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Phuket’s wake-up call. The hard work starts here.

Tim Newton

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OPINION

More hotels, a changing tourist mix, an exodus of expats and a decline in tourist numbers. Despite the new Tourism and Sports Minister pumping up the local tourism tyres during his visit last weekend, there’s a lot of hand-wringing and the sound of closing shop shutters around the tourist island of Phuket.

To make things more complicated the situation is not consistent in all areas of the tourism industry on the island. Some hotels still report good occupancy numbers although almost everyone is admitting they’re discounting rates to keep the tourist cash register ringing.

There are really only two conversations in Phuket.

  1. The tourists are coming
  2. The tourists aren’t coming

Everyone has an opinion and there is broad, but mostly unfounded, suspicion in the TAT’s statistics. Keyboard warriors continue to believe their own opinion and what supports their narrative no matter how many facts anyone throws at them.

There is a sense of mild panic but most of it is unwarranted, in the long-term.

Statistically, and historically, things really aren’t THAT bad. In a worst case scenario – say the tourism arrivals were really down 30% – then we’re back to tourism numbers of 2016 when things were considered OK. 2016’s tourism numbers were more than four times the numbers of a decade before. So the flight numbers and passenger arrivals have been, generally, on the up and up for two decades. It’s been a good run and the island has morphed from a tropical destination into more of a tourism business hub with a lot of investment and new money being spent in Phuket.

Away from tourism there’s also an anecdotal decline in expats living on the island, particularly in the English-speaking nationalities from UK, Australia, America and South Africa. Speaking to a number of Embassies and Honorary Consulates in the past week they’ve shared their feeling that the numbers have been declining without providing specific figures.

Any hard times in the tourism industry impacts everyone on the island – it’s a holiday island and has little to fall back on in the way of other industry or manufacturing. There will be fewer jobs for expats, locals and the people that have moved from other parts of Thailand to enjoy the fruits of Phuket’s tourism rise.

Bill Barnett from c9hotelworks.com, who lives on the island and has been following tourist, airlift and hotel stats for two decades, says the drop of tourism for a few months this year is on the back of big growth in the early part of last year and the sense of ‘panic’ is largely unwarranted.

“Hotel and tourism remain cyclical businesses and, in looking at declines now, we have to look at first half of 2018 that was a high water marker, so the bar is raised exceptionally high.”

“Phuket despite being an island is being effected by a larger picture. The global Chinese slowdown is not just about the boat sinking but the US-China trade war and the slowing Chinese econonic picture will impact the entire world – we are just one piece of a much larger picture. Nothing grows in straight lines and what is encouraging about Phuket longer term is geography, airlift and the broad tourism product. Every road has bumps in it and we are hitting some this year.”

“But more than 15,000 new keys (hotel rooms) will come on the market within the next five years. The surge in room numbers is not only hurting the revenue of hotel operators but also causing damage to natural resources.”

Meanwhile an anonymous, prominent Phuket hotelier, who writes articles about the island’s hotel industry for The Thaiger, says that the signs are quite good for the coming months.

“It has been very positive to hear that from mid-August and especially September figures are now moving nicely with a good pick up of reservations currently on hand. For example, our resorts are now already showing ‘on the books’ figures higher than we ‘closed’ the month of September in 2018 which is very encouraging to see.”

“Some of our Chinese partners have been asking for more rooms as their holiday season starts which is very positive and more traditional ‘low season’ tour operators’ supporters too.”

But even the Thai Hotels Association note that the numbers weren’t good for Q2 this year following a reasonably good New Year and Chinese New Year.

“Average room rates for the first six months this year dropped 5% compared with the same period last year.”

“From April to June, the rates slid further by 8%, worse than expected as the Songkran holidays did not bring a respite to the province.”

Phuket's wake-up call. The hard work starts here. | News by Thaiger

But the situation is sure to remain ‘lumpy’ with a continual evolution in the tourism demographic, much of it more to do with world trends and global economics more than what individual businesses or even the TAT can do to drive extra tourist arrivals.

For now it is up to local businesses to stop assuming the tourists are just magically going to turn up and be pro-active in promoting their businesses. Checking your instagram posts and your Facebook feed, sitting behind the counter, isn’t going to help the situation.

When the going gets tough, the tough have to get going, or shut up shop. The slight drop in tourism in Q2 deserves justifiable concern but business owners, tour operators, island and tourism officials need to accept and embrace the changes.

So too, the ingrained locals hunkered around Fort Bangla Road who still think all the tourists need are expensive drinks and girlie shows. That this hub, and a lot of Patong, is having a difficult year should come as no surprise as the rest of Phuket has blossomed in the past decade providing a lot of competition for the party town and are chasing the 2019 tourist, not the ones from 1990.

There are few islands with such good beaches, reasonably good infrastructure, excellent hotels and tourist options as Phuket, in the region. And the island connects to Krabi, Phang Nga, Khao Lak and Krabi – all with growing infrastructure and potential.

Phuket will continue to thrive, mostly through the stubborn resolve of the people that live here and rely on the island’s success for an income.

This year’s ‘bumps’ have been a wake up call that the tourists, and expats, won’t keep coming by waiting at the doorway or praying at the temple. The hard work starts now.

Phuket's wake-up call. The hard work starts here. | News by Thaiger

 

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Tim Newton has lived in Thailand since 2012. An Australian, he has worked in the media, principally radio and TV, for 41 years. He has won the Deutsche Welle Award for best radio talk program (public radio Australia), presented over 11,000 radio news bulletins, 3,900 in Thailand alone, hosted 950 daily TV news programs and produced 2,100 videos, TV commercials and documentaries. He also reported for CNN, Deutsche Welle TV, CBC, Australia's ABC TV and Australian radio during the 2018 Cave Rescue and other major stories in Thailand. As founder of The Thaiger in 2016, Tim is the current CEO for company, based in Bangkok.

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