
One of Thailand’s most stunning coastlines is getting a boost with the first branded property coming to Sichon under the Banyan Tree Brand.
Set to be named Banyan Tree Residences Sichon, the boutique branded residences project is being developed by the Urasaya Group.
A key feature of the 2.5 hectare development is oceanfront real estate that will be sold as branded villas.
Banyan Group is also rolling out a new global vacation property rental program called Banyan Living.
The long stretch of beaches between Nakhom Si Thammarat and Surat Thani, namely Sichon and Khanom are seeing increasing interest in tourism.
So why have Phuket hotel owners and operators developed a bad case of FOMO (fear of missing out) for over more than a decade and why can’t they keep it up (rates that is)?
Good insights from Jesper Palmqvist STR stat man at this week’s Phuket Hotels Association quarterly meeting. Did you realize that for the period 2012 onwards for more than a decade, not counting COVID19, that marketwide rates have stood still.
Diving deep is the seasonality factor when most properties rake it in during the 5ish months high period and then drop their pants during low periods. STR data shows a 1/3 reduction in occupancy but a boost in the summer season, though rates at the same time are down 50%.
Is it bad rate management, over-reliance on wholesale business, or just the dreaded fear factor? As rates grow in 2023 and now into 2024 they hold, what will come when the peak season snowbirds leave? Calling all revenue managers.
On the back of soaring land prices, hotel developers are now moving to inland locations in Phuket’s booming Bangtao district.
In what is not being referred to as the ‘Thonglor’ area of Phuket, this area will play host to the upcoming The Standard Residences and also a branded Peri Hotel.
Another new signing by Wyndham is The Ozone Signature, A Registry Collection. This mixed-use property has 118 keys and will open in early 2027.
According to C9 Hotelworks market research, there are over 20,000 residential-led projects in Greater Bangtao either under development or planning. Add to that 8 more hotels coming into the pipeline.
Bali is back and tourism is booming. Did you know in 2023 5.3 million international visitor arrivals and nearly 10 million domestic travelers went to Bali? Read the latest on one of Asia’s best-known travel destinations in C9 Hotelworks and Horwath HTL Bali Hotel and Branded Residences 2024 report.
Top tourism source markets include Australia, UK, USA, and rising star India. Rates are staying high. For demand, with the market strong, Kuta, Legian, and Sanur have moved up the scale. Expectations for the year are strong on fundamental stability.
Turning to branded residences, the property market remains hot with a mix of both Indonesian and foreign buyers. Mixed-use properties and investment-oriented real estate are leading trends. We expect a new wave of international branded properties to be announced soon as projects are moving to the development phase.
To read the full Bali Hotel and Branded Residences 2024 report CLICK
The release of plans for a massive highway interchange in North Phuket is spurring development activity in the Mai Khao area. A Mueang Mai interchange on the road leading to Phuket International Airport on the island’s main North-South artery will also have a direct connection to the East Coast spur highway 4027. (CLICK to see map)
This is expected to create significant growth of traffic to the island’s East side where over 70% of the spur roadway that starts at the Heroines Monument has been widened. Part of the Interchange will see the final stretch of road to Mueng Mai widened to complete a 4 lane highway from the airport via the East Coast.
Currently, plans call for the construction of an underpass at the Heroines Monument to start later this year, which is expected to create a gridlock situation for North-South traffic and access to the airport. Given the underpass will be a multi-year project, this is anticipated to mostly affect travelers in the South, Patong, and central part of the island, with the movement of tourists and those looking to get to from the airport.
Property developers who have been hit by high land prices in the Bangtao Chengtalay area where land per rai is exceeding THB20 million are now looking to Pa Klok where values are currently 1/3 of the West Coast areas.
As for those who were wondering why Bumrungrad chose the Mueng Mai/Mai Khao area, the new interchange is expected to create a large commercial and residential district. A well-known retail developer is holding a large parcel adjacent to the interchange.
Looking at the current real estate trends in Phuket, C9 Hotelworks research is showing some investors who bought multiple properties in estates or condominiums are starting to bring these into the secondary market to take profits. We expect a larger influx of secondary units in both single detached homes and villas, as well as condominiums
With new project launches now peaking and some notable ones coming in the next 3-4 months, by mid-year, the competitive landscape between off-plan and secondary market units is anticipated to become more competitive and price-driven. While 2023 was a record-setting year for transactions, we look at 2024 to continue rising by the sheer metric of new project launches and mass market sales.
That said, there are mounting concerns about an over-reliance on Russian and Eastern European buyers, and by mid-year developers will be forced to look for new markets and return to more focused sales and marketing activities in diverse geographic sources of buyers.
One final trend to take note of is that there is movement in the end-user segment of buyers of those seeking less traffic but still seeing Phuket International Airport as a key lifestyle indicator. This journey is over the Sarasin Bridge in Phang Nga. Here, foreign retirees and empty-nest couples are moving to the Thai Muang area and even further North to Khao Lak where land values are lower than Phuket prime areas by 50-75% in some cases. The four-lane highway North has increased access and we expect the coastal drift up to continue.
Leading Bangkok-based wellness group GOCO has signed a deal with Singapore’s Temasek private equity group via The Fullerton Fund.
The injection of funds into GOCO is reportedly ‘high eight figures’ and will fund expansion in Thailand and Southeast Asia into hospitality assets.
Two acquisitions are expected to be announced in March by Founder and CEO Ingo Schweder.
Thailand’s wellness sector is attracting more international investment as the country is a market leader in the sector back such as well-known destination resorts Chiva-Som and Kamalaya.
Another overseas group Alta Hospitality Fund Asia invested in best-in-class operator VIKASA in Koh Samui and is currently expanding the group into other destinations.
Back of surging tourism numbers. Phuket hotel owners and developers are increasingly looking to convert to brands or affiliate to soft brands.
The 274-key Village Coconut Island Beach Resort is part of the Spanish hotel group Barcelo. Now known as Barcelo Coconut Island, it is located on Phuket’s east coast on Koh Maphrao. Barcelo has over 250 hotels in 22 countries.
Another brand affiliation is the upcoming Nai Yang Beach Resort which is slated to open in 2028 and is under IHG’s Vignette Collection. The property features 115 rooms. This is the 3rd IHG signing with the same developer, under the Vignette Collection. The other two are the Dinso Resort and Villas in Patong and another Dinso in Koh Chang.
Brand conversions were a hot topic at this year’s Thailand Tourism Forum 2024. To view the session that focused on Diving Into Hotel Conversions – A Case Study, check out the video at –
The resort island of Phuket which once was highly tourism dependent, has quickly evolved into a global hotspot as an international community for a rising tide of global citizens. Taking flight is a migration megatrend that is being driven not only by geopolitical events worldwide but a series of other emerging segments. Those highlighted in C9 Hotelworks latest research include urban flight, an increasingly mobile work-from-anywhere class of business owners, executives, and digital nomads, and a greying population that is retiring early and moving across borders.
Take a closer look at what is happening on the ground, there is no better example than KP Ho’s pioneering destination-integrated resort (IR) Laguna Phuket. Developed in stages over more than three decades, the composition and DNA of the mixed-use project was highly premised on an idyllic holiday getaway that had everything you wanted on your doorstep. It wasn’t about getting away, more so it was in an insulated package that reflected travel trends of the day. As often happens, things changed, the smartphone opened a world of options in your palm and suddenly travelers wanted out of the box, into non-traditional accommodation and freedom of choice.
Wind forward to 2024 and the Banyan Group which was founded as a hospitality icon and their Laguna flagship has shifted into a real estate-led entity. I’m reminded of Willie Sutton’s famous quote on why he robbed banks and he replied ‘That’s where the money is.’ You could pretty much say the same thing in a side-by-side hotel vs. real estate comparison.
For KP Ho, who once changed the face of integrated resorts, his latest endeavor is developing an inland USD2 billion international community called Laguna Lakelands on a large land bank of 276 acres (approximately 700 rai). Set to house over 5,000 residential units in various configurations, but the main property classes planned are condominiums and detached single-family homes.
Laguna Lakelands is located in the island’s hottest property market Bangtao/Cherngtaly, in what is now being referred to a Phuket Thonglor. The latter is a reference to one of Bangkok’s trendiest urban districts. In early 2023, C9’s market research identified over 10,000 residential units in the pipeline, and in less than a year, the number now tops 20,000.
What is clear is that Bangtao is no longer just about the beach, and as in the case of many resort areas over time from Waikiki to Bali is that they are becoming urban-focused. That said, today’s socio and economic trend and post-COVID-19 changes is that instead of being transformed into a new CBD (central business district) Bangtao/Chengtalay’s inland areas are gravitating towards central lifestyle districts (CLD). Bolstered by soaring land prices and height restrictions mid-rise development will be the path forward for the greater share of properties.
As for the transition from tourism to lifestyle, Laguna Phuket which introduced resort real estate properties in the mid to late 1990s has seen the transition of many travelers who first came to Phuket as tourists and later came to live a resort lifestyle. There remains much chatter in the property market about Russian and Eastern European buyers being a dominant force, the reality is there are 13 international schools on the island, and speaking to the largest of them, our research shows there are 59 nationalities of students.
Closing out the piece I’m often asked how deep is the Phuket property market or how much more can it grow. In my opinion, the metric should not be isolated to the current key demand segments or nationalities, but look to a rapid global lifestyle migration trend which means that the island’s potential is truly set to see sustained growth in the decade ahead as an international community.
