Almost half of Phuket’s hotel projects delayed

PHUKET: Up to 48 percent of all new hotel developments in Phuket are experiencing major construction delays due to the global economic downturn and concerns over Thailand’s political stability, an authoritative report has found.

However, according to the Phuket Hotel Market Update Mid-Year Report (Click here to download the full report) released by respected hospitality consulting firm C9 Hotelworks, the slowdown on hotel construction sites has not dented developers’ enthusiasm for entering the accommodation market on the island.

C9’s Managing Director Bill Barnett said that despite the delays, new developments continue to enter the stream, with 38 properties offering 6,231 rooms at various stages of advancement in the construction cycle.

“Non-traditional products, such as hotel-managed villas and condos now represent 34% of the upcoming inventory,” Mr Barnett said.

According to the research, first-half trading for 2009 indicated that tourist arrivals declined by 14% but a combined luxury/upscale/mid-scale occupancy rate of 60.4% produced an average room rate of USD141.

The report also noted that rate wise, branded hotels outperformed non-branded properties by 33.7%, although the non-brand sector outperformed the brands on occupancy by 12.4%.

“Looking forward, short-term trading will focus on occupancy at the expense of long-term rate strategies,” said Mr Barnett.

“Cash flow is a key underlying consideration in this market. Most hospitality assets are carrying low debt ratios. Defying the trends are the luxury high-end tier properties, which operate in a favorable supply and demand segment, and budget-tier hotels who have captured changing demographics, are experiencing business from price-conscious travelers.”

The report concluded that Phuket’s long-term outlook remained positive due to brand concentration, growing airlift and infrastructure improvements. However, recovery in 2009 has effectively been written off, with prospects pushed into 2010.