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Phuket’s Low Season Growth and China Drive Amass Record Numbers in 2017

Developers eye tourism attractions to cash in on mounting visitor demand

Bolstered by a strong low season and double-digit China growth, Thailand’s leading resort destination Phuket has hit a historic high note. For the year 2017, the island’s gateway airport posted 11.3% y-o-y growth to reach an estimated 8.4 million incoming passengers. This was mainly driven by a 20% surge in Mainland Chinese travelers to the island and a rising number visitors during low season of 11.2% compared to the same period in 2016.

Airlift is clearly as the key catalyst according to consulting group C9 Hotelwork’s newly released Phuket Hotel Market Update. Hotel performance continued to see an uptick in occupancy at 77% last year based on data from STR, though the volume metric resulted in a slight downward trend with a median room rate of THB3,740.

Data in C9’s report reveals there was an average of 641,863 passenger arrivals per month in 2017 during low season compared to 759,703 in the high season. This is a significantly smaller gap than in previous years. What is demonstrated is how the island is evolving into a year-round destination. Another key trend is market-wide occupancy was pushed up as 54% of Chinese and 55% of Australians chose to visit Phuket during the May – October low and shoulder seasons.

Analyzing the market C9’s Managing Director Bill Barnett is quick to point out that island hoteliers need to be pragmatic about the impact in shifting geographic segments. “Phuket International Airport is the de facto entry point for tourists to Khao Lak which has nearly 9,000 hotel keys in its inventory. Lower priced accommodation and a large selection of beach front properties are benefitting from increasing Australian and Chinese numbers in July and August.

Two other key points are that while arrival growth is prevailing, the average length of stay is shrinking due to regional Asian market take up. And secondly exponential growth in shared economy offerings such as Airbnb are becoming mainstream competitors to hotels.

Soaring tourism numbers are only driving hotel development but peripheral sectors such as attractions. With its successful water park in Hua Hin, Proud Real Estate plans to start the development of Vana Nava Phuket by Q4 2018. Coupled with a 255-room Holiday Inn Express, the project is valued at nearly THB3 billion. Kata Water Park is another notable project that will begin construction in 2018. Developed by Kata Group on a 13-rai plot, replacing Kata Plaza, the plan includes a 300-room hotel and multiple dining outlets.

Summing up Phuket’s continued growth trajectory Bill Barnett of C9 Hotelworks says “while the recent upgrading of Phuket International Airport and new terminal has been a welcome change, the long-term reality is it’s just a band aid to a macro issue. As Khao Lak continues growing along with the beach areas North of Phuket, the need to diversify Phang Nga’s rising tourism market with its own airport is becoming more and more urgent by the day.”

Download: Phuket Hotel Market Update.

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