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Chinese currency devaluation could shake Phuket

Legacy Phuket Gazette

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Chinese currency devaluation could shake Phuket | The Thaiger
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PHUKET: Leaders of Phuket’s tourism and property industries are uncertain what the impact of the yuan’s tumble this month will be, as tremors continue to be felt throughout the world.

A 138% surge in Chinese visitors during the first half of 2015 helped pave the way for the Thai tourism industry to bank more than 697 billion baht in total visitor expenditures, according to figures released by the Ministry of Tourism and Sports.

However, on August 11, the People’s Bank of China’s (PBOC’s) devaluation of the yuan caused the currency to fall to a four-year low, decreasing the spending power of its citizens abroad and raised fears of a global ‘currency war’.

The PBOC quickly moved to calm fears as stock markets around the world took a major hit.

“Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan,” the PBOC said.

Though the Chinese arrival and expenditure numbers look strong at the moment, officials are aware that the full impact of the Bangkok bombing and devaluation of the yuan may not be seen in the tourism and property markets for several months.

“I warn that China might launch another round of currency devaluation and that this sudden currency deprecation reflects a looming Chinese economic crisis that could be much larger than thought, and will have a greater effect on global economic balances,” Anusorn Tamajai, dean of economics at Rangsit University, told the Gazette.

“While China is struggling to maintain its economic expansion to prevent turmoil, the decision to use exchange rate policy by depreciating its currency is a means of exporting part of its internal problems to other countries for collective responsibility.”

Chinese visitors are the largest source of both tourists and expenditure for Thailand, including Phuket, totaling 4 million arrivals in the first six months of this year and representing an enormous number of room keys on the island.

Nonetheless, Bill Barnett, founder and managing director of C9 Hotelworks, explained that there will likely be little impact on hotel occupancy from the yuan’s fall.

“Thailand remains a short-haul destination for the Chinese market. We may see Chinese who once travelled long haul go to closer destinations such as Thailand. Location remains Phuket’s key advantage,” Mr Barnett said.

TheChinese market’s real impact in the last two years is driving room rates down with the pressure of mass market numbers.

“Room rates have been strongly impacted for the past 12-18 months by the Chinese movement, and we can expect this to continue. The key [for Phuket] is to find replacement markets, and despite growth in short-haul arrivals, and from some locations like Spain and South Africa, there is no major solution,” Mr Barnett said.

The Cabinet is already considering a bill to help combat cheap tour group packages, but this is not expected to negatively affect arrival numbers for Phuket, explained Santi Pawai, Director of the Phuket office of the Ministry of Tourism and Sport (MOTS).

“If Cabinet passes this into law, it will be a step forward for the tourism industry.”

Although the bill is designed to put an end to ‘zero baht tours’, which rely on mass tourism to be commercially viable, Mr Santi explained that it would not affect the number of Chinese budget tourists taking part in group tours in Phuket.

“Chinese companies are ready to pay a standard rate. However, Thai tour companies are constantly trying to undercut each other by providing cheaper and cheaper packages,” Mr Santi said.

“Smaller, less established companies will be the ones most affected by the bill.”

Kritchakorn Roongmong-kolnam, executive committee member of the Phuket Tourism Association, who oversees the Chinese market on the island, agreed that the bill would not have a negative impact on the tourism industry and that the devaluation was nothing to worry about.

“I do not think there will be any negative impacts on Phuket. This is a good situation for China to balance its currency, and it will be good for tourism,” Mr Kritchakorn said. “There was a previous devaluation of the baht, which caused the yuan to go up almost 20 per cent over the last two years. Now, the yuan has been decreased. It’s a good balance.”

Mr Kritchakorn said the devaluation was nothing compared to the drop in the Russian ruble, which saw an exodus of one of Phuket’s most important markets.

“We may see some changes in the long term, but at this point we just have to wait and see. It is too early to be concerned,” he said.

The local Tourism Authority of Thailand (TAT) director also said a ‘wait-and-see’ policy is best.

“At this point, the Chinese market has not changed here. There have been no cancellations or any other signs that should concern us,” said TAT-Phuket Director Anoma Wongyai. “It really is too soon to tell. It takes time for us to see the effects of something like this – for better or worse.”

A slump in the Chinese tourism market, which has yet to be seen, could be an indicator of changes to come in the property market, pointed out Mr Barnett.

“Summer months are the Chinese high season, followed by Chinese New Year, so the timing is disconnected,” Mr Barnett said. “It took six to eight months to realize the impact of the Russian debacle.”

Unlike Mr Kritchakorn, Mr Barnett said it was too early to tell whether or not the island will face something similar to what happened to the Russian market on the island.

“There is nothing comparable to China, so we are heading into unknown territory. While speculation is easy, it’s a wait and see situation,” said Mr Barnett.

The real worry is the domino effect the devaluation could have, pointed out Mr Barnett,

“You have to view the knock-on effect of the yuan issue on global currencies, as that’s the greater concern. Phuket’s Chinese property market is only a ripple in the stream, but if there is contagion to other markets, that’s a trigger,” said Mr Barnett.

“In the later part of the 2000s, the decline of the UK currency had a far stronger impact than the Global Financial Crisis, given the leveraging of that currency to a large catchment of property buyers.”

In fact, there are indications that devaluation might have a positive impact on the property market.

“There are signs that the move may spur other Asian countries to match this move. Given the impact on exports and those trying to match it, this could see the baht depreciate and create more value in the market for opportunistic buyers,” Mr Barnett said.

“However, in broad terms, events like this are generally not a good thing for investment sentiment in property,” he concluded.

— Chutharat Plerin

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

Thai Life

Happy Loy Krathong Phuket. Where to launch your krathong tonight

Tim Newton

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Happy Loy Krathong Phuket. Where to launch your krathong tonight | The Thaiger

Happy Loy Krathong Phuket. But this year authorities are saying ‘only floating Krathongs thanks’. No polystyrene, no steel pins – keep it natural and plant-based please. This year Loy Krathong in Thailand co-incides with the annual Halloween celebrations on October 31.

Authorities are also urging people to choose, or make, their krathongs using natural materials only. The latest craze for “edible” krathongs is also causing problems. Read about that HERE.

Loy Krathong is a festival celebrated annually throughout Thailand The name could be translated as “to float a basket”, and comes from the tradition of making krathong or buoyant, decorated baskets, which are then floated on a river. Loi Krathong takes place on the evening of the full moon of the 12th month in the traditional Thai lunar calendar so the exact date of the festival changes every year.

In Phuket, the Provincial Office says fireworks, fire crackers and sky lanterns are prohibited “for people’s safety” (but be assured there will still be a few sky lanterns seen flying off the islands beaches this evening).

 

Happy Loy Krathong Phuket. Where to launch your krathong tonight | News by The Thaiger

Loy Krathong is celebrated at many of the island’s popular waterways and at many of the beaches. Many hotels also host their own celebrations for their tourist customers. Here are a few of the locations you will be able to launch your own Krathong or buy one on site and watch families and couples launching Krathongs.

Popular locations in Phuket include…

• Saphan Hin Park Lake, Phuket Town

• Suan Luang Park (off Naka Market Road)

• Bang Wad Dam, Kathu

• The recreation lake near Ket Ho Temple in Kathu (The Thaiger ‘local’)

• Tin Mine Museum Lake on the Kathu back road, near BIS International School

• Nai Harn Lake and Nai Harn Beach

• Bang Maruam near the Alan Cooke Cricket Ground in Thalang

• Laguna (the main lake just inside the entrance)

• Just about anywhere along Patong Beach

Happy Loy Krathong Phuket. Where to launch your krathong tonight | News by The Thaiger

On the night of the full moon, Thais launch their krathong on a river, canal or a pond, making a wish as they do so. The festival may originate from an ancient ritual paying respect to the water spirits.

We would urge people to consider the environment if you’re making your own Krathong or try and select Krathongs that are made from natural products. Many of the ‘commercial’ Krathongs use polystyrene and pins that end up scattered along our waterways and provide a hazard on the island’s beaches when the Krathongs eventually wash ashore and disintegrate.

Same goes for the new fad of bread and “edible” krathongs. Officials say these can be dangerous for the fish and cause long term problems for water catchments.

Happy Loy Krathong Phuket. Where to launch your krathong tonight | News by The Thaiger

If you’d like to make a krathong, here’s a very quick guide…

If you want the easy way out, you will find hundreds of stalls on the way or near any waterway around the island that is participating in the event. Try and pick ones that appear to be made from natural materials.

Happy Loy Krathong Phuket!

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Phuket

Phuket tops travel destination list of cheapest hotel prices – Dertour 2020 Price Index

Caitlin Ashworth

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Phuket tops travel destination list of cheapest hotel prices – Dertour 2020 Price Index | The Thaiger
PHOTO: Phuket Hotels Association

Phuket tops a list of the cheapest travel destinations with a 1 night stay at a hotel costing on average less than $30 USD, according to a study by the German travel company Dertour. Phuket is going through what some say is a “crisis”, certainly a current tourist vacuum. The island province largely relies on income from foreign tourists, but with travel bans over the last 7 months, hotels and other businesses in the tourism industry have been at a loss.

For domestic tourists, Phuket currently offers a serene, peaceful tropical stay where you’ll have a lot of the island to yourself. There are plenty of daily flights to the island, but all from domestic locations at this stage – the international terminal remains closed.

Along with being listed as hotels with the lowest price, Phuket also made the top 5 cities with the largest price drop from 2019 to 2020, according to Dertour’s 2020 Accommodation Price Index. The company studied hotel prices for 75 popular tourist destinations around the world. Bangkok was just above Phuket at the fourth city with the largest hotel price drop. Bangkok hotel prices dropped by 34.6% while Phuket’s hotel prices dropped by 33.8%.

Prices will continue to be low, CEO DER Touristik Central Europe Ingo Burmester says…

“Travel itself will be cheap in 2021… Although it has been a challenging period, we have seen a great deal of interest in domestic travel. We also predict a major catch-up effect for Mediterranean destinations, European trips and long-haul routes in 2021 as soon as travel restrictions are lifted.”

Phuket ranks as the destination with the cheapest accommodation prices at an average price of $29 USD, according to the list. Average prices for 3-star hotels are $26 USD and an average of $54 USD for 5-star hotels.

Bangkok followed, ranking fifth on the list of cities with the lowest hotel price at an average of $43 USD per night. 3-star hotels in Bangkok average at $30 per night and 5-star hotels average at $93 USD.

Top 5 destinations with the lowest price in accommodation

  1. Phuket: Average of $29 USD per night
  2. Delhi: Average of $34 USD per night
  3. Kuala Lumpur: Average of $36 USD per night
  4. Bali: Average of $36 USD per night
  5. Bangkok: Average of $43 USD per night

Top 5 destinations with the largest price drop in accommodation

  1. Amsterdam: Dropped by 51.6%
  2. San Francisco: Dropped by 39.2%
  3. Vancouver: Dropped by 37.1%
  4. Bangkok: Dropped by 34.6%
  5. Phuket: Dropped by 33.8%

To read Dertour’s full report, click HERE.

Catch up with the latest daily “Thailand News Today” here on The Thaiger.

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Phuket

Man arrested after allegedly slicing a man’s face with sickle

Caitlin Ashworth

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Man arrested after allegedly slicing a man’s face with sickle | The Thaiger
FILE PHOTO

A man was arrested on charges of grievous bodily harm after he allegedly sliced his friend’s face with a sickle, causing a gash about 25 centimetres long.

3 men, identified as Saeng, Ta and Rop, had been drinking at a shanty in Phuket’s Rassada district where Rop lived. An argument broke out over money. A bank transfer was apparently made, but no one received any money, according to Rop as he related the story to police.

The men didn’t come to an agreement and ended up going to bed. Ta stayed awake and slapped Saeng twice while he was falling asleep, Rop says. Saeng then got up, grabbed the sickle and swung the hooked blade across Ta’s cheek, Rop says.

Reports don’t go into detail about Ta’s condition, but photos of the scene by the Phuket News show a significant amount of blood on the concrete floor.

SOURCE: Phuket News

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