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Phuket RevPAR takes hit with source market transition

Legacy Phuket Gazette

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Phuket RevPAR takes hit with source market transition | The Thaiger

PHUKET: Differences in source markets and government spending have forced Bali and Phuket to take dramatically different approaches to adjusting to the recent tourism climate with regards to balancing occupancy and rates.

Hotels and resorts in Bali have taken a mostly unified approach by holding rates and allowing occupancy to dip.

In Phuket, however, even within market segments, a number of approaches can be seen, as some hotels and resorts drop prices to increase occupancy and others choose to hold rates relatively steady.

“Source markets for Bali are more widespread and are also different as they have traditionally been skewed to more domestic visitors than Phuket. They also have a lot more Australian visitors,” STR Global’s Area Director for Asia Pacific Jesper Palmqvist explained to the Phuket Gazette last week.

“I can think of two reasons for the rates holding in Bali as compared to Phuket. Firstly, Phuket is different because it has seen a dramatic shift from Russians to Chinese wholesale visitors – with the latter commanding a much lower rate overall. So it’s a simple demand/supply equation, and Bali has not seen the same shift.”

“Secondly, Bali is currently going through different dynamics, with less government spending on hotels in light of austerity measures, along with many new hotels opening. They need to be good at revenue management and should try to uphold rates for [the day] when demand starts to come back.”

After a shocking drop in occupancy in 2014, below 65 per cent, Phuket has quickly recovered in 2015, showing some growth on 2013.

However, despite the 2015 year-to-date data collected by STR Global showing a 7.3 per cent increase in occupancy and 7.4 per cent increase in demand over supply, revenue per available room (RevPAR) dropped by nearly one per cent.

“In terms of RevPAR, it is not always easy to make changes as a single hotel. When the overall tourism profile changes, you either decide to accept the majority of guests or you don’t,” Mr Palmqvist said.

“But we do see, of course, which hotels seem to attract what kinds of guests as well. By being diligent and skilled you can cover your bases better by widening your source markets and guests – more easily done these days using good data intelligence and online tools.”

“The challenge for Phuket could be the fact that it is primarily Chinese and Russians coming in, and then there is a wide gap down to the next source markets; there could be volatility in that.”
The diverse strategies being implemented should help mitigate some of that volatility to make Phuket, as a destination, stronger.

Nonetheless, given the drop in rates and the clear dominance the Chinese market is expected to have over the next several years, it will be very difficult to grow RevPAR in Phuket.

“Customers quickly get used to paying lower rates, which diminishes the value proposition of the property and also hurts the essence of the brand. I would not say this is happening to an extreme in Phuket – it’s larger forces at play here. The majority of hotels seemed to have managed it well so far.”

— Isaac Stone Simonelli

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

Continue Reading

Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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