Best Year Ever for Phuket Visitor Arrivals

Phuket passenger traffic smashed all previous records with 3.5 million arrivals during 2010 - or 22% growth over the previous year - with new markets such as Russia and China emerging as the major drivers of growth.

Consultancy firm C9 Hotelworks' latest market research report, 2010 Phuket Hotel Market Update indicates annual tourism figures soundly recovered from early political angst to hit new highs.

C9 Hotelworks Managing Director, Bill Barnett, said both Russia and China have emerged as star performers, with charter and direct flight capacity fast tracking growth.

"The departure of legacy geographic markets has come at a cost with shrinking average room rates," Mr Barnett said. "While new replacement players have become dynamic revenue sources, the shift in arrival markets continues to baffle hotel strategy sessions into how to capture these new revenue sources."

Data from the report highlights market capitulations and reactionary pricing resulting in a market-wide occupancy increase of 4%, offset by a 3% fall in room rates.

During 2010 there were new hotel openings adding 1,389 keys, reflecting an increase of 3.2% for Phuket's existing 43,036 rooms registered in accommodation establishments.

Mr Barnett added the real storyline remains airlift as traffic surpassed 2007's peak year by 19% with growth of 28% over 2009. China sprouted wings, ranking second overall among international source markets.

"Patong is experiencing wildfire growth and a transforming change is underway for the central entertainment district where projections show more than 50% of new hotel supply will be massed over the next five years," he said. "This evolution will see a destination emerging within a destination for the growing price sensitive mass tourism market ... Thai developers increasingly dominate the overall hospitality investment horizon mainly in the mid-market segment, contributing 77% of new projects in the pipeline."

Umbrella future development for Phuket sees 5,749 more rooms, representing a 12.9% increase to existing supply. Delayed openings from 2010 pushed into 2011 of which 723 keys will contribute to total of 1,472 rooms entering supply this year.

"But it's not all blue sky for Phuket's future," Mr Barnett added. "Supply outpaced demand for the first time in a decade which undermines market stability. Key storylines for the year will be hotel transactions and increasingly vocal Phuket business owners and residents asking the poignant question – is more better?"

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