BRITISH INTERNATIONAL SCHOOL, PHUKET
BRITISH INTERNATIONAL SCHOOL, PHUKET
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Silver linings tempered by cautious optimism

Silver linings tempered by cautious optimism

PHUKET: Silver linings about the immediate future of Phuket’s tourism and property industries have been tempered with some cautious optimism by tourism and property industry experts, who believe the return of tourism will be more gradual than exponential even with the reopening of the country to vaccinated tourists without quarantine on Nov 1.

tourismpropertyeconomicsCOVID-19
By The Phuket News

Saturday 23 October 2021, 06:24PM


The panel of expert speakers, from left: Matthew Barclay, Australian Consul-General in Phuket; Sumi Soorian, Development Director at Phuket Hotels Association; Shaun Stenning, CEO of 5 Star Marine; and Stuart Reading, Head of the Group Property Development and Senior Vice President at Banyan Tree. Photo: Jason Beavan

The panel of expert speakers, from left: Matthew Barclay, Australian Consul-General in Phuket; Sumi Soorian, Development Director at Phuket Hotels Association; Shaun Stenning, CEO of 5 Star Marine; and Stuart Reading, Head of the Group Property Development and Senior Vice President at Banyan Tree. Photo: Jason Beavan

The message came at the Joint Chambers Phuket Business Briefing “What’s Ahead - Phuket’s Plan for Kickstarting the Economy”, led by the Australian Chamber of Commerce, held at Boat Lagoon Marina on Wednesday night (Oct 20).

The event, attended by Boon Yongsakul, the Deputy Managing Director of Boat Lagoon Marina, was sold out with 80 people in attendance.

Matthew Barclay, Australian Consul-General in Phuket, marked how fast the tourism situation was changing, and confirmed that the Australian state of New South Wales would not require any quarantine for Australians returning home from Nov 1.

“We are already seeing early signs that airlines will re-engage with Australia and that Australian airlines will re-engage with Phuket and Southern Thailand very soon,” he said.

“It was very surprising to see that THAI Airways announced a couple of days ago with very little fanfare that direct flights to Sydney were to resume 1st November and one of those flights will be Phuket to Sydney starting mid-December, taking advantage of the festive season there. So these are really positive signs,” he added.

Mr Barclay pointed out that the less-than-expected response to the reopening of travel between Australia and New Zealand earlier this year indicated that Australians were being cautious in travelling abroad.

“I think what we’re seeing is that Australians want to take tentative steps before they head back overseas. They want to see the system work, and I think that is something that is really good for Phuket,” he said.

“We’re talking about plans to kickstarting Phuket’s economy, the most important thing here is that 85% of Phuket’s economy is tourism. It goes without saying, Phuket is standing out in the crowd when it comes to Australian travel destinations. 

“Phuket with the Sandbox and the systems they have put in place, and the vaccination rates which are phenomenal. It has to be one of the most vaccinated places on the planet

“Phuket is promoting itself not only as a travel destination, but also as a COVID safe destination. There really are very few parts of the world that have put in place the systems that Phuket has,” Mr Barclay noted.

“We heard some people saying, ‘They haven’t hit 100,00. They haven’t hit the targets they set. Honestly,  I think the system itself is a success here, and I think that’s the selling point, and that’s something that no other part of the world has that at the moment. We literally have places like Langkawi, Bali, looking to use that model,” he said.

Mr Barclay also pointed out that many Australian business people stood to benefit from the official Phuket economic strategy GEMMMSST (Gastronomy, Education, Medical and Wellness, Marine Tourism, Sports & Events, Smart City and a Tuna Hub).

“Many Australian interests could easily successfully engage in developing those industries to broaden Phuket’s economic base,” he said.

“Phuket is coming out of the far side of a pandemic. Realising that having 85% of your economy geared towards tourism is not a viable long-term plan, considering this will not be the last global shock that we will go through,” Mr Barclay added.

“The economy in Phuket last year shrunk by 83%. A lot of you were for the tsunami; of course the human cost was horrific, but the economic cost was a contraction of 15% of the economy.

“Recovering from the pandemic will take years. I think there will be a lot of risk aversion. But I think that if Australian business can play into those sectors, I think we could be set for success.

There are a lot of reasons why those sectors will be a success,” he said.

“The headline statistic that I like to tell people looking at investing in Phuket, In 2019, before the pandemic, Phuket was the 14th most-visited city on the planet. If you had a platform that was the 14th most-visited city on the planet, what could you do with that? What kind of sectors could you project? What kind of services could you base here, what kind of services could you hub out to?

“We are sitting at a place that is at the crossroads of the world. We are within seven hours flight to probably about 80% of the world’s population,” he noted.

SLOW TRAIN COMING

Sumi Soorian, Development Director at Phuket Hotels Association, reported that the hotel industry in Phuket, among the hardest hit by the travel bans to counter the spread of COVID-19, were grateful to the Sandbox scheme for providing “a lifeline” to the industry.

“Although Sandbox numbers were not as high as we anticipated, they are rising – they have been a lifeline to Phuket. The hotel industry has been hit quite hard,” Ms Soorian said.

The focus of talks among the industry is that tourists are looking for safe places to visit, a criteria that Phuket is matching well, Ms Soorian noted.

“While Bangkok was shut down by COVID restrictions, we saw a rise in the number of visitors coming to Phuket, where the restrictions are bearable,” she added.

“in October we still expect a slight decrease in the number of arrivals, but we have a higher forecast for November and dDecember onwards, as Europe reopens

“We are seeing a lot of snowbirds making bookings. It will be a ‘mini high season’, not as high as anticipated, but it is rising. The number of flights and the number of destinations [source markets resuming travel] are increasing. These are positive signs of the industry coming back again,” Ms Soorian said.

“Phuket is on people’s minds. There is pent-up demand. The COE will be removed, and there is a lot of interest in Phuket as a safe destination. We have come out as a role model. The Sandbox is a success, and the country is confident to open up to other cities [to tourism],” she noted.

While hoteliers are currently looking at Russian, Australia and Singapore as source markets, tourists from China are not expected to return in any significant numbers until the first quarter or second quarter next year, after Chinese New Year, Ms Soorian said.

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“With India, we are getting a lot of enquiries through DMC groups [tour operators] and clients, especially as families want to come and discover Phuket,” she added.

“In short, the forecast is looking good. Next year I think will still be a recovery period for hotels but possibly 2023 we’ll have more stability in the industry,” Ms Soorian concluded.

LESSONS LEARNED

Shaun Stenning, CEO of 5 Star Marine, pointed out three key issues learned through the COVID crisis over the past 18 months that Phuket’s marine industry will benefit greatly from, if they put old habits behind them and move forward.

Mr Stenning delivered three key points: a need to focus more on domestic travellers as a survival and growth strategy shifting away from over-reliance on international visitors; a need for clear coordinated rules for conducting tours to neighbouring provinces Phang Nga and Krabi; and a clear shift away from the volume of mass tourism of the past.

Mr Stenning strongly pointed out the serving domestic tourists was vital for local businesses to survive during the pandemic.

“If we continue to keep Phuket beautiful and the islands beautiful… If we can do that, then the domestic market will remain interested. If the domestic market sees the international market return in a way that is not sustainable, they will not come because it is not beautiful anymore,” Mr Stenning cautioned.

“If we can solve those three key things, I think we can get to a point where we can survive a pandemic again, because we can fall back onto these three mainstays of our industry,” Mr Stenning said. (See full story here, ‘We can’t go back to our old ways’)

PROPERTY SHIFT

Stuart Reading, Head of the Group Property Development and Senior Vice President at Banyan Tree, also pointed out how well Phuket, and Thailand, was coping with allowing arrivals into the country, notably in comparison with Australia.

“Australia feels like seven different countries because Australia has seven different states and each state is a law unto themselves,” he said.

“It’s been a pleasure coming back to Phuket and do the Sandbox, because that’s been a doddle. Coming back to Thailand and doing quarantine in Bangkok has been a lot easier in Australia, where it is vastly different. I think Australia can learn a few things from the way things are done in Thailand,” he added.

“The Phuket Sandbox has actually been an international success for other places to follow. I think we can all learn a lot from that.”

Touching on key data points, Mr Reading pointed out that tourism is the mainstay of the economy in Phuket, but also a key driver of the real estate market in Phuket as well.

“The resort real estate market in particular relies on a lot of tourists coming in,” he said.

“They become regular visitors. They enjoy their stay here and consider a second home, a holiday home or an investment home, or relocate here and make it their primary home.

“In terms of airport arrivals, pre-COVID the preceding three years 2017-2019, about 10 million people arrived through the international airport [each year],” Mr Reading said.

“That obviously dropped off significantly in 2020, to about 2mn, and that was mostly the result of people arriving in the high season in the first first quarter last year.

“The first half of this year, less than 1,000 people made it to Phuket,” he said.

“We have seen a big rebound through the Sandbox in Q3 this year, with about 40,000 people coming to Phuket,” he added.

“Looking at the property sector, pre-COVID, annual demand was about 2,000 units per annum. That demand was probably 75-80% condos, because after the GFC [Global Financial Crisis] there was a big demand shift to condo developments because of the affordability of the emerging middle class, particularly among the countries and economies within Asia,” Mr Reading explained.

“We have seen demand during COVID significantly drop off. Demand last year was about 300 units, a drop off of about 80-85%, similar to what we have seen in the hotels. And the way it is tracking for the first half of this year is quite similar,” he continued.

“The impact on the Phuket property market has been just like with hotels. We all rely on the international market, and we had to pivot quite quickly; we had to pivot toward domestic markets as well. That has been a big change in the mindset,” Mr Reading said.

“Similar to the hotel side, There has been an over-reliance on two key source markets into Phuket,” he admitted.

“A lack of diversification has seen 50-60% of business for most of the property sector as well as the hotels coming from China and Russia. I think that is another big thing which is forcing us to rethink our business strategies. We have to be more diversified. We can’t just rely on those two key markets, because if something happens to those key markets, there is obviously a flow-on effect to us,” he said.

“Since the pandemic, really no new projects have been launched, and a number of property projects have been suspended. Some off-plan projects have already collapsed,” he added.

“Another big shift is that pre-COVID a lot of condo properties for sale had an investment focus with guaranteed returns. I think that will shift. I don’t think recovery in the hotel sector will be exponential. I think it will be very gradual. There will be a lot of pressure on rates. They’re going to have to get the demand first before they can start to increase rates,” Mr Reading noted.

“That’s going to make it very difficult for property developers who are providing an investment-focussed real estate proposition to satisfy the consumer,” he added.

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Christy Sweet | 24 October 2021 - 02:08:27

Yet about a mile north in Layan 3 projects have launched   recently- and um..where are their masks? 

 

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