Average room rates market-wide shifted downward by 9 per cent in the first half of the year compared to the same period in 2014, according to C9 Hotelworks’ new Phuket Mid-Year Hotel Market Update.
“What is highlighted here is that the trend has existed for a sustained period of time and marks a departure from typical cycles as the island now moves towards an increasingly urban landscape,” Mr Barnett explained.
“Market maturity is evident and while hotels have been able to hold occupancy, the direct hit has been in sharply declining RevPAR.
“It would be a gross mistake for hotels to gloss over the facts by viewing growing airport arrivals as the lead indicator for tourism, while the reality is that a changing geographic base of core business is firmly in the driver’s seat,” he added.
C9’s research pointed to statistics by China’s leading outbound tour operator Ctrip and showed that the average length of stay for mainland Chinese visitors to Phuket is 2.2 days.
“Comparing the ALOS [average length of stay] to those of the legacy European segment, the math attached to the relevance of a volume driven tourism market is fairly straight forward and in this case more tourists are stacking up to less in the big scheme of things,” said Mr Barnett.
Another critical factor to hotel performance is the massive influx of unregistered tourism accommodation in Phuket such as condominium and apartment hotels.
“One only has to look at the large number of new developments offering guaranteed rental returns or investment yields despite the projects not securing hotel licenses. Clearly the government needs to understand the damage this sector is causing to legally operating hotels and ensure compliance is a priority,” Mr Barnett added.
“While it’s quite easy to point to Thailand’s lengthy political events as a key influence, but the reality is that Phuket’s underlying infrastructure still lacks depth in terms of world-class branded tourism attractions.
“The beach is no longer enough to drive hotel rates at a higher trajectory as currently there are 27 confirmed hotels in the island pipeline and another 4,400 rooms coming online between 2016-2018.”