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Phuket hotels make urgent plea for help, industry faces massive fallout from failure of domestic tourism

Phuket hotels make urgent plea for help, industry faces massive fallout from failure of domestic tourism

PHUKET: Phuket’s hotel industry is reaching breaking point and drastic economic support from the government is needed for it to survive the high season, said a release from the Phuket Hotels Association issued today (Sept 8).

By The Phuket News

Tuesday 8 September 2020, 01:17PM

In the wake of the controversial “Phuket Model” international travel reopening scheme, reality is biting back as hotels in Thailand’s leading resort island are unable to sustain operating viability based on domestic tourism, noted the release.

New research by consulting group C9 Hotelworks points to COVID-19’s crippling implications with airport arrivals plunging, the Phuket Model stuttering and 50,000 jobs expected to be lost if there are no overseas visitors this year, it noted.

According to the Airports of Thailand (AoT), passenger arrivals at the aviation gateway have plunged 65% year-on-year from January through July of this year.

What is clear is that the 86,000 rooms in Phuket’s registered accommodation establishments cannot realistically break-even or even be cash-flow positive with only domestic demand. This realistically could set the scene for 50,000 job losses in the hotel sector this year if there’s no support forthcoming or international visitors are not allowed in.

“One of the green shoots is the Alternative Local State Quarantine (ALSQ) program, with over 60 island properties applying. While this program is meant to emulate the ASQ program in Bangkok, given there are no direct flights to Phuket, the government needs wider support of a return of international travelers at a local level and implement inter-ministerial coordination before it could materialize. But this may take months,” the release added.

 Anthony Lark, President of the Phuket Hotels Association, which represents 78 hotels in Phuket said, “The math simply doesn’t work with single-digit occupancies being reported. No amount of induced local demand can prevent the dramatic continued loss of jobs and rapidly eroding financial crisis for owners and operators. We strongly advocate a safe, pragmatic, and strategic reopening for foreign travelers.”

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With tourism being the lead economic indicator in Phuket data newly released by hospitality consulting group C9 Hotelworks reveals the COVID-19 impact on the hotel development pipeline with 69% of hotels now being delayed or put on hold. Looking at the economic consequences, at the end of 2019, there were 1,758 licensed accommodation establishments on the island and today incoming projects stand at 58 hotels, representing a 19% rise in supply with 16,476 additional rooms planned.  

C9 Hotelworks Managing Director Bill Barnett said, “Thailand’s failure to relaunch overseas tourism creates a dangerously perilous scenario for Phuket’s hospitality industry. The domino financial impact is not only on hotels and the expanded tourism sector, but it suffocates the development pipeline. This will negatively trigger the erosion of jobs in construction, real estate, retail and ultimately be manifested in consumer credit defaults. The situation is bad, and likely to get worse, as operating hotels continue to incur losses day in and day out.”

In terms of updating the Phuket hotel situation on the ground, there continues to be much controversy and a lack of national and local consensus over the proposed “Safe and Sealed’ sandbox long-stay program. While a stark warning was issued last week by the Bank of Thailand (BoT) over the potential disruption to the heavily tourism-dependent country, the fate of Phuket’s coming high season remains very challenged, the release added.

Citing a way forward C9’s Bill Barnett commented, “Any reopening plan must not only be well planned but has to win the hearts and minds of the Thai people to see any chance of success. While the island may hold the keys to the Kingdom in leading a restoration of tourism, but the more critical issue is how hotels can fight for their lives in the current state of limbo.”

Speaking about Phuket’s current situation Anthony Lark added, “Firstly, greater proactive dialogue between the public and private sector has to be undertaken. We can’t simply say we are now in unknown territory forever. Steps must be taken and a single voice formed.

“Secondly, the Bank of Thailand (BoT) has to look at interim measures to assist hotels with short-term operating bridge loans to weather the storm and retain jobs. Tourism is a human endeavor and without protecting and nurturing our Thai workforce there will be no recovery.”

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LALALA | 09 September 2020 - 12:28:53

Big A...correct. What all this so called Experts say is common sense, maybe not in LOS though....and NO...i not feel for Phuket...maybe its Karma...after many years ripping of foreign tourists that is what they deserved.

CaptainJack69 | 09 September 2020 - 11:53:19

Who gives a damn about the "pipeline"? We've all been saying for years there's too much construction. Help tourism by stopping all construction now. Forget about new hotels and help the ones we already have. This development was unsustainable before COVID.

BigA | 09 September 2020 - 10:04:39

All this was to expect, we do not need a C9 or anybody else to explain ,so go on your reserve ,shrink and wait,sorry for those who lost there jobs,they also have to go on there reserve! thats  free enterprise !
Horst | 09 September 2020 - 09:23:03

I feei for you all, stay strong Phuket

cpfleger | 08 September 2020 - 21:30:19

Oh, how unexpected! Not!!! 
But hey, so many Thai experts praised "We travel together" - if just one of them has ever set a foot in the real world of Phuket or Koh Samui in terms of tourism impacted by Covid19?

ericphuket | 08 September 2020 - 19:17:21

Its clear as long as this incompetent goverment is in charge nothing will improve. 
Keeping the skies closed, being paranoia about covid and 2 weeks quarantine will just push deeper the Phuket economy and close the last 5% business who are open and struggle to survive. Every war has casualties and this should be accepted and not stopping from restarting the economy. 


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