Phuket looks beyond wealthy Westerners
PHUKET: The economic crisis means that while formerly well-heeled travellers from the US, Europe and Australia drove the island's economy, planeloads of Chinese, Russian and Middle Eastern visitors will now dictate growth.
Sunday 18 March 2012, 07:00PM
Phuket in recent years has become known as the playground of the West's rich and famous, attracting pop stars, celebrities, supermodels and run-of-the-mill millionaires. Some of these visitors spend time checking out property in the area, which spawned a healthy market for villas costing 30 million baht or more.
The financial crisis that began in the United States in 2008 took some of the wind out of Phuket's sails as wealthy Westerners began to watch their budgets, but the island's tourism industry has barely missed a beat. The new wave of visitors may not all be jet-setters but they're happy to spend on tourism or property.
Visitors from China are now ready to contribute to a new boom in Phuket's economy.
According to a survey by Ctrip.com, China's leading online booking agency, Hong Kong was the top destination for Chinese travellers, with Phuket second. Considering that Hong Kong is actually part of China, that puts Phuket in top position as an overseas destination for Chinese holidayers.
Russia, meanwhile, is also threatening to overtake Australia as Phuket's second prime source of tourists. One reason for the dramatic increase in numbers is simple. The severe winter weather in Europe, notably Eastern Europe, has shaken up many people and spurred a desire to relocate to safer, better homes.
The busiest time is between October and April when the weather in Europe is really cold. Previously, Russians were visiting places such as Turkey and Egypt in greater numbers, but due to the political unrest in those areas, and with the cost being about the same, many have turned to Phuket.
Another reason for the shift is that it's never been easier for Russian and other international tourists to get to Phuket. Many charter airlines now run direct flights between big and small cities in various parts of the world to Phuket.
The first Russian private airline, Transaero Airlines, has launched scheduled flights from Moscow and St Petersburg in Russia to Phuket airport. Next season, there will be more direct flights to Phuket from approximately 15 cities from Russia.
There are currently about 10 cities in mainland China that have direct flights to Phuket. Besides Beijing and Shanghai, these include Chengdu, Chongqing, Kunming, Nonbo, Taiyuan, Wuhan and Xian.
The island has found great success with the increasing number of direct flights. Phuket is abuzz with talk of all these new tourists. While some ultra-wealthy Chinese and Russians are regular visitors to the island, the new wave of travellers are mainly lower middle class.
And so, even though the number of tourist arrivals to Phuket has risen sharply, the total revenue of many shops along Patong, Kata and Karon beaches remains about the same as these tourists tend to come on package tours and are known for spending hardly any money outside their nearly all-inclusive packages.
The first 10 months of last year proved that Phuket is successfully gaining an increased tourist share. The emerging markets are Middle Eastern, up 63.2% from a year earlier, Asian (up 41%) and Russian (up 14.5%).
Nevertheless, the hotel market did not grow strongly as impacts from the sluggish global economy are still being felt. The market was mainly supported by Asia-based purchasers who are less likely to be influenced by the debt crisis in European countries.
Patong is an area that is attractive for Chinese visitors since the location is convenient and full of facilities such as retail outlets, nightspots and restaurants.
In order to attract even more visitors, many infrastructure development projects are being considered, as it is to everyone's advantage that Phuket tourists enjoy as many choices as possible in terms of entertainment and convenience:
- The Phuket light rail and transport network.
- A Patong tunnel, in which the Chinese government is reportedly prepared to invest as part of its promotion of mass transit and infrastructure on the island.
- A plan for another major water park in Patong, on half of the 20-rai site owned by Chinese entrepreneurs down the hill near Nanai Road.
- A new commercial centre for the Laguna Phuket entrance. Work on the community mall, Boat Avenue, is already under way and will be completed in early 2013.
- The development of Phuket Deep Sea Port: The project envisages the addition of two berths with access bridges, increasing total quay length to 420m and adding a single-storey 900 square metre passenger terminal that would have a duty-free store, an immigration check, customs and a quarantine area, restaurants and shops.
Driven by bright prospects and spurred by growing international visitor totals, hotel performance during the first 10 months of 2011 recovered as emerging tourist markets replaced the US and European markets.
With Asian economies booming,it is forecast that Phuket will be full of tourists all year round and we will also see the Phuket property market pick up within this year.
- Risinee Sarikaputra is associate director of Research and Valuation, Knight Frank Thailand, email email@example.com. This column first appeared in the Bangkok Post and was republished with permission.