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PSU study brands Phuket economy at ‘tipping point’

PSU study brands Phuket economy at ‘tipping point’

PHUKET: A study by the research department of the Faculty of Hospitality and Tourism at the Prince of Songkla University (PSU) Phuket campus has found signs that Phuket's economy is changing with the research director branding the island’s economy as at “tipping point”.

By The Phuket News

Friday 13 December 2019, 01:38PM

The study results were announced by Dr Chayanon Pucharoen, Associate Dean for Research and Graduate Studies at PSU Phuket’s Faculty of Hospitality and Tourism yesterday (Dec 12).

“Our studies have recently found quantitative signals which raised questions about the sustainability of growth in one of the most promising economies in Thailand, Phuket,” said Dr Chayanon, who holds a PhD in Economics from Chulalongkorn University.

“Throughout the last decade, Phuket economy has grown at the average pace of 6.7% per year, which was continuously higher than the nation’s average GDP growth.

“However, the concerns about province’s prosperity have become widespread during the last year,” he added.

Dr Chayanon explained that recent data has shown that the number of Phuket job vacancies decreased for the first time in the past three years (quarterly basis year-on-year comparison) – only in the third quarter of 2019, job vacancies plummeted by 24.5%.

“In addition, Phuket’s overdraft figures, which are an extension of funds for business, increased by 6% in the latest quarter.

“In terms of consumption, recent statistic figures also reveal a slowdown, for example, negative growth rate in Phuket new passenger-car registration is observed for the first time in past five years,” he added.

“However, the economic stagnation has not only been an issue in Phuket. The 2019 Bank of Thailand (BOT) nationwide survey indicates a deterioration in income for overwhelming number of respondents, when compared to the 2018 survey figures,” Dr Chayanon pointed out.

In a written statement, Dr Chayanon noted, “Tourism is the main (and perhaps only) engine that drives Phuket economy. When observing the (relatively) real time passenger arrival data, a growth of 4% (Jan-Nov) can be noted. This makes the question of what is actually happening to Phuket’s tourism in the year 2019 even more puzzling.”

Dr Chayanon identified three issues in particular that he said “might” provide some clarity on Phuket’s economic slowdown. He noted in his presentation the following observations, and recommendations:

Thai baht appreciation

Dr Chayanon explained that the study found that 74% of Phuket’s tourists are international tourists, particularly from China and European Union.

With the recent baht appreciation, the purchasing power of the majority of Phuket’s tourists declined. The deterioration rate is as much as 11.13% (y-o-y) for tourists from Euro-denominated nations and 10.53% (y-o-y) for mainland Chinese tourists, he said.

Phuket Hospitality Challenge 2020

“Although an updated figure of spending per tourist has not yet been released, we anticipate a waning figure, due to a decline in price competitiveness of Thailand’s offered products and services.

“Conversely, the purchasing power of Thai travelers due to the baht appreciation increased, encouraging Thais to spend their holidays abroad rather than on a domestic trip,” he explained.

“Our recent data indicates that even the ARR and occupancy rates of well-established luxury hotel brands in Phuket declined by 7% and 10% y-o-y respectively,” Dr Chayanon noted.

Dr Chayanon gave the recommendation that local operators’ pricing strategies not be based on baht-denominated value alone, and that entrepreneurs should rather consider changes in purchasing power of their main customers.

Digital Disruption and a new landscape of competition

Digital transformation has increasingly affected almost every player in Phuket tourism industry, Dr Chayanon also explained.

Accommodation expenditure accounts for the largest portion (28%) of average tourist’ spending. Digital middlemen had made their mark on Phuket’s accommodation industry many years ago in the form of OTA, he added.

“Our 2018 survey found that 64% of Phuket Gen Y tourist booked their room through OTAs. The new online platforms such as Grab, Klooks, etc. progressively play a role in other categories of tourists’ spending as well, such as transportation (11.51%) and entertainment & tours (21.91%),” he noted.

For this issue, Dr Chayanon gave the recommendation that tourism entrepreneurs adjust their business practices to be able to compete within the new landscape of competition and tourist behaviour.

Phuket as nature tourist destination?

Dr Chayanon pointed out that Phuket has been promoting its natural resources to attract an inflow of tourists for over three decades, but explained that promotions of the natural attractions had presented a distorted image to the public.

“Our recent big data analysis had found that the words associated with Phuket’s natural attractions; for example, beach and water were more frequently mentioned with negative, rather than positive connotations. Simultaneously, recent studies revealed the rising of creative and cultural tourist tourism images of Phuket,” Dr Chayanon said.

To this Dr Chayanon called for integrated and significant efforts from all stakeholders be concretely set with the aim to improve and broaden Phuket tourists’ experience while holidaying on the island and the surrounding area.

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GerryT81 | 15 December 2019 - 16:48:34

I try to imagine if an expat like the serial poster would have a seat at that committee .Worst case scenario ! If anyone would listen to his advises,Phuket would probably more look like a home for the elderly and being the most stuffy place on planet earth.

Just a reminder to all people posting comments on any stories here... We will try to allow comments that reply to a previous comment posted...

Kurt | 15 December 2019 - 10:51:38

And:  The Tipping Point is not now. That was already some time ago! Before the present Phuket water crisis started.

Kurt | 15 December 2019 - 10:47:27

Local thai top Officials just sit temporarily on Phuket until they going to retire or shift to another province. Expect nothing more from them than local ceremonial doings. As Phuket floats on foreign tourism set up a advice committee of expats  ( european, chinese, russian, indian, australian, etc.) and take advices in consideration to lift the present doubtful  image of Phuket.

Kurt | 15 December 2019 - 10:36:03

Dr Chayanon's observations/recommendations were well noted. Point is: What they go to do after this noting down? Actually, as Phuket floats just on tourism only, the question to answer is just: "What does the tourist want, that Phuket has to do to lift the present doubtful image". We all know the answer, but local Officials who function to short time on Phuket are not interested in i...

Shwe | 14 December 2019 - 06:25:53

over developed and over priced, Beach restaurants mostly gone, no sunbeds or umbrellas, bad attitude from locals,  Thailand is now the Land of Snarls. I would not recommend any of my friends to visit Phuket


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