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Soaring Airline Arrivals as Phuket Leads Thailand's Tourism Recovery

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Passenger traffic through Phuket International Airport surged 28% in the first half of this year compared to 2009, marking a dramatic recovery for the destination as it leads Thailand's tourism revival and a return to the boom year of 2007.

According to the mid-year edition of Phuket Market Update, a research publication released by hospitality consulting firm, C9 Hotelworks, the road to recovery has firmly begun with higher hotel occupancies and a "game changing" shift in tourist profile that is driving growth.

C9 Hotelworks Managing Director Bill Barnett said one clear indication of the bounce back is by hotel wide performance statistics, with occupancies rising from 61% in 2009 to 70% in the same period of this year, although this did come at a cost of average room rates - down 9%.

But the longer term implications of the shift away from European visitors looks likely to have a more telling impact on the destination as it once again delivers the pre-economic crisis levels of 2007.

"Market dynamics are evolving with a game changing shift in tourist profile from a historical Eurocentric dependence on long haul European visitors to short haul Asian travellers," Mr Barnett said. "Driving this trend is the weakening of the euro and pound sterling which have jolted market sentiment and transformed travel patterns to the resort island destination."

According to figures revealed in the report, 2009 registered a jump in arrivals by 1.74 million. However, when comparing year-on-year data for the past five years, passenger volumes have now hit levels of those back in 2007 or the pre global and economic crises period.

"There could be some bumps in the road going forward - but the hotel pipeline is still showing development resilience and investment confidence with the addition of 4,538 new rooms or an 11% spike over the next four years," said Mr Barnett. "A concern on oversupply exists, though this could be cushioned by induced demand and larger trading volumes."

Bill Heinecke, Chairman and Chief Executive Officer of Minor Group International - one of Thailand's largest upscale hotel and resort owners and operators through the Anantara brand and its ownership of the JW Marriott in Phuket – is also bullish for the hospitality industry on the island after recent local and international incidents had stimied growth.

"The latter part of this year's third quarter is seeing positive pick up in the market, which is a good sign given that it is traditionally low season on the island," Mr Heinecke said. "Following recent events and low season demand ... we are delighted to see that we have better results than last year. With regards to the fourth quarter, we have already seen positive signs for strong bookings coming in for October, November and December, so we remain positive that there will be 15% year-on-year growth."

Mr Barnett added that the effect of the political crises in Bangkok during the months of April and May caused a 38% drop in the second quarter of 2010 compared to the first quarter – but the impact on hotels was minimal as this came on the heels of the tourist high season coupled with increasing direct international flights that allow door-to-door access to the island.

"Gazing into a crystal ball the key storyline of infrastructure enhancements and increasing airlift aimed at supporting a mass tourism model though looks set to create some controversy when eyeing Phuket 2.0 and the direction the next upward cycle will take forward," Mr Barnett said.

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