C9 Hotelworks Releases Mid-Year Phuket Hotel Market 2023

In the first half of 2023, Phuket experienced a resurgence, signaling a promising path toward recovery. International and domestic flights both saw significant increases, accounting for 75% of the total flights in 2022. Airlines and travelers alike are eager to reengage with Phuket’s offerings. In terms of passenger arrivals, the first half of 2023 displayed an impressive rebound, already representing 87% of 2022’s volume.

This optimistic outlook is further supported by the addition of new direct flights from China. The reopening of Chinese borders led to a timid resurgence of Chinese tourists, particularly in the second quarter. Additionally, plans announced by the new government cabinet to expand the list of visa-free countries, including China and India, could likely contribute to boosting Chinese tourist arrivals, a key factor in Phuket’s recovery.

Furthermore, investment opportunities in Phuket are on the rise due to high demand for both Hotels and Branded Residences, combined with the weakening of the Thai baht against major currencies. Foreign and Thai investors are increasingly looking to the Phuket region for their next projects.

Looking ahead, Phuket’s market is set to surpass both 2022 results and 2019 levels. As the high season approaches, there are mounting concerns over the island’s failing infrastructure. Upgrading is imperative to accommodate sustained demand. While Phuket’s tourism market continues to grow, there may be dark clouds on the horizon if badly needed infrastructure projects continue to lapse.

To read and download C9 Hotelworks Mid-Year Phuket Hotel Market Update CLICK

One good indication of Phuket’s return to tourism recovery is airlift growth.

Making news this week is Thai Airways International’s reported resumption of service on the high-traffic Phuket Bangkok route.

The airline will start a once-daily right on 1^st October 2023.

Thai Smile (WE) will still operate other flights til the end of November when Thai Airways (TG) effectively takes over the route.

This is great news for those tired travelers of Thai Smile single-bodied aircraft and the return to the island of Thai’s larger widebody fleet.

Hotels and resorts around Southeast Asia are failing to understand the “green premium” and how to leverage it to attract quality guests, according to leading figures in the region’s hospitality industry.

The message that hotels and resorts are falling behind counterparts in other parts of the globe when it comes to capitalizing on the benefits associated with sustainable tourism was one of the major takeaways from PHIST (Phuket Hotels for Islands Sustaining Tourism), Southeast Asia’s largest sustainability forum, held this week at SAii Laguna where over 1,000 participants gathered.
Hotel developers in Southeast Asia have broadly failed to make sustainably a must as they do in Europe or North America. It’s a massive disconnect.

Other expert speakers at PHIST included star designer Bill Bensley and KP Ho, the founder and executive chairman of Banyan Tree Holdings and Laguna Resorts and Hotels—urged resort owners to become more cognizant of the wider benefits associated with sustainable tourism.

By pioneering green or mindful practices ranging from waste management and energy conservation to farm-to-fork dining, sourcing organic produce from local farmers, and better community engagement, resorts can streamline costs and build goodwill. In doing so, they can also enhance their appeal to clients who place a premium value on experiences that are ethical, sustainable, and — perhaps most importantly—unique.

Jesper Palmqvist, STR Global’s Area Director for Asia Pacific, hosted a roundtable at PHIST where figures from top resort names such as Six Senses and Soneva discussed environmental best practices moving forward.  He agreed that the hospitality industry in Southeast Asia needs to be more proactive about enacting meaningful changes.

“It’s important that the industry develops green champions, best practice documents, and training modules that can be modified by hotels,” he said. “Furthermore, hotels need to be pressured into fulfilling international sustainability certification. This would show more ambition to adopt new criteria relating to the environment and thus stay ahead of the curve.”

Other discussions about ways to seize the opportunities afforded by sustainable tourism were to the fore as some of the biggest names in the region’s hospitality sector gathered for PHIST.

KP Ho was instrumental in the transformation of Laguna Phuket from a barren moonscape of scarred land—abandoned by the tin mining industry and declared as uninhabitable by the UN—into Southeast Asia’s leading integrated resort development.

Bill Bensley has helped curate some of Asia’s most charismatic sustainable tourism experiences. His Shinta Mani Wild in Cambodia, for example, offers luxury, tented accommodation while using funds to preserve its surrounding private nature sanctuary from poaching, mining, and logging.

The “green premium” and how to sway it was just one of many topics up for discussion at this year’s PHIST, which featured 16 interactive workshops and over 30 exhibitors.

Workshop discussion covered issues such as the circular sustainable economy, green hotel loans, and start-up funds, glamping, farm-to-table cuisine, environmental hospitality design, data, and measurement, greentech innovation, marketing sustainable hotels, water conservation, sustainable wellness and more.

Directly preceding PHIST, outdoor lodging practitioners gathered and agreed upon the formation of the Asia Pacific Outdoor Lodging Association (APOLA), a trade body set up to guide, promote, and structure the development of the outdoor lodging sector in the region as it expands.

APOLA’s mission will be to help define the standards for the region, raise awareness, develop an accounting system for project financing, and educate the industry about the advantages of this lower-impact, sustainable hospitality model. Interested developers, owners, and managers in the sector are invited to submit their interest to join the association by contacting APOLA at CLICK

C9 Hotelworks is co-event organizer of PHIST together with Greenview and Phuket Hotels Association.

As Southern Thailand’s Andaman coast experiences the onset of the rainy monsoon season, the vibrant surf culture in Khao Lak comes alive. At the heart of this burgeoning aqua sports scene is the famed Memories Beach in Pakarang, drawing an excited blend of both Thai and international travelers.

The surf scene in Khao Lak has flourished in recent years, with a significant contribution from trailblazers like Bert Berger, the visionary behind Sunova Surfboards. Back in 2016, the company relocated its factory to this region, kickstarting a trend. Presently operating under The Board Factory, this successful start-up has expanded its horizons beyond surfboards to encompass SUPs, windsurfs, and kiteboards. Visitors stepping in are greeted by an exhilarating skatepark, setting the stage for an engaging factory tour.

No visit to Memories Beach is complete without basking in the shade and savoring refreshments or a meal at the Karkinos Beach Club. The club’s sustainable design, incorporating natural materials and a sand bar, is an Instagram-worthy attraction. The genius behind this awe-inspiring Mad Max/Robinson Crusoe structure is none other than Phuket architect Joe Sanya from Architects11, making it the go-to destination for the quintessential West Coast sunset experience.

GARANG Artisan Ice Cream, another local start-up sensation, has triumphed in this landscape. Here, gelato is meticulously handcrafted, incorporating local flavors that pay homage to the essence of Khao Lak. Situated in Bangsak, the vibrant, colorful shop boasts boho-chic interiors and surf-inspired artwork, creating a distinct neighborhood ambiance.

In the midst of the COVID-19 pandemic, Khao Lak experienced an influx of Thai visitors, including the trendy denizens of Bangkok who embraced the art of surfing at Memories Beach. Presently, the area is swiftly transitioning into an urban retreat and a favored destination for small-scale start-up tourism ventures. This revival is backed by robust economic foundations, where off-beach land just a short 2-3 minute drive away from the shore costs around THB4-5 million per rai. In contrast, the property prices in Phuket have soared to THB10-15 million per rai or even more.

What’s clearly evident to these emerging businesses is the shared advantages of airport accessibility, captivating West-facing sunsets, and pristine stretches of white sand beaches that rival those of the neighboring tourism behemoth, Phuket. The Khao Lak and Phang Nga Hotel Market Update Report by C9 Hotelworks reveals that despite approximately 10,000 registered hotel rooms, supply and demand remain favorable. The entry of international hotel chains has also paved the way for specialized opportunities for smaller properties.

Two segments poised for substantial growth are boutique hotels catering to surf and outdoor enthusiasts, as well as long-stay villa estates offering a resort-like experience. Compared to other Thai beach-focused destinations, Khao Lak presents lower barriers to entry in the market.

Journeying to Khao Lak has been made incredibly convenient with the introduction of a four-lane highway, significantly shortening the travel time from Phuket International Airport to just over an hour. A notable stop on this journey is 076 at Thai Muang. This enchanting garden oasis pays tribute to Phang Nga’s agricultural heritage, seamlessly combining a café, relaxing spaces, and locally inspired shopping. The brainchild of Sii Eawsakul, a prosperous internet entrepreneur and luxury travel aficionado hailing from the region, this labor of love serves as a homage to her roots.

A new direct flight service between Saudi Arabia and Phuket will commence in October 2023.

According to news, the carrier will be Saudi Airlines.

Currently, a number of Middle East airlines fly the route including Qatar, Emirates, Etihad and Oman.

Tropical rainy weather is a novelty for ME travelers, given the hot, arid temperatures in the other sandbox

Phuket hotels are buzzing about Saudi being an attractive growth market for tourism.

Vietjet has kicked off direct flights between Hanoi and Phuket.

The airline also operates daily service between the Thai resort island and Ho Chi Minh City.

While short-haul regional Phuket is gaining pace, with China gaining traction, long-haul traffic to Thailand remains slower compared to 2019, according to OAG.

Thai Airways International’s absence from the Bangkok Phuket route continues to be sidelined in favor of the single-body flights from Thai Smile.

Over the past week, we have been compiling our latest hospitality, tourism, and hotel research on Thailand’s second-largest island, Koh Samui. The island remains a bit of a ‘little-big’ anomaly in Southeast Asia’s massive resort island arsenal. Despite hosting famed global hotel brands such as Four Seasons, Ritz-Carlton, W, InterContinental, and Banyan Tree, its smallish private airport capacity has somehow created a natural barrier to mass tourism in the development-crazed last 25 years.

Looking at the tourism recovery trajectory in our newly released Samui Hotel Market Update 2023, the best word I could use for growth was the impish term ‘moderate.’ No, the island has not broken into a full sweat, but looking at the mounting hotel room night demand in Q4 of last year and into the first quarter of 2023, there are positive signs of momentum.

One of the most important pieces of recovery news is the re-starting of direct flights between Hong Kong and Koh Samui by Bangkok Airways starting the 1^st of July. Three weekly flights are set, using an Airbus A319 aircraft. Mainland China flights are also on the books for May which is another strong positive. And for hotels, room night demand has been rising at a great pace this year.

But, this is the conundrum, the destination has limited low-cost airline access, with limited numbers coming from the mainland’s Surat Thani airport and then taking a ferry. While other Thai resort destinations such as Phuket and Pattaya hotels have been on a sharp incline upward, Koh Samui’s return to normal continues to be slower and  at a more protracted pace

But my point here is, maybe that’s okay. As fast-growing resort islands across Asia grapple with high population growth, traffic woes, and broken infrastructure, perhaps Koh Samui’s airport-imposed limitation is not entirely a bad thing. Smaller can often be better and chasing the endless tail of growth is not the right recipe for every destination.

One of the niche tourism segments that the island has maintained over the years is wellness. The Kamalaya Wellness Sanctuary and  Holistic Spa remain one of Asia’s best-in-class offerings. Rumored to be expanding their current operation with additional land, we can’t wait to see what’s in store next for this icon.

Another health and wellness product, Vikasa attracts a global audience with its yoga training and in-house programs. They have been successful enough to tap into investment from the Alta Capital private equity group and are in the process of expanding to other regional markets.

The bottom line for health, wellness, and fitness travel is how sustainable the marketplace is given a high return guest profile, exceptional in-house spending at a time when hotels are losing traffic to outside restaurants, and most importantly a longer average length of stay. Why the latter is important for smaller destinations where typical regional tourists may spend 2-3 nights on a short break at the beach, while program-driven travelers may stay 5-7 nights, hence requiring less flight frequency.

Moving off of Koh Samui, Koh Pha-ngan which is famed for its epic Full Moon Party, has continued to attract more spiritual-oriented travelers, looking for meditation, spiritual connections,  healthy eating, and a like-minded social scene. Again, this is a very specific demographic, but not every destination has to cover tourism in an A-Z travelers cookbook.

As for the idea of how to battle a surge in resort island urbanization that has plagued mass-market destinations such as Bali, Phuket, and Boracay, there is a lot to be said for sharing the business with other nearby locations. Take the Surat Thani mainland and Nakhon Si Thammarat with stunning white sand tropical beaches in Sichon and Khanom and other coastal areas. Plus, there are two large-scale airports in both of these provinces that have growth capacity and offer access to larger jet aircraft.

Real estate in Koh Samui at the higher pricing points is mainly villas and the island has seen two decades of growth with an impressive array of products. Villa rentals continue to attract the luxury market and create an attractive alternative to hotels. One trend in other Thai leisure destinations that the island has avoided is a build-up of midrise condominium hotels (often referred to as condotels), with the local government pushing back on these types of developments. Often relegated to low-rate mass travel and many times unlicensed, their absence is not altogether unwelcomed.

But many island businesses are of the opinion that the failure to expand the existing airport and the lack of a new site with a longer runway remains a blight on the economy. Late last year the Expressway Authority of Thailand (Expat) announced plans for a feasibility study to link Koh Samui and the mainland, via Khanom in Nakhon Si Thammarat. Whether the island needs a bridge or not, many think the money would be better spent in rehabilitating the existing aging infrastructure.

At the end of the day, the old adage ‘Be careful what you wish for, as someday it may come true”, is a telling comment, and in Koh Samui’s case, staying small might be but the best wish of all.

According to C9 Hotelworks new Phuket Hotel Market Update 2023, the resort island’s tourism recovery has accelerated over the past six months. With the removal of Thailand’s pandemic travel restrictions in 2022, airlift quickly ramped up as India and Malaysia were key early source markets.

Over the current winter season aside from the return of the traditional ‘snowbird’ market from Northern Europe and Scandinavia, an influx of Eastern European travelers including those from Russia has spiked demand. Room rates have soared and average stay (ALOS) increased.

Looking ahead at the remainder of 2023, we are looking at a balanced recovery led by the Chinese market. For China, July and August along with National Day holidays in October look to play into a methodical build-up of traffic as airlift returns.

We expect a return to 2019 trading by the year-end of this year and the start of a new tourism cycle in 2024.

To read and download the full report CLICK