Damage Done: Phuket’s tourism industry will take years to recover, say experts

Worse, if a moratorium on loan repayments for tourism businesses is not extended beyond the end of this month, the damage will deepen, adding even more years to the expected time frame for the industry to recover, he said.

“We have shouted this and shown the extent of the damage done to the industry for months, and yet still nothing has been done,” Mr Thanusak said on Monday (Oct 12).

The procession of high-end officials, including Deputy Prime Minister Jurin Laksanawisit, arriving to see firsthand and report the state of the island’s economy back to Bangkok has also failed to provide relief, he added.

However, Mr Thanusak noted that he had been informed that Prime Minister Prayut Chan-o-cha is expected to visit the island himself in November.

By that time, the number of businesses that will have shuttered permanently will start to increase rapidly, Mr Thanusak said.

At last report, Phuket Governor Narong Woonciew admitted that an estimated 70% of all tourism businesses on the island are already closed “temporarily”. Mr Thanusak expects that number to change dramatically.

“We are on the verge of collapse. We need actual help fast,’ he said.

Mr Thanusak called for the government to extend the moratorium on tourism business loan repayments by at least two to three years, and for the interest rate on such loans to be capped at 2%.

“We did this after the tsunami [in 2004], and it worked. The tourism industry was able to recover within a few years, and by last year was generating some B400 billion for the national economy,” he said.

With no action taken to help support the industry, banks will foreclose on their loans and seize properties, he said, adding that this will only add more years to the time it will take for the industry to recover even if new players enter the market and snap up seized properties sold by the banks to recover their losses.

Also needing urgent attention are smaller tourism operators who have outstanding personal debts that they are unable to repay.

“This group is a big group in the tourism industry, and with no tourists these people have no way to repay their loans,” he said.

“If these people do not receive assistance, they will lose their credit rating, meaning that they will not be able to launch new businesses when the industry does start to recover. That means a loss of many experienced operators in the industry, and that will directly affect Phuket’s ability to relaunch as a competitive tourism destination,” he added.

Bhuritt Maswongssa, who serves as the Southern Thailand representative on the Tourism Council of Thailand (TCT), supported Mr Thanusak’s call for financial support for the island’s tourism industry, and agreed that it already will take the island several years to recover.

“The government must ask for cooperation from the banks to give and guarantee soft loans with 2% interest, and interest-free periods of at least three years, so that there will be more employment and the tourism industry can keep going,” Mr Bhuritt told The Phuket News.

“Without these soft loans, the result will be a chain-reaction collapse in the tourism industry. Not only hotels, but also tour operators, restaurants, souvenir shops, and entertainment venues. So these businesses need help as fast as possible,” he stressed. 

Mr Bhuritt added that he could not foresee the island’s tourism industry recovering on its own until the number of hotels, resorts and other tourist accommodation venues started experiencing about 50% occupancy.

“And that will take at least a few years, even if the businesses start to receive help soon,” he said.

Dr Chayanon Pucharoen, Associate Dean for Research and Graduate Studies at the PSU Phuket Faculty of Hospitality and Tourism, on Monday (Oct 12) told The Phuket News that Phuket was on track for his “worst case scenario” of the COVID-19 crisis costing Phuket more than B127 billion in lost revenues.

Dr Chayanon presented his prediction at a meeting at Phuket Provincial Hall attended by the-then Phuket Governor Phakaphong Tavipatana on Apr 28.

“Our initial research estimated that Phuket could lose up to B127bn in tourism revenues from February to July as a result of the virus outbreak,” Dr Chayanon said at that time.

However, on Monday, he declined to offer a revised version, saying “My prediction has not changed. Nothing has changed for me to revise that estimate.”

Of note, Phuket Governor Narong Woonciew as early as Sept 8 admitted, “The efforts to bring foreigners into Phuket is for the benefit of the nation and for Phuket province. Phuket is getting ‘sick’ now, and the revenue generated from the tourism industry, about B400 billion a year, has all disappeared,” he said.