The drop in the number of tourists heading to Phuket, could have an adverse impact on the number of both existing hotels and projects under development.

At a glance:

• 56 hotel in the pipeline in Phuket
• Influx of tourist from Malaysia and India
• Tourists from China and Russia decline
• Kamala and Patong popular locations for hotel residence

In C9 Hotelworks’ latest research showed a total of 56 properties or 15,463 keys in the pipeline, representing 18 percent growth in the next five years from the existing supply of 84,707 keys.

These pipeline projects are categorized into three types: hotels, hotel residences with mandatory or optional rental management programs. Of the total 56 pipeline properties, more than 46% are hotel residence developments with either mandatory or optional rental management programs. These hotel-managed properties either offer guaranteed returns or revenue share generated from the rental pool program.

The most popular locations for hotel residences are Kamala and Patong, which have 2,169 and 1,353 units, respectively. Management and franchise offerings with international brands and operators are rising.

Declining tourism demand resulted in a market wide occupancy drop by more than six percentage point for period January thru May 2019.

According to the consulting firm, after an exceptional start to 2018 and challenged second half of last year, the first five months of 2019 has not seen recovery of volume driven mainland China and Russian markets.

However regional Asian feeders are expanding, with Malaysia rising significantly by 42 percent, and India tripled its volume as of May 2019, compared to the same period last year.  

To lessen the impact of the storm, the Ministry of the Interior is currently reviewing Phuket’s development zoning regulations and the revisions likely impacting the real estate and hospitality sectors on the island.

The Thai government has also announced a Hotel License Amnesty Program by the Thai government has put pressure on unregistered hotels to be documented legally.

While a second Greater Phuket airport located in southern Phang Nga will move forward with a total investment budgeted at THB75 billion.

“With the Phuket tourism market in a mature cycle, the massive hotel pipeline has raised oversupply concerns for both existing hotels and projects under development, with increasing stress on island infrastructure inevitable,” stated Bill Barnett, managing director at C9 Hotelworks.

Source: C9 Hotelworks